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Restructuring

Restructuring refers to “changes in the way goods and services are being developed, designed, produced and distributed, i.e. to changes in companies’ organisational structures and the technologies they use” (Ruigrok and van Tulder, 1995). Some scholars prefer to use the term ‘adjustment’ in place of ‘restructuring’ or ‘reorganisation’. We can also take restructuring, following Eurofound, as an attempt at managing and anticipating industrial change, and simultaneously tackling its issues of economic, social and environmental significance. It is a striking feature of the industrial landscapes subject to fragile economic climate and uncertainties in the world over the last four decades. However, its technological, organisational and labour relations patterns are said to vary from one country to another and across sectors, and at the intra-sector company level as well, even as there is a case for their universal homogenisation under neoliberal politics and economics. And the introduction to a comparative study of the diverse, along with common, patterns may require at least a one-year or even two-year specialised MBA programme dedicated to restructuring alone! Which is hard to come by. In Europe, there are rigorous studies about the varied sectoral impact of restructuring—in the steel sector, financial sector, motor manufacturing, tourism sector, ICT sector and aviation sector. Restructuring is studied in terms of what is happening by way of bloodletting through downsizing, outsourcing, and layoffs; mergers and acquisitions; collective bargaining/agreements; corporate governance; and ‘reflective’ restructuring. Industrial relations aspects of mergers and takeovers as also private equity deals as a chance for business turnaround are examined. Involvement of employees and collective bargaining in company restructuring as also the impact of collective agreements on employment and competitiveness are examined.

How the systems of corporate governance, i.e. the structures that influence and control management, have a key impact on the type of restructuring carried out by a company is studied. Corporate social responsibility policies and their impact on the stakeholders are also investigated. Studies on reflective restructuring are about how companies are arranging for training breaks, sabbaticals, job-sharing, remote working and reduced working hours as well as promoting the take-up of maternity and parental leave in order to offset their need for flexibility, coupled with employee demands for improved quality of life. Further, the effects of direct employee participation on employment levels and how these relate to workplace flexibility issues such as downsizing, part-time work and employee consultation are studied. The initiatives aimed at reconciling work and family life and how collective bargaining can be used to improve the situation are probed. Furthermore, there are studies on the main trends in temporary agency work and the problems and challenges arising from this phenomenon; the impact of flexibility on working conditions and the resultant health and social effects on workers engaged in this kind of work; the possible effects of non-permanent employment on the quality of working life in terms of working conditions and the employees’ labour market position and prospects; and the extent and uptake of progressive retirement schemes and their importance in the current debate between governments and social partners.

In India, we do not have any such systematically collated picture of the varied sectoral and company-level restructuring as in Europe at any point of time. We can only pick up bits and pieces of some anecdotal information at different points of time. All the same, I think, Ghosh (1995) was the brilliant pioneer in pointing out three distinct patterns in industrial restructuring and its impact on labour, that could be discerned in the post-liberalisation context of India. The first and dominant pattern, which dates back to the 1980s, and perhaps even 1970s, was nothing but an all out warfare against the organised labour through lockouts and in terms of effecting widespread job losses and getting more work out of the remaining through stiffer productivity norms in organisations with poor labour relations or high manning levels, apart from not recruiting against natural wastage of permanent workforce. This restructuring involves downsizing (via voluntary retirement schemes), greater automation, increasing casualization and farming out as much activity as possible to contract labour, ancillaries or vendors, and thereby (a) reducing dependence on internal permanent workforce which is perceived by management to be expensive and difficult to manage and/or (b) improving competitive advantage by cutting labour costs. In other words, the employers resisted the collective bargaining by destroying the internal labour markets or internalised employment systems concerning the established or permanent workers.

They also achieved this objective by redesignating bargainable jobs to remove them from the union category, denying the sales and supervisory staff the right to join unions, repeatedly charge-sheeting or suspending or dismissing union leaders on various trumped-up charges, fiercely resisting federations representing workers in several establishments of the same company, etc. A wave of judicial decisions also came in support of the employers to usher in the end of story of the adversarial industrial relations between the employers and the unionised ‘workmen’ as defined in Indian labour law. In the second pattern, which is not commonplace at all in terms of its approach to permanent labour, the stress is on redeployment rather than on attempts to get rid of a certain number of redundant workers due to rationalisation of production or introduction of new technology. It is accompanied by explicit policy statements by management that no employee would be retrenched or laid off, the surplus being absorbed in new work being generated.

This restructuring, with attendant employment security, is made possible due to conducive labour relations climate. The third pattern of industrial restructuring concerns innovative shopfloor experiments (e.g. management-led decentralised workstations, and Japanese production methods) of pitchforking labour as the provider of competitive advantage to organisational functioning. But substantive empirical research on the use of HRM or innovative work practices or Japanese manufacturing techniques or new microelectronics technologies and the associated exemplary social organization of the labour process in the Indian industries has been conspicuous by its absence. The Business Schools in India have not even attempted to create any reliable and worthwhile bank of case studies in this regard. And economists in general have not bothered about this inside-the-firm- topic. They have not even shown any sympathetic concern for the notion that “the labour of a human being is not a commodity or article of commerce” as expressed long time ago in the US Clayton Act of 1914. On the contrary, we have a very authentic and quite disturbing trajectory of restructuring, trending now in India as follows, as revealed by the anthropological investigations of Chakrabarty and Nayanjyoti (2018).

This study has focused on the Gurgaon-Manesar-Dharuhera-Bawal-Tapukara-Neemrana industrial belt in Haryana and Rajasthan, which is an important ‘node’ or part of Delhi-Mumbai Industrial Corridor (DMIC) and a major destination of capital in the last few decades. The pointers of this study are like writing in blood on the pages of Economic and Industrial Democracy—a Sage journal from Sweden. The increased mobility of capital and setting up multiple units of the same company in the industrial belt and the easy shifting of production from older to newer units (with more flexible labour regimes), and even closure of old units, have reduced workers’ control over production, effectiveness of strikes and bargaining capacity of unions in the older units. It has reduced associational bargaining power of workers. New technology has made workers more disposable and has given management more control over production. Mechanization and fixed as also flexible automation has made skill and experience increasingly redundant and has threatened workers with job insecurity. Intensification of work demands young docile workforce instead of older experienced people. Continuous industrial restructuring has reduced structural bargaining power of workers. Crisis of agriculture, jobless growth and India’s demographic dividend has created a large pool of unemployed youth waiting outside the factory gate, and ready to work like slaves even under worsening working conditions.

Informalization of work in formal sector like the automobile sector has shifted the burden of production from permanent to various categories of temporary workers. Permanent workers have become a small minority of workforce. Their union thus has less control over production. The new categories of workers like Diploma Trainee, Student Trainee, and Diploma Apprentices are not even recognized as ‘workers’ and thus have minimal connection with the union process. The increasing connectivity inside production process under ‘just-in-time’ and ‘lean’ production and the competitiveness of auto sector cannot tolerate any form of workers’ subjectivity that influences the production process and creates uncertainty. It has resulted in projecting union process and ‘collective bargaining’ of workers as ‘acts of indiscipline’. Thus, ‘labour dispute’ is now seen as ‘law and order’ problem. It has led to criminalization of labour struggles and repression in place of mechanisms of reconciliation and mediation. The Bharatiya Janata Party coming to power in States such as Haryana and Rajasthan and in the Centre after 2014 and its pro-corporate policies have led to gradual dismantling of labour protections, pro-corporate changes in labour law and weakening and eventual cannibalisation of institutions (labour department, labour court, tribunal, etc). Employers as a cabal in India have thus, de facto, moved ahead fast with their restructuring drives compatible with managing workforce without the latter having the right to organize and collectively bargain. This has resulted in a very defensive and progressively dying trade union movement, and minimum wages as maximum for most workers and overall decline in labour share in terms of wages and emoluments in the organised manufacturing sector.

And this, in turn, has portended widening income inequality, demand constriction and slowdown of economic growth. Finally, in the Covid-19 context, as Miyamura (2021) has highlighted, the Indian Central and State governments have aggressively pursued de jure policies to sanctify the already existing de facto practices, that have further intensified labour exploitation and widened inequality. In light of similar realities in North America, researchers from the Haas Institute for a Fair and Inclusive Society at UC Berkeley have pointed to six evidence-based policy solutions that can have a positive effect on reversing rising inequality, closing economic disparities among subgroups and enhancing economic mobility for all—increase the minimum wage; expand the earned income tax; build assets for working families; invest in education (and health); make the tax code more progressive; and end residential segregation. We need such policies based on complicated understanding of labour markets as social institutions (Zweig, 2015), and suitable to counter the deleterious restructuring outcomes in the specific contexts of India/Asia, America Latina, Africa and Oceania. Much of the world is devoid of serious and substantive interventions in favour of even flexicurity capitalism as endorsed by the ILO (Auer, 2007) and perhaps well executed in some European countries. The ruling governments in India have not paid any attention to some sensible and feasible proposals, in this regard, that have come from the Centre for Sustainable Employment of the Azim Premji University. By Annavajhula J.C. Bose, PhD Department of Economics, SRCC

Reference

Amit Chakrabarty and Nayanjyoti. 2018. Changes in Production Regimes and Challenges to Collective Bargaining: A Study of the Gurgaon Industrial Belt. Centre for Sustainable Employment Working Papers. Azim Premji University. Bengaluru.

https://belonging.berkeley.edu/six-policies-reduce-economic-inequality https://cse.azimpremjiuniversity.edu.in/

https://www.eurofound.europa.eu/topic/restructuring Michael Zweig. 2015. Complicating the Labour Market as a Social Institution. Review of Radical Political Economics. May 22. Peter Auer. 2007.

Security in Labour Markets: Combining Flexibility with Security for Decent Work.

https://www.ilo.org/empelm/pubs/WCMS_113923/lang--en/index.htm, Working Paper. Satoshi Miyamura. 2021. Turbulence Ahead: Labour and Struggles in Times of Covid-19 Pandemic in India. Canadian Journal of Development Studies.

42 (1/2). Somnath Ghosh. 1995. “Industrial Restructuring and Labour Relations: Emerging Patterns, Implications and Strategic Choices”, Indian Journal of Industrial Relations. 31 (2). October.

Surendra Pratap and Annavajhula J.C. Bose. 2015. Labour Management Today without Right to Organise and Collectively Bargain. Management Today/For a Better Tomorrow. 5 (3). July-September. Winfried Ruigrok and Rob van Tulder. 1995. The Logic of International Restructuring, Routledge. London and New York.

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