The nation is indebted to Jawaharlal Nehru because he was a visionary in the true sense and multiple steps taken by him on the eve of Indian independence were in the right direction. Despite the naysayers, he established the foundations of Indian democracy (which was thought to be nothing more than a futile endeavour at that point of time), implemented a world class Constitution and clearly delineated a framework for smooth and unhindered transition of power through a free and fair election process.
However, as the head of a nascent state, he took many other steps which were not correctly perceived and one such step was promoting and nurturing a culture of ‘job security’ which has had disastrous consequences for the nation. He made a very famous statement once to JRD Tata, who was the torchbearer of Indian private sector at that time. He said ~ “Never speak to me about profits, Jay, it is an ugly word.”
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He evidently looked with suspicion at all private business enterprises in India and presumably considered legitimate profitmaking to be equivalent to profiteering, and this was a perception that was fundamentally wrong. It cannot be argued that at independence, India was a relatively destitute nation. It had no industrial base, abysmally low levels of investment both in physical and social infrastructure and extremely low life expectancy levels. Nehru had the wisdom, foresight as well as the enterprise levels to lay the foundations of Indian industrialization.
Since capital formation levels were very low in India at that time, he had used state intervention to establish the mighty ‘public sector’ with an underlying culture of job security which implied or warranted that all employees who were inducted into these companies would enjoy job protection unless they committed fraud or embezzlement that caused financial loss to the company. The thought process that might have played a role in this decision was to give an opportunity to some citizens of our nation to earn their daily bread as other viable alternatives did not exist in large numbers.
Nehru was deeply influenced by socialistic thoughts and intended that India would have its own version of socialism as distinct from other nations. As a protective concept, job security was one of the stems that might have originated from such a thought process. However, the hollowness of this idea lies in the fact that no two persons can have the same intelligence and acumen levels, nor contribute to any activity or process in the exact same fashion with the same output measured in any continuum of scale.
A situation of job security where it is not possible to perform any replacement of roles leads to a situation where even an inept person in a role will be perpetuated in that role ~ and this will be directly detrimental to the cause of achieving productive efficiency, apart from precluding any opportunity to another person to perform the job better. Barring exceptions, it has been seen almost on a universal scale that in organisations where job protection was or is being harboured, employees seldom take their job seriously and develop a casual and lethargic attitude towards work.
On one end of the spectrum, it encourages inefficient persons not to take their job seriously as job protection does not urge them to perform their duties better (there being no need to do so) and on the other, it discourages efficient employees from discharging their jobs efficiently because there is no incentive to perform better. Thus, from a holistic point of view, job security perpetrated mediocrity and inefficiency directly into the bones of an organization and directly impacted productive efficiency. It is no wonder that this culture led to a situation in organisations that offered job security of recording losses and becoming a burden on the state. Job security has been the harbinger of another ominous development in India that goes by the name of militant trade unionism.
The militant trade unionists, taking advantage of a situation of job security, were soon to learn that it was possible to get away by not contributing in a sincere manner to the day-to-day conduct of business. In place of sincere and diligent work, they concentrated on such issues as taking the management to gunpoint on all issues that they considered legitimate and threatening them with stoppage of production, wrenching out all productivity-related incentives and creating a situation where they could be claimed as a matter of right.
Managements, faced with such a situation and on the backdrop of archaic labour laws, adopted a conciliatory attitude towards such unions, as they were very often left with no other alternative. This was often against the interests of business and caused a rise in prices of commodities or services that were provided by such enterprises. It was a cancer that did no one any good. It can be argued that in an overpopulated country like India, the absence of job security will lead to situations that would destabilize the lives of many employees. The fallacy of this argument can be discerned after a level of deliberation.
Business enterprises do not operate in silos, but in tandem with various external factors such as market demand over which they cannot have much influence. Such external factors require a reduction in workforce headcounts, so that enterprises can cope with adverse change agents (such as coronavirus induced situations) and survive and prosper optimally. Inflexible labour laws that do not permit substitution or tapering off headcounts stand in the way of achieving the objective, apart from diminishing organizational agility.
Moreover, the presence of such laws that promote job security often deter entrepreneurs from setting up new industrial enterprises, which in turn reduces opportunities for new job aspirants. If India would have had flexible labour laws and did not promote job security in organisations, we agree that role or job substitution would have destabilized some employees, but the presence of many more entrepreneurs keen to establish new concerns would have provided opportunities for all displaced employees.
It is not out of place to mention here that United States, undoubtedly the richest and most powerful country in the world, could have easily implemented this concept of job security to provide a level of protection to her own workforce. On the other hand, it follows a diametrically opposite labour policy where all employment stipulations are based on a concept called “at will”, where an employee or an employer can terminate employment with or without any reason or advance notice. It may be sound harsh, but this factor has singularly catapulted it to the level of an industrial giant where entrepreneurs feel incentivised to set up enterprises that offer jobs to new and displaced employees.
Times change, and the old order gives rise to the new. The control bound, inward looking, intervention-centric socialist India of the Nehruvian era has embraced capitalistic ideas and is now a burgeoning economy, which is the sixth in the world in terms of nominal GDP and the third largest in terms of purchasing power parity. At this point of time, despite very strong headwinds and irrespective of the fact that we are passing through a pandemic, our future looks bright. The days when our dreams would get fulfilled do not appear very far away. There is no reason not to feel optimistic about the future. However, it is regrettable that this spectre of job security haunts our public sector enterprises even today.
No political party has the grit and the resolution to effectuate a set of unpalatable reforms to do away with job security for enterprises that employ more than 300 workers, as this has the potential to cause widespread public resentment and cause a loss in its vote bank. Let us hope that there will come a day when a political party in power and having a majority in both houses of Parliament gets emboldened to take steps to finally implement such a change for all enterprises in India. If this can be achieved, nothing will stop us from becoming an industrial superpower in the long term.
(The writer is a Chartered Accountant in practice and a consultant in the field of information technology. Views expressed herein are personal)
