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The Rediff Business Special/ Gisele Regatao

PSU unions become realistic about privatisation

Three years ago, George Abraham learnt that Air-India would soon be privatised. As general secretary of the Air-India Employees Guild, the company's largest union, Abraham had no doubts about what had to be done. He had to act quickly to mobilise public opinion against the move.

But in the ensuing three years, the AIEG as also Abraham have changed their minds and are now all for privatisation. How did this change come about?

"We became more realistic," says Abraham. "We had no other choice." The shift in AIEG's position was not spontaneous, though. The union did try to convince the government that Air-India should look for solutions other than privatisation, but they did not succeed.

Faced with accumulated losses over the last five years and with no inflow of funds, the national carrier had to be sold. When confronted with this scenario, AIEG shifted its stand on the issue. "The union became conscious of what is good for the company," is how Jitender Bhargava, director, public relations, Air-India, puts it.

The fact that AIEG changed its stance shows that unions cannot do much in India anymore. Slowly, they are realising that the times of long strikes organised by trade union leader Datta Samant in the eighties are over. At a time when State-run companies are faced with fierce competition and deep financial crisis, concepts like job protection for employees make no sense. As a consequence, unions are becoming weaker.

"Unions are not losing power. They have lost it already," says Leslie Rebello, visitor professor of labor law at Bombay University and director of the management consultancy, L R Associates. Rebello believes Indian trade unions are losing power because they made a big mistake: "They did not educate workers to be more productive." With stronger competition and increase in imports following the reforms implemented in the country, many Indian companies became unable to survive. And there was nothing the unions could demand from such companies which were already in the red. "Unions have to swallow this bitter pill," says Rebello. "They have no role to play anymore."

The examples are many. A big blow to Indian unions came two years ago with the opening of the insurance sector to private companies. Apart from opposing the move, the unions could not really do anything to stop the move.

A lot is yet to come for unions. For instance, as part of its divestment programme, the Indian government is planning to sell its shareholding in big-ticket public sector units -- Maruti Udyog Ltd, Indian Oil Company, Videsh Sanchar Nigam Ltd., Mahanagar Telephone Nigam Ltd., Gas Authority of India Ltd., and the National Hydel Power Corporation. Sooner of later, telecom blue chip PSUs too will join this list.

Indian unions, however, are not willing to accept this reality. They still oppose privatisation and do not accept the fact that they cannot fight it. P R Krishnan, secretary at the Maharashtra State Committee of the Centre of India Trade Unions, says, "Unions are not losing power, but people." Although the official figures say 3,515 factories closed down in Maharashtra in the last seven years, CITU believes this number is greater than 11,000. "That means an erosion in the bargaining capacity of the working class," says Krishnan.

Workers cannot organise themselves if they do not have jobs. That is why many unions keep swimming against tide and doing everything they can to avoid layoffs. Take the example of Air-India itself. Despite the company facing a financial crisis, AIEG has been trying to avoid layoffs in the last few years. The union agreed to the move only after voluntary schemes for the workers were offered two years ago -- like the two years leave without pay or a three-day work week for 60 per cent of the salary.

The schemes did not help Air-India's situation. Around 1,000 employees left the company in the last 12 months, thanks to these programmes, but the firm still has 17,600 workers, 765 per aircraft. This is more than four times the ratio of bigger carriers like British Airlines and United Airlines. Abraham defends himself saying these companies outsource many of their employees. But even discounting this difference, Air-India would have a high ratio: Around 500 employees per aircraft.

So, will AIEG accept layoffs after privatisation? "Not at all," answers Abraham. The union insists it will not permit a reduction in the number of jobs. As the company will outsource some services, people will leave Air-India's labour force but will be hired by these firms.

The job security brings back the productivity issue raised by Professor Rebello. People who know they will not lose their jobs have fewer stimuli to work hard. But Abraham believes the fact that Air-India employees will get 10 per cent of the company's shares after privatisation will motivate them to increase their productivity.

And what if they are not given this stake? The union has not considered this possibility as yet.

Gisele Regatao, a graduate student of business journalism at City University of New York, is spending six weeks at rediff.com, after winning a Reuters Foundation fellowship in journalism.

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