Unions want to kill reforms


It is to the credit of the Narendra Modi regime that it managed to convince the Bharatiya Mazdoor Sangh (BMS) out of the all-India strike called by ten unions today. The BMS, part of the saffron brotherhood, is said to be largest trade union. But, as we shall see, government’s victory is small. It is doubtful if it can weaken the jihad that the striking unions want to wage against growth and development.

The strikers indulge in what the American author Thomas Sowell calls the “art of the impossible”: the actions they favor and the goals they desire to achieve are mutually incompatible. They want “concrete measures for employment generation,” and yet most of their demands, if accepted, would spell curtains to job creation.

To begin with, they emphasize on the strict enforcement of all basic labor laws. As it is, our labor regime is exceptionally bad; it is tilted in favor of organized labor, which comprises less than 10 per cent of the workforce; every rule and regulation has been made keeping in mind the interests of this section, while those in the unorganized sector have little job or social security. It is a big dampener for investors, domestic as well as foreign. And if there is little investment, there would hardly be any new jobs.

The strikers want a universal social security cover for all workers. A good idea indeed, but who’ll bear the cost? The government certainly won’t because it can’t; it doesn’t have the money.

Another idea is minimum wages of at least Rs 15,000 per month. There are two problems with this demand. First, wages and salaries are determined by the market; if government decides to determine remuneration, this would an odious state intervention. Second, implementing this would further give a fillip to venality in government, as employers would pay the market price but force the employees to sign on a higher slip; this practice is already rampant in India. It would be instructive to note here that West Bengal, despite 34 years’ continuous rule by the Marxist party, could still not improve wages of workers in a substantive manner.

Then there are grossly improper demands: stop disinvestment in public sector undertakings or PSUs; don’t allow foreign direct investment in Railways, insurance, defence, etc. Unions are also against the corporatization of postal services. The impropriety lies in exceeding the brief: the dharma of unions is to safeguard the genuine interests of workers; they should stick to their dharma. FDI, disinvestment, etc., are subjects relevant in the domain of politics, which should not be made an issue by union leaders, but this is exactly what is happening. Big unions are affiliated to one or the other political party: worse, unionism is often politics by other means. For once, the Modi government has registered a political victory.

But this victory is tactical rather than strategic: the government, which promised to galvanize development, can start good work in the economic sphere only by countering the Left-liberal narrative that unions and others peddle; but, in the marketplace of ideas, the government is unable to sell any wares different from those already available. There is not even a desire to sell anything new.

So, Labour Minister Bandaru Dattatreya said, “We don’t want any confrontation with trade unions. The workers’ rights and interests are supreme to us. We will continue talks with trade unions even after tomorrow’s strike.” This is it: we, the government is saying, are not only committed to continuity and ‘incrementalism,’ but are also devoted to the old, socialist modes of thinking, to the conventional wisdom.

In a way it is astounding that liberalization has continued for almost a quarter of century in a country whose public discourse regards the 1991 reforms as the original sin and seeks redemption only in the dark Nehruvian past. The desire to travel back in time is very strong in many quarters, the most important of them being the intellectual class and the Congress; during 2004-14, the latter actually did try to bring back the horrors of the pre-1991 past, and did succeed to some extent.

The people of India reposed great faith in Modi because they believed that he would be able to navigate the economy from the quagmires of socialism. But he seems to believe that, despite all the swamps and marshes marring the Nehruvian landscape, the situation is not hopeless; it is possible to make the socialist, welfarist system function if there is will, integrity, and capability on the top. And since he and his coterie think that they do possess the prerequisites, the sick Leviathan can be made robust and benign.

It is time the government confronted trade unions, the grand old party, intellectuals—everybody who opposes reforms—and chart a new course for the economy. Otherwise, the pathologies of the past—quota stir in Gujarat, caste politics in Bihar, union strike all over the country—will continue to resurrect.