The Indian industrial scenario has seen rapid transition in the last decade. From a traditional factory based mindset the Indian industry has moved on to become world class large conglomerate. Indian industry has moved on beyond the Indian borders and is spreading it’s footprint across the globe. Indian family owned businesses are today an epitome of professionally run multinational organization. Indian Family run businesses now employ Expats, CEOs and employees to run their profit ventures.  Clearly the business mindset – the way we were used to conducting business of our industries - has undergone a sea change.  How and why did this transformation transpire?

In the late nineties, Indian manufacturing sector has undergone an economic slowdown. This resulted in closure of many well known businesses. People working in these industries were rendered jobless. In order to survive, the industry resorted to various cost cutting initiatives, which included rationalization of its employee force. The Trade Unions raised this as a big issue as one of the basic principles of the constitution of the Trade Unions – protection of jobs – was being shaken. That was the time when the industrial Managements embarked upon the journey of building effective and transparent communication channels to win over the partnership, collaboration and working trust of the Unions. The downturn was long enough to enable these efforts to stabilize. The Trade Unions became effective partners in progress and actively participated in cost elimination drives, manpower rationalization drives. Although, manpower rationalization was implemented through various Voluntary Retirement Schemes (VRS) or Golden Handshakes. This process in the late nineties till about 2002 helped organizations to close non profitable / non sustainable sections of their businesses and also did effective cost rationalization and manpower rationalization – thus becoming LEAN in the industrial sense of the term. Later, when the upswing came these lean organizations were absolutely ready like a crouching tiger and made the best use of resources in taking all possible advantages of an ever liberalizing economy. Trade Unions which had witnessed the recent downtrend were happy to support all the progressive programmes initiated by the new Managements. The now leaner and more prudent Managements also made it a point to take the responsibility of spreading the knowledge amongst their workforce and started working towards enhancing employee connect and engagement. The above scenario and resulting efforts brought about a change in the erstwhile Management / Union adage of US & THEM. There was now a TEAM which worked together for the betterment and fortification of the industry and its employees.

I have the privilege of advising a lot of industrial units by virtue of my holding honorary positions in the industrial associations both at the local and at state / national levels. I have clearly seen a marked change in the industrial dispute resolution process.

First: as I have mentioned above, due to the maturity of the TEAM in an industrial organization, the complexion of industrial disputes has undergone a change. The small, individual – sometimes frivolous – type of industrial disputes have reduced and more issue based disputes which affect larger population or the ones which challenge a question pertaining to interpretation of a policy or its clause are now becoming more in numbers.

Second: The shift from Tripartite to Bipartite way is happening at a very fast pace. The Managements and the Unions have realised over a period that the way the dispute resolution process runs under the Tripartite based system – involving Government agencies – it only results in delays and as they say justice (read Resolution) delayed is justice denied. Therefore, the Managements and the Unions now sit across the table and after hearing each other out are finding resolutions to their differences. The positive side effect of such type of resolutions is that they are respected more and thus are more long lasting.

Third: The way the Government agencies have gone about resolving disputes, has left much to be desired and delivered. The approach in most of the cases has been enforcement than conciliation. The Indian Laws are by and large are labour protective. This was necessitated by the way earlier industrialists used to run the industries. This is not the case in India only but it has its roots in the ’sweat shops’ of 19th century industrialised Europe. However, on one hand, like in other developed / developing nations, Indian industry too has embraced modernization and follow processes which are ergonomic, safe and produce world class quality products. On the other hand the Indian Industrial legislation still remains archaic.  I would like to bring forward a point here that the Indian Trade Unionism took birth when India was not an independent country. The Trade Unionism took its roots in the fight for freedom – freedom struggle and this added a very strong flavour to the recipe of Indian Trade Unionism. Then, the Indian industrialists – the pioneers – the first generation – have their industrial rooting in an Imperialistic & closed economic scenario. Even after India won its freedom, this negative inertia continued to drag the Indian industry. Combined with the above said archaic and over protective labour legislation – this became a recipe for disaster. Indian industry struggled with this recipe for almost 50 years post independence.  Then dawned the era of LPG – Liberalization, Privatization and Globalization.  Suddenly, the over protected Indian industry was exposed to the harsh presence of a giant – Global Economy and the related competition. Many large Indian Business houses could never come out of this sudden awe. Whereas, most of the industrial houses showed quick responses and they were very swift in adapting to the new world order. In my view the Indian industry took about ten years time to unlearn the business ways which it was entangled with for more than a century. Now the Indian industry is seen with a renewed global level of respect. I have many examples to quote here which would make any Indian proud. What did these successful Managements do?

My view is they decide to do much more than just what was absolutely required under our laws / legislations. They took over the right to manage from these laws and their enforcers and took upon themselves to devise their own guidelines. Management, it is not just fulfilling the peripheral needs – outer standards of Labour Laws. In the open and liberalized Indian market economy the issues of Productivity, Quality, and Globalization are the ones which are currently under a lot of focus, and sadly our Labour Legislation or for that matter the dispute resolution machinery is not up to speed on such important points. Therefore, Progressive industries are moving away from the legal peripheral issues. They are stepping into the ARENA – where all the action is. There is a need of the industry to distinguish between Laws and Management – to wean away (not avoid) from Labour Laws as these are laws and just laws are not Management. The focus has changed from just fulfilling the bare minimum legal requirements to doing much more so that the focus shifts from just complying with the laws but the same energy is being focused on transformation of employee mindset towards becoming World Class. Coming over to the Dispute Resolution…..what is it? I can say it is primarily about two things…  - Assuaging hurt feelings -Protection against insecurity generated by actual or perceived threats  Although, everyone has heard the saying’ Prevention is better than cure’, I strongly believe that in Employee Relation scenario – ‘Prevention is the ONLY cure’.

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ER & Labor Laws Rajiv Kapor