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2nd National IR Conference at XLRI

The 2nd National IR Conference was organized by XLRI between the 27th and 29th of December. It was inaugurated by Justice S.B.Sinha. Four tracks were discussed over the 3-day period. The sessions ended with the valediction which was attended by Mr. B. Muthuraman, MD, TISCO and M. Rama Jois, Governor of Jharkhand.

Session 1: Corporate Restructuring

Chairing the session was Mr. B. N Sarangi, Head HR & IR, Tata Steel.

Mr. Sarangi while introducing the session spoke about the imperative for corporate restructuring, more so given the fast pace of environmental change today. The issues such as mergers and acquisitions, closure and downsizing that come under corporate restructuring are not merely reactive measures but proactive strategies that the organizations should undertake to promote growth.

Mr. Sarangi gave the example of Tata Steel to illustrate how downsizing can have a human face. He also quoted experiences and leanings from the closures, downsizing and mergers that Tata Steel had been through in the past. With regards to the labour legislation in the country, Mr. Sarangi highlighted the difficulties the employers face to keep the business profitable under such archaic laws. He also expressed his disappointment with the Second National Commission of Labour (NCL) report, which failed to provide any comprehensive solution to such problems.

Mr. Vivek S. Patwardhan, VP HR Asian Paints was the next distinguished speaker.

Mr. Patwardhan congratulated the organizers for the pertinent theme for the conference chosen by them and emphasized the need for employers to develop a consensus for change in labour legislation. At the outset he explained the backdrop against which the labour legislation had been formulated and he stressed that the provisions of these laws were very logical given the License Raj of the past. However he stressed that such legislation should also change in line with the economic reality. Toady such legislations serve merely as hindrance to the growth of the industries without fulfilling the aim with which they had been framed. According to Mr. Patwardhan, any corporate restructuring exercise would involve the following pertinent questions.

  • Adjusting the size of the enterprise: The decision for the right size of an enterprise is not a management prerogative any more and has to involve the trade unions of the organization. He was dissatisfied with the stated number 100, exceeding which an employer has to obtain permission from the appropriate government for any downsizing in the organization. He suggested that reduction of 50% of workforce should be allowed with out having to seek permission for the same.
  • Adjusting the structure of the enterprise to ensure high performance: He felt that an immediate fallout of restructuring was a job redesign. This can be best done by innovating the new strategy in one place and then implementing it elsewhere. He gave the instance of his own company and told how this had been done but he cautioned that this would often take a long period of 7 to 8 years and felt that people must be given free right by the government to reorganize.
  • Finally he talked about the process of reorganizing the work within the enterprise: In this he showed how technology is having an increasing impact on the workplace situation. He quoted examples about the difficulties faced by the industrialist due to BIRA etc. to drive home the point, about how Law could be restrictive at times.
He made an interesting point while saying that if we can have measures like TPM, TQM, ISO 9000 initiatives as standards for excellence without any legal requirement, we could follow the same trend and take initiative to promote industrial relations voluntarily.

Mr. T. D. Banerjee was the next distinguished speaker.

Mr. Banerjee spoke about the evolving management thought and the changing role of industrial relations with it. He talked about the direction to which the current IR movement is taking a turn. Today there is greater emphasis on workers participation in the management, which has to be supported by strategic changes in organizational structure. Concepts such as Self-managed teams have been implemented with great success in many organizations and it recognizes the contribution that is made by the worker to the organization. He emphasized that any restructuring exercises in the organization should take into account that the individual at the work place is provided with variety in work, elbowroom for decision-making, mutual support and respect and meaningfulness in the4 work he is given. He illustrated the above point with the help of Tata Steel's experience in formulating the Performance Ethic Programme (PEP) together with McKinsey.

Salient Features of Session 2: NIRC

Speakers: Mr. R. N. Mishra
                    Dr. Pranabesh Ray (President of the Session)

Introduction
With the arrival of the age of liberalization, privatization and globalization Indian industries are at crossroads. There is no going back to government protectionism rule, which has made it imperative for the industries to decide whether they want to prosper through competition or die.

Salient Features
In the above backdrop the given topic is a delicate and sensitive, yet important one. This issue has become a more debatable one in the present scenario of organized workforce regime.

  • One should not look at outsourcing as a 'cost-saving measure'. Rather, outsourcing is based on the principle of "right man for the right job".
  • Need for looking at 'outsourcing' from the market competitiveness perspective.
  • Need to distinguish between core jobs and non-core jobs of an enterprise and analyze these concepts in the light of business realities. In effect, outsourcing allows enterprises to take advantages of world-class practices.
  • Outsourcing helps in career development and career progression of people.
  • Basic purpose of outsourcing: accelerated delivery system
  • One should be in a position to share the risks with its outsourcing partners. That is, the need of the hour for strategic outsourcing is to take risks jointly, not individually.
  • Despite being an important tool, outsourcing is like 'King Midas's touch'. Conventional outsourcing brings with it the widely debated yet unresolved issue of 'contract labourers'. At various points In time, judges have been seen to have had divergent views on the subject. Reference to this has also been made in the 2nd NCL Report.
  • The focus should not be on hiring contract labour at cheap rate - rather, it should be on giving them good remuneration.
  • There is a tendency to confuse 'outsourcing' and 'mere delegation of responsibility'
  • The successes of all outsourcing activities mostly depend on 'vendor selection'.
  • There can be three types of outsourcing: -
    • Conventional Pattern of Outsourcing (this brings along with it the problems of contract labour)
    • Collaborative Pattern of Outsourcing
    • Business Transformational Outsourcing
  • Managerial work can be broadly classified under three heads:
    • Interact with people both within and outside the organization
    • Collect information
    • Make decisions
Of these, only the first two activities can be outsourced, while retaining their co-ordination function within the enterprise. The third activity should solely rest within the enterprise.

Session Three: Social Security

Speakers: Dr. C.S.Venkataratnam
                    Mr. Harbhajan Singh
                    Dr.H.K.Pradhan,Chairman

The state of social security in India is not favorable. Less than 2% of the GDP is spent on social security as compared to around 40% in the developed countries. The challenge of the hour is to balance modernization and urbanization with the human side of social security. In designing social security, the points to be kept in mind are that it should be equitable, provide necessary incentive to participate, contributory in the long run, partnership between state, employer, and employee, and integration of all schemes is necessary.

Most of the recommendations given by the NCL were endorsed by the speakers, who commented that the NCL has done the maximum justice to the topic of social security among all others. The commission used a multi-pronged approach, and recognized the heterogeneity of the workforce and their varying needs. Some of the recommendations that were discussed were:

  • Social security benefits should be universally available to all the people employed, irrespective of the size of the establishment or nature of activity. The responsibility of providing a minimum social security benefit should rest with the state
  • There should be uniformity across all legislations regarding wage ceilings and employment thresholds for their applicability.
  • Rationalize all existing schemes into one comprehensive scheme.
  • Use the existing government infrastructure like post offices and banks for efficient service delivery at the doorstep of the beneficiaries.
  • Privatize and outsource health and other benefits.
  • Unemployment insurance for workers affected by restructuring (for the organized sector); and separate funding by IRDA etc for social insurance cover (for the unorganized sector)
It was stressed that there is already ample legislation in India on every possible topic related to labor, and that all that is required is proper implementation and administration of the existing legislation, instead of introducing new laws. Bureaucratic procedures that impede the process of justice for the needy need to be removed.

Session Four: IR law reforms

Mr O.P.Malhotra gave the historical perspective of the evolution of industrial law in India. Although there are a number of acts governing industrial relations, the reality is that not much work has been done to improve the stagnant situation in a long time. Some examples of the steps that were taken but not implemented are:

  • 1980: A few amendments were suggested to the ID act, the most important of which was the revision of the definition of industry, which would have resolved all issues about the ambiguity of the definition. This amendment never became part of the act due to political vagaries.
  • 1996: A comprehensive bill, based on the recommendation of the first NCL, was proposed, which would have brought all the labour laws into just one act. Due to the dissolution of the government, this also never saw the light of the day.
Mr. Malhotra spoke about the elements of IR, conciliation, arbitration, and adjudication. He felt arbitration was most important as the existing courts are overloaded, and the process of adjudication is very expensive.

Dr Rao spoke in detail about the various recommendations of the NCL, some of which are:

  • Substitution of the word "industry" by "establishment", which will bring even domestic help under its umbrella.
  • Simplification of the term "wages" in all the enactments.
  • Provision for training and retraining of employees.
  • Layoff and retrenchment do not require permission.
  • Use of check off system for recognizing the bargaining agent.
  • The NCL has asserted that the recommendations should either be implemented in their entirety, or not at all. It has also asserted that there should be no lenience shown to the public sector in case of any violations as against the private sector.
Dr. Padhi said that the NCL had come up with recommendations that were but a reiteration of previous attempts and that there is nothing new to offer in this report.

Contributed by -
Arjun,
External Linkages, XLRI.