'We blame our labour policies but there is a lot we need to introspect'

Pradeep Bhargava, Director at Cummins India, has spent 40 years in the manufacturing sector and has done nine wage settlements. Today, he is a man with a mission. He is carrying out a pilot project, trying to convince companies to follow best practices when treating their contract labourers. Edited excerpts of a conversation with Goutam Das:

Q. Why is industry not getting a handle on labour strife?

A. The industry considers white collar as human resources. When it comes to blue collar, we call it industrial relations (IR). So when we come to labour it becomes "inhuman resources". Because the whole perspective of the organisation has been shareholders' interest, customers' interest, talent upgradation. But we treat kamgars [workers] on the shop floor as factors of production, and treat them as inhuman relations.

I am not singling out anybody but I have seen this over the years. We have not only been unfair to the worker, we have missed an opportunity for unleashing their potential. Somehow, industry has not been able to put its arms around industrial relations as a key result area. The question is why? Why is it that in India we haven't addressed it?

We as a society and as industry are very fond of beating up the government for everything. We find fault with the policies and say reforms are going to be the answer. We use the lack of exit policy and tight labour policy to justify huge amount of unfair, unethical and unreasonable conduct when we deal with our workforce. Tell me where in Europe can you get rid of a worker easily? We blame our labour policies and lack of reforms but honestly there is a lot we need to introspect. What do we do with the contract labour? He gets Rs 6,000 while he sees a permanent worker doing lesser work get Rs 40,000. We need to do a lot more fair, equitable conduct with our workforce. We need to treat them as human beings and we in the industry need to recognise these can be our competitive advantage. Every time there is an incident in Manesar, in Coimbatore and Bangalore, we wake up and do just about stitching and damage control, and not introspect.

Q.Tell us about the pilot on contract labour you are conducting.

A. This occurred to me soon after the Manesar episode. I requested Mr Muthuraman [B. Muthuraman, Vice Chairman of Tata Steel] and Rajeev Dubey [HR chief of Mahindra] to engage. We said it would be unilateral, proactive, expecting nothing in return, and we shall not go to the government asking for any change in law. We have done wonderful things. It is on the CII platform.
First is hygiene. Contract labour is a reality. We can't pretend he is not my employee. We need to take ownership. So if there is an accident on the shop floor, we can't ask the contractor to solve it. Let's acknowledge that everybody working in our premise exists because of us. As far as their health, safety, accident-related things are concerned, let's not make a distinction between contract and permanent workers. If an accident happens due to work, we should treat them all same. A number of companies don't do it. Even contract workers should be treated with dignity.

The second issue is uniform. Contract workers should be given some identity and some sense of dignity. When he leaves home he can't tell his wife he works for a company. This is a simple thing but makes a world of difference.

The third element is canteen facility. Everybody should have a dining facility and also be given food. We are also asking companies to decide how much of contract labour they require in core jobs. Don't use contract labour as a mechanism for not giving permanent employment. The other issue is wages. Low wages for contract labourers mean trouble. They also work more than permanent workers because his job is at risk. So we said when he is employed in core jobs, he should be paid in some relation to the permanent worker at the entry level.

Q. What is the financial impact of your suggestions?

A. It is trivial. In a manufacturing company material cost is 60-70 per cent of sales. People cost is between five to eight per cent. Labour cost of this is less than three per cent. If you take away the permanent workforce, contract employee costs is less than one per cent of the turnover. So if you give them uniform, personal protection equipment, salary, the impact will be in decimals. But then look at the impact it has on the morale of the organisation.