There is growing confidence amongst those who argue that India is likely to become the next manufacturing hub of the world. The rising costs in China, the uncertain tagged value of the yuan to the dollar and the impending need to de-risk from “all the eggs in the China basket” situation are fuelling the argument in India’s favour.
India has several plus points that strengthen its case for manufacturing, including a large growing domestic demand and a favourable comparative labour cost arbitrage. Indian manufacturing is also coming of age. Several companies have engaged in the process of continual improvement, embracing philosophies such as total quality management, lean management, ‘just in time’, and so on.
The manufacturing workplace is also being transformed. The workforce, which was once primarily hired as “hands” — simple labour — is now being trained, engaged with and motivated to apply its “minds, hearts and souls” on the shop floor. Manual production operations are being replaced by ergonomically designed, quality assured and environmentally responsible processes. Shop floor workers are being trained to engage as stakeholders in this process of competitive manufacturing. Statistical process controls and six sigma are enabling workers with just X Standard education to become the champions of a resurgent manufacturing India.
Developed and positioned as a premier example of an industrial township, this undisputed engine of growth in Uttar Pradesh is an all-consuming hub for all the workforce that is leaving their villages as soon as they turn 18 (if not earlier) to seek a livelihood . This regular influx is the “core comparative resource” that the Indian industry aims to leverage in its pursuit of a sustained double-digit growth.
The minimum wage in Noida means cash in hand of Rs 4,485 per month for an ordinary worker. The minimum monthly rent for a shared “hole in the wall” at one of the several slums in Noida is Rs 2,000. That leaves the worker with just about half his wages to feed himself and take care of the family he has left behind in his village. He works for eight hours at his factory — and toils through the other 16 hours at his room in the slum — fanning himself through power disruptions during summer, wading through knee-deep sewage in the monsoon and fighting mosquitoes and queuing up for water, through the year. A production shift at the well-lit, 5S shop floor with six sigma posters on the wall, is undone by a daily struggle for survival during the following 16 hours.
Rigid laws A growing number of industry owners are learning that a clean, organised shop floor is indeed more productive. Responsible customers across the western world are forcing the more reluctant, less progressive entrepreneurs to convert. Our very own inspectors from the labour department (yes, they are still alive and thriving!) are ensuring that factory- wallahs who do not fall in line, part with a portion of their earnings regularly. They are also keeping an eye — ensuring that workers do not work overtime, no more than the permitted 50 hours per quarter. The labour laws that are meant to protect the interests of labour (and are too politically hot to be touched) do not permit an escape from the room in the slum.
Here, we have an example of an industrial hub — with no worker hostels, no cycle tracks, a law that does not let them legally earn more than minimum wages and in case you fall ill, an ESIS Hospital that you’d not wish upon your enemies.
If our workforce is the base on which we aim to claim our position in the manufacturing world, this foundation certainly needs reinforcement. As a starting point, all industry areas must encourage building and maintenance of low-cost, but efficient, employee hostels. This may be done in a PPP mode, wherein the employers can take a number of rooms on long lease and/or participate in the equity.
Working ‘casually’ In practice, a 10-12 hour workday can be the norm. If workers receive even one-and-a-half times the regular wages for overtime hours beyond eight hours, this will add a substantial 70 per cent additional income in the hands of the worker. The employers will also like the idea because they will have fewer numbers to take care of (two shifts instead of three). This will hopefully encourage owners to register more employees on the regular rolls — and not treat them eternally as “casual workers”.
They may also eventually realise that a “casual “worker does treat his work “casually”. Sustainable business mandates that customers be served and profits made while ensuring that interests of all stakeholders are taken care of. Building a manufacturing hub, while neglecting our workforce, is perilous.
Call for reforms Our politicians, for too long have stayed away from any discussion on labour law reforms. The need to increase the share of manufacturing in India’s GDP is a no-brainer. In reality however, ever since the government announced its resolve to enhance the share from 15 per cent to 25 per cent, it has fallen consistently to levels around 13 per cent. Even in sectors that have recorded reasonable increase in manufacturing, it has largely been “jobless growth”.
The industry’s demand for a review of labour regulations is seen merely through the prism of “hire and fire” policies. It is clear that the laws that date back to 1948, are today, working against the interests of both labour and industry. We need to comprehensively revisit not only wages and working conditions, but also the kind of environment which workers have to deal with outside the ‘modern’ workplace. It is unfair to expect a worker living in what is for all practical purposes a slum, and battling a taxing environment at home, to somehow switch to a ‘Six Sigma’ mindset at the workplace.
If we are to leverage our demographic dividend, the industry and the government have to engage in much more than the lip service that this key pillar of manufacturing has received so far. A healthy open dialogue is the need of the hour.
(The author is Chairman, ESC —Electronics & Software Export Promotion Council — and Chairman, CII National ICTE Committee. The views are personal.)