Striving for a stable industrial relations
Tamil Nadu has come to occupy a dominant position in the Union Cabinet ever since the dawn of coalition era in Indian politics. The State has been having significant representations in the Cabinet, managing to wrest some high profile and heavy-weight portfolios. Key Central portfolios such as telecom, information technology and shipping and transport have gone to representatives from the State.
Even as the State has become the focal point of national politics, it has also become a desirable destination for business houses from within and without. Considered a safe haven, Tamil Nadu has managed to attract domestic as well as foreign capital across industry domains. Ford, Hyundai, BMW, Saint Gobain, Nokia, Samsung, to name only a few have all set up shop near Chennai.
Notwithstanding their global woes, big names such as Nissan, Renault et al are all in the process of establishing their presence here. Ashok Leyland, too, is upping investment in the region.
Unlike elsewhere in India, both the major political parties in Tamil Nadu have been proactive in attracting investments and, surprisingly, engage in competitive wooing of the industry. This has indeed been a major reassuring factor in the capital flow into the State.
Key factors
Much to the chagrin of other colleagues in the Union Cabinet, some Central ministers from Tamil Nadu (especially the representatives of the regional parties) have unabashedly led many high profile investments into Tamil Nadu, much to the discomfort of other States.
In a global environment, everybody is competing for scarce capital. And, capital will flow into any region not by diktats of ministers alone (which may have a facilitating influence, at best). The key, however, is RoI (return on investment), which hinges on very many factors such as cheap labour, right business environment, among other things. A fairly quiet industrial relations scene has in no small measure contributed to the success of Tamil Nadu in attracting investment.
Turbulent times
The State had indeed some turbulent times in the early 1990s when aggressive trade unionism had led to the closure of some big names — considered jewels in the crown of Tamil Nadu.
An aggressive labour leadership literally had led the famous B&C Mills into the pages of history. Liquor baron late Ramasamy Udayar’s no-holds-barred efforts to turn around the sick B&C Mills and make a mark as an industrialist remained a pipe-dream.
Vijay Mallya had to sell Best and Crompton, unable to carry on in the wake of labour intransigence. The company, which had undergone a major metamorphosis under a new owner from Indonesia, today is just a shadow of its past. Who will forget the death of Standard Motors?
Tamil Nadu has indeed come a long way since then. But a couple of happenings — the management-union face-off at the MRF factory in Arakkonam and the industrial relations hiccups at Hyundai Motor India — have been worrying the industry, in general, and some fair-minded labour leaders, in particular. Is aggressive trade unionism staging a slow come back? Are managements turning insensitive? If both are true, the timing is inopportune to pursue either of them.
While the U.S. and European economies are truly into recession, the Indian economy has definitely slowed down. The inflation rate going into the negative space has only heightened the worries of captains of the industry. The high interest rate has added to their problems. Survival has become a lot more tough. Given these, MRF, Hyundai and nobody for that matter will wish a labour unrest on top of their piled-up worries. Any effort to vitiate the industrial relations scene could only spell long-term trouble for the business environment in the State. The immediate fallout of any unhealthy industrial scene could have factory-level impact as had happened at MRF and Hyundai. If this trend is not quarantined immediately, it could have a cascading effect.
A thoughtless and not-so-pragmatic labour leadership is the last thing that the State requires at this point in time. One is also tempted to argue that the situation is tailor-made for the managements to turn a blind eye to the plight of labour.
Not long ago, we saw how the management of Jet Airways was forced to take back its fired employees after television channels went to town with their coverage of young men and women staging a dramatic agitation. In the post-liberalisation and globalisation era, the union appears to have sort of lost its relevance.
The Jet Airways episode, however, has brought the focus back on unionism. One thing, however, is certain. The rules of the game have changed or rather re-written drastically since the 1990s. A compassionate management and a pragmatic labour leadership are key to ensure that Tamil Nadu does not fritter away the gains it has made in the last decade or so. The Government will do well to ensure that a stable industrial relations climate is there for all time.
K. T. JAGANNATHAN
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