IT should get its ‘Act’ together

For the last several months, the IT majors in Bangalore and the Government of Karnataka have been engaged in intense debate and discussions about the applicability of the Industrial Employment (Standing Orders) Act, 1946 to the IT industry in the State.

In squabbling over technicalities about how and why the above Act was made applicable to establishments registered under the Karnataka Shops & Establishments Act, the IT and ITeS majors are failing to acknowledge the elephant in the room — the 2.8 million employees in the $100-billion IT and ITeS industry are functioning without a strong labour governance framework. This is the real issue.

current situation

All major and significant industries in India are covered under an industry-specific legislation. So, factories are covered under the Factories Act, plantations under the Plantations Labour Act, mines under the Mines Act, port workers under the Dock Workers (Regulation of Employment) Act, construction workers under the Building & Other Construction Workers (Regulation of Employment & Conditions of Service) Act, and so on.

What about the 2.8 million employees in the IT and ITeS industry? Well they are currently covered by the Shops and Commercial Establishments Act which was really intended to address the needs of small units of establishments like a retail shop or trading establishment, a bank, an insurance establishment, an office or a hotel, restaurant, a cinema or any other place of public entertainment.

From this perspective, it appears a huge error of omission that the IT industry has been left uncovered or covered by a highly inappropriate piece of legislation – an error that in many ways has made things easy for the industry.

The Industrial Employment Standing Orders Act which works in conjunction with these Industry specific Acts requires industrial establishments to formally define, publish and on that basis implement uniform and transparent rules and conditions that should govern all the workmen employed by it.

This includes things like categories of employment, leave, attendance, holidays, the manner in which the organisation will deal with termination and the manner in which it will deal with misconduct and punitive actions as well as with grievances. It also deals with the manner in which records will be maintained.

The Government of Karnataka in its wisdom found it necessary to cover the IT industry under this legislation -- but had earlier granted exemption to the industry from the provisions of the Act. This ten year exemption expired in August 2011.

Around this time, the Government received representations from a few employee bodies pleading that the exemption must come to and end and that the IT industry should adopt the Act. The Government responded and said that the exemption shall end, and the companies must conform to the requirements in six months time. Meanwhile there were hectic representations that the exemption should continue.

The debate finally culminated in the Karnataka Government declaring its intention to create a customised Employment Standing Orders for the IT, IT-enabled services and the hardware and electronics sectors in the State. Industry leaders have finally welcomed it as a wonderful initiative.

The larger context

To understand the real issues it is important that we transcend technicalities and see the big picture. There are many aspects to this larger context that come to my mind, underscoring the need for regulation:

The IT industry is extremely large today: The IT industry has become extremely large today. In FY 2012, the Indian IT-BPO industry-aggregate revenues crossed the $100 billion mark, with exports at $69 billion. From a workforce size that was around half a million in 2000 it has grown nearly six fold to around 2.8 million.

When we make any plea about the need for flexibility and freedom from any piece of legislation, we must keep this size in mind.

IT / ITeS employee more closely resemble workmen: From a time when the IT workforce was seen as consisting only of highly educated and skilled engineers doing complex technical work, its workforce now increasingly resembles any other industry – a large contingent of skilled and semi-skilled workmen who are doing a huge amount of routine, repetitive work and a smaller contingent of technical specialists, managers and leaders. Today, competitive forces have made pay, benefits and employment conditions in the industry a lot tougher and a lot less glamorous. Thanks to years of de-skilling efforts to contain costs, IT employees have become less employable in a relative sense.

From being a source of employment for the urban elite, it has now become the bank or government job of the 21st century, attracting large numbers who seek job security and stability. From a time when everyone in the industry belonged to one homogenous group, we are beginning to see the growth of a very large pool of IT workers who may never make it to real management jobs in a long time. Many, in fact, may not even want to.

Stress is a huge factor: The IT and ITeS industry is plagued by issues of stress, caused by long working hours, odd shift timings, living with multiple cultural identities, in addition to special problems that women employees face in balancing work with their personal needs, not to mention issues of sexual harassment.

Employees in this industry, more than in any other, are widely reported to suffer from mental health issues (evident from increase in suicides, breakdown of marriages and other stress induced consequences).

(To be concluded)

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