ON WAGE PROBLEM AND INDUSTRIAL UNREST

By Naval H. Tata, C. V. Pavaskar, B. N. Srikrishna

Summary

This Forum of Free Enterprise pamphlet collects three talks on India’s wage structure and the deepening industrial unrest of the early 1980s, delivered by Naval H. Tata (President of The Employers’ Federation of India), C. V. Pavaskar (Additional Labour Adviser, Bombay Chamber of Commerce & Industry), and the advocate B. N. Srikrishna. Each contribution speaks from a management-and-law standpoint and converges on a shared diagnosis: an ideologically driven, ad hoc state intervention regime — impounded dearness allowance, an undefined profit-sharing bonus, an eroded occupational differential, and weak conciliation machinery — has produced a wage system that is neither fair nor enforceable while militant trade unionism has displaced responsible collective bargaining.

The remedies the three speakers urge — tripartite consultation before any State labour legislation, productivity-linked bonus, faster adjudication along the lines of the Kantharia Committee, statutory recognition of unions, parity of enforcement between employer-side and union-side breaches, and a defence of collective bargaining as the primus inter pares of dispute settlement — give the volume its argumentative centre. The collection reads as a coordinated employers-and-bar critique of the post-Independence labour settlement, published from Bombay under the Forum’s classical-liberal banner.

Essays

I (untitled section by Naval H. Tata)

By Naval H. Tata

Naval H. Tata, President of The Employers’ Federation of India, opens with the claim that India’s industrial wage structure is in a chaotic state, with reports of the National Labour Commission, the Bhoothalingam Committee, the Chakrabarty Committee and successive Five-Year Plan labour chapters routinely shelved by Government without action or explanation. He attributes the inertia to a habit of seeking ideological solutions to purely economic problems, noting that India has not assessed ab initio whether GNP can sustain promises of social justice for 660 million people; the only vocal industrial and bank-and-insurance workers therefore keep extracting gains at the expense of the unorganised non-industrial majority. Ad hoc actions — impounding dearness allowance, compulsory deposit of a percentage of salaried income, cuts in LIC bonus, managerial-pay guidelines — paper over a defective wage design rather than rectify it.

Tata reserves particular criticism for the profit-sharing bonus law, calling it the biggest single factor for generating industrial discord, and praises the Prime Minister’s courage in eliminating Section 34(iii) against trade-union opposition. If even bonus legislation is so easily circumvented, he asks, how can minimum-wage legislation ever be enforced where State Governments will not stand behind employers in the face of agitators. He urges that future labour law pass through tripartite forums before enactment, warns against hasty State legislation on ideological or regional grounds, and proposes a comprehensive wage policy that links pay to production, restores inter-occupational and inter-industry differentials, and protects the supervisory and managerial tier whose salaries have eroded under inflation and pay-curb policy.

• Successive committee reports (Bhoothalingam, Chakrabarty, National Labour Commission) on wages, prices and incomes have been routinely shelved by Government without explanation.
• Ad hoc patchwork — impounding dearness allowance, compulsory deposit of part of salaried income, LIC bonus cuts, managerial-pay guidelines — leaves the underlying wage design defective.
• Profit-sharing bonus, undefined by the Bonus Commission itself and applied even to loss-making units, is the single biggest source of industrial discord; the elimination of Section 34(iii) is welcomed.
• Universal-suffrage politics gives the vocal organised sector recurring wage gains that the unorganised majority subsidises, in the name of a social justice the GNP cannot fund.
• Reform should run through tripartite consultation, link wages to production, restore inter-occupational and inter-industry differentials, and protect supervisory and managerial pay from erosion.

II (untitled section by C. V. Pavaskar)

By C. V. Pavaskar

C. V. Pavaskar, Additional Labour Adviser of the Bombay Chamber of Commerce & Industry, describes a labour scene of turbulence in which the Industrial Disputes Act, 1947 has failed to settle disputes and collective bargaining has degenerated into coercive bargaining. Go-slow, he argues, must not be granted the legitimacy that strike enjoys; responsible and responsive unions are progressively being edged out by militants, with Gresham’s law fully in operation in the field of industrial relations. Bonus demands routinely outrun the Payment of Bonus Act, and managements are pushed beyond the statutory ceiling through strikes, go-slows and indiscipline.

Pavaskar locates the trouble in weak conciliation machinery, in outsized multi-industry unions where power concentrates in a few hands and the individual plant disappears from view, in appeasement-driven settlements (he points to Bombay concerns granting Rs.300–500 monthly increases that ripple into neighbouring units), and in adjudication delays whose remedy he draws from the Kantharia Committee’s compulsory pre-trial hearing scheme. He calls for statutory union recognition through the law (citing the Maharashtra precedent), recognition that lasts co-terminus with the settlement, de-recognition of unions that flout settlements, and parity of enforcement between employer-side statutes (Factories Act, EPF, ESI) and union-side breaches of awards. He closes by insisting that, despite these aberrations, there is no substitute for collective bargaining as the primus inter pares for settlement of disputes.

• The Industrial Disputes Act, 1947 has failed and collective bargaining has degenerated into coercive bargaining; go-slow should not enjoy the legitimacy granted to strike.
• Responsible unions are being edged out by militants — ‘Gresham’s law’ applied to industrial relations — and bonus demands routinely exceed the statutory ceiling.
• Weak conciliation, outsized multi-industry unions, and appeasement settlements (Rs.300–500 wage hikes in Bombay concerns rippling through neighbourhoods) drive industrial unrest.
• The Kantharia Committee’s compulsory pre-trial hearing scheme and tighter Tribunal timelines should curb adjudication delays.
• Statutory union recognition (on the Maharashtra model), de-recognition of unions that flout settlements, and parity of enforcement between employer-side and union-side breaches are urged; collective bargaining remains the primus inter pares of settlement.

III (untitled section by B. N. Srikrishna)

By B. N. Srikrishna

B. N. Srikrishna, an advocate, frames industrial relations as inherently conflict-generating because capital and labour, in practice, assume that their interests are mutually contradictory. He defines industrial unrest broadly as any activity that increases the strain between capital and labour, manifesting either as worker-initiated strike, gherao, go-slow and similar coercive tactics, or as capital-led shut-down, lay-off, retrenchment and lock-out. He divides unrest into the lawful (within the framework of law and even encouraged by it) and the unlawful, using a Queensberry-Rules boxing-ring analogy in which the State acts as referee — an analogy that, he notes, must stop short of accepting that the activity is contained within the ring.

From this frame Srikrishna moves to causes. He treats industrial unrest as a symptom of a wider society-wide fall in ethical and moral standards, a runaway inflation that consumes a fifth of one’s real earnings each year, and an industrial adjudication machinery that has tried to feed ever-larger dearness allowance into the inflationary spiral. He concedes the simmering discontent has legitimate roots in poverty, squalour and ignorance, but charges contemporary union leadership with abandoning dedication and social service for self-aggrandisement and money-making, ‘puncturing the pressure vessel itself’ rather than acting as safety valves. The essay continues past the rendered pages.

• Industrial relations is inherently conflict-generating because capital and labour assume their interests are mutually contradictory.
• Industrial unrest is defined broadly to include both worker-side activity (strike, gherao, go-slow) and capital-side activity (shut-down, lay-off, lock-out).
• Two heads of industrial unrest: that which operates within the framework of law and that which lies outside it — the State is the referee in a Queensberry-Rules boxing ring.
• Unrest is a symptom of a wider fall in ethical and moral standards and of inflation that erodes about a fifth of real earnings each year.
• Trade union leadership has degenerated into a mercenary profession that punctures the social pressure vessel instead of serving as a safety valve.

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