India’s antiquated labour laws have undermined its competitiveness on the global industry stage. Jamshed J. Irani, director, Tata Sons, argues that changes are not just necessary but essential for the country’s entrepreneurial efforts to come good in the new world economic order, and they must involve the triumvirate of management, union and government

When the National Institute of Personnel Management approached me to deliver the Naval Tata memorial lecture on ‘New direction to industrial relations to meet global competition’, my initial reaction was to decline on the ground that I am not an authority on the subject. Later, when I realised the importance of the memorial lecture and the honour that was being offered to me, I changed my mind. Mr Naval Tata was a true son of the house of Tata and reflected in all ways the good and progressive practices followed by the group for over a century in matters concerning labour and industrial relations. These practices, particularly those aimed at labour welfare, were well ahead of the times in which they were introduced in Tata companies.

Our country is currently trying to come to grips with the second phase of economic reforms. The first phase was initiated in 1991 and there was significant progress in the early part of the decade. Then came a hiatus of several years and now, over the past year, the present government, and particularly our finance minister, has been trying to push forward the second phase of economic reforms — with questionable success.

Competition in the marketplace has become very stiff and, in this context, it is essential to remodel the industrial relations set-up in India. This will create the ability to detect emerging trends quicker than the competition does, help in the taking of rapid decisions, and lead to agility in seeking new ways to do business. These things are possible only with strong human resource professionals acting together with the common objective of succeeding in business. But before I come to the present it would be worthwhile to peek into the past. I will obviously rely heavily on the experience of the Tata Group in general and of Tata Steel in particular.

In the early days of industrialisation in our country, labour was looked upon as a necessary input, just like machines, raw materials, energy and so on; nothing more and nothing less. Gradually the realisation grew that labour should be treated humanely and not mechanically like any other input. This promoted the trade union movement in our country, which was designed to fight for the rights and privileges of labour. Combative attitudes built up, with labour on one side and management on the other. This was unfortunate but inevitable since labour was an exploited lot in the early days of industrialisation.

Enlightened management saw the importance of the need to work together towards common objectives. The house of Tata was in the forefront when it came to understanding the important contribution that could be made by a willing workforce. Men of vision, such as Mr Naval Tata, led this movement. Tata Steel has a proud record of initiating several pioneering labour-friendly measures in India, measures, which became law many decades later. The role played here by leaders of the Tata Group was recognised by other industrialists and Mr Naval Tata represented the employers of India at national and international forums for several years.

Referring to industrial peace, Mr Naval Tata once said: "However strong our passion for peace and harmony may be, peace is not likely to descend on us from the heavens by mere exhortations and prayers. Serious efforts will have to be made by all concerned to keep the path of industrial peace free from misunderstandings, misrepresentations, and undue interference from third parties. The potholes cut in the path by rough passage of negotiations and/or breaches of agreements, strikes and lockouts need to be mended through an objective study. Then only can the caravan of industrial peace roll smoothly along."

Tata Steel, among other companies, put these principles into practice and the result has been the building of a strong culture of working together. This has resulted in over 70 years of industrial peace at the company. Not one single hour during this period has been lost through a strike, lockout or any other agitation not conducive to industrial progress.

In the early years of India's independence, there was a great urge to protect the rights of labour and stop their exploitation by the so-called capitalists. Parliament enacted laws to protect labour against the actual and imagined onslaught of owners and managers. The pendulum had swung to the opposite extreme. Many of the labour laws and judgements enacted then stay with us to this day and can be looked upon as impediments to our competitive status in the arena of global industry. What was good and fair then need not stymie our progress in the totally changed environment in which we find ourselves today.

If we are to succeed today, changes in our labour laws are not just necessary but essential. There are tenets in the Industrial Disputes Act, the Contract Labour Act and other laws which may have been pertinent five decades ago, but which are totally out of date in the present environment. In the years following the first phase of economic liberalisation, successive governments in Delhi have made important changes in legislation governing trade, finance and industrial policy. But similar changes have not been made in India’s labour laws. Legislation has been proposed and planned, but no changes have come about as yet. However, even under such conditions responsible labour unions and enlightened managements have arrived at ‘win-win’ situations. In spite of these deterrents to industrial progress, I am proud to say that Tata Steel has remained a pioneer as far as industrial relations are concerned.

It would be worthwhile to mention that while Tata Steel was making significant strides on the labour front, hundreds of other industries were facing great difficulties in dealing with their workforce and industrial relations were fraught with strikes and discords. It is well known that in the years following independence, the government's active intervention was sought by labour leaders in securing a better deal for the working class.

Tata Steel, with its focus on labour-friendly measures, was able to not just ensure the growth and development of our enterprise as a profitable and successful entity, but even today is considered the role model on industrial relations and harmony. Industries across the country have eagerly sought to emulate our principles and actions. In a recent note that I have received from the members of a jury that was assessing Tata Steel for an award, I was informed that we have set the industry benchmark in this aspect of management.

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Uploaded in September 2001