Skewed policy

Published : Mar 13, 2009 00:00 IST

M.K. Pandhe: The government should create jobs.-VIPIN CHANDRAN

M.K. Pandhe: The government should create jobs.-VIPIN CHANDRAN

THE impact of the current economic slowdown is not going to be equal for all sections in society. With agrarian distress already having reached high levels and the government remaining unwilling to push public investment aggressively, trade union representatives are worried about the future. M.K. Pandhe, president of the Centre of Indian Trade Unions (CITU), told Frontline why he felt the United Progressive Alliance government (UPA) lacked a holistic vision and the political commitment to deal with the economic crisis. Excerpts from the interview:

What is the scale of the employment crisis as a result of the global financial meltdown. What is the shape of things to come?

Initially, our Finance Minister said we were insulated from the crisis. Now they have come around to at least admitting that there is a problem. All the packages offered by the government are only for industry, not for the working class.

The Reserve Bank of India released one lakh crore rupees to industry, allowing it easy credit. At the other end, the working class is losing jobs, their working conditions are getting affected, but yet there is no government support forthcoming for these sections. Three bailout packages have been given by the government to stimulate the economy, but the major cause of the crisis has to do with demand.

Demand has to be created and this cannot happen merely by increasing production. This can be done by increasing minimum wages and reducing unemployment. All this will add to the demand, which finally will absorb production just as it happened in China. The truth is that Indian industry is taking all the stimulus from the government but not increasing production.

In December, after two stimulus packages were given in October-November, production declined by 2 per cent. So where has the money gone? It has been pocketed by industry. The stimulus is not leading to a solution of the crisis but making it worse. The government should learn some lessons.

[President Barack] Obama declared that he would give bailout packages where the salaries of the top executives were not higher than that of the U.S. President. One financial journal in India published a list of 500 top executives where the earnings of the top-most layer were Rs.25 crore per annum while that of the lower-rung executives were Rs.58 lakh. The monthly salary of the President of India is not more than Rs.1 lakh.

Do government estimates capture the full scale of job losses?

As a result of the crisis, a number of unfavourable conditions have been imposed on the working class. In units employing more than 300 people, managements cannot retrench without the permission of the government. This is provided for under the Industrial Disputes Act [IDA]. But the law is being violated across sectors.

We have learnt that in one Tata automobile factory, workers would now work only for three days a week and get no salary for the rest of the week. The Air India management has put up a notice that workers can go on leave for five years without wages.

In several sectors, the managements, taking advantage of the crisis, are making workers do 12 hours a day without overtime. A recent study prepared by the Labour Ministry showed that in the information technology sector, workers were doing more than 12 hours a day. In the hosiery units in Tirupur, workers are putting in 12 hours a day with no overtime. A private airline company has imposed wage cuts on employees. Under Section 4 of the IDA, any change in the working conditions cannot be implemented without a discussion with the unions. We wrote to the government, but there has been no response.

Interestingly, when the Prime Minister called a meeting of Ministers to discuss the economic crisis, the Labour Ministry was not involved. A study by the Ministry of Labour says five lakh jobs have been axed in three months, spanning September, October and November. An ASSOCHAM [Associated Chambers of Commerce and Industry of India] study projected that in one single year, one crore jobs will be lost. Our assessment is that it will be much more. The real impact of the economic crisis is yet to be felt. Fresh export orders have almost ceased from advanced countries. While they protect their own economies, thousands of small units here are feeling the pinch of declining orders.

The job losses have been mainly in three sectors, textiles, leather and metal production. In Gujarat, three lakh workers have lost their jobs in the diamond cutting and polishing industry.

The steel market is down, both in the private and in the public sector. So is the case with cement. There is hardly any demand, so what we see is a reduction in construction-related activities too. In the last four to five years, freight rates went up, but following the recessionary phase they have declined, affecting the shipping industry as well. Real estate, too, has suffered. The builders association says getting credit from the banks for building and selling homes has become difficult. Many of the mega power projects are dependent on borrowed money; if their work gets affected, so will power generation.

The IT sector may get affected further after the U.S. decision to reduce outsourcing. We have learnt that many IT companies have already announced cancellation of job interviews.

Voluntary retirement is being pursued vigorously by companies. The management of the steel industry has decided to retire 500 workers. The Vizag management at the Visakhapatnam Steel Plant told us that they were losing Rs.100 crore a month owing to the lack of demand from sectors like construction, railways and roads. Almost 300 sponge iron factories are on the verge of closure. The government is not giving any stimulus to the public sector and the small-scale industry.

Do you see the government as having a coherent policy to deal with the crisis? What needs to be done now and in the long term to protect workers from such instabilities?

The government does not have a policy framework to deal with the crisis. For instance, Kerala produces sufficient amount of cardamom, but the government here is importing cardamom and pepper. Thanks to the governments commitment to the WTO, quantitative restrictions on as many as 1,250 commodities were lifted and Open General Licences issued. Our indigenous industry is unable to compete with imports.

If workers have to be protected, industry has to be protected first. Advanced countries have stopped exporting from us but we continue to import from them. When all that is required here is assembly-line work, then obviously fewer workers will be required. The government should ensure full implementation of labour laws, including in government jobs. Despite giving all kinds of concessions to special economic zones, exports have declined and we know that retrenchment has taken place on a large scale.

Instead of giving bailout packages, the government should increase public investment to create jobs, which in turn will create demand. It should invest in infrastructure, rural industries and construction and undertake rural works such as tanks, ponds, houses and reclamation of land on a large scale. If employment is not created in the economy, how can we generate markets? In the long term, the government should raise resources to finance development projects. It must have the courage to tax the rich.

The government policy is all skewed to favour a few. The prices of aviation fuel were reduced five times in a year alone. Today, the cost of aviation fuel is lower than that of diesel. The aam aadmi who drives a two-wheeler pays more for oil than what civil aviation companies are paying for fuel.

Interest rates have been cut down only to benefit industry. What does the common man have to do with lower interest rates? The number of people going for home loans or buying homes has not gone up. Neither has the cost of flats come down. Peasants in this country do not get cheap credit as they cannot produce security. Banks are refusing to give loans as they fear that the government may write off the loans.

What are the expectations of the trade unions from the government in these circumstances? What are the trade unions planning to do?

We have prepared an 18-point charter of demands, which includes the creation of an unemployment allowance. We also feel strongly that the government should give bailout packages only to those who promise not to lay off workers. The minimum wage level has to be increased. The real wages of agricultural workers has gone down. Job creation is a must.

The governments claim of having created two crore jobs is dubious. The loans of the peasants who borrowed money from moneylenders are yet to be written off. The Minister for Agriculture stated that 17,000 people had committed suicide in the past one year. In the tenure of the UPA government alone, nearly two and a half lakh farmers and peasants committed suicide.

It is not only industry that should benefit from the lowered rate of interest; the government should increase the rate of interest on Provident Fund deposits. There also should be heavy public sector investment in rural development infrastructure.

We plan to conduct a sustained struggle beginning with the joint trade union protest on February 18. We also plan to raise these issues at the forthcoming 42nd session of the Indian Labour Conference.

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