Column : Re-imagining trade unions

Written by Manish Sabharwal | Updated: Feb 22 2013, 10:04am hrs
The lukewarm response to the trade union-called general strike of the last two days will be remembered as a turning point. It will either mark the point when this institutionvital to societyrefused to believe that India has changed and that will accelerate its decline into irrelevance. Or it will mark the point when trade unions recognised that the future of Indias labour market is different from the past. India is young65% of our population is less than 35 years old. The world of work is differentthe lifetime mai baap employment contract has morphed to a taxicab relationship. Nobody can predict the jobs of the futureemployability and skills are more important than employment. Laws cannot guarantee employmentcompetitive markets mean that shareholders dont pay salaries but customers do. The narrative of job creation pivoting around big companies is a myth100% of net job creation in India over the last 20 years has happened in companies with less than 20 employees. Technology changes are ensuring that manufacturing job creation is about much more than unit labour costsonly 4% of the value of an iPod forms assembly costs to China. Our huge self-employment50% of the labour forcedoes not signal an overweight entrepreneurial gene but that there are not enough jobs for the poor; they cannot afford to be unemployed so they are self-employed.

Trade unions are a very important institution for society if they escape their current domination by a minority who position their narrow self-interest as national interest. They must represent and take up issues that matter to all labour and realise that job preservation is not a form of job creation. Id like to make the case that a democracy like India could benefit greatly from vibrant trade unions that focus on four issues:

Skill development: More than 58% of Indias youth suffer some degree of skill deprivation. Only 1 in 26 kids that start school finish it. We are realising that nobody can teach a child something in 6 months that they should have learnt in 15 years. As many as 120 lakh and 60 lakh kids fail class 10 and 12 every year, respectively. And most discourse on skills focuses on new entrantsthe 10 lakh kids who will join the labour force every month for 20 yearsbut we also need to think about the 400 million already in the labour force who need to be re-skilled to move to new professions. Trade unions have largely ignored the skill issue but it is vital to capture the hearts and minds of youth.

Formal employment: 100% of net job creation since 1991 has happened from informal jobs. Indian employers dont have a genetic disposition to informal employers. But labour laws that allow employment marriage without divorce encourage informalisation; how many trade union leaders would be willing to sign property leases without an exit notice period Current labour laws need a comprehensive review if India wants formal employment to move beyond 10% of total employment. And trade unions must recognise that informal employment is not only undesirable but very difficult for them to service or mobilise.

Benefits regime: Current labour laws confiscate 49% of salaries in poor value-for-money schemes with low competitionEPFO, EPS, EDLI, ESI, LWB, etc. These benefit regimes were structured for a very different labour market of lifetime employment while employees today look for backpack benefits that are freely and costlessly portable between employers. Trade unions must ask for administrative and efficiency improvement in the current organisations but should fight for allowing employees to pay their provident fund dues to the NPS and buy health insurance from public or private sector insurance companies.

Non-farm job creation: Only 12% of Indias labour force works in manufacturing. And the 58% of our labour force that works in agriculture only produces 15% of GDP. India needs a massive increase in low-skilled manufacturing jobs that are a portal off farms. But making India a fertile habitat for manufacturing job creation needs massive infrastructure creation; roads, power, public transport, new cities, water and much else. When was the last time a trade union went on strike for a metro or power supply But urban infrastructure issues lie at the heart of the geography of work question; will India take jobs to people or people to jobs India has 6 lakh villages but 2 lakh of these have less than 200 people. Trade unions must make urbanisation and infrastructure issues the core of their agenda.

Trade unions have become the ultimate interest groupMancur Olsons explanation of how a small but vocal and organised minority in a democracy can hijack the agenda. Their strike hurt the poor and middle class. Trade unions were not always so selfish and self-referential. The Bombay Mills labour association was formed in 1890 but the association worked with the government on behalf of workers. Mahatma Gandhi founded his textile labour association in Ahmedabad in 1917 and the All India Trade Union Congress was formed with Lala Lajpat Rai as president in 1920. But the last two days showed their lack of imagination. Trade unions must recognise that without employers there are no employees. And by taking up these four issues, they will show they care for more than themselves.

The author is chairman, Teamlease Services