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A trend new to India is making its appearance: hard-pressed companies trying to limit work to a few days in a week as a cost-cutting measure. Close on the heels of a similar move by Ashok Leyland, Air India has offered the option of a three-day work week to its employees. This is something Europe began to do several years ago in the midst of high unemployment. Workers were asked to take pay cuts in return for working only a few days in a week.
In principle, this is a good idea for squeezed companies and for workers. Cutting back production or other work in companies whose products or services are not currently in demand is a good way to cut costs without leading to full-scale unemployment. All workers working fewer days for a pay cut is better than looking for ways to retrench and put people out of jobs altogether. In principle it leaves workers free to add to their earnings through self-employment or part time work on days when they do not have to work for their company. It points to the sort of innovationand flexibility that is a must for businesses to stay afloat in hard times. This is especially true as labour is an area which has remained impervious to reform through economic liberalisation. Compa-nies several years ago began to resort to contract and casual labour on a large scale to skirt a system where freedom to fire is virtually non-existent in the organised sector. Limited work days are a logical extension of this.
That said, the optional operation of such schemes is likely to produce the same disappointing results that large-scale experimentation with voluntary retirement schemes (VRS) produced some years ago. Almost invariably the best and brightest accepted golden handshakes to make their future using the VRS money or finding better jobs elsewhere. The deadwood, lacking enterprise and job opportunities, stayed put. With limited work days, likewise, only those are likely to accept an optional scheme who are confident of compensating themselves through other opportunities. Those lacking specialskills or enterprise will insist on the full working week to maintain their existing earnings. Of course, given India's labour laws, limiting production or work to a certain number of days would probably be subject to government permission which may not be forthcoming. But perhaps if company managements skilfully negotiate with their unions, make it worth their while in some tangible way to accept the scheme on all workers' behalf, and make them sufficiently aware of the threat posed by intransigence to jobs, the government could become more sympathetic.
The bottom line of course is and always was that labour legislation cries out for reform. It does seem over-optimistic that a union would accept limited work days voluntarily. There are precedents in Europe of unions accepting such a thing, notably Germany's Metallgesellschaft in the Volkswagen case. But Indian unions are not known for their enlightened and long-term view of things. This is why government has to set right its own wrongheaded labourlegislation if companies' labour costs are to be viable. Until -- unless -- that happens, desperate companies such as Air India will have to keep resorting to half-hopeful measures such as this one.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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