Notes

Scan_0001.jpg

MONOGRAPH NO. 4.

THE SUN RISES IN THE WEST

— A Managerial Viewpoint

H. C. Parekh

BOMBAY CHAMBER

COMMERCE & INDUSTRY

Mackinnon Mackenzie Building

Ballard Estate, Bombay 400 038.

Scan_0002.jpg

SR. NO.	TITLE	DATE	PAGE NO.
1.	The Sun rises in the West—Part I	17.11.86	1
2.	The Sun rises in the West—Part II	28.11.86	5
3.	The Sun rises in the West—Part III	8.12.86	9
4.	The Sun rises in the West—Part IV	15.12.86	12
5.	The Sun rises in the West—Part V	27.12.86	15
6.	The Sun rises in the West—Part VI	22.1.87	19
7.	The Sun rises in the West—Part VII	28.1.87	24
8.	Freedom at Midnight	1.1.87	28
9.	'Scala-mobile escalator'	16.8.84	31
10.	Technocrats on the new horizon	18.12.84	34
11.	Reducing manpower	6.12.85	36'
12.	Productivity & unemployment	12.2.86	41
13.	A country fights back	3.8.86	43
14.	Not alone	20.8.86	45
15.	Point of no Return?	24.8.86	47
16.	No Escape in the sky	29.8.86	49
17.	The Good Times/The Bad Times	5.9.86	51
18.	Catch them doing something Right	23.9.86	54

1987

Price Rs. 20

Published by B. P. Gunaji.

Bombay Chamber of Commerce & Industry,

Mackinnon Mackenzie Building,

Bombay - 400 038.

PRINTED IN INDIA

by Arun Naik at Akshar Pratinioop P. Ltd.,

42, Ambedkar Marg,

Bombay - 400 031.

Scan_0003.jpg

Introduction

Even at the best of times, communicating, effectively is a difficult task. Whereas most managements are willing to spend huge sums of money for public relations and advertising—which is communicating with the external world—they are quite reluctant to spend time or energy talking to their own employees.

Whatever little "talking with" that takes place, is done during times of trouble, such as a strike or a lock-out or a go-slow.

I am therefore happy that the Chamber decided to bring out this monograph consisting of a few selected employer-employee communications regularly being sent out by Mr. H.C. Parekh in the past 7 years, to 7,000 employees of the company he works for.

I do hope this will encourage some managers to initiate an on-going dialogue with the employees of their companies.

N. M. DESAI

President

February 10, 1987

BOMBAY CHAMBER OF

COMMERCE & INDUSTRY

A word about this book

This publication is very unusual in the sense that, for the first time, a compilation of messages from a General Manager to his staff—supervisory as well as authorised workforce—has been made, and this will perhaps be considered unconventional for a Chamber. However, in the pages that follow are contained excerpts from circulars and others such material which highlight a manager's attempts to try to establish a continuous wave-length with those working in his organisation. It was felt that this effort deserves to be brought to the notice of members and others who have been greatly concerned with the imperative need to evolve a healthy human relationship in a mechanical environment. The ideas and observations contained in these articles are Mr. Parekh's and in bringing out this book the Chamber has merely tried to act as a vehicle of information dissemination, notwithstanding the fact that these messages were initially intended for the workforce in a single member company.

Scan_0004.jpg

Author's Preface

Indian Companies love to complain about the intransigence of their workers. How many managements realise that lack of communicating with their employees could be the root cause?

This nation has to find a way out of the atmosphere of confrontation prevailing in the industrial relations climate, a few hometruths will have to be understood. These include:

—new forms of co-operation will be required.

—steady blurring of classic employer/employee relationship

—talking to employees (in a paternalistic manner) mostly when there is a crisis of some kind will just not do.

Time is running out and a revolutionary process of "attitude change" has to be induced. Governmental legislation on the cards will give employees more say in the participative process. Do we want to wait for this? Why have a situation where management is "SUSPECT" and where workers are "WARY"? why wait for a confrontational situation, be it a strike, lockout, go-slow, suspension of operation, or closure?

Managers will have to do some direct and plain talking to the employees not only on bargainable issues but on ALL issues which affect the company and therefore everyone working in it. We have to do this day-in and day-out, when the going is bad and when it is good.

This monograph comprises a select list of articles (both in MARATHI & ENGLISH) which I have issued to our employees over the last seven years. The message which I have tried to convey is, "The traditional role of the union (using collective bargaining power) to get wage increases and turning a myopic eye to the company's problems, does not help. If company's profitability and productivity both go down, both, the management and the unions are faced with a series of unpleasant options. Actual case studies from all over the world serve to bring out the need for taking employees into confidence at the earliest. This should not be a 'fad' but a continuous process".

H. C. PAREKH

General Manager (Powai) Larsen & Toubro Limited

The Sun rises in the West—Part I

Dear Friends,

As children, we learned in Geography that the Sun rises in the East. It first rises in Japan, then in India, thereafter in Europe and finally in America.

Europeans are waking-up when we are almost ready for lunch! They are behind us by 4-5 hours. We are ahead of them.

But not when it comes to creating jobs.

When it comes to creating new jobs, the Sun rises in the West!

I did not believe myself until I read an article

"Europe starts to create Jobs"—(Fortune—July 7, 1986).

It is a good article, but it is difficult to understand.

So I decided to rewrite it in simple words which you can understand.

With lots of figures, the article tries to prove the following points:

POINT NO. 1

Using their collective-bargaining power, Unions manage to get big wage increases for workers, year-after-year. They also manage to get narrow, rigid job-classification ("This-is-not-my-job" type of work rules).

POINT NO. 2

Companies' costs keep rising (due to ever-increasing employee-cost).

So their product-cost rises, forcing them to raise selling prices. In the meantime, productivity keeps at same level—or even drops—due to rigid job-classification. This pushes up product cost still higher.

In the meantime, competitors are doing something smart (we will talk about this soon), to push up their productivity and keep their costs down. A high-cost company starts losing orders. Sales and production go down but costs remain high.

And if you think this is true of Europe but not in India, I quote from

Scan_0005.jpg

Shri Rajiv Gandhi's inaugural address at the National Conference on Productivity in New Delhi on October 29, 1986.

I was told by an industrialist from Bombay the other day that the lowest paid unskilled employee in his industry gets Rs. 2300 a month. The demand is to double the salary and reduce the working days by 100 days a year so that 25 per cent more people can be employed. The result is that he is going to shut down his factory in Bombay and move out into a district where such demands don't come about.

The unions must be more responsible, they must work for the rights of the workers but the rights of the workers must be linked with the increased productivity and efficiency of the worker.

POINT NO. 3

Company's profitability (profits as a percentage of sale) goes down—(as in our own case. Do you recollect my circular on Economy (Co-operation) Drive) ECD-3 of July 28, 1986, showing L&T's falling profitability and rising wage bill?). Sometimes even profit amount goes down.

POINT NO. 4

Companies start one or all of the following actions:

(a) Stop further recruitment (as in our case).

(b) Lay-off or retrench employees (if the law permits).

(d) Stop or reduce sub-contracting (to keep own employees busy, produce components at a much higher cost as compared to buying from outside. Although this is alright for a short time, if this is continued for long, it further pushesup the product cost!.)

(e) Start an Economy-Drive (as in our case).

(f) Invest, whatever little profits are there, in more and more automatic machinery which can work with less number of operators.

(g) Start new factories in remote locations where labour-costs are low.

(h) And if nothing works, close down or sell off the factory (if the law permits).

(i) And finally—in a country like ours—if the law does not permit you to close down the factory, let the government take it over and run it for ever (using tax payers' money) at a loss!

(Some of these points are mine—not mentioned in FORTUNE article).

POINT NO. 5

With factories stopping recruitment or retrenching or closing down, Union's influence reduces. Less and less employees want to become members of Unions.

Realising that economy is slowing down and unemployment is rising, the Government and unions get worried.

So the Government passes laws which make it easier for companies to "hire-and-fire"—hire workers when business is good and fire (lay off or retrench) when business is bad. Adjust employee strength according to business conditions.

The Unions also become more reasonable and agree to remove rigid job-classification and introduce flexible and liberal work-rules.

POINT NO. 6

Wage increases granted are less than the rate of inflation (i.e. the rate at which prices are rising in the market). Wage-increase does not neutralise one hundred per cent the rising prices. This means a decrease in the purchasing power of the workers.

POINT NO. 7

Decrease in labour-cost, brings down product-cost. Companies can keep the selling-prices constant for longer periods.

If at the same time, labour-productivity also goes up, a company can afford actually to reduce its selling prices! This can bring more orders.

POINT NO. 8

If a company (or a country) can manage for 5 to 7 years,

(a) to keep wage increases below the inflation rate and

(b) to improve productivity by 5 per cent each year, then there can be so many orders that it can afford to,

(i) expand existing factories;

(ii) put up new factories;

(iii) increase employment;

(iv) share its prosperity with employees.

Now if all the above stated points sound so much like fairy-tale, please do challenge me to prove it with facts and figures! Even if you

Scan_0006.jpg

don't, I will share with you some harsh facts of today's industrial life in the second part of this circular next week.

November 17, 1986

The Sun rises in the West—Part II

In Part I of this circular, I had mentioned that the European unions used their muscle power (of collective bargaining or blackmailing?) to obtain annual wage increases which were higher than the inflation rate.

This means there was more than 100 per cent neutralization.

Which means, in real terms, the purchasing power of Pound or D.M. or Franc or Lira (like our "rupee" these are European currencies) actually went up as far as the workers were concerned.

This Fact (No. 1) can be easily seen from the following graph:

Fact No. 1

(Graph showing EUROPE (1971 - 1980) on the X-axis for Years and Y-axis for Percentage. Annual Wage Increase is $13.4\%$ and Inflation rate is $10.1\%$).

Since L&T is an enlightened company, it has been "copying" Europe sincerely in this matter! If you are not already aware, take a look at the following graph:

Scan_0007.jpg

Fact No. 2

Wages includes: Basic + D. A. + H. R. A. + Sp. Allowance + Medical + L. T. A.

(Graph showing an INDEX on the Y-axis from 0 to 800 and Years from 1971 to 1986 on the X-axis. 'Powai SSA Wages *' rises to 642, and 'CPI' rises to 279.)

Infact this is one item in which we are ahead of Europe & America:

Fact No. 3

RISE IN LABOUR-COST IN 16 YEARS

Adjusted for Inflation

(1986 over 1970)

(Bar chart showing Percentage rise on Y-axis. U. S. A. is $10\%$, EUROPE is $50\%$, and L&T is $115\%$).

And this is not all! What about the INDIRECT LABOUR cost?—

Such as:

—Provident Fund

—Gratuity

—Welfare (Transport/Medical/Canteen, etc.)

—Leave

In this case let us compare ourselves with the British! After all they ruled over India for 150 years and made sure that we got some of their worst habits!

Fact No. 4

(Graph showing Labour, Social Security, & Other Indirect Cost (as percentage of Wage-bill) on the X-axis. Percentage on Y-axis from 0 to 25. Britain is $16.15\%$, L&T is $19.06\%$ (For 1984-85) and $9.55\%$ in 1968, and $16.6\%$ in 1986 for L&T.)

And the Unions were kept pressing the managements for higher and higher wages—especially in the "unskilled" category! These "school-kids" were twisting the tail of the Unions!

To understand let us take the example of L&T.

	1975	1985
1. Highly-Skilled Wages	Rs. 690.00	Rs. 2,307.00
2. Unskilled Wages	Rs. 296.00	Rs. 1,407.00
Ratio	HS	2.33
	US

Scan_0008.jpg

And to see "how", look at the following graph:

Fact No. 5

RATIO (Wage Spread):

Highly Skilled Wages

Unskilled Wages

(Graph with RATIO on Y-axis and Years 1975 to 1985 on X-axis. The line for L&T goes from 2.33 to 1.64. The line for German Metal Industries is a straight line at 1.15).

This means US Wages rose at a much faster rate, but the wages of HS category rose comparatively slower. So the "gap" reduced. Will this gap someday disappear altogether?

Anyway what happened?

The "US" workers priced themselves out of the market! No one wanted them and more and more became "unemployed (Jobless)". In my next circular I will show to you, how the employment situation got worse, due to rapidly rising wages.

November 28, 1986

The Sun rises in the West—Part III

So what happened when the wages of the unskilled workmen rose rapidly?

The inevitable happened!

Result No. 1

(Bar chart showing UNEMPLOYMENT-RATE (EUROPE) of Young (20 Yr. - 24 Yr.) Unskilled Workers on Y-axis as Percentage. 1975 is $7.65\%$ and 1985 is $23.5\%$).

Within 10 years, their unemployment rate jumped-up 3 times! And if you are still not convinced that,

High Wages $\to$ Automation $\to$ Unemployment then look at the following:

In the 12 year period (1973-1985) Europe lost 50 lakh jobs in the manufacturing (most of these in the unskilled category).

And in one single year (1981) it lost 19 lakh jobs!

But during the same period Europe could create only 15 lakh new jobs. (Do you remember that the European labour-cost rose by 50 per cent—adjusted for inflation—during 1970-1986?)

Scan_0009.jpg

Result No. 2

(Graph showing EUROPE Total Unemployment (Young + Old) on Y-axis as Percentage. 1975 is $4.5\%$, 1980 is $6.55\%$, and 1985 is $11.8\%$).

And what was happening in America during 1973-1986?

Result No. 3

America created 240 lakh jobs!

Reason:

After adjusting for inflation, American labour-cost rose by only 10 per cent during 1970-1986!

The conclusion is inescapable!

A country can create jobs only if it could keep its labour-cost low.

Ideally, the wages (and salaries, too!) should rise slower than the inflation-rate.

But if you insist that the wages should rise faster than the inflation-rate you should be prepared for the following!

Result No. 4

WORK-FORCE GROWTH (EUROPE) - ANNUAL INCREASE

(Bar chart showing Work Force in lacs/year on Y-axis. 1970 $\to$ 1980 is $10$ lacs/year, $1980 \to 1985$ is $6.92$ lacs/year, $1985 \to 1990$ (Estimated) is $3.65$ lacs/year, and $1990 \to 1995$ is $3.65$ lacs/year).

How long before the European work-force STOPS growing altogether? 2001 A.D.?

But while we are waiting for the work-force to stop growing, the Union membership has already STOPPED growing!

In case of doubt, look at the following chart:

Result No. 5

UNION-MEMBERSHIP (EUROPE)

(Graph showing Union Membership (in lacs) on Y-axis and Years 1974 to 1986 on X-axis. Membership is around 430 in 1974, rising to around 500 in 1979/1980 and then staying around 500 in 1986).

And the Unions were not the only ones getting worried! The European governments were even more worried! Some of them—like the French government—depended upon the Unions for their power.

So you would think that they would not do anything to anger the Unions!

Think again!—while you are waiting for my next circular.

December 8, 1986

Scan_0010.jpg

The Sun rises in the West—Part IV

To improve employment situation, the French Government finally did something!

In January 1986, it passed a law,

—which gave the companies a right to introduce flexible working hours, if they would reduce the average work-week from 39 hours to 38 hours!

So in one stroke, French Government expects to achieve TWO results,

Result No. 6

—Increase employment opportunity by decreasing working hours.

Result No. 7

—Increase productivity of labour-force by giving management flexibility.

The French Company MERLIN-GERIN did not lose time.

—It rescheduled work-time.

—It introduced round-the-clock, six-days-a-week, working in its factory.

1980 - 62 Hours/Week

1986 - 102 Hours/Week

French Government also found out something else!

Hundreds of companies were applying for "laying-off" workers—because they had no work to give to their workers.

But

In $13$ per cent of the cases, the labour-inspector was refusing permission (in Bombay, what is this percentage? Will the Labour Commissioner, please enlighten!)

So,

The Government passed a new law and removed the power of the labour-inspector to refuse lay-off!

The Germans were red in the face! The French had taken the lead!!

Not to be out-foxed, the German Government sprang a surprise.

It passed a new law,

Which allows companies to hire workers on "Contract of up to 18 months. When the contract ends, companies can lay-off the workers!!"

How did the GERMAN Industry react?

Here are two examples:

(a) West German Metal Industry reduced work-week from an average of 40 hours/week to $38.5$ hours/week without reducing pay!

(b) German car-manufacturer VOLKSWAGEN.

—In $1982/83$ froze recruitment for $18$ months.

—In $1984-85$, hired $19000$ workers.

—In $1986$, plans to add $10000$ workers.

Net Result No. 8

—19 European (OECD) Countries are expected to create $800,000$ jobs in $1986!$ the best performance since $1979$.

Question

How did this reversal become possible?

Answer

Through a realisation on the part of the workmen—and the Unions that if JOBS are to be saved, two things must happen:

(1) Restrictive Work-Rules/Practices must go

Example

Amalgamated Union on Engineering Workers (AUEW) has $10$ lakh members in Britain.

For creating a mere $500$ jobs, it recently agreed to NISSAN MOTOR CO. (of Japan) who wants to start a factory in Britain—to wipe-out restrictive work-rules.

This is the same Union, which prevented closing of BRITISH LEYLAND—a car company—and saved thousands of jobs, by co-operating with the management and removing restrictive work-rules (rigid job-classifications)

And before I go on to tell you what in the SECOND thing that must happen in order to create jobs, I would like you to take a look at some of the restrictive, work-practices existing in our own POWAI FACTORY right now!!

Would you like me to find out the current unemployment rate in Europe or America and compare it to the figures mentioned in the text?

That's a lot of material! I have converted the text from all ten uploaded image files and arranged it by filename for you.

📄 Text Conversion by Filename

Scan_0001.jpg

MONOGRAPH NO. 4.

THE SUN RISES IN THE WEST

— A Managerial Viewpoint

H. C. Parekh

BOMBAY CHAMBER

COMMERCE & INDUSTRY

Mackinnon Mackenzie Building

Ballard Estate, Bombay 400 038.

Scan_0002.jpg

SR. NO.	TITLE	DATE	PAGE NO.
1.	The Sun rises in the West—Part I	17.11.86	1
2.	The Sun rises in the West—Part II	28.11.86	5
3.	The Sun rises in the West—Part III	8.12.86	9
4.	The Sun rises in the West—Part IV	15.12.86	12
5.	The Sun rises in the West—Part V	27.12.86	15
6.	The Sun rises in the West—Part VI	22.1.87	19
7.	The Sun rises in the West—Part VII	28.1.87	24
8.	Freedom at Midnight	1.1.87	28
9.	'Scala-mobile escalator'	16.8.84	31
10.	Technocrats on the new horizon	18.12.84	34
11.	Reducing manpower	6.12.85	36'
12.	Productivity & unemployment	12.2.86	41
13.	A country fights back	3.8.86	43
14.	Not alone	20.8.86	45
15.	Point of no Return?	24.8.86	47
16.	No Escape in the sky	29.8.86	49
17.	The Good Times/The Bad Times	5.9.86	51
18.	Catch them doing something Right	23.9.86	54

1987

Price Rs. 20

Published by B. P. Gunaji.

Bombay Chamber of Commerce & Industry,

Mackinnon Mackenzie Building,

Bombay - 400 038.

PRINTED IN INDIA

by Arun Naik at Akshar Pratinioop P. Ltd.,

42, Ambedkar Marg,

Bombay - 400 031.

Scan_0003.jpg

Introduction

Whatever little "talking with" that takes place, is done during times of trouble, such as a strike or a lock-out or a go-slow.

I do hope this will encourage some managers to initiate an on-going dialogue with the employees of their companies.

N. M. DESAI

President

February 10, 1987

BOMBAY CHAMBER OF

COMMERCE & INDUSTRY

A word about this book

Scan_0004.jpg

Author's Preface

Indian Companies love to complain about the intransigence of their workers. How many managements realise that lack of communicating with their employees could be the root cause?

This nation has to find a way out of the atmosphere of confrontation prevailing in the industrial relations climate, a few hometruths will have to be understood. These include:

—new forms of co-operation will be required.

—steady blurring of classic employer/employee relationship

—talking to employees (in a paternalistic manner) mostly when there is a crisis of some kind will just not do.

H. C. PAREKH

General Manager (Powai) Larsen & Toubro Limited

The Sun rises in the West—Part I

Dear Friends,

As children, we learned in Geography that the Sun rises in the East. It first rises in Japan, then in India, thereafter in Europe and finally in America.

Europeans are waking-up when we are almost ready for lunch! They are behind us by 4-5 hours. We are ahead of them.

But not when it comes to creating jobs.

When it comes to creating new jobs, the Sun rises in the West!

I did not believe myself until I read an article

"Europe starts to create Jobs"—(Fortune—July 7, 1986).

It is a good article, but it is difficult to understand.

So I decided to rewrite it in simple words which you can understand.

With lots of figures, the article tries to prove the following points:

POINT NO. 1

POINT NO. 2

Companies' costs keep rising (due to ever-increasing employee-cost).

And if you think this is true of Europe but not in India, I quote from

Scan_0005.jpg

Shri Rajiv Gandhi's inaugural address at the National Conference on Productivity in New Delhi on October 29, 1986.

The unions must be more responsible, they must work for the rights of the workers but the rights of the workers must be linked with the increased productivity and efficiency of the worker.

POINT NO. 3

POINT NO. 4

Companies start one or all of the following actions:

(a) Stop further recruitment (as in our case).

(b) Lay-off or retrench employees (if the law permits).

(e) Start an Economy-Drive (as in our case).

(f) Invest, whatever little profits are there, in more and more automatic machinery which can work with less number of operators.

(g) Start new factories in remote locations where labour-costs are low.

(h) And if nothing works, close down or sell off the factory (if the law permits).

(i) And finally—in a country like ours—if the law does not permit you to close down the factory, let the government take it over and run it for ever (using tax payers' money) at a loss!

(Some of these points are mine—not mentioned in FORTUNE article).

POINT NO. 5

With factories stopping recruitment or retrenching or closing down, Union's influence reduces. Less and less employees want to become members of Unions.

Realising that economy is slowing down and unemployment is rising, the Government and unions get worried.

The Unions also become more reasonable and agree to remove rigid job-classification and introduce flexible and liberal work-rules.

POINT NO. 6

POINT NO. 7

Decrease in labour-cost, brings down product-cost. Companies can keep the selling-prices constant for longer periods.

If at the same time, labour-productivity also goes up, a company can afford actually to reduce its selling prices! This can bring more orders.

POINT NO. 8

If a company (or a country) can manage for 5 to 7 years,

(a) to keep wage increases below the inflation rate and

(b) to improve productivity by 5 per cent each year, then there can be so many orders that it can afford to,

(i) expand existing factories;

(ii) put up new factories;

(iii) increase employment;

(iv) share its prosperity with employees.

Now if all the above stated points sound so much like fairy-tale, please do challenge me to prove it with facts and figures! Even if you

Scan_0006.jpg

don't, I will share with you some harsh facts of today's industrial life in the second part of this circular next week.

November 17, 1986

The Sun rises in the West—Part II

This means there was more than 100 per cent neutralization.

Which means, in real terms, the purchasing power of Pound or D.M. or Franc or Lira (like our "rupee" these are European currencies) actually went up as far as the workers were concerned.

This Fact (No. 1) can be easily seen from the following graph:

Fact No. 1

(Graph showing EUROPE (1971 - 1980) on the X-axis for Years and Y-axis for Percentage. Annual Wage Increase is $13.4\%$ and Inflation rate is $10.1\%$).

Since L&T is an enlightened company, it has been "copying" Europe sincerely in this matter! If you are not already aware, take a look at the following graph:

Scan_0007.jpg

Fact No. 2

Wages includes: Basic + D. A. + H. R. A. + Sp. Allowance + Medical + L. T. A.

(Graph showing an INDEX on the Y-axis from 0 to 800 and Years from 1971 to 1986 on the X-axis. 'Powai SSA Wages *' rises to 642, and 'CPI' rises to 279.)

Infact this is one item in which we are ahead of Europe & America:

Fact No. 3

RISE IN LABOUR-COST IN 16 YEARS

Adjusted for Inflation

(1986 over 1970)

(Bar chart showing Percentage rise on Y-axis. U. S. A. is $10\%$, EUROPE is $50\%$, and L&T is $115\%$).

And this is not all! What about the INDIRECT LABOUR cost?—

Such as:

—Provident Fund

—Gratuity

—Welfare (Transport/Medical/Canteen, etc.)

—Leave

In this case let us compare ourselves with the British! After all they ruled over India for 150 years and made sure that we got some of their worst habits!

Fact No. 4

And the Unions were kept pressing the managements for higher and higher wages—especially in the "unskilled" category! These "school-kids" were twisting the tail of the Unions!

To understand let us take the example of L&T.

	1975	1985
1. Highly-Skilled Wages	Rs. 690.00	Rs. 2,307.00
2. Unskilled Wages	Rs. 296.00	Rs. 1,407.00
Ratio	HS	2.33
	US

Scan_0008.jpg

And to see "how", look at the following graph:

Fact No. 5

RATIO (Wage Spread):

Highly Skilled Wages

Unskilled Wages

(Graph with RATIO on Y-axis and Years 1975 to 1985 on X-axis. The line for L&T goes from 2.33 to 1.64. The line for German Metal Industries is a straight line at 1.15).

This means US Wages rose at a much faster rate, but the wages of HS category rose comparatively slower. So the "gap" reduced. Will this gap someday disappear altogether?

Anyway what happened?

November 28, 1986

The Sun rises in the West—Part III

So what happened when the wages of the unskilled workmen rose rapidly?

The inevitable happened!

Result No. 1

(Bar chart showing UNEMPLOYMENT-RATE (EUROPE) of Young (20 Yr. - 24 Yr.) Unskilled Workers on Y-axis as Percentage. 1975 is $7.65\%$ and 1985 is $23.5\%$).

Within 10 years, their unemployment rate jumped-up 3 times! And if you are still not convinced that,

High Wages $\to$ Automation $\to$ Unemployment then look at the following:

In the 12 year period (1973-1985) Europe lost 50 lakh jobs in the manufacturing (most of these in the unskilled category).

And in one single year (1981) it lost 19 lakh jobs!

But during the same period Europe could create only 15 lakh new jobs. (Do you remember that the European labour-cost rose by 50 per cent—adjusted for inflation—during 1970-1986?)

Scan_0009.jpg

Result No. 2

(Graph showing EUROPE Total Unemployment (Young + Old) on Y-axis as Percentage. 1975 is $4.5\%$, 1980 is $6.55\%$, and 1985 is $11.8\%$).

And what was happening in America during 1973-1986?

Result No. 3

America created 240 lakh jobs!

Reason:

After adjusting for inflation, American labour-cost rose by only 10 per cent during 1970-1986!

The conclusion is inescapable!

A country can create jobs only if it could keep its labour-cost low.

Ideally, the wages (and salaries, too!) should rise slower than the inflation-rate.

But if you insist that the wages should rise faster than the inflation-rate you should be prepared for the following!

Result No. 4

WORK-FORCE GROWTH (EUROPE) - ANNUAL INCREASE

How long before the European work-force STOPS growing altogether? 2001 A.D.?

But while we are waiting for the work-force to stop growing, the Union membership has already STOPPED growing!

In case of doubt, look at the following chart:

Result No. 5

UNION-MEMBERSHIP (EUROPE)

(Graph showing Union Membership (in lacs) on Y-axis and Years 1974 to 1986 on X-axis. Membership is around 430 in 1974, rising to around 500 in 1979/1980 and then staying around 500 in 1986).

And the Unions were not the only ones getting worried! The European governments were even more worried! Some of them—like the French government—depended upon the Unions for their power.

So you would think that they would not do anything to anger the Unions!

Think again!—while you are waiting for my next circular.

December 8, 1986

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The Sun rises in the West—Part IV

To improve employment situation, the French Government finally did something!

In January 1986, it passed a law,

—which gave the companies a right to introduce flexible working hours, if they would reduce the average work-week from 39 hours to 38 hours!

So in one stroke, French Government expects to achieve TWO results,

Result No. 6

—Increase employment opportunity by decreasing working hours.

Result No. 7

—Increase productivity of labour-force by giving management flexibility.

The French Company MERLIN-GERIN did not lose time.

—It rescheduled work-time.

—It introduced round-the-clock, six-days-a-week, working in its factory.

1980 - 62 Hours/Week

1986 - 102 Hours/Week

French Government also found out something else!

Hundreds of companies were applying for "laying-off" workers—because they had no work to give to their workers.

But

In $13$ per cent of the cases, the labour-inspector was refusing permission (in Bombay, what is this percentage? Will the Labour Commissioner, please enlighten!)

So,

The Government passed a new law and removed the power of the labour-inspector to refuse lay-off!

The Germans were red in the face! The French had taken the lead!!

Not to be out-foxed, the German Government sprang a surprise.

It passed a new law,

Which allows companies to hire workers on "Contract of up to 18 months. When the contract ends, companies can lay-off the workers!!"

How did the GERMAN Industry react?

Here are two examples:

(a) West German Metal Industry reduced work-week from an average of 40 hours/week to $38.5$ hours/week without reducing pay!

(b) German car-manufacturer VOLKSWAGEN.

—In $1982/83$ froze recruitment for $18$ months.

—In $1984-85$, hired $19000$ workers.

—In $1986$, plans to add $10000$ workers.

Net Result No. 8

—19 European (OECD) Countries are expected to create $800,000$ jobs in $1986!$ the best performance since $1979$.

Question

How did this reversal become possible?

Answer

Through a realisation on the part of the workmen—and the Unions that if JOBS are to be saved, two things must happen:

(1) Restrictive Work-Rules/Practices must go

Example

Amalgamated Union on Engineering Workers (AUEW) has $10$ lakh members in Britain.

For creating a mere $500$ jobs, it recently agreed to NISSAN MOTOR CO. (of Japan) who wants to start a factory in Britain—to wipe-out restrictive work-rules.

Scan_0011.jpg

Getting ready to leave as early as an hour before actual closing time.
Breaking for lunch earlier than the scheduled time and leaving the place of work for canteen earlier.
Collecting funds for different purposes during working hours.
Spending time for planning and purchase of material for pujas, felicitations, etc.
Punching cards before changing into uniforms.
Tendency to waste time at the start and end of the shift and also before and after tea/lunch recess.
Extended tea breaks.
Visiting dispensaries for very minor non-industrial ailments which can be treated during non-working hours.
Employees gathering in groups and chit-chatting for long durations.
"This is not my job" attitude.

Those of you who think the list is incomplete, please do write to me!

December 15, 1986

The Sun rises in the West—Part V

While I am waiting for the list of our restrictive work-practices to grow, I promised to tell you what is the SECOND THING that must happen for creating jobs.

And that happens to be

"Wage-increases" will have to be less than the inflation rate.

Example

In France, FORD MOTOR CO. was giving wage-increases as high as 10 per cent during 1980-84.

Last 2 years, it is giving no more than 4 per cent

Example

The current average inflation-rate in Europe is 6 per cent. Expected rise in manufacturing pay in 1986 is 5.75 per cent. All wages are now increasing roughly in line with prices!

Example

According to Mr. Larry Mishel, an American Researcher, there had been an average 13 per cent decline in wages since 1973 when adjusted for inflation.

Result No. 9

Adjusted for inflation, wage-cost of manufacturing a single unit of product declined by 0.3 per cent from 1982 to 1985!!—bringing back ability to compete with the world.

Writing in the Economic Times of December 4, 1986, ("America Worries Over lost competitiveness"), Jayshree Sengupta gives us following information:

	In 1985
	Japan	America
1. Average Annual Work-Hours	2100	1800
2. Paid Annual Vacation (Days)	14.6	19.6
3. Vacation Enjoyed (Days)	6.2	19.6
4. Increase in Hourly Factory Output	5.6%	2.2%

Scan_0012.jpg

But coming back to the question,

"Why is America succeeding in creating jobs?"

Let us look at the following chart from Business Week (Sept. 22, 1986).

(Bar chart showing Compensation Gains for all Private Industry Workers. Percentage Change from Previous Year on Y-axis. 1981 is 10.0, 1982 is 7.4, 1983 is 6.0, 1984 is 5.4, 1985 is 4.4, 1986 is 3.8.)

From the chart shown above, can we conclude that,

Lower Wages $\to$ Lower Product cost $\to$ More Demand $\to$ More jobs $\to$ Factory Expansion $\leftarrow$

And while we are on the subject of wages, let us see what is happening 18000 Kms. away from America.

In POWAI!

Annual Average Wage Bill per DR Employee (Powai+ Madh)

Percentage Increase Over Previous Year

*Basic+D.A.+Payroll Related Allowances

(Bar chart showing Percentage Increase over Previous Year (1979-80 to 1985-86). 79-80 is 15.0, 80-81 is 23.5, 81-82 is 19.4, 82-83 is 11.9, 83-84 is 28.8, 84-85 is 22.4, 85-86 is 10.4).

I know that some of you will immediately jump to the conclusion and say,

"That is why we are losing jobs in Powai. Look at the following chart"

DR-Employee Strength at Powai¹

(Bar chart showing Number of Employees on Y-axis. JAN 1979 is 3937, JAN 1986 is 3790 with a decrease of (-147)).2

Let me assure you that there are other reasons as well, the most important being that no industry is allowed to ex3pand within Greater Bombay.

But, of course, fast-rising wages continue to be the main concern—not only for L&T but for almost all the leading engineering companies of Bombay, as you can see from the following chart:

Total Emoluments—1985 (Over 1983=100)

(Graph showing Index on Y-axis from 0 to 100. Comparing Semi-skilled Workmen (Min. of Grade) for Company A (77), Co. B L&T (59), Co. C (55), Co. D (41.4), Co. E (39), Co. F (26.8), Co. G (26.4), Co. H (25.1)).

Scan_0013.jpg

And if you want to know what is happening to the profitability of these companies, keep looking at the Notice Board for my next Circular.

December 27, 1986

The Sun rises in the West: Part VI

The imaginary dateline that divides "To-day" from "Tomorrow" passes in the Pacific Ocean.

Look up any good map of the world. You will find that when the island of TONGA is getting ready to welcome Monday morning, a few hundred kilometres in the East, the residents of SAMOA island decide to lie in bed for another half-an-hour because it is a beautiful Sunday morning!

So that is as far west as the Sun can rise! No farther. For our purpose, let the Sun, this time rise in the city of DETROIT—the car-capital of America.

Some 30 years ago (in 1956), I spent one summer-vacation in Detroit, working as a draftsman, in a company called Massey-Ferguson Ltd. It was a temporary job. Many American companies hire college-students for a short period of 2/3 months during their summer vacation and I was one of the lucky ones.

But perhaps it was more than mere luck.

From 1948 to 1955, for nearly 7 years, I had spent all of my vacations in the repair-garage of my brother in Rajkot. He was a dealer of Ferguson tractors and 35 years ago, farmers did not know how to use a tractor nor did the mechanics know how to repair one. So there were plenty of tractors to be repaired and many-a-times I was in the garage well beyond the midnight trying to find fault in the hydraulic system. In those 6/7 years, I learnt a lot about Ferguson Tractors—and may be that is why I got the job in Detroit.

With very few friends, all I could do on the long week-ends (Saturday and Sunday weekly-off days) was to walk for many miles on the Grand River Avenue—a straight road that perhaps stretches for $10/15$ kms. And with thousands of second hand cars (which appeared brand new to me) for sale on both sides of this road, Detroit made a deep impression on me. It was truly the industrial-capital of America just as Bombay is the industrial capital of India.

Detroit was the power-house of the American Economy. When Detroit sneezed, America caught cold. Almighty Detroit fought (and

Scan_0014.jpg

won) all major battles of American economic Mahabharata!

And 30 years later, in 1986, Detroit is living through the Mahabharata once again—except that this time it is a different episode.

Those of you who have read Mahabharata well, know that, after defeating the Kaurava army, Arjuna became very proud and considered himself an "Almighty". So Lord Krishna decided to teach him a lesson. He asked Arjuna to escort a group of "Gopis" through the jungle and provide them protection. Half-way through the jungle, a small number of ordinary robbers challenged Arjuna who at once readjusted his famous bow "Gandiva" and started shooting arrows in the direction of the robbers. Disregarding the arrows, the robbers attacked, captured Arjuna, tied-up his hands and feet and ran-away with the Gopis!

So Tulsidas was inspired to write,

"Kahe Arjun Luntio, Wohi Dhanush Wohi Ban"

In Detroit too, the mightiest of the mighty is licking dust at the feet of ordinary robbers! The Mighty General Motors!! The car (manufacturing) King of America!

And you don't have to guess "how", I will tell you.

(1) GM Profits

1983 - $ 5.5$ billion

1985 (est.) - $0$ (zero) (Trying very hard to avoid a "loss")

(2) GM's Market Share

During the last 5 years, GM has lost its market-share from 46 per cent to 42 per cent.

So what does GM do?

(1) On Nov. 6, 1986, GM announced plans to shut down 11 factories during the next 18 months, reducing capacity to 70 per cent.

(2) GM plans to cut its salaried work-force (office-staff) by 25 per cent and reduce its fixed cost by Rs. $6,500$ crores ($5$ billion) every year. GM will also retrench 29000 workers (about 4 per cent of work force).

(3) Reduce price of a car by $1500$.

(a few days ago Premier Automobile reduced the price of PADMINI model by Rs. $6500$ calling it "ECONOMY MODEL").

(4) Sell cars on "hire-purchase" with interest-rate of 0 to $2.9$ per cent.

(I am told you can drive away a PADMINI car by paying Rs. $24000$ now and rest in easy instalments—no more waiting 7 years or paying "ON" money!)

And since the customers are getting tough with GM, GM is getting tough with the Union! (GM stands for General Motors—not General Manager!).

Union has a role to play!

United Auto Worker (UAW) is the Labour-Union of GM

UAW has agreed to reduce the number of assembly-line job classification from 140 to 2!

UAW also agreed to adopt a team approach which will put 6 to 12 workers in charge of a production area, and try out a 4-day work-week (3 unpaid weekly-off) on one shift!

Five years ago when Chrysler Car Company (also in Detroit) was about to close-down UAW (it is the same Union for all American Car Companies) accepted a wage-cut from $12/hour$ to $8/hr!$—33 per cent reduction.

The fatso!

But with fat labour-costs, the mighty Detroit has become flabby! It is not in a fighting shape!

Look at 1986 Wages in Car industry:

(Bar chart showing $/Hour on Y-axis. U.S.A. is $25$, JAPAN is $15$, SOUTH KOREA is $2.5$).

Scan_0015.jpg

That makes American cars expensive, very expensive!

Look at their production-costs/car:

(Bar chart showing $ in Thousand on Y-axis. GM is $11,500$, Ford is $9,800$, Chrysler is $9,300$, S. Korean (Hyundai) is $5,000$, Yugoslavia (Yugoimport) is $4,000$).

And the profits are shrinking

AMERICAN CAR INDUSTRY

(Bar chart showing $ in Million on Y-axis. 1984 is $9.8$ billion, 1985 is $8.1$ billion, 1986 (est.) is $7.1$ billion (on a sale of $123$ billion)).

At $96.4$ billion annual sales (1985), General Motors is the World's largest industrial company.

And although

—its market-share is shrinking

—its capacity is shrinking (closing down old factories),

—its profits are shrinking.

it is installing $20$ billion worth of automatic machinery to

—reduce costs/car

—remain competitive

So that it can survive!

The Sun may, afterall rise on the West coast of Lake Erie where Detroit is situated!

January 22, 1987

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The Sun rises in the West? No—in the Middle East! Part VII

Perhaps you know that the biggest share-holders (therefore, owners?) of L&T are the Financial Institutions like,

— UTI (Unit Trust of India)

— LIC (Life Insurance Corporation)

etc. etc.

Between them, I believe, they hold more than 35 per cent of L&T shares and they nominate members on our Board of Directors. The Board takes policy-decisions and guides the destiny of the company.

Now, if BKS (Bharatiya Kamgar Sena) were to be the largest share-holder of L&T, what kind of policy-decisions would they take with respect of L&T?

— Future operations?

— Current operations?

I do not know!

I will not even guess!!

But I do know about a large trade-union federation (like our INTUC, AITUC, etc.) of Israel and the kind of decision it is taking in a company it OWNS!!

The Federation : HISTADRUT

Membership : 12 lakhs workers

Group of Companies : KOOR INDUSTRIES

"owned" by this Union

KOOR size:

KOOR is the largest manufacturing industry in the Middle-East, with 250 subsidiaries and offices in 40 countries.

	1985 Revenue
1985 Revenue	: Rs. $3120.00$ Crores
1985 Profit	: Rs. $22.75$ Crores

KOOR products

Ammunition/Mortars

Electronic Products

Antibiotic Drugs

Mayonnaise (like butter)

Pilotless Airplanes!

KOOR compensation:

— 20 per cent higher than other Israel companies

— One month bonus

KOOR welfare:

Subsidised meal
Discount consumer co-operative stores
Loans (to members) for,

— child care

— college tuition

KOOR actions:

When KOOR's profitability started going down, what did the owner-Union do?

They did the same thing that capitalist-management do anywhere else in the World!

They hired a professional (M.B.A.—Business graduate) Manager Mr. MEIR AMIT to set things right! AMIT took following actions, fully supported by the Top Management—sorry, Top Union!

Closed money-losing motor factory
Cement Factory

(a) Reduced manpower from 900 to 600 (33 per cent less)

(b) Increased production from 300,000 Tons to 700,000 Tons ($+233$ per cent)

Added new products in—

(a) electronics

(b) metals

Tripled (3 times) employment in 9 years' time.
Located new-plants in unpopulated parts of Israel!
What happened at the Subsidiary companies of KOOR?

Scan_0017.jpg

Name of Subsidiary: SOLTAM

Company: TADIRAN

	SOLTAM	TADIRAN
Product	: Munition (Bullets/ Bombs)	: Electronic Products
Sale	: 1983: Rs. $166.4$ Crores; 1985: Rs. $102.7$ Crores	: 1985: Rs. $742.3$ crores
Growth Rate	: ...	: $1980-1982$: $+20$ per cent; $1983-1984$: $+5$ per cent
Action	: Lay-off 20 per cent 2000 workers	: Lay-off 8% of 12000 workers

KOOR philosophy:

President AMIT said,

"I am not a welfare department of HISTADRUT (the Labour Union who is the owner of KOOR).

When Union leaders objected to manpower reduction, AMIT replied,

"I am a good socialist, and I am in favour of even (uniform) spread of wealth. But first you have to have something to spread! To spread "nothing" evenly (uniformity) is no big deal".

Next President GAVISH said:

"We are in a business that must make profit: First comes profit, then welfare".

Not to be left out, Chairman BLUMENTHAL saids,

"For us profit-making is the measuring-rod that tells us whether we are on the right track".

"Our main aim is to create jobs. To do that we have to survive in the free market. Jobs should take precedence over earnings".

And because Union is the sole owner of KOOR, you would think that they will announce a big dividend, for the shareholders (that is, for themselves!). Afterall, who is to stop them!

No way!

KOOR management's (I mean Union's) policy is—

NO DIVIDENDS!—NEVER!

Typical case of

"When a lover gets married and becomes a husband, he ceases to be a lover!"

Moral of the story (for the Government of India?)

Do not be in a hurry to put a worker on the Board of Directors.

Let "Worker-participation-in-Management" begin where it should—on the shop-floor.

January 28, 1987

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Freedom at Midnight

This is the title of a famous book written by Mr. Lapierre.

It tells the history of our country's freedom-struggle and the role played by such eminent persons like Mahatma Gandhi, Pandit Jawaharlal Nehru, Sardar Patel and others.

It tells how the sacrifices (of even life) made by thousands of Indian patriots finally led to our country becoming an independent nation on the midnight of August 14, 1947.

This was nearly 40 years ago—and a large number of our Powai employees were not even born by that time.

So I can understand that they neither know nor appreciate why thousands sacrificed their lives for this freedom!

But is that the reason, why some of them have taken to a different kind of Freedom at Midnight?

A few days back, a couple of foremen made a "surprise-visit" of a department at midnight.

And what did they find?

— 7 workmen were playing cards.

— 2 workmen were sitting in the cloak room.

— 1 worker was sleeping in the cloak room.

All during working hours!

But there were also 10 other self-disciplined workmen who were continuing to work at their work-place!—in the same department!

And then there were 500 other workmen all over Powai in that second shift who were also working—and trying to earn their bread honestly!

Apparently the $7+2+1$ workmen had found a new, young-generation meaning of

"Freedom at Midnight!"

I am not going to reveal the names of these workmen or the name of their department, but your friends will tell you when you are eating in the canteen or travelling in the bus.

By now, some of you must be itching to ask me,

"What was the department supervisor doing all this time?"

But some of you will never ask me this question!

Because you were asking me a different question when I met you at the last Worker Education Class, or at the Lonavala Shibir on Dec. 20, 1986. You were asking me,

"Sir, why do we need so many shop-supervisors? Our worker-strength is coming down but shop-supervisor strength is going up. Are they making any contribution to production?"

Although I knew the answer, I told you to raise this question with your Managers.

But now you know the answer!

— We don't need them full-time for production.

— But we do need them for policing!

That night, the shop-supervisor had left the shop on some urgent work—so in fact, there was no one to do the policing.

So what happens?

Promptly, 10 out of 20 workmen stop working!

No wonder, during the 3 year period (April $81$–April $84$).

— whereas worker-strength went up by only 23 persons (3676 $\to$ 3699)

— the shop-supervisor strength went up by 43 persons! (291 $\to$ 334)

Which means,

— In 1981, we needed one supervisor to supervise 12.60 workers

— In 1984, we needed one supervisor to supervise 11.07 workers

If only employees would keep working for the eight-hours whether anybody is watching or not, we could manage with half the number of Shop-Supervisors!!

And if 160 supervisors could be spared from the shops, they could do much more productive work like,

— Planning production.

— Getting materials/components.

— Designing tools.

— Making process-sheets

— Conducting method-studies.

— Selecting machineries.

— Laying-down assembly-lines, etc.

Let me tell you one thing in case you don't know.

No shop-supervisor likes (let alone enjoys!) to waste his time looking for missing-from-the-workplace workmen in the toilets and

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cloak-rooms!

If anything, they hate such work! It is an unpleasant work. But if it is forced onto them, they will do it.

The purpose of this letter is not to find fault with certain individuals.

For that, management has the normal methods of show-cause, charge-sheet, domestic-inquiry, punishment, etc.

The purpose is to find fault with our behaviour and our attitudes.

Will we behave properly only when someone is watching us from behind or from above?

If that helps, I would like to remind all my colleagues—whether working in shops or offices, whether in first shift, second shift or third shift, that if they are to look-around, they will find nearby somewhere, a picture of the God, watching them from above!

And if you will listen carefully (even without closing your eyes!) you will hear Him say

"Work is Worship and I am Watching YOU all the time!"

'Scala-mobile Escalator'⁴

In Brazil they call it "Indexation".5

In America they call it COLA (Cost of Living Adjustment)6

In Italy they call it Scala-Mobile Escalator7

In India we call it D.A. (Dearness Allowance)8

But everywhere, it means the same thing to the employees.9

Whenever inflation pushes up prices in the market, some index published by the Government will also rise. (In India, we call it Consumer Price Index—C.P.I.).10

Whenever C.P.I. goes up, D.A. goes up, putting more money in the hands of an employee.11

The idea is that even though the prices may have gone up, with the extra D.A. in his hands, he can continue to purchase the same quantity of articles as before.12

Rising prices raise the cost of living.13

So the experts thought, "Let us put mor14e money in the hands of an employee—to take care of the rising prices—to neutralise the cost-of-living rise."

Fine idea!

In fact, originally this is an Indian idea!

We, in India, introduced it 40 years ago.

Americans and Italians introduced it only a few years ago.

Italians call it Scala-mobile Escalator. Seems like they borrowed the idea from our own escalator-culture (remember Babul Tripathi?).

Except that they seem to have discovered something within 5 years (1979-1984) which we have still not discovered after 40 years! Or do not wish to discover!

And that is,

Everytime D. A. goes up, cost of production also goes up!

And if cost-of-production goes up, selling-prices must also go up.

(We were forced to raise the selling prices of our Switchgear Standard products a few days ago).

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If we do not raise our selling prices, our profits will go down.

But nobody likes profits to go down—neither the shareholders nor the employees.

So what is the problem? Just keep raising the selling prices, whenever costs go up.

But the Italians are thinking.

"No, that won't work. If we wish to sell fertilizer plants in India, our selling prices must be lower than the selling prices of the Japanese manufacturers (who last month gave a YEN 6 billion loan to India, to buy a fertilizer plant from Japan) and our selling-prices must be lower than those of an Indian company called L&T. But we cannot force L&T to raise its selling prices. All that we can do is to reduce our costs, by slowing down the scala-mobile escalator. Down with D.A.!"

If our Mr. V. G. Desai (Divisional Manager—Chemical Division) could hear the Italians thinking, he would jump-up and say, "very dangerous thinking!"15

"He means dangerous for us—for L&T! (VGD, let me assure you, I can feel no love lost for the Italian workmen!) And with all the affection he has for our own employees he keeps gazing at the following chart:16

(Graph showing D.A. Rise in Rs./Month on Y-axis and Month/CPI on X-axis. Min D.A. rises from Rs. 475 to Rs. 1114. C.P.I. rises from 1447 to 2682. The D.A. increase is 17$97\%$ while C.P.I. increase is 18$85\%$).19

3220

And he wonders,²¹

How the Italians (even Japanese) would love to get a copy of this chart!?²²
Does Indian industry have the "Italian Option" (of stopping or slowing down the D.A.)? If not,²³
Can people of Powai, possibly increase their productivity quickly enough to neutralize the following increases in the wages?²⁴

Increase/Employee	Rs./Month
A. Jan. 1979 Settlement (²⁷Average)	200
B. D. A. Increase (Jan. 1979-July 1984)	475 to 1114
C. April 1984 Settlement (Average)	550
Total	1225 to 1864

How shall we respond to these questions?

August 16, 1984

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Technocrats on the new horizon

I recently came across the following piece of information in 'Business India'—(November 1984).

An Indian industrial worker has to work more than twelve times as long as his U.S. counterpart to earn enough to buy the same small basket of food, according to a survey published in Geneva.

A U.S. factory employee can earn enough to buy a kilo of meat, a litre of milk, 500 grams of bread, plus fish, butter, potatoes, sugar and oranges in one hour 30 minutes—but his Indian equivalent has to work 22 hours 38 minutes to buy the same things.

Is this not terrible? Must L&Tites at Powai, have to work so much longer than the American workers, to buy the same quantity?

Have you ever wondered why?

I will tell you why!

This is because Indian workers who are producing these things are very inefficient and unproductive! They are taking too much time to produce the milk and the meat and the bread and the sugar and all those other things! They are not working fast enough and smart enough! So naturally their cost of production is high—making their products expensive!

And to be able to buy these expensive products, we need more money. And to earn more money we need to work longer than our American friends.

So far we talked about our having to work longer—but what about others who buy L&T products?

Do they also have to work longer to buy our switchgear and our cement plants and our dairy equipment because these are very expensive?

And why are these very expensive? Because we take too many hours to produce these!

Perhaps we will never know, because there is hardly an L&T product which is purchased by the common man on the street (except perhaps our MK Starter which is bought by the Indian farmer for his

pumping set!).

And the industrialists who purchases our equipment does not have to "complain" to us about our high cost. He has an option to buy it from other companies—at a lesser cost!

Would you like to know the productivity of the Indian worker?

Here are a few examples:

STEEL

In our steel factories, one worker is able to manufacture 60 tons of steel in one year.

In Japan, one worker produces 200 tons of steel in the same time!

TEXTILE

One Indian worker produces 3 tons of textile (cloth) in one year.

A Japanese worker produces 10 tons of cloth in one year!

SUGAR

An Indian worker produces 24 tons of sugar in a year.

An American? 430 tons!

RICE

In India, one hectare produces 1870 kgs of rice.

In Korea one hectare produces 6780 kgs!

And these are 2/3 years old figures!

No wonder Mr. Chandrakant Kirloskar is worried!

At one place in the following article he writes,

"In Japan, 125 men manufacture 20,000 pumps and here in India (in Kirloskar's own factory at Devas) as many as 750 persons manufacture only 10,000 pumps. What a contrast!"

So when it comes to manufacturing pumps, the Japanese are 12 times more productive than us!1

To find out why, please read the following article.2

December 18, 19843

354

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Reducing manpower⁶

What is common between7

a) Refrigerator Industry8

b) Central Government Staff Strength9

c) Tamil Nadu Electricity Board Agreement with Union?10

Apparently nothing—except that the following reports appeared on a newspaper on the same day!11

What difficulties are being faced by refrigerator manufacturers? To name a few:12

— Rising material/Component Costs13

— Rising labour costs14

— Heavy taxes (excise etc.)15

— Fierce competition (entry of Voltas)16

— Slack demand.17

The report says Kelvinator is carrying a stock of one LAKH refrigerators valued at Rs. 30 crores!18

This is despite reports that Kelvinator has not raised its selling prices during last 5 years—and this is despite the fact that Kelvinator employees raised their productivity by 75 per cent in the same 5 years (from 8 refrigerators per employee per month to 14 19refrigerators per employee per month).

Amongst the products that we make at Powai, do we have any which will end-up like refrigerators with profit margin of only 0.8 to 0.5 per cent?

In my February circular, I had also mentioned about the productivity of Maruti-employees.

Last month, while in Delhi, I got the latest figures about Maruti from one of their senior executives.

The news-report on the "Central Government Staff Strength" speaks of

— Winding up departments/sections

— Reducing Staff

— Weeding-out inefficient, unwanted corrupt employees

— Recruitment freeze of last 3 years

— 10 per cent reduction in staff strength

— Sub-contracting/Leasing out

— Surrendering unfilled posts

— Handing over loss-making units to private sector

But if a private-sector unit starts making loss, who shall it hand-over itself to?

To Government!

No chance! The Government is not likely to make that mistake again!

And as far as other private-sector companies are concerned, there are few willing to take over a "Sick" unit. And if ever someone is ready, his first condition is,

— Get rid of all your existing employees before I take over".

And in case you have not heard, National Rayon had a 18 month strike/lockout in 1984-85. They reopened in May 1985, but are back in trouble once again. And this time it looks like "terminal" illness!

Their chief executive Mr. R. P. Kedia is reported to have said (Fin. Exp. Oct. 17) that

— It took National Rayon 30 years to build up a reserve of Rs. 27 crores.

— It has taken 3 years of employee agitation to reduce it to ZERO!

And further east in Durgapur, The Alloy Steel Plant (ASP) of Central Government has accumulated a loss of over Rs. 117 crores!

With manpower numbering 7400 and earning an average of Rs.

Scan_0023.jpg

35,000 per year (highest amongst SAIL plants), direct manpower-cost alone comes to Rs. 26 crores/year! And from October 3, they have "stopped working". (This assumes that they were "working" earlier!!)

Mr. Nayak, a Senior Executive of that Company has appealed to the employees in the following words.

"In view of disturbing financial position of the Company, such a plant would have to be closed down but, this was not done because it is still hoped that the plant will recover by the determined and united efforts of all of us.... Any industry has to make internal efforts to counteract adverse external conditions in order to survive.... Total manpower should not be further increased. This is a necessity for the survival of ASP.... it is well-known that overmanning led to reduction of efficiency of individuals as well as groups of people".

Turning to the agreement signed between Tamil Nadu Electricity Board (TNEB) and the unions, we find that the staff strength will be reduced as follows:

— Field staff - 19300

— Revenue staff - 3610

— Stores staff - 150

Total: 23060

But will someone explain the meaning of,

"The Post of Helper... has been abolished but 18250 helpers now in employment will not lose their jobs as 26700 posts are lying vacant because of no recruitment to this cadre since 1974."

I have asked for details, but I suppose they know what they are talking.

Whichever way you look, the message is clear.

It is no more

"Produce or Perish"

It is,

"Produce productively or perish"

In the context of Powai Works, this reads,

"Produce more with less people or perish".

And we do not have to go very far to understand why I am making such a statement.

In the seventeen months, (since we signed our 4-year agreement), the D.A. has gone up as follows:

	D.A. (Rs./Month)	Increase (Rs./Month)
	April 84	Sept. 85
Min. D.A.	906	1021
Max. D.A.	2160	2436

After we allow for,

— Service increment of April 1984

— Normal increment of April 1984

— Normal increment of April 1985,

wages, at Powai, have gone-up as follows:—

Total wages (Rs./Month) at midpoint of the grade

Month	Clerk I	Steno A	TA I	HS	SB	SSA
April '84	3366	3253	3251	3208	2530	2246
Sept. '85	3728	3643	3635	3585	2987	2629
Net increase per month)	362	390	384	377	457	383

Wages include Basic, DA, HRA, LTA, SPL Allowance, Medical Allowance and Conveyance Allowance.

And what is expected to happen to our manpower strength at Powai?

Let us see

	Retirements in Calendar year 1986	Net additions planned during budget-year 85-86
1. Sup/Off/Cov.	14	14
2. M.R. (Unionised)	14	21
3. D.R. (Unionised)	14	21
Total	42	78

(*excludes all types of Trainees.)

Scan_0024.jpg

What I do not know for sure is,

"While calculating net additions whether replacements for persons retiring are included or excluded".

And I suppose, it would be a safe guess that

"Department-heads will certainly ask for replacements of employee separations due to death/resignation/termination".

What will this do to us? This rising manpower and galloping wages?

If there is very little we can do to stop wages from rising, let us at least bring down manpower!

And let us do this before some of our products sink below the minimum profitability line, taking some of us with them!

It is time to stop saying "this is not my job"!

Tomorrow there may be no job!

December 6, 1985

Productivity and unemployment

Does increasing productivity increase unemployment? Let's look at the fundamental definition of Productivity. Productivity is equal to

$$\frac{\text{Output}}{\text{Manpower}}$$

Let us take an example of our famous MK-1 starter.20

Over a six year period (from 1979 to 1985) the MK-1 assembly workers' productivity rose by 24.8 per cent.21

During the same period, (1979-1985) the wages of the Assembly worker went up by 282 per cent!!! But the CPI Index went up by only 179 per cent in the same period.22

So you have seen that productivity increase, means "doing the same with less manhours".23

That means, we require less men than before (to produce the same quantity).24

That means, "surplus" people.25

That means, unemployment!26

Seems so simple! Some people (the surplus-ones) must lose their job!27

By now, you are itching to ask28!

"If that is so, why the hell must we increase productivity? If that means throwing some people on the roads!"

If we do not throw some of our people on the road, the competitors will throw all of us on the road!

If our productivity does not increase (even at the cost of a few jobs), our cost will keep going up and we cannot sell our products in the market.

And, if we cannot sell our products, we do not need anybody.

— the Managers

— the Engineers

— the Accountants

— the Stenographers

Scan_0025.jpg

— the Store-keepers

— the Worker

— the whole lot!!

And this is what seems to be happening in Europe & elsewhere right now. To give you an example, please see the chart below showing number of employees shed by 8 reputed companies.

Name of Company	Employees shed or proposed to be shed (Nos.)
1. AT & T's Information System Division	24,000
2. Ford Motor Co.	10,000
3. Union Carbide Corpn.	4,000
4. C B S	2,000
5. Motorola Semi-Converter Group	9,200
6. Du Pont	11,200
7. Kodak	9 per cent of its workforce
8. Warner-Lambert Co.	21,000

Source: Fortune (International) Magazine October 28, 1985

Compared to America, and Japan, the European productivity continues to be low. Hardly a day passes without some European factory closing down (because they cannot sell their expensive products), throwing hundreds of employees on the road.

This is especially true of the European Automobile Industry. This is why I have made some notes from a recent article in the TIME magazine, which I am reproducing below. Now, I would like you to answer the question.

"How come, Europe, whose productivity has remained static/ stagnant over the last 8/10 years, has a rising level of unemployment, whereas America, which has increased its productivity has created 18,00,000 new jobs during the same period?"

Did you say, "...increased productivity means losing jobs?".

February 12, 1986

A country fights back

Bob Hawke became Prime Minister of Australia in March 1983.

Until 1980, he was the head of "Australian Council of Trade Unions". That makes him a strong labour leader.

Before Bob became Prime Minister, Australian economy was in a bad shape. Unemployment was close to 10 per cent and inflation had crossed 11 per cent.

But within 2 years of Bob taking over the Government, economy started growing by 5 per cent every year, inflation came down to 5 per cent and unemployment dropped to below 8 per cent, the budget deficit came down from 29$12$ billion to 30$5.5$ billion.31

But things started getting bad again in 1985.32

— Unemployment again went upto 7.8 per cent33

— Inflation climbed back to 9.2 per cent34

— Export deficit rose by 14 per cent35

So Bob has decided that his country must fight back—and he is telling his countrymen,36

"As a consequ37ence, we have, for the time being, to accept a reduced standard of living and, permanently increased standard of effort."

Although Bob runs the risk of becoming unpopular (especially with his trade-union friends) he has taken the following decisions:

In place of two big wage increases every year, the workers will get only one wage increase this year—and that too a small 2.3 per cent!
An appeal to the Directors and Senior Managers not to raise their own salaries.
Income-tax to continue at present level. Reduction promised in September to be postponed.
Public services (such as transport, hospitals, education , etc.) will be reduced.
To get their benefits, unemployed persons will have to clean streets and parks.

Scan_0026.jpg

Imports will be reduced.

We don't know from where Bob got these ideas. One possibility is that he got these from Prime Minister Lee of Singapore.

Lee announced a freeze on wages a few months ago, in his tiny country. Singapore is a small country—about the size of Andheri + Vile-Parle + Santacruz! Well, may be you can add Goregaon!!

But its exports are more than the exports of the whole of India!

Singapore's economy was growing by 12 per cent-15 per cent each year for the last 15 years (against 4 per cent-5 per cent growth of our economy). But 1985 turned out to be a bad—very bad-year for Singapore too. There was no growth in economy—a round 0 (zero) per cent!

But Prime Minister Lee is a tough man. He has ruled Singapore with an iron-hand for the last 25 years. He begins each day by running 4 kms. And he keeps his 40 lakh countrymen running for survival.

Because, like Japan, Singapore has no natural resources and therefore it must import all raw materials, process them and export finished products.

What, Singapore adds to the imported raw materials is its own labour—the labour of 40 lakh citizens. And if this labour becomes expensive, Singapore is doomed!

So Lee has ordered a nation-wide wage-freeze.

Fighting for survival is never sweet—it is always bitter.

And what works for a country, also works for a company.

If we don't implement a few tough decisions right away, we too may not be far from a wage-freeze!

What are these decisions?

— Stop all overtime, everywhere.

Do you know how much we spend on overtime every year?

In Powai - Rs. 48 lakhs

in Canteen - Rs. 27 lakhs

Rs. 75 lakhs

To this if we add the overtime wages of

— Madh/Tenaj/Ewaz/City Offices,

I am sure the figure could add up to Rs. 85 lakhs per year.

Let us get rid of this evil completely in 1986-87.

All that we have to do is to make sure that we do not waste those 20-30 minutes during change of shift! and we save Rs. 85 lakhs per year!!

As simple as that! Unless some employees want to make it tough!

August 3, 1986

Not alone

We are not alone.

When it comes to cutting costs and raising productivity, we have got company.

And who are they?

It is an interesting list comprising

— 125 mills of National Textile Corporation (NTC)

— Hindustan Machine Tools (HMT)

— Heavy Engineering Corporation (HEC)

— Bharat Heavy Electricals Ltd. (BHEL)

— Bharat Heavy Plates & Vessels (BHPV)

— Burn Standard Company (BSC)

And what are they trying (especially things which we have not tried yet!)?

The Central Government has told General Managers of 125 textile mills that after April 1987, Government will not reimburse their cash losses.

And what are NTC's problems?

Low Productivity
Low Output
High wages (34 per cent-207 per cent of output value)
Excess Manpower (20 per cent-25 per cent of workforce)
Lack of discipline

How do they propose to solve these problems?

— Economy drive

— Cut non-productive expenditure

— Recruitment freeze

— No promotion

— No revision of wages

— No replacement against retirement (550 in last 2 years)

— Greater delegation of authority to GMs

— Introduce new blended fabrics

— Introduce staple and blended yarn

Scan_0027.jpg

— Suspended 3 senior executives and a General Manager!

If all of this sounds drastic, remember that during the last 3 years, these mills have incurred losses totalling Rs. 717 crores!

That is yours (and mine) tax-money!

As far as the steps proposed to be taken by the others is concerned, we are told that:—

HMT will

— raise export percentage from 12.4 per cent to 20 per cent (including tractors & watches)

— modify existing products

— introduce new products

— do more project-consultancy etc.

— save 2.5 per cent of turnover (sales) during 86-87 & 87-88 (we are ourselves aiming at about 1.5 per cent in 1986-87).

HEC will reduce costs by Rs. 10 crores in the current year through

— saving energy (power)

— reducing inventory from 7.3 months' stock to 5.2 months' stock

— reduce wastage

— upgrade technology

— stop fresh recruitment

— reduce surplus workforce

BHPV will also

— save Rs. 50 lakhs every year by installing word-processors & micro-computers

— increase capacity utilisation from 66 per cent to 75 per cent

— reduce working capital need

— improve material handling.

The newspaper does not tell us about the plans of BHEL—whereas

BSC lists the following problems (but no solutions!)

— Lack of professional managers

— inadequate funds for modernisation

— high age of shop-floor management and of all things,

— low pay-scales! (I wish we had that problem!)

But whereas problems cannot be borrowed (these are our own creation), solutions can be borrowed. I would like to hear from you which of these solutions we should try in our company.

August 20, 1986

Point of no-return?

Is the American Steel Industry about to disappear from the scene?

Perhaps not—at least not in the near future. But it could very well happen within 15 years—before the arrival of the 21st century! May it be it is in the final act of a 3-act drama.

One company—LTV—has already applied for "Bankruptcy protection". This means, the banks cannot recover its loans and the company can retrench all employees—without paying any compensation!

But the company about which I want to talk to you today is a company called USX—the largest steel-maker in America—which will soon become the smallest—or may not even make any steel before long!

The USX Story

(Source: Business Week: 18.8.86)

At one time, USX was known as "U.S. Steel"—the largest steel manufacturer in the world. Chairman is David Roderick. The Company had a steel-making capacity of 379 lakh tons of steel.

From 1978, USX started reducing its capacity. In the last 8 years it reduced it to 262 lakh tons. It closed down 20 factories and retrenched 27,000 workers.

During the next 4 years (1986-1990), USX is planning to close down another 4 factories, retrench another 7,444 employees and bring down capacity to 165 lakh tons of steel.

So USX will be bringing down

— capacity by 57 per cent

— employee strength by 38 per cent.

But what is the reason behind all this chopping and chipping?

If you want a one-word answer, it is "COMPETITION".

If you want a two-word answer, it is "COMPETITION & HIGH LABOUR-COSTS".

To give you a better idea—

— In the steel industry, world-wide, surplus capacity is 2000 lakh

Scan_0028.jpg

tons of steel.

This means fierce competition. American steel makers are finding it difficult to sell steel at $ 400 per ton.

— American labour-costs are 33 per cent higher than the Japanese labour-costs and 700 per cent higher than the South Korean labour-costs!

So what can USX do?

— USX has started sub-contracting in a big way and reduced its own labour-force. This has helped it to boost productivity. Earlier USX spent 10.8 man-hours to produce one ton of steel. Now it spends only 4 man-hours (its own man-hours) to make one ton of steel.

But this has not helped—not enough.

Chairman Roderick says only 2 things can help—

— Wage and Benefit cut (he has submitted a formal demand to the Union on July 29th).

— Company's right to assign jobs and fundamentally reorganise work crews with no union interference.

He calls these his "last ditch attempts to restore profitability".

The Union has responded by going on strike from 1st August—their first strike since 1959.

The question is,

"Did the management fail to make the employees—and the union—see the dark clouds on the horizon before reaching the point of no-return?"38

or39

Like any good, Australian ostrich, the union—and the workmen—hid their face under the sand to ignore the storm!40

As far as Powai-works of L&T is concerned, I do not wish to sound like a pessimist but at least, I do not wish to be accused of the single biggest managerial failure—the failure to share the facts of life with the employees.41

August 24, 1986⁴²

48⁴³

No Escape in the sky!⁴⁴

If you have problems on earth, can you run-away in the sky to escape?45

Perhaps not. But if you have problems in the sky, where can you run for an escape?46

Sometime back, I wrote to you regarding the loss-making public-sector (Government) companies which are trying to cut costs. But because the Government owns these companies! (and the public owns the Government!), they can never become bankrupt! They can go on making losses forever!—as long as you and I keep paying taxes.47

But a "private-sector" company (owned by share-holders) cannot afford to make a loss. I cannot even afford a lower profit!—whether it is L&T or Eastern Airlines of America.48

What is happening to Eastern Airlines?49

— 12 50per cent drop in income despite 5 per cent increase in capacity

— Fierce competition from other airlines

— Loss during Jan/Feb/March 1986—Rs. 144 crores.

— Loss during April/May/June 1986—Rs. 57 crores.

— Forced to cancel 3 per cent of daily flights due to MAIN-TENANCE BACKLOG.

After reading this, my wonder that "Texas Air" (another airline company) purchased Eastern Airline!

Although taken over by "Texas Air", Eastern Airline is fighting a better battle of survival.

Chief Executive Joseph Leonard has issued following orders:

Freeze all expansion-plans
Cut operating costs by Rs. 130 crores within one year
Senior managers to cut expenses
Cancel Miami-London flight
From Charlotte city, cut 41 flights (out of 53)
Sell-off many Boeing 727 airplanes
Lay-off (send home temporarily) surplus employees
Within 3 months, cut fuel-bill by Rs. 100 crores (already achieved)

Scan_0029.jpg

For 4600 pilots, flight attendants and non-contract workers, cut pay and benefits by 20 per cent (already done)

When International Association of Machinists—IAM (the Labour-Union), refused to agree for a similar 20 per cent cut in the wages of the 12,000 workers, the management had no choice but to sell the company to "Texas Air".

And this has forced Joseph Leonard to write to all employees,

"We may have to consider, however reluctantly, a period of consolidation or even retrenchment".

What Joseph is trying to tell his co-workers is that,

"When a company is fighting for survival, there are no sides such as the Union and the Management (and the supervisors and officers!). There is no escape from the sky!"

August 29, 1986

Source: Business Week—Aug. 18, 1986

The good times/The bad times

Sometime back, I wrote to you regarding Prime Minister Bob Hawke of Australia and President Lee of Singapore—how both are trying to improve the economy of their respective countries and, in the process, taking some unpopular decisions—(most effective medicines are bitter!).

Going through my old newspaper cuttings, I came across some of these decisions which, I think, are equally relevant to our own country in 1986.

Singapore enjoyed an annual growth rate of more than 10 per cent in 1970s and early 1980s—but registered an unprecedented 2 per cent negative growth in 1985.

Opening the parliament on February 21, 1986, President Lee said,

"Last year's recession marked the end of an era of high growth and relatively easy progress for Singapore. My government has taken some steps to reduce business-costs and restore competitiveness. I urge the people to react to this adversity cohesively and decisively"

Finance Minister Dr. Richar Hu announced,

"About 130,000 public servants in Singapore will not be paid this year's increase in the National Wage Council Salary in view of the current economic hardship"

(Now compare this with the announcement of our Finance Minister Mr. V. P. Singh on 21st August 1986, that class B, C & D government employees will get only pay-scales announced by the 4th Pay Commission from October 1986).

And how did the Labour Union of Singapore react?

Example No. 1

"How can we ask for a salary-increase when we fully understand that the country's economy is in bad shape!".

— Mr. S. Kandaswamy

General Secretary

Scan_0030.jpg

Catch them doing something right

A few days back, a shop-representative came and asked me,

"Sir, is it true that last night you came to Powai around 11.30 p.m. and caught some employees playing cards during working-hours?".

The suddenness of the question did surprise me but I managed to reply,

"No, I did not surprise anyone last night—but since you asked, do people often play cards during the second-shift?"

I was not prepared for what I heard next:

"It is not often in second-shift; it is often in the third-shift! If only managers paid surprise visits at night, they would know what is going on—and they would be able to catch the culprits".

I have been thinking eversince. How many employees come in third shift? May be 245 out of our 7332 employees. Then there are 305 working-days in a year. Even if I wanted to, how many nights can I make a surprise-visit to Powai? May be 10 in a year? And how many dishonest (time-stealer) thieves will I manage to catch? May be 5—may be 10?

But on the other hand, is it not more likely that for every one dishonest employee doing something wrong in the middle of the night, there are perhaps 100 honest employees doing something right during the broad day-light of the day-shift?

So why not concentrate on "catching them doing something right?" and telling the rest of Powai about them? That way, may be more and more employees will feel motivated to do more and more right things! And very soon the w-o-u-g "acts" will disappear!

I got just such an opportunity recently when I received a note from Mr. C. S. Martin of Switchgear Prototype Shop. Reproduced below is what Martin had to tell me:

"Dear Mr. Parekh,

Sub: ECD 1.8.86

In response to your call for suggestions on the above subject, my feedback to you is as follows:

We, the 25 from the Prototype Shop (PSW 21-13) had our first meeting on ECD on 18.7.86 wherein we discussed the need for ECD based on circulars issued by the management, and from the word go after a few probing questions by all regarding the genuineness of ECD it was decided to give full co-operation.
Though our output is not easily quantifiable being a development department, I can assure you that the extra efforts our boys are putting in will definitely result in at least 10 to 20 per cent more output and better quality of prototype.
Suggestions regarding productivity improvement that came forth during the discussions are as follows:

a. Previously one TA was handling Tool Stores, Machine Maintenance, Planning of material, vendor follow-up, etc. and Stores activity was taking up most of his time—hence it was decided that each Fitter will take the tools from the open cupboard and keep it back after use. This has resulted in better machine maintenance, planning, etc.

b. Work tables and Chargeman tables in the department were rearranged to bring in maximum efficiency.

c. Everybody agreed to give full co-operation to each other in order to increase productivity and quality of work in the department.

Lastly, as a feedback to you on ECD we felt that this should have been done long back i.e. ECD.

Personally speaking and in my own opinion I feel that cutting down on overtime, reducing varieties in the canteen like serving only one type of soup, stopping of sweet dish or even reducing varieties of vegetables is a good idea, but I still wonder whether it was really necessary to stop Mutton dish which is the main dish for us non-vegetarians, are we saving substantial amounts on this item—instead we should strive to increase productivity at all levels.

The pressure must be felt right from the top and everybody from JGM, DGM, Managers' and others down the line who are responsible for Production in one way or the other should come right down on the shop-floor and spend a few minutes everyday and show their interest and concern for productivity and I am very

Scan_0031.jpg

Amalgamated Union of Public Employees (AUPE)

Example No. 2

"About 10,000 employees at 44 firms in the industrial and business sectors have agreed to accept yearly wage rise of about 4 per cent of usual 6.5 per cent".

— Union Official

Singapore Manual & Mercantile Workers' Union

And an August 20th report from the Australian city of Canberra says that Finance Minister Paul Keating is cutting U.S. dollars 1.9 billion (Rs. 2337 crores) from Government spending on

— Welfare

— Health

— Education

— Defence and

— Foreign Aid.

Keating says there will be ZERO real growth in government spending and Prime Minister Bob Hawke (one time trade-union leader) adds,

"I am prepared to risk election-defeat to achieve a budget which is appropriate to our economic decline. This is our greatest crisis since World-War-II".

In size, Thailand is much bigger than Singapore but much smaller than Australia. So Thailand is sandwiched between the economic crisis of the two countries!

A report from Thailand says,

Labour unions in the automobile industry have agreed to a reduction in wages so as to avoid the possible laying off of workers, according to a source in the International Metal Workers Federation.

The unions, the source said, were very much concerned about the worsening situation in the local automobile industry as it would affect the employment of thousands of people working in this and other related industries. He said several companies have already reduced workers' wages by about 20-25 per cent with the agreement from the unions so as to save workers' jobs.

And in INDIA?

According to an expert's estimate, the proposals contained in the 4th Pay Commission Report will cost the Government Rs. 17,000 crores

during 1986-1990! This is only for the Central Government employees.

But suppose similar pay-scales are granted to

— the State government employees?

— the public-sector employees?

— the private-sector employees?

As per EMF report, as far as international competitiveness is concerned, India is second—from the bottom! Only Mexico is worse than us! But at this rate how long before we replace Mexico?

How long before the wind of self-sacrifice from Australia, Thailand and Singapore reaches the shores of India?

September 5, 1986

Scan_0032.jpg

sure that with the co-operative atmosphere prevailing in Powai our Productivity will far exceed our expectations.

The following personnel from Prototype Shop would like to see the film "Productivity—We learn from the Japanese" any day after $15.45$ hours but preferably on Friday.......

With best regards,

Sd/-

C. S. Martin

Congratulations, Martin—and congratulations to your 25 colleagues—for allowing me to catch you doing something right!

Sd/-

September 23, 1986

H. C. Parekh

P.S: And for this reason, I have decided to ignore the following anonymous note received on 22/8/86.

"H C P

Request you to personally make a surprise visit to Shop III—1st floor Mezzanine Pantry—PSW East, between 7.40 am and 8.10 am and see for yourself the number of union representatives collected inside the room and having a merry time everyday. I am not disclosing my name for obvious reasons."

Scan_0033.jpg

* आपली संस्कृती म्हणजे 'एस्केलेटर' संस्कृती! *

(फलक लेखन अंतर्गत खासगी दिलजमावडीकरिता)

मी विचारतो,

"दारावर लावलेले फलक वाचिकांना काही वेगळेच सांगून जातात का?"

"येथे तर ठीक चल."

'पुस्तकाचे हाताळण सर्व क्षेत्रामध्ये चालते.'
'येथे सर्व प्रकारच्या फाईल्समध्ये काम चालते.'
'येथे सर्व प्रकारचे काम केले जाते.'
'येथे काम होत नाही.'
'येथे काम चालू आहे.'
'येथे काम चालू नाही.'
हाच आहे फरक.

ज्याप्रमाणे 'स्काला-मोबाईल एस्केलेटर' जागा गरमवायला लावतो.

त्याचप्रमाणे 'एस्केलेटर'ची जागा गरमवायला लावतो.

होय! आपली संस्कृती म्हणजे एस्केलेटर' संस्कृती आहे.

मी तुमच्याशी बोलतो.

'एस्केलेटर' म्हणजे काय? मी विचारतो.

'एस्केलेटर' (D. A.) चा सिध्दांत म्हणजे माणसाच्या मूळ सवयीचा हिस्सा आहे. 'बाबूलांच्या' 'आरामदायी' गरजांचा नाही. 'दासांच्या' राक्षसी गरजांचा नाही. कारण 'D. A.' मध्ये आपणच वाढ करतो.

आधुनिक जीवनामध्ये, तुमची मुल्ये काय आहेत?

'आराम' आणि 'नियम' तुमचे तत्वज्ञान बनले आहे.

'अस्वस्थता' आणि 'स्वार्थ' हे तुमचे मूल्य बनले आहे.

आपला 'एस्केलेटर' वाढतो. त्यामुळे तुमच्या 'इतरांनी' वाढवले नाही तर तेच 'गरिबी' मध्ये ओढले जातात.

जे काम तुम्ही आठ तासांत करता, तेच काम तुम्ही 'दोन' तासांत पूर्ण कराल तर, तेच 'उत्पादन' तुम्ही एका आठवड्यात मिळवाल.

आणि जर तुमचे उत्पादन कमी झाले, तर तुमचे उत्पादन विकत घेणारे 'इतर' लोक 'गरीब' राहतील.

उदाहरणार्थ:

काही दिवसांपूर्वी 'केल्व्हिनेटर' कंपनीचे कर्मचाऱ्यांचे उत्पादकता '७५' टक्क्यांनी वाढली.

तरीही त्यांचा नफा '०.८' टक्क्यांवरून '०.५' टक्क्यांपर्यंत खाली आला.

कारण त्यांच्या उत्पादन खर्चात '५' वर्षांत '१३' टक्क्यांनी वाढ झाली.

आणि या १३ टक्क्यांत 'D. A.' चा किती वाटा आहे?

'D. A.' चा वाटा '९' टक्के आहे.

तुम्ही, तुमच्या उत्पादनात '७५' टक्के वाढ केली, पण तुमच्या 'D. A.' मुळे झालेल्या वाढीने ती सगळी वाढ खाऊन टाकली!

एस्केलेटर वर बसला की खाली उतरणे कठीणच.

आणि मी तुम्हाला आठवण करून देतो.

तुमच्यावर 'काहीतरी' नेहमी पाहत आहे.

तुमचे पांघरुण ओढले जाणे हा तुमचा 'स्केल-मोबाईल एस्केलेटर' आहे.

आज मी तुम्हाला 'नियम' आणि 'अडथळे' यांच्याबद्दल विचारतो.

तुमच्या नोकऱ्यांचे आणि कंपनीच्या 'स्वार्था'बद्दल काय विचार आहे?

काय तुम्ही तुमचे उत्पन्न 'शून्यावर' आणायचे ठरवले आहे?

(अक्षय पाठीवर मी. वि. ग. देसाई (डिव्हिजनल मॅनेजर—केमिकल डिव्हिजन) यांनी खालील चार्ट पाहिला.)

(एक चार्ट D. A. आणि CPI मध्ये वाढ दाखवतो)

फेब्रुवारी २८, १९८४

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मी विचारतो,

* एस्केलेटर संस्कृती *

(फलक लेखन अंतर्गत खासगी दिलजमावडीकरिता)

खालील फलक वाचताना, मी वाचकांनी आणि खासगी-कर्मचाऱ्यांनी खालील माहिती वाचणे आवश्यक आहे.

ही माहिती नियमांबद्दल आहे.

मी वाचकांना विचारतो, नियमांमुळे उत्पादकता वाढते की कमी होते?

या विषयावर लिहिलेला कागदपत्र वाचकांना विचारायचे आहे:

काय या 'नियमांत' 'ईर्ष्या' आहे?

'तुम्ही' कशाबद्दल बोलत आहात?
'तुम्ही' किती वेळ घालवत आहात?

मी तुम्हाला आठवण करून देतो.

काम करणे ही एक उपासना आहे. आणि मी तुम्हाला नेहमी पाहत आहे!

मी तुम्हाला 'एस्केलेटर' खाली उतरण्यास सांगत आहे.

एस्केलेटरचा सिध्दांत 'माणसाच्या मूळ सवयीचा भाग' बनला आहे.

आज 'मी' तुम्हाला 'नियमां'बद्दल बोलतो.
आज 'मी' तुम्हाला 'गरिबी' बद्दल बोलतो.

मी तुम्हाला खालील गोष्टींची आठवण करून देतो:

D. A. (Dearness Allowance) मध्ये वाढ झाली की, उत्पादन खर्चात वाढ होते.
उत्पादन खर्चात वाढ झाली की, किंमतीत वाढ होते.

तुम्ही, तुमच्या उत्पादनात $75$ टक्के वाढ केली, पण तुमच्या $D. A.$ मुळे झालेल्या वाढीने ती सगळी वाढ खाऊन टाकली!

मी तुम्हाला खालील प्रश्नाची आठवण करून देतो:

एस्केलेटर वर बसला की खाली उतरणे कठीणच.

आज मी तुम्हाला 'काम' आणि 'पैसा' याबद्दल बोलतो.
आज मी तुम्हाला 'गरीबी' आणि 'नोकरी' याबद्दल बोलतो.

(एस्केलेटरच्या सिध्दांत वरून एक चार्ट दाखवला आहे.)

दि. २४ जाने १९८५

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Wednesday, 8 November 2000

THE SUN RISES IN THE WEST (ENGLISH)