Diagnoses Diagnosespresonts analyses ofthe diagnostic case by invi- ted academics and practitioners. Problems are examined, their causes are analysed, and issues of relevance are dis- cussed. Creation of an industrial culture is always aslow and difficult process, especially for high-tech industries in backward areas. In such circumstances, what is the role of the state government and the management in creating this culture? What parameters should be used to evaluate demands for wage rise? These are some of the ques- tions that the diagnostic case, The Bajaj Lockout, raises. The casewriter and other experts from the academic and the practising worlds provide us their diagnoses of the case. To promote and foster healthy industrial rela- tions, Kher emphasizes the need to edu- cate the workers in fair negotiation prac- tices while Shelat elaborates on the role of the state government in ensuring an ideal industrial climate. Joseph highlights the role of sys- tematic grievance handling procedures whereas Sarkar observes that faulty recruitment policy combined with the promotion of an internal trade union are sure indicators of deficient personnel management. Removing barriers to com- munication between workers and the management and introducing participa- tive management will contribute to better industrial relations concludes Saha. Vol. 14, No. 1, January-March 1989 Mature Negotiation: Key for Amicable Settlement ‘Manik Kher ‘Tho Timot Research Foundation Pune Despite being a common feature of industrial life, every strike and lockout is a case by itself and hence amatter of curiosity for a social scientist. Particular- ly so, when a large organization launches another plant in an industrially backward area and has to face labour unrest on the issue of wage parity with the sister concem in the industrially developed re- gion within just about two and a half years’ time from commencement of production. With the in- creasing number of multinational and Indian com- panies opening up new production ventures in in- dustrially backward areas, workers’ demand for parity in wages and benefits is likely to be a recur- rent phenomenon. It is precisely for this reason that the Times Research Foundation took up the study of the lockout at the Bajaj Auto Ltd. (BAL), Waluj (Aurangabad). I had interviewed the top executives, middle cadre employees, workers, and the union represen- tatives of the company, ‘Besides, I had discussions with other union activists and management consult- ants in Pune and Aurangabad. These were carried out soon after the wage settlement was arrived at by the management and the union. The facts ofthis case have already been stated in the diagnostic piece. In order to avoid repetition, only the major issues are analysed here. Provision in Standing Order Creates Tension In view of the characteristics of the labour force, it is clear that the workers had yet to internalize the way of industrial life, No worker was confirmed un- less he maintained productivity levels at 100 per cent during the probationary period. Further, the provision in the standing orders about the raising of the probationary period to six months (as against the statutory minimum of three months) and the man- agerial discretion to extend it further by another six months created tremendous uncertainty and tension in work life. otBy another major chango in the certified stand- ing orders, the management made an additional clause in the acts of misconduct. A worker was li- able for punishment for riotous and indecent beha- viour, not only within the establishment but even outside, if it had a rational connection and bearing with the employment in the establishment. Although the changes in the standing orders are justified, the manner in which the changes were initiated was quite objectionable, By the statutory requirement, the certifying officer has to invite the views of thé union/worker representative and can- not certify them unless the latter approves them in writing. It is obvious that no union would have ap- proved of the changes mentioned above. In all fair- ness, these changes, essential as they are, need to be initiated by the government by way of amending the pieces of legislation, ‘The Bargaining Game It is woll known that the trade unions pitch their de- mands very high with room for bargaining, The BAL ‘workers at Pune too, after the termination of their previous settlement, had demanded a raise of Rs 2,000 and had finally settled for Rs 500. The worker representatives on the negotiating. committee at BAL, Aurangabad, mentioned to me that their actual expectation was to get a raise of Rs 700 as against the stated demand of Rs 1,700. Itis obvious that this de- mand is exorbitant as a result of which warkers lose their credibility. ‘A question arises: What should be the basis for bargaining? The parameters normally used by the union have been rise in productivity, total turnover, and the value added. Rise in Productivity, Labour productivity is a product of labour istilization and labour efficiency. Use of technology plays a prominent role in decid- ing both these factors. For instance, in the Auran- gabad plant, 800 scooters are manufactured everyday by 3,500 workers as against 1,600 vehicles produced by more than two-fold the strength of workers at Pune. Thus, the output per worker is higher because of the modemized machinery. The capital investment per employee too is higher at Aurangabad (Rs 4.29 lakh per employee) as against at Pune (Rs 1.72 lakh per employee). Whereas the unions conveniently overlook this aspect, the managements place emphasis on it during negotia- tions. ‘Total Turnover. The total turnover, too, cannot be 52 the right index for bargaining as itis largely decided by the competition in the market and the quality and saleability of the product. A glance at Exhibit 1 of the case shows that the market share of BAL, in terms of sales, has been fluctuating. It is noteworthy that in one of the clauses in the settlement of BAL, Aurangabad, the workers’ role in maintaining the strong competitive position of the company has ‘been emphasized. In view of the inicreased competi- tion, the workers should adopt a mature stand during negotiations. Total Value Added. Another index for bargaining which is commonly used by the trade unions is the total value added. Wages, however, cannot be in- creased in proportion to the rise in total value added Decause together with wages it comprises interest plus depreciation plus profit before tax. During 1985-86, the total value added of BAL was Rs 136.8 crore, During the following year, it was Rs 175 crore, thus showing a rise of Rs 39,2 crore, The composition of this increase is given in Table 1. Table 1: Components of Value Added Percent Salaries and wages 22.70 Interest 4.59 Depreciation 26.79 Profit before tax 45.02 SCs rc tsa gE 100.09) While the proportion of profit before tax in the increased value added has been 45.92 per cent, the proportion of salaries and wages in the increased value added has been only 22.7 per cent. Thus, there is room for the union to bargain for higher wages and salaries. It is possible that the manage- ment would claim higher profits in proportion to the capital investment since the investment per employee at Waluj has been four times higher as, against that at Pune, Itis essential to note that the figures in Table 1 are aggregate and include figures for both the plants at Pune and Aurangabad and hence must be taken cautiously. When the trade union had placed its demand on the basis of profit of Rs 113.3 crore, it had deliberately not taken into consideration the provision for depreciation while arriving at this figure. Provision for depreciation is necessary in order to replace the entire plant machinery when its expected life is over. Ignoring depreciation would Vikalpamean Killing the goose laying the golden egg. Ap- parently, the union adviser had arrived at the profit gure in order to provoke the workers against the management. ‘The most important issue leading to thé lock- cout was the management's insistence on the region- cum-industry principle for deciding wages. ‘The Region-cum-Industry Principle ‘The capacity of any company to pay the workers is, decided after making the necessary allowance for depreciation and tax. However, its wage rate must be compatible with that of other units of similar in- dustry in the particular region. For, a high wage rate in one organization should not disturb the recruit- ment and the overall personnel policies of other units in the surrounding region. In various de- cisions, thé courts have stated that the principle of region-cum-industry is necessary for avoiding un- fair competition and for obtaining a fair deal for workers. ‘The courts have also laid down that in the ab- sence of similar industry in the region, the nearest similar industry has to be considered for the purpose of deciding the wage rate. If there are no comparable industries in the region, the Supreme Court has al- lowed considering the additional factor of capacity to pay ( For example: Tata Chemicals Ltd. versus Workmen—LLJ 1978 I 22). Nevertheless, the region- cum-industry principle has to be honoured so as to bring socio-economic harmony in any industrial region, ‘The prevalent basic wage rate; deamess al- lowance, and other benefits offered to the worker in the industrial belt of Aurangabad are highlighted in Exhibit 2 of the case. From Exhibit 2, it is evident that prior to the present settlement, the basic wage at BAL, Auran- sabad, was less compared to the average paid in the major companies in the region. Hence, the workers" demand for being a number one wage earner in the region was justified, What was not justified, how- ever, was their demand for wage parity with their counterparts at Pune. It is interesting to see the difference between workers’ demarid and the final compromise in the settlement (see Table 2). The thanagement of BAL, Aurangabad, has maintained parity with BAL, Pune, in basic wage and other benefits which in fact are Jess than the average paid in the Aurangabad region Vol. 44, No, 1, January-March 1989 as given in Exhibit 2 of the case. ‘Table 2: Difference between Workers’ Demand and Final Compromise Tam Bemand by Final Workers Settlomont ade 300 T7680 ERA 300 130 LTA 1500 50 Education 1s 52 allowance Medical allowance 140 52 {aon ESD Special allowance 780 942.50, Fixed DA 858 104.00 Toul wages per 405 Ba ‘worker Cost-Benefit Analysis What did the workers goin after this long drawn struggle? Roughly, they would have earned Rs 9,600 during the lockout period. Despite a rise of Rs 345, per month, they will have to work for more than two years in order to make up for the losses during the strike period, This would be even more difficult for those who have incurred debts. The workers had in- itially presumed that the lockout would last at the most for about a month. Many of them returaed to their native places and did not feel the pinch of the lockout because they were single. However, even if they did not admitit, they could not carry on for long and were eager to resume work. Thus, the union has only displayed its immaturity while handling the issue, The present rise was offered by the manage- ‘ment way back in March itself. Whatever is the extent of justifiability of any demand, the use of violence to pressurize manage- nient is grossly unjustified. Normally, workers resort to violence only after their other coercive tactics fail. ‘At the Aurangebad plant, however, the course of events had been reverted and cases of violence were reported soon after the negotiations started. As are- sult, the workers could get no sympathy from any- ody other than the union activists, mostly from within, ‘As for the management, the lockout has caused a loss of Rs 150 crore. It is quite possible that the management would go in for more automation in the near future to boost its production and make up for ‘the loss incurred by them. 53‘Supervisors’ Tale of Woe ‘The first line supervisors and trainee engineers were the worst affected people during this period. As the settlement was nowhore in sight and threatening and manhandling became a daily feature, many of them left the organization, Those who have con- tinued are aware that labour unrest and violence have become inescapable in one's career. Still, they do carry with them bitter feolings towards the wor- kers who resorted to inhuman pressure tactics. De- spite the threats during the lockout, the middle cadre employees kept the production going by pro- ducing 30 to 40 scooters a day. However, being in a non-bargainable category, they are uncertain about ‘the management's plan to compensate for their hard work and the reduced gap between their emolu- ‘ments and the wages paid to the workers with re- trospective effect, Time alone will patch up their hurt feelings. Was the Lockout Unavoidable? ‘The management could have averted the lockout by taking an undertaking of discipline and normal pro- duction from the workers soon after the operations ‘were suspended, thus making their entry condition- al to such undertaking. Besides, both the parties should have appointed an arbitrator much earlier. Lessons Giant companies move into industrially backward regions to avail of the concessions offered by the government and reduce thelr labour cost, which is normally 11 per cent (of the total cost of the product) in the developed region. Besides, there are con- straints on expanding their operations in the in- dustrially developed area. Ifthe labour fofce adopt such an immature and adamant stand and resort to violence, the companies will increasingly opt for more automation, Ultimately, the'workers will be the losers. Nevertheless, managements cannot ignore their role in providing a congenial atmosphere at work and thereby improving the quality of work life of workers, The management of BAL, Aurangabad, will have to concentrate on this aspect and their responsibility is increased because the modernized. machinery brings psychological fatigue to workers. Encouraging sports activity among them, get- ‘togethers with the managers, and engaging them in leisure activities outside the premises would con- tribute towards this end. 54 ‘The workers will have to make a hard choice between more employment or exorbitant demands displaying their immaturity. To reach the golden ‘mean, they will have to acquaint themselves with the essential requirements of mature negotiations. ‘The workers’ education centres will be of help in this context. Above all, the workers should not destroy the plant machinery and resort to violence under any circumstances. A logical and mature ap- proach has no substitute for arriving at an early amicable settlement without causing harm to either party. —_——— State Government and Industrial Culture SK Shelat, IAS ‘Managing Director ‘Gujarat industrial Investment Corporation Ltd. Ahmedabad From the case study of The Bajaj Lockout, it appears that the management of Bajaj Auto Ld. had failed to encourage ‘healthy’ labour union activity. The man- nor in which the management took active interest in creating an ‘intemal union’ shows that they did not adopt democratic norms, such as elections under secret ballot, The internal union was not even for- mally registered. The workers were complaining of being confined to a job for eight hours without re- spite. The standing orders were changed without consulting representative sections of labour as re- quired by the Supreme Court judgement, The wor- ers were not even aware of the amendment in stan- ding orders till a fellow worker was suspended for misconduct. Iti, therefore, not surprising that they lost faith in their so-called representatives and de- cided to elect their own representatives. The new union, as is normal, came up with demands which the management could not have hoped to meet and, therefore, alockout was declared. This is aclear case where the management acted in haste and somewhat rashly by forming the so-called representative union and trying to contain the demands of the labour force. But for the fact that the Bajaj group has a num- ber of plants elsewhere in the country, it could not have afforded such a lockout. If one plant was not functioning, they could continue production from other units, such as Pune, and still remain the mar ket leader, To that extent, the labour union’s action tumed out to be a damp squib,, since the man- agement's sales were perhaps not affected to such an Vikalpaextent as to have an appreciable impact on its work- ing. In such a situation, the role of the government assumes great significance. Basically, the role of the state government and its corporations in atiracting industries is that of an Nndustzial catalyst.” As an industrial catalyst, the state and its corporations have to play a very sig nificant role in four areas: © infrastructure development support by way of financial incentives for backward area development © support for liaison with outside agencies such as the central financial institutions, the Government of India, environment protection agencies, etc. ‘¢ maintenance of healthy industrial climate, Infrastructure Facilities ‘The term infrastructure would include not only and, water, and power, but also other essential ser- vices such as telecommunication, transport facilities, post and telegraph facilities, fire fighting equipment, schools, hospitals, prayer places (temple, mosque, church, etc.), and, if necessary, burial/cremation grounds as well. Such a com- prehensive definition of infrastructure has become necessary because several industrial workers migrate to such industrial areas in bulk and a new township is required to be developed for them. Financial Assistance ‘The second form of assistance is very common which includes assistance from financial institu- tions by way of term loan or underwriting/invest- ment in equity/share capital or by way of seed money or risk capital. However, speed has to be en- sured in sanction and disbursement of loans by such financial institutions. Further, the financial incen- tives, such as cash subsidy and/or sales-tax exeimp- tion/deferment have also become too common to need further elaboration. Liaison Support ‘Through their offices in Delhi or the offices of the Industries Commissioner/Directorate of Industries, the state government renders assistance for follow- ing up matters either with the Government of India or its organizations as well as with financial institu- tions. The effective manner in which problems are Vol. 14, No, 1, January-March 1989 taken up by the state government and its agencies will naturally be reflected in terms of obtaining the letters of intent/licences and other clearances. ‘Healthy Industrial Climate However, the most important function of the state government and its agencies is to ensuro an ideal in- dustrial investment climate, The word ‘industrial climate’ encompasses not merely ‘tangible’ benefits such as financial incentives by way of cash subsidy and sales-tax benefits, but also a healthy labour ‘management relationship which is central to main- tenance of industrial peace. Many a time, entrepreneurs are lured to a par- ticular area by the so-called ‘tangible’ benefits of financial incentives. Many examples can be cited of industrial units which have suffered for not taking into account, at the time of selection of location of the project, the ‘intangible’ benefits or drawbacks of a particular site or location. In fact, the intangible ‘enefits/drawbacks can be great or devastating, as the case may be, compared to the tangible ones. For instance, ifa plant has to remain closed on account of labour strike for a period of say three months, perhaps, « large amount of benefits derived by way of fiscal or financial incentives would be ‘wiped out. Itis this ‘intangible’ factor which should ‘be uppermost in the mind of an entrepreneur before he chooses a site in a particular location. Another intangible benefit/drawback could be availability of power. Quite often, even power-deficit states en- courage power-intensive industries such as mini steel plants. The result can be disastrous in a situa- tion where power cuts have to be imposed by such states. This happened in a number of states such as Karnataka and Andhra Pradesh. For example, let us take the cement industry. ‘At one time, Andhra Pradesh boasted of nearly 25 pper cent of cement production in the country but due to power cut, the units were forced to instal diesel generating sets. As a result, production had gone down heavily leading to tremendous loss which wiped out the financial benefits given initially to those units by way of subsidy/sales-tax exemption, ete. About a decade back, there was a craze to put up mini steel plants and more than one hundred such plants came up all over the country. The Gujarat Government, as a policy, had decided not to support more thaa five mini steel plants and that too at dispersed locations as it is a power-deficit state. 55However, there was tremendous pressure on the government to set up more mini steel plants and any entrepreneurs from outside Gujarat were will- ing to come to Gujarat for this purpose. But the government remained firm in its policy and re- grotted its inability to give power to more than five units, In the short run, these entreprencurs, natural- ly, were unhappy at the government's attitude. However, the units which were set up in other power-doficit states had to suffer due to sovere power cuts. The five units which came up in Gujarat Gid not suffer heavily, even though there was a ‘power cut, as compared to the units in other states. Considering the multi-dimensional role as des- cribed above, it is clear that the state government and its agencies have to take a long term view in maintaining healthy industrial environment. It can- not afford to take sides: either prolabour or pro- management. In fact, its policy has to be pro-in- dustrial development, consistent with the légitimate aspirations of the labour Role of the Labour Commissioner ‘The maintenance of law and order by the state government becomes essential for a healthy in- dustrial environment. This does not merely mean prevention of acts of violence but also includes taking all preventive steps by the Labour Depart ‘ment as soon as any labour trouble is about to begin. ‘The role of the Commissioner of Labour is very cru- cial in this regard, He has to be a ‘balanced’ person without which he cannot command respect of either ‘the labour or the management, Further, he has to be positive in his attitude, Thirdly, he must not be obstinate but willing to negotiate and arrive at a suc- cessful compromise between the two sides. When the negotiations succeed, he must give credit to both labour and management and remain in the back- ground, Apart from acting on his own, he should take help from others like Ministers, MLAs, and other persons in the society who can command re- spect amongst the warring groups and then only can he perform the role of asuccessful negotiator. On his own, he cannot perform this difficult role, unless there is an ethos for maintenance of industrial peace at the highest political level, viz. the Labour Mini- ster and the Chief Minister as well. In fact, such a culture has to be inculcated by way of tradition. For instance, the textile industry of Gujarat has had a glorious tradition of Gandhian methods of trade union activities through its active organization called the Majoor Mahajan because of which there 56 has hardly been any general strike since 1942. The ‘Major Mahajan has always shown resilience and ‘willingness to solve labour problems in a “business- like manner.” So long as they followed this ap- proach, they succeeded in maintaining industrial peace consistent with higher production, However, oflate, there are signs of “unbusiness-like approach” to the solution of textile crisis by the labour unions. ‘As a result, a number of textile mills which could have paid handsome retrenchment compensation are prevented from doing so. Its rather paradoxical. and strange to note here that the annihilation of tex- tile industry in Bombay was a result of militant unionism while in Gujarat it is due to the policy of "non-violence" being followed by the Majoor Mahajan in Ahmedabad. Since the present case study relates to labour policy, the analogy of the textile industry and the labour policy followed both in Maharashtra and in Gujarat is relevant. Improper Labour Policies It is not clear from the case as to what the Govern- ment of Maharashtra did or did not do. The govern- ment, however, did not follow proper labour policies by allowing the standing orders to be changed with the help of the Deputy Commissioner of Labour in 1986, without consulting the union. Even if such a mistake was committed, the higher authorities should not have allowed the situation to come to a point where lockout had to be declared. They could have called representatives from both the sides and sorted out the problems. This would have smoothened the rufiled feelings of labour. ‘A comparison of the wages paid by Bajaj in their units at Pune and Waluj shows that the workers at Waluj plant were paid much less. Considering that workers in the same industry and under the same management should not have such wide dis- pparity in wages, there is reason to presume that there is some justification in their demand. Even allow- ing that Pune has a higher standard of living than Waluj, the management should have worked out ¢ reasonable wage structure between the two fac- tories, which could have averted the lockout, Inall cases of lockout/strike, the long term im- plications are loss of production and, more impor- tant, loss of credibility between labour and ‘management which can have considerable psy chological setback for healthy industrial relations. ——_— VikalpaReopen Communication with Genuine Representatives Jerome Joseph ‘Assistant Professor, Personnel and Industrial Relations Indian Institute of Management Abmedabad ‘The lockout at the Waluj BAL plant is without doubt a turing point in its organizational history. Clearly something has to be done immediately to restore normalcy and to restart operations. The question is how? Ifthe hawks would have thieir way, they would probably suggest that the future of the plant depends on the message the management can give the intran- sigent workers and their union. There can be no two opinions among the hawks as to what this message ‘would be: © take atough stand © a golden opportuity to show the workers that management cannot be pushed around and bullied ‘you act tough, I can act tougher continue the lockout no talks no deals no concessions fight to the finish ‘yes, even if it means moving out of here. After all, without the company, where will the workers be, where will the union be? The hawks among the hawks might even go so far as to say— shut down, Heady stuff ... Some may even consider it a thrill to have an eyeball to eyeball confrontation bet- ween a tough management and a bunch of trade union toughios. But the hawks have not contended with the hatdnosed business type. Shut down operations? Shift location? Continue the lockout tll the red-eyed union activist comes knocking at the factory gates bleary eyed, broken? What about the 800 scooters to bbe produced per day? What about the 4.29]akh capi- tal investment per employee? What about the 18.77 lakh capital investment per unit of installed capacity per day? What about the implications on the company's market share in the increasingly com- Petitive two-wheeler market? Some steps have to be taken. But if the right Kind of steps have to be taken, BAL (Waluj) will have Vol. 14, No, 1, January-March 1989 to retrace its steps to find out how the current situa tion came about. I think a series of false steps (listed below) taken by management ultimately snowballed into the current situation, Faux Pas No 1 Assuming that industrial workers drawn from a tural backward region would be naive, gullible, manipulatable for any length of time. Faux Pas No 2 Assuming that active organization and promotion of a company union would lead to harmonious in- dustrial relations. Faux Pas No 3 Assuming that the building of an equation with the top leadership of the company-sponsored union would effectively suppress the development of worker consciousness and militancy. Faux Pas No 4 ‘Assuming that the rank and file can be taken for granted in a situation where unfon representatives are management stooges. Faux Pas No 5 Assuming that a situation in which there is a com- bination of "backward" workers and "an amenable union" management can be insensitive to the im- provement of the quality of work life of the workers, Faux Pas No 6 Assuming that since the union is under management patronage, standing orders can be changed with the concurrence of the concerned authority without taking into account the workers’ point of view. ‘The net result of the above false steps was the alienation of the workforce from the organization and the resultant upsurge of worker consciousness. ‘This in turn has led to the formation of a trade union which not only flows from the raising of the con- sciousness of the workers but also from the impoten- cy of the leaders of the company sponsored union. Pent up ill-feeling has also been expended through attacks on property as well as supervisors and ‘managers. 2 What should management do to restore a semblance of fairness and harmony in this situation? © First of all, the situation is an extremely difficult one. Hence it has to be handled with tact as well as integrity. 57Instead of having recourse to the legal route available under the provision of the MRTU-PULP Act, the management should try to hoal the wounds through an effort to start the process of a constructive and hon- ourable relationship between itself and Tebour. Efforts should be made to open channels of communication with the union, and demonstrate willingness to negotiate with the leaders of the union which has just een formed. This should not be viewed as a prestige issue but as an opportunity to redeem the loss of credibility which has taken place. ‘© The organization should also create proper mechanisms within the organization in order to enable lebour to re-represent its viewpoint, to air its grievances, and also to protect and promote its interests through Jabour's own representatives. ‘The task of reopening channels of communica- tion in order to negotiate a fair deal is by no means easy. But when an organization has to step forward on the right path after having taken a series of false steps, the courage involved in admitting one’s own error and doing everything humanly possible to rec- +ify the error is a price worth paying. Improve Personnel Management SC Sarkar General Managor (Works) Klockner Windsor India Lid. ‘Abmedabsd ‘Two faulty policies of the management of Bajaj Auto Ltd, Waluj, culminated in a situation which forced the management to doclare a lockout. They are dis- cussed below. Recruitment Policy ‘The company had recruited young ITI diploma holders in its workforce. Generally, young people without much family responsibility are easily ex- citable. Therefore, it is a good policy to have a work- force with people from various age groups with an average age above 30 years. Recruiting the entire workforce from the local area is not a very sound policy, in my view. The company could have thought of encouraging people from other areas to come end work et this factory. Outsiders tend to be- have more rationally, It is not clear if the manage- 58 ment did any community balancing while recruit- ing, Unfortunately, Indians, particularly from rural areas, tend to decide many issues on caste con- siderations. Labour Policy ‘The management's decision to select and train 35 workers as leaders was certainly not the right ap- proach, Giving prominence to a solocted number of workers without the general approval af the other workers and making them responsible for helping management on tasks like'maintaining discipline would only make them appear stooges of manage- ‘ment. Obviously, this policy has failed. Further, the company’s decision to change the standing orders without prior consultation with the workers’ repre- sentatives is again another unthoughtful approach of the management to labour problems. This clearly indicates lack of trust and understanding between ‘the management and the workers. Further, itappears that the human relations in the factory has not been. handled satisfactorily. The workers’ complaint of not having enough time for relaxation should have een takes care of by the management well in time, Tt could have been amere problem of wrong percep- tion on the part of the workers and with deliberate efforts it could have been corrected at the very begin- ning. How to Evaluate the Demands for Wage Rise Regional parity and the industry-wise parity are nor mally considered while deciding a wage rise, As- suming thet the inflation factor is nullified by the in- crease in variable D A, Iam of the opinion that fur- ther rise in wages should be connected with produc- tivity, If this does not happen, the ultimate result could be the erosion of long term profitability of the company. The measure of productivity, in my view, should be the percentage increase in the value added. This is a simple way of measuring produc- tivity and avoids the problem of getting into techal- cal details normally involved in such an exercise. But, on the whole, the question of sharing prosperity should not be forgotten. ‘The Role of Government 1 feel that the present government machinery for resolving industrial disputes is inadequate to main- tain good industrial relations. My suggestions are: © Each industrial area should have an in- dustrial relations committee with, repre- sentatives from the government and Vikalpaindustry, The government representatives should be trained in HRD approach of man- agement. This team will monitor industrial relations in various units and guide the management from time to time. For big units like Bajaj, there can be an internal committee which will work as internal au- ditor for human relations, © When a company sets up a factory in a backward area, the predominant con- sideration is cost reduction, Therefore, it will become difficult for them to accept a ‘wage structure similar to units in metro- politan cities. In a way, itis also unfair be- cause the cost of living in the cities is cer- tainly higher than inthe rural areas. In my view, the government should consider this issue and fix some wage ceiling in the back- ward areas (to be reviewed from time to time) so that the workers can be restrained from asking for wages beyond this ceiling. This may not be very effective but never- theless can work as a restraining factor, © There are many reports of violence in the ‘units located in the backward areas. One reason could be the culture shock. The presence of an industry in the backward areas entails an overnight change in the ways of living of the local. people employed there, Both the management and the government should consider these aspects and make appropriate changes in the work rules. It may also be useful for the company to engage in social work in that area to influence the attitude of the local people towards the industry as an agent for social change, The approach will go along way to build good relations between the workers and the management. The govern- ment can probably help such companies by subsidizing a part of the cost of such work, Balanced Regional Development ‘The current policy of declaring some areas as back- ward and giving hefty incentives for setting up in- dustries there is not satisfactory. tis is also true that many industrialists take advantage of the incentives without real intention of running the industries in these areas, The effect of this on the psyche of local People is adverse. Keeping this factor in view, the government should consider the nature of the peo- Ple in various areas and allocate areas most suitable for different types of industries. The backward areas, Vol. 14, No, 1, January-March 1989 in my view, will be more suitable for agricultuze- based or mineral/chemical-based industries, where a flexible system of timing and work standard can be adopted. If sophisticated enginesring industries are to be located in the backward areas, then sub- stantial social work is necessary to educate the people on the changes that will occur in their way of living due to industrialization, ‘What BAL Should Do An industry cannot be run with the workforce alienated from its management. Tha company will have to change its personnel policy. It will have to start dialogue with the workers, take initiative in the local areas to be an agent of social change, and take recourse to HRD approach in their day-to-day management of the workforce. Remove Communication Barriers Kakoli Saha ‘Senior Gore Faculty Bank of Baroda Staff College ‘Ahmedabad The workers of Bajaj Auto Ltd., Waluj, demanded highor wages, the management did not accede to their demands, and negotiations failed. It resulted in violence, suspension of workers, and lockout. This is the usual series of episodes in a lockout situa~ tion—the negotiations centre around the economic or financial aspects of the demands. But all these demands did not surface over- night. The Bajaj lockout case highlights the series of factors over a period of time which contributed to the charter of demands, If a solution to poor employer-employee relations is to be found, these latent factors need to be examined. Background of Workers ‘The government gives financial incentives for set- ting up industries in backward areas. It assumes that once industrial sheds are set up, people from near- by areas would get employment and this in tum would lead to industrialization and development, But this does not happen in reality, Most of the in- dustrialists run into problems managing their units like the management of Bajaj Auto Ltd. had got into. Ithas been mentioned in the case that agricul- ture was the main occupation of most of the workers and they had left their old occupation to join the In- 59dustrial Training Institutes (ITIs). The ITI training helps the workers to learn the job but does not help ‘them to adjust to the industrial work culture. In industrial units, especially in autémated plants, a strict schedule is maintained. This leaves ‘the workers with very little freedom on the job and virtually no time for relaxation. This work culture is contrast from the one that exists in the agriculture sector—people have to work hard, but they can work at their own pace. People working in the fields enjoy comparatively more autonomy in scheduling their work and leisure, When people experience lack of autonomy in the work place, behavioural problems are likely to crop up. Moreover, industrialization brings about chan- ges in the social life of people. Neither the govern- ment nor the management makes any systematic or serious efforts to understand the concomitant chan- ges of industrialization and its impact on work be~ haviour. As mentioned in the Bajaj Lockout case, workers hardly had any time or energy left to do any- thing other than sleeping. In this process, social con- tacts, customs, and traditions which are the back- bone of non-industrialized society get snapped. ‘These changed circumstances often cause distress amongst workers, ‘These psychological processes have to be dealt with. One way is through educating the workers about the needs of industrial development and changed work habits. At this point, one needs to ex- amine who has to educate—the government or the ‘management. If the government decides to educate the workers, it would be general in nature and the ‘management of every unit will have to augment the educational effort by introducing systematic and in- tensive induction and socialization process. This augmentation is necessary in view of varied needs of the industry. Communication System Apart from dealing with individual workers, the management has to be aware of the processes that they generate consciously or unconsciously by their functioning style. For example, in the Bajaj Lockout case, the management's belief that an internal trade union would play a constructive role and help main- tain a cordial relationship between management and people is a myth, There is no doubt that upward communication promotes understanding but the management's tactics of promoting an internal trade union was merely a way to manipulate the majority of workers, The underlying assumption in. the 60 above mentioned style of functioning is that a majority of the workers are not responsible! This as- sumption may or may not be true, Secondly, the management set up a group of representatives chosen by them so that manage- ment-worker communication was maintained but when the management changed some service condi- tions, they did not find it necessary to communicate it to the workers. This resulted in loss of faith in the representatives. It clearly indicates that workers have expectations from every communication sys- ‘tein—they need information so they can understand what goes on in the organization and why. Further, workers need action on things that bo- ther them, This is indicated in the case that the group was required to help workers solve their work-related matters such as tool crib, etc. The group worked in this role for neatly one and a half years. ‘Thus, while designing a communication sys- tem, the management has to take care of both the aspects-of communication, i.e. generation/transmis- sion of information and action for altering the exist- ing practices. Depending on the need of the or ganization/industry workers, a package of program- mes for improving communication needs to be worked out. Attitude towards Workers ‘The case indicates that due to increasing occurren- cos of stabbing and assault on managerial personnel, the management resorted to changing the standing orders after obtaining due approval of the Deputy Commissioner of Labour. This act of changing the standing orders indicates that the management believed that punishment was the only way to con- trol worker behaviour. It is not clear from the case whether the management considered any other op- tion, If management wanted to explore other op- tions, it did not have to be an alternate style of management but in their attitude towards others and how people interact. Possibly, the reasons for the deteriorating law and order situation could be ex- plored through ‘Meetings.’ Of course, conducting such meetings where power is shared with workers is a difficult but not an impossible task, Vikalpa