Want to reduce labour risk?

Emulate foreign banks in India: Hire more women

Subhash Agrawal

Stories about India’s poor labour environment are now legion. Even though the scenario has improved significantly in the last ten years, at least in the private sector, foreign and Indian businesses are still very wary of labour risks. It was not long ago when the MD of Bata India was physically attacked by workers in Calcutta, or when employees of Mitsui brought the trading giant’s Indian operations to a near close for a month due to a localised altercation involving a Japanese expatriate. Major international studies have consistently rated India as having the worst labour environment in Asia.

Why is it then that labour-intensive industries in India, such as banking, software and call centres are sectors attracting the most foreign interest if not real investment?

The operations of foreign banks in India may provide a clue. These banks have successfully minimised, almost eliminated, labour unrest in the last ten years. Aside from Standard Chartered, which faced agitation in 1999 against plans to close local branches in Amritsar, Goa, Calicut and Cochin, there has been virtually no strike in the past few years. One reason is higher wages and better working conditions. None of the 18 foreign banks in India is part of wage negotiations under the aegis of of the IBA (Indian Banks’ Association), and staying away from this collective wage bargaining has actually curbed labour-management friction and unionisation.

Major banks like Citibank and Amex are now almost completely non-unionised as compared to 1970 when Citibank had 2.5 union workers for every one non-union worker. Banque Nationale de Paris and StanChart-Grindlays (post-merger) are still unionised but these unions are no longer hostile. Until 1989, the ANZ employee unions had vigorously opposed computerisation but in the past decade they have willingly, even enthusiastically, endorsed branch automation. In BNP, the proportion in 1980 used to be five union employees for every one non-union worker, but now the ratio is somewhere in the neighbourhood of 1:1.

Better pay, more technology and more humane practices — all these have helped. But perhaps the real reason is the increasing feminisation of the workforce in the last decade. There has been a sharp and steady rise in women employees in all banks, whether public, private and foreign, and this trend has dramatically changed the dynamics of union politics in the larger banking sector.

In the early 1980s both the All India Conference of Bank Officers’ Organisations (AICOBOO) and the All India Bank Employees’ Association were forced to form a separate women’s wing to adopt and give high priority to issues affecting women such as creches, maternity leave and flexi-hours. As per an International Labour Organisation report published some time back, the new generation of bank and insurance employees in India, especially women, are very serious about their work and less interested in union activity. This report mentions that due to the large recruitment of women in the banks the attitude of employees is changing and “they no longer look at the unions as an expression of their aspirations and their real interest is their career”.
The proportion of women employees in lower-to-medium-grade posts in all banks in India has increased from 5 percent in 1970 to over 55 percent in 2000, and this is even higher in some foreign banks. Rough figures from StanChart-Grindlays (pre-merger) show that till 2000 almost 45 percent of its nation-wide workforce were women.

The trend of more women employees has in fact meshed well with greater thrust on information technology in banking. Most women employees in banks now opt for jobs involving data processing and IT, and in fact have been very keen to learn to use computers. Why? Because being in the EDP department has less interaction with others and hence less chance of sexual harassment, and also it protects them against transfers to remote areas, since EDP departments are located largely in big cities.

In a larger sense, major labour unions in banks are now on the defensive. Their priority has clearly shifted from demanding greater pay and less work to protecting jobs. In fact, in November 1999, representatives of bank unions implicitly agreed to management’s right to relocate branches, a major victory for management. The focus of PSU bank unions these days is to stop privatisation and not to ask for more holidays or pay. That itself is a major change from what used to be.

The effects of these changes are evident in the bottomline: there’s a large body of indisputable evidence which shows that multinational banks have done far better than public sector banks in terms of financial performance, customer service and even wages. And all this success largely because of a simple strategy: hire more women.

Mr Agrawal is an analyst of Indian political and business trends. He is the editor of India Focus, a political risk report for international investors.