Kochi: Militant trade unions, strikes and lockouts that kept many investors away from Kerala have been on the decline in the past three years.
From 31 instances of labour disputes that led to the closing of workplaces in 1999 and 30 in 2000, the number of lockouts dwindled to single digits until there was none in 2007, according to data from the state labour commissioner’s office.
Also See On A Decline (Graphic)
The office doesn’t have data yet on lockouts in 2008.
Lockouts, a tool that managements resort to typically when workers go on long-drawn strikes, have been tapering off since 2004 mainly because labour unions have become more receptive to changes, says Balachandran Nair, additional labour commissioner responsible for industrial relations in the state.
“Kerala has gone past labour militancy cycle—an issue that once kept investors away from the state,” says G. Vijayaraghavan, founder and former chief executive of Technopark, Kerala’s first technology park, and currently president of consultancy firm Venture Management Associates.
“Over the last few years, there have been absolutely no issues of problems raised by organized labour. As a result, there is...a change in the investment climate and after the recession, Kerala should see investors making it a destination,” Vijayaraghavan said.
Elamaram Kareem, Kerala industry minister, also notes a new maturity in the trade unions.
Kareem points to the case of public sector United Electric Co., where the labour unions, as part of a revival package worked out early last year, agreed to accept a wage hike only after the company returned profits for three consecutive years.
This change in attitude has encouraged the government to start discussions with private firms in sectors such as information technology, biotechnology, tourism and petrochemicals for investments in the state, he says.
Bharat Heavy Electricals Ltd, Hindustan Aeronautics Ltd, NTPC Ltd, Bharat Earth Movers Ltd and Bharat Electronics Ltd have announced large investments in Kerala in the past two years and a few projects in the private sector are also being discussed, Kareem added, but did not give details.
K.N. Ravindranath, president of the Kerala unit of the Communist Party of India (Marxist)-affiliated Centre of Indian Trade Unions, or CITU, says trade union members have agreed to wage hike freezes and even wage cuts when necessary.
Still, a lockout that started in early December at the Apollo Tyres Ltd’s unit at Kalamassery near Kochi has stretched to 40 days as on Wednesday.
George Oommen, head of operations at the unit, says the issue with workers was related to raising productivity and manning of operations, as practised at the company’s other units at Baroda, Pune and Perambra in Kerala, which also saw a lockout earlier in 2008.
The Kalamassery unit has a daily production capacity of 90 tonnes.
To increase capacity, Apollo Tyres began work on a new factory outside the town limits as the Kalamassery unit didn’t have enough space for expansion, but promised all benefits, including transport, for the workers, says Oommen.
The workers opposed the plan and a lockout was necessitated when they stalled the movement of equipment such as tyre moulds to other units, he adds.
According to Oommen, a day’s lockout at the unit typically results in daily loss of at least Rs1 crore.
Ravindranath of CITU, which represents the workers at the unit, says the workers later agreed to the company’s plans but claims the management introduced fresh conditions after union members agreed to the earlier terms to raise productivity. He claims the company is extending the lockout as demand is slowing.
In a 22 December story in Mint about companies slowing dispute resolution because of poor demand, Satish Sharma, chief of India operations at Apollo Tyres, conceded that managements were in a stronger position during a downturn.
“When markets are up and running and you are selling every tyre produced, you take certain things lightly,” he had said. “But in times like these, one can have some say.”
But Sharma had also added a lockout was never the “natural” choice for a company.