RE-EMERGENCE of INDUSTRIAL RELATIONS IN ORGANIZATIONS Dr. Rajen Mehrotra*

Academic Institutes, professional bodies, chambers of commerce, trade associations, employer organizations, and also enterprises in India every year organize an annual conference on topics mostly dealing with Human Resource Development (HRD), as this has been considered an important area for the success and growth of business / enterprise.  The violent industrial strife at Manesar, Haryana in August 2012 which led to the death of Awinash Kumar Dev, General Manager (HR) of Maruti Suzuki India Ltd has presently resulted in most of these organizers choosing the theme of “Re- Emergence of Industrial Relations” for their annual conference. In the last three months (i.e. Sept to Nov 2012) I had opportunity to participate in some of them as a speaker.

Occurrence of violence is not new. Three executives of Everest Industries in Nashik were stabbed on 24 August 2012, by a group of workmen on strike demanding increase in wages and reinstatement of dismissed workmen. Regency Ceramics workers in Puducherry, in early 2012 killed the Company President K C Chandrasekhar. Korean company, Hyundai Motor Ltd., at its Chennai Plant in Dec 2009 had violence when it sacked 87 workers. Japanese company, Honda Motors in Manesar,Haryana in Sept 2009 and also in 2005 witnessed violence by the workers. Roy George, Head of HR of Pricol Ltd., an instrument panel manufacturing company was killed by the workers in Sept. 2009 on issue of wage freeze. In Rico Auto Industries in Haryana in 2009, a worker was beaten to death by people believed to be associated with the company management.  Italian Oerlikon Corporations, manufacturing unit Graziano Trasmissioni Chief Executive, Kishore Chaudhary was killed in September 2008 by the workers over a wage freeze issue.  These are some of the incidents of violence, though there are others which have not been covered by me.

Apart from these cases of industrial violence cited above, we have had cases of violence in sectors such as Coal, Forest, Construction and Real Estate, where it is well known that the contractor mafia has a major role in the operation of the business. In 2003 Satyendra Dubey, project director with the National Highways Authority of India was murdered, because he tried exposing the contractor mafia involvement in the construction of a section of the Golden Quadrilateral project to the Prime Minister’s office.

When I started my corporate career in 1970 in Mumbai I recollect incidents of industrial violence taking place in Mumbai, Pune and Nasik industrial belt in certain enterprises when the management failed to reach a settlement / agree to the wage increase demands of the workmen made by the unions led by R J Mehta in the 1960’s and 1970’s and by Dr. Datta Samant in the 1970’s, 1980’s, and part of 1990’s.We did witness a trend of violence/ militancy during this period, hence quite many organizations under fear of being impacted by violence agreed to recognize their union leadership and also sign settlement of wage increase, which were much more than the industry cum region norm or compared to their earlier settlement. Hence, the approach of violence / militancy did bring dividend / reward to the workmen during that phase in the Mumbai, Pune and Nasik industrial belt.  There were also enterprises in Mumbai, Pune and Nasik industrial belt which were not prepared to be pressurized by threat of violence and unilateral demand of these two trade union leaders and fought them and their demand, which did lead to strikes or lockouts, and these cases also got resolved with absence of their leadership.  However the enterprises which decided to fight also suffered financial losses, some of their employees got assaulted due to the approach of violence adopted by the leadership and also the striking workmen lost wages and in some cases also their jobs. I had an experience of witnessing this situation in 1980’s when I was a member of the management team that was involved in handling the 13 month lockout cum strike led by Dr.Datta Samant’s union at Mukand Iron & Steel Works Ltd (now called Mukand Ltd.) factory located at Kalwe, Thane. Most are aware of the Strike in the Textile Mills of Mumbai in the 1980’s under the leadership of Dr Datta Samant, which ultimately led to over 100,000 workers losing their jobs and finally closure of most of the textile mills. During these periods many executives of enterprises in West Bengal and some other states also experienced Gherao’s.  However, the 1990’s and 2000’s in the country saw a decline of violence and militancy after the new economic policy of 1991, when most enterprises both in manufacturing and service sector  reduced their workforce through Voluntary Retirement Schemes (VRS). It is true that 2010’s is once again seeing signs of industrial violence and militancy in various parts of the country.

Presently industrial violence occurrences’ get flashed on electronic media immediately as “news” coverage of the incident, and there is limited coverage on the analysis. Each of these occurrences has two sides and a history of earlier actions that lead to the final incident. The killing of Awinash Kumar Dev, General Manager (HR) of Maruti Suzuki India Ltd in August 2012 is not the only incident of violence in this country, though this incident has generated a lot of debate not only in the personnel professional fraternity but also in other professions. Resorting to violence, as a methodology of resolving disputes adopted by anybody in any area needs to be condemned and is an uncivilised method of pressurizing and power play to achieve the end objectives. The individuals involved in violence need to be expeditiously punished, as per the law of the land. The legal process in our country is time consuming and quite often the individuals involved in violence succeed in not being punished due to lack / absence of evidence.

The International Labour Organization (ILO) which was born in 1919, as a tripartite organization has always propagated “Social Dialogue” to resolve industrial disputes. The ILO has a convention C 144 on Social Dialogue which has been ratified by India in 1978. Social Dialogue refers to “All types of negotiation, consultation or simply exchange of information between or amongst representatives of Governments, Employers and Workers, on issues of common interest to economic and social policy”.

When I started my corporate career in 1970, Industrial Relations were an integral part of Personnel & Works Management. Also the factory work force consisted of permanent, temporary, and badli workmen with few supervisors and officers. Those days’ contract workmen engaged in the factory through a contractor / service provider was negligible. My apprenticeship in works management in those days made me learn how to deal fairly and firmly with both blue collar and white collar employees including the internal trade union leaders on works management and personnel management issues involving input material consumption, wastage/ rejection, shift output (good, defective, rework, rejected pieces), safe handling of the machine including the tooling along with the jigs and fixtures, productivity, safety, absenteeism and discipline. In most large size manufacturing organizations there were one / two social workers and also one/two labour welfare officers. These persons regularly interacted with the blue collar and white collar employees, visited the residence of some of them and met the families. These interactions and visits facilitated in understanding the problems and grievances of the workmen by the management and in finding solutions to the problems. These channels of communication did help in building relationships where in the employees perceived that their seniors were fair and firm. There were industrial disputes which at times did lead to go slow, work to rule, slogan shouting at the factory gate and also at times to a strike , but they did not lead to an industrial violence, as both sides knew that they can resolve the issues through dialogue or at times  by arbitration.  I was fortunate to learn the practical aspects of industrial relations as a part of works management in my employment with Mukand Iron & Steel Works Ltd. (now called Mukand Ltd.) because of the regular interaction on the shop floor with the workers, the internal and external trade union leaders and with the persons working in the personnel management department. This learning and experience helped me in handling all the areas under personnel management when I headed the personnel management function with Novartis India Ltd and ACC Ltd

A Professor Friend of mine teaching human resource management subject in a leading management institute in India in  a recent interaction said to me :“The Human Resource Management Department of enterprises in India in  the last two decades has divorced Industrial Relations hence we are seeing industrial violence”.  I replied to him “Human Resource Management Department of enterprises in India never married Industrial Relations, so where is the question of a divorce”.  When I started my corporate career in 1970 there was a Personnel Management Department and Industrial Relations function was an integral part of that Department.  In the 1990’s most enterprises both in manufacturing and service sector not only changed the name of Personnel Management Department to Human Resource Management Department, but took an approach that they will mostly employ officers, avoid employing blue collar and white collar workers, deal in a very limited manner with trade unions and hence forgot that there is something called industrial relations and labour laws. With the new economic policy of 1991, most enterprises in manufacturing and in service sector reduced their work force through Voluntary Retirement Scheme (VRS) {also referred to as Compulsory Resignation  Scheme (CRS) by trade unions}, froze recruitment of employees who would be covered under the Industrial Disputes Act, modified the business model by outsourcing and also engaging  contractors / service providers who through their employees  perform the noncore and in some cases also the core activities, and upgraded most jobs so that they are done by employees who were designated as officers. Also the service sector which grew at a very fast pace also had mainly officers as employees and engaged contractors / service providers who in turn employed workers , and the Human Resource Management Department of these organizations firmly believed that they had nothing to do with industrial relations . It is true that the profile and expectations of employees in the service sector from the Personnel Management Department is quite different from employees in the manufacturing sector.  Most of these service sector enterprises have built up an effective personnel management systems in dealing with individual employees who are predominantly knowledge workers and employed as executives / officers. I do visualize that these knowledge worker employees and contract employees engaged by service sectors initially in IT / ITeS , retail , insurance and later in others will form trade unions / associations to protect their interests and collectively negotiate with the employer.  In most service sector enterprises the personnel management professionals engage the services of consultants to deal with the application for permissions ,filing of forms /returns with the Government Labor Department, as they consider these as transactional activity and claim that their role is predominantly strategic. Reality of the situation is that many of these personnel management / human resource professionals, including those working at senior levels in service sector organizations have limited knowledge and experience in dealing with collective issues coming up in industrial relations involving the Government labor department, external and internal trade unions and the labour laws of the country.

The situation today is that in most enterprises the wages received by the contract workforce provided by the contractors / service providers both in manufacturing and service sector is much lower than the wages of permanent employees in the enterprise. This disparity which is very high compared to the 1970’s, 1980’s and 1990’s does create a lot of dissatisfaction amongst these workers, and the trade unions demand increase in wages to have parity with the permanent workers. Managements argue that the contract employees are engaged as per the Contract Labour (Regulation and Abolition) Act, also the jobs are not permanent and the business needs flexibility because of fluctuations in demand.  In quite many cases where the contract labour works, the jobs are of a perennial nature and it is purely a strategy of cost reduction, as contract employees are mostly paid the statutory minimum wage or marginally higher and have been working for a very long time and at times with artificial breaks.

An analysis of cases where industrial violence occurred  will indicate that these could be because of non recognition of trade union, inter union rivalry, contract workers desiring permanent jobs with the principal employer, large wage and benefits disparity between contract workers and permanent workers, ineffective neutralization of inflation,  harsh working conditions, wage freeze , frustration of no signs of settlement in a long drawn out strike, demand for reinstatement of dismissed workmen / union leaders , vested interest of contractors / service providers not to be replaced , mafia / militant  external / internal trade union leaders . Each case of industrial violence is unique, it has a demand desired to be fulfilled by the parties, along with a history and profile of the two constituents i.e. management, employees / trade unions. There is a need for the two constituents to build a relationship of trust with each other, so that the issues involved can be discussed and resolved and even if there are unresolved issues the parties agree to disagree and move forward and violence in any form is avoided.

There are quite many MNC’s that have commenced operations  in India after 1991 and most of them have been wanting the right to retrench the workforce based on business exigencies and hence desire an exit policy,  which the labour law of India does not presently permit. Most of these enterprises on the recommendations of the Indian managers are engaging the services of contractors / service providers to provide the blue collar, white collar and at times gold collar workforce. Hence the number of contract employees working in the enterprises is much higher than the permanent workforce. At the same time the wages and benefits of the contract employees is much lower than the permanent workforce. Also the trade unions at times take an aggressive stand with MNC’s and recently some of the industrial violence was in the MNC manufacturing enterprises. There is also a need for the ex-pat MNC executives to understand the cultural and legal differences in dealing with employees while working in India and also for the Indian executives to explain the situation to the MNC expats plus the senior executives of the parent company of the implications of their decisions on the operations. A better understanding will help in preventing occurrence and resolving industrial disputes both in the interest of the enterprise and the employees.

Post 1991, many of the personnel professionals totally ignored the relationship part of the job, started using fashionable jargons and terminologies in the arena of human resource.  Also such personnel professionals became the darlings of the top management, and they were considered as 'forward looking’. Also Top Managements in many enterprises became 'business-like ‘, totally disregarding the 'human angle of relationship ' of dealing with employees even if they were engaged through a contractor / service provider . Those personnel professionals who were talking about 'relationship factor ' were considered as 'outdated'. This was at least true in the manufacturing sector.

Industrial Relations need to be an integral part of Human Resource Management Department in each enterprise, as it was when we had the Personnel Management Department till the 1980’s. Enterprises posts 1991 are increasingly depending on outsourcing in the supply and distribution chain, continuing to increasingly engage contract employees through contractor / service provider. This business model is bound to lead to a situation of disputes being raised by employees and / or their unions. Enterprises need personnel professionals who can analyze and understand the situation, have the art of building relationship not only with their employees but also with the employees engaged through contractors / service providers and unions, along with the ability of amicably settling the disputes / differences in the interest of the organization and the employees associated with the enterprise.

The occurrence of violence in certain enterprises, leading to loss of life, has presently resulted in the top management of enterprises desiring to understand the reason for such incidents and the need to take corrective action where required. There is a realization of the need to build relationships and the re- emergence of industrial relations in the enterprise in dealing with all employees including those engaged through a contractor / service provider. Top management of certain enterprises has started reviewing the need of having personnel professionals in their employment, who have the experience and competence of effectively handling the industrial relations role.

When businesses are growing and doing well it is easy to deal with employees at all levels including the contract workforce , but when the business is not doing well, one also needs to know the art of resolving issues involving  a shrinking pie.

*President Industrial Relations Institute of India (IRII), Former Sr. Specialist on Employers’ Activities for South Asia with International Labour Organization (ILO) and Former Corporate  Head  of HR of ACC Ltd. and Novartis India Ltd., E-Mail:[email protected]

Published in Current Labour Reports and Industrial Relations Institute of India (IRII) Journal Arbiter – December 2012 issue