A strike and beyond

State government employees in Kerala call off their month-long strike even as the Congress(I)-led United Democratic Front government decides to go ahead with a series of controversial economic reforms.

R. KRISHNAKUMAR in Thiruvananthapuram

ON March 9, coming out of the State Secretariat after concluding the talks that ended a 32-day-long agitation by State government employees and teachers, Kerala Chief Minister A.K. Antony and his Cabinet colleagues were trying hard to conceal their jubilation. It was an agitation that the Congress(I)-led United Democratic Front (UDF) government had wanted so badly, in order to try and break it convincingly, before it went ahead with its sure-to-be unpopular fiscal reforms programme.

Antony told mediapersons, who were waiting outside the venue of the talks: "I have told the union representatives that the Government is willing to reduce by half the cut planned in their pension commutation benefits. I have also told them that the government will pay the full salary for "protected" (excess) teachers in private (government-aided) schools until June this year, instead of cutting their salary by half from January 2002 as announced earlier. The government has also given the assurance that it will not act in vengeance against the employees for taking part in the strike. However, the employees will not be paid for the days they did not work (under the principle of dies non). Regarding the other austerity measures affecting the employees, I said that the government would hold talks with them with an open mind after one year, based on the financial position of the State at that time. It is now up to the employees to call off their strike, which has already caused enough hardship to the people."

Later in the day, as the pro-UDF State Employees and Teachers Organisation (SETO), the pro-Left Democratic Front (LDF) Action Council of State Employees and Teachers and other smaller unions of employees separately announced the withdrawal of their agitation, there was no doubt as to who the winner was in the extended tug-of-war between the government and its employees. Of the 26 austerity measures announced on January 16 by the government which slashed their allowances and other benefits and pushed the 5.5 lakh employees into unusual unity and a joint agitation, the Antony government eventually agreed only to make concessions on two counts.

The measures the government refused to roll back included the scrapping of the leave encashment facility; the refusal to raise the age of retirement from 55; a deferment in the payment of salary by 15 days in February and March; identification and redeployment of excess staff (who number more than 60,000, according to some Ministers) in government departments; introduction of a voluntary two-year off-duty scheme with reduced salary for the excess staff; confining the University Grants Commission scales of pay to college teachers who have the UGC scheme of work; closing down of uneconomical schools with less than 100 students (if there are other schools within a 2-km radius); a "careful" review of temporary posts created so far and the scrapping of unnecessary posts; making a committee's approval mandatory for new appointments; scrapping of government pension and introduction of a contributory pension scheme for all new recruits; introduction of a two-year training period with only basic salary for all new recruits in government and public sector undertakings; and scrapping of loans to purchase houses, vehicles, computers and so on.

Antony had called it a "rescue operation" to save Kerala from an unprecedented financial crisis (Frontline, March 15). Antony claimed that his government had inherited an empty treasury and that its revenue earnings were not sufficient to meet the salary, pension and administrative expenses and to pay interest on loans taken by previous governments. To meet the shortfall, the government was forced to resort to new borrowings. Antony said that it was a government that existed only to pay its employees. It had no money to look after the essential requirements of the large majority of other sections of society, which had experienced a drastic fall in their incomes in recent years as a result of the policies of liberalisation and globalisation. Antony said that government employees, who made up only a small section of Kerala society and had the luxury of a regular income, could not be insulated from these hard times as the government launched austerity measures in February.

What followed was an unusually determined agitation by the employees with unions affiliated to the ruling and Opposition parties and the Bharatiya Janata Party, almost always at loggerheads with each other, joining hands to paralyse the State government machinery.

As supporters of Antony now admit, it was an agitation that the government wanted the employees to launch so that it could defeat it. State government employees were the largest and the most powerful of the organised sections in Kerala and the government had to win - and demonstrate it effectively - if it were to clear the way for similar measures and substantive economic reforms. Moreover, a failed agitation would also effectively curtail the temptation to demand further hikes in salaries and allowances. The government stand was clear. "It was unrealistic any longer to expect the government to be the main source of employment in future," a Congress(I) Member of the Legislative Assembly told Frontline.

Hence, Antony stubbornly refused to hold talks with the employees, claiming that there was no point in holding talks since the government could not go back on the austerity measures. It was perhaps the oldest trick in the book - to appear to be unreasonable and undemocratic and not hold talks, in order to concede a bit later, but only at the right time.

However, as a supporter of Antony told Frontline, what the government had expected initially was an agitation of only about two weeks. It expected the strike to fizzle out, given the tough stand that it was to adopt and the division it sought to create in society by focussing on the relative insulation of government employees vis-a-vis the deep economic crisis affecting other sections of society.

In fact, the formula that eventually saw the end of the agitation was ready and generally accepted by almost all sections of employees, especially within the pro-Congress(I) SETO (which claimed a representation of 35 to 40 per cent of State government employees), even as the agitation crossed its second week and affected normal life. If SETO withdrew from the agitation, as it was expected to do then, the pro-LDF unions were expected to follow suit soon as there was a section of politically uncommitted employees who were hit hard by the loss in their wages and who were ready to join duty.

However, according to a Congress(I) MLA, the agitation continued for two more weeks "merely because of a question former Chief Minister and Antony's rival within the party K. Karunakaran had posed before his supporters, especially within SETO: 'Do you want a stronger Antony to emerge after the agitation?"' Apparently, the State was held to ransom for two more weeks merely because of a clash of personal interests within the State unit of the Congress(I). Moreover, the party's poor image at a time when the All India Congress Committee general secretary in charge of party affairs in Kerala, Ghulam Nabi Azad, was to visit the State to discuss organisational matters on March 7 also played a role.

Finally, even the prolongation of the agitation by two more weeks proved to be to Antony's advantage. The strike had affected life in the State. Offices and educational institutions remained closed for days, especially during a period when the annual examinations were approaching. Over six lakh students were to write the Secondary School Leaving Certificate (SSLC) examination scheduled in March. As far as the general public was concerned, there was no government in existence. Protest marches, picketing and dharnas had almost become normal fare in the streets and in front of government offices. Pro-LDF trade unions organised demonstrations and a one-day of general strike in support of the agitation. There was rising public ire against the prolongation of the agitation, and losing more then a month's salary was becoming a burden the majority of employees could not bear. The stage was set for Antony to "climb down" from what was described as an "undemocratic" and "autocratic" position and to say that he was ready for talks.

BOTH sides have claimed victory, with the employees eventually saying they could "bring the Chief Minister to his knees by forcing him to hold talks". But the most significant facet of the agitation lay buried amidst all the claims of victory and defeat.

In his Budget speech in the State Assembly a day before the agitation was withdrawn, Finance Minister K. Sankaranarayanan explained what the government intended to do once it got over the hurdle of the employees' agitation. He said that according to the letters on shared goals exchanged with the Central government, the State had given shape to a medium-term fiscal reforms programme "to bring down fiscal deficit, to regulate the revenue deficit, to limit the increase in interest payments, wages and salaries and to eliminate subsidies". He said what the government had in mind was "comprehensive fiscal reforms", including the implementation of value added tax (VAT) and "recovery of costs for services", comprehensive budget reforms to ensure fiscal transparency and substantial reforms in the power sector "to ensure accountability, cut losses, effective regulation, full recovery of costs and encourage private sector participation". Sankaranarayanan said the government also intended to undertake substantive reforms in the public sector, encouraging private sector participation and "considering seriously" the future of loss-making public sector undertakings (PSUs).

Although everyone in the government, including the Chief Minister, continued to deny that the fiscal reforms were being dictated by the Asian Development Bank (ADB) holding out the promise of a huge loan to the State, the Finance Minister left no room for doubt about this. Sankaranarayanan told the Assembly: "It is high time that we realised that technical and financial assistance from international financial institutions is not anathema... One of the main advantages of the ADB package is that it will help us to restore fiscal accountability... The package will bring in substantial investments in the power sector, public enterprises and fiscal reforms. The ADB has earmarked $600 million (about Rs.3,000 crores) for the period 2002-04. They have also expressed their intention to double the quantum of assistance to $1,200 million. We have to bear in mind that this is a concessional form of assistance and that the rate of interest is only 7 per cent."

The State government had finally decided that the steps that were needed to revive Kerala's ailing economy were the same as the ones prescribed for the smooth operation of a global market economy. Significantly, what all this will mean for the common man in Kerala has been left unsaid. In the context of many other States deciding to embark on second-generation economic reforms, the agitation was a crucial experiment that must have helped the pro-reform administrators gauge reactions of the victims of the harsh measures and of the general public.

The Antony government had decided to take the bull by the horns, by launching austerity measures in a sector where it could expect the most organised resistance. While the government succeeded in projecting the agitation as "anti-people", the employees' unions and to some extent the Opposition whose leaders had said "they will support, but will not take over the agitation", failed to bring the harsh implications of the government's austerity measures under public scrutiny.

Significantly, Chief Minister Antony told mediapersons after the strike was withdrawn: "I am now convinced that we must not be averse to reforms fearing that there would be opposition. I got hundreds of letters from people in all walks of life encouraging the government's moves. It is this public opinion that gave me strength. We must all open our eyes to reality. I learnt that people are always ready for change. What they need are the results of those changes."

Antony's detractors will now expect him to deliver on his promise of vaguely defined "results". Stage Two may not be that easy after all.