Jet Airways Labor Dispute

HRM0049

Jet Airways’ Labour Dispute: Trade Unions and India’s Labour Conundrum “According to the government data, the number of strikes in 2008 was almost double that recorded in the previous year.” 1 st – Business Standard, October 1 2009

“A more flexible and transparent regime of laws, including labour laws, will in fact contribute to increased employment. Appropriate and relevant labour legislation are, therefore, in the interests of labour and in the interests of the nation as a whole,” 2 – Dr. Manmohan Singh, Prime Minister of India

On September 8th2009, around 650 pilots of JetAirways, India‟s largest private airline company, took a mass sick leave as a protest against the management that sacked two of its pilots for joining a union. The pilots‟ union named National Aviators Guild (NAG), was formed in August 2009. Thousands of passengers were stranded because of the flash strike which lasted 5 days and forced the management to cancel around 900 flights. The strike is an added woe to the already ailing Indian aviation industry. But surprisingly, aviation industry is not the only industry which suffered from labour discontent in recent times. Multinational companies in India – Nestle, Hyundai and others – also suffered from similar labour disputes adversely affecting their operations. As Indian economy bets heavily on labour intensive service industry, India‟s age old labour laws might need a modification.

1

Majumdar Shyamal, “India Inc‟s Labour Pains”, http://www.business-standard.com/india/news/shyamal-majumdar-india-incslabour-pains/371797/, October 1 st 2 00 9

2

“Prime Ministers Address to the 40th Indian Labour conference”, http://labour.nic.in/lc/40ilc/40ilcpmspeech.doc, December 9th 2 0 0 5

This case study was written by Vivek M.V. under the direction of Dr. Nagendra V. Chowdary, IBSCDC. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2009, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

Indian Labour Disputes Indianlabour knewnothingaboutrights exceptduties,spendinglongyearsunderBritish rule.Colonial labour legislation highly leaned towards British employers3 that reminded them of duties rather than rights. Though the legislations have undergone vast changes during the post-colonialism era, the basic discontent of labour does not end, or that is what the labour disputes‟ history in India suggests. The labour discontent in India traces back to 19thcentury. With the establishment of first cotton mill in Bombay in 1851 and first jute mill in Bengal in 1855, India was slowly gaining vigour of the modern factory developments. In 1875, the workers joined together to demand better working conditions. The first Factory Commission was formed in Bombay in 1875 and the first FactoriesAct was passed in 1881. The act prohibited employment of children under the age of 7 years and restricted the working hours of children under the age of 12 years. With little concern about the work duration and weekly off, the act was a total disappointment to the working class. In 1884, another Factory Commission was formed. During the same year, Narayan Meghajee Lokhande (Lokhande) organised a conference of factory workers and presented a memorandum signed by 5,300 factory workers to the Commission. The memorandum‟s suggestions of weekly rest, half an hour‟s recess, compensation for disablement were not considered by the Commission. Continuingan agitation for factorylegislation Lokhande succeeded in submitting a petition to the Governor General in 1889 and holding a mass meeting in 1890. In 1890, Lokhande also succeeded in forming a union, the first in India, named Bombay Mill Hands Association (BMHA). The labour agitation again gathered momentum during Swadeshi movement following the partition ofBengal in 1905. The policyof boycottingBritishgoodsfitted wellinimprovingthe workingconditions of Indian workers in mills. However, an agitation followed in 1908, in support of Bal Gangadhar Tilak who was convicted of sedition and strikes continued to hamper the mills in Bombay. Slowly, more organisations similar to BMHA were formed, the dominant one among them being Kamgar Hitvardhak Sabha (Workers‟ Welfare Association) that was formed in 1910, aimed to improve the workingconditions. But the real movement of unionism erupted with the non-cooperation movement in 1920s. With political unrest increasingin the country, almost every political party lent their support to trade unions. Bombay, Calcutta and Madras were becoming the centres of trade union activities. Though BMHA was formed as a union, it did not function like a trade union. The first trade union of the modern kind was Madras Labour Union, formed in 1918. It had memberships, organisers, office bearers and independent existence. With increased political support and influence, trade unions were on the verge of getting politicised. Soon, in 1920, All India Trade Union Congress (AITUC) was formed by the Indian National Congress to represent the Nation at International Labour Organisation of the League 5 of Nations.4 AITUC contained all shades of political opinion, nationalist, socialist and communist.

3

Bhasin Lalit, “Employment and Labour Laws in India”, http://unpan1.un.org/intradoc/groups/public/documents/APCITY/ UNPAN029043.pdf, August 24 th 2 00 7

4

“All-India Trade Union Congress (AITUC)”, http://www.britannica.com/EBchecked/topic/15873/All-India-Trade-Union-Congress

5

Crouch Harold, “AITUC and the Split in the Communist Party”, http://www.jstor.org/pss/4356954, 1966

2

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

The next milestone in the Indian trade union history was the passing of the Indian Trade Union Act in 1926. Giving a legal status to the trade unions, the Trade Union Act enhanced the status of working class in India. The trade union act gives the employees the right to form unions. The act, which describes trade union as the most suitable organisation for balancing and improving the relations between the employer and employees, also says that unions are formed to inculcate the sense of discipline and responsibility (Exhibit I).

Exhibit I Aims of Trade Union Act 1926 •

Secure fair wages for workers and improve their opportunities for promotion and training

•

Safeguard security of tenure and improve their conditions of service

•

Improve working and living conditions of workers

•

Provide them educational, cultural and recreational facilities

•

Facilitate technological advancement by broadening the understanding of the workers

•

Helpthemin improvinglevelsof production, productivity,disciplineandhigh standardofliving

•

Promote individual and collective welfare and thus correlate the workers‟ interests with that of their industry.

Source: “Industrial Acts and Legislation: The Trade Union Act”, http://business.gov.in/legal_aspects/trade_unions.php

There were no major labour activities till 1947. The Industrial Disputes Act was passed in 1947 6 and still continues to be India‟s central piece of labour legislation. Thrilled in the new found independence, India was preparing for major changes in legal, economical and social developmental processes. Indian government sought support of trade unions in the planned developmental processes. The working class movements were soon politicised. Indian National Congress formed a seperate, Congress-controlled trade union, Indian National Trade Union Congress (INTUC) and moved out of AITUC. The Congress Socialist Party also left AITUC to form Hindu Mazdoor Sabha, followed by Marxist idealists forming United Trade Union Congress (UTUC) and by 1948, AITUC became 7 an arm of Communist Party of India (CPI). By 1949, there were four central trade unions in the country; AITUC, INTUC, Hindu Mazdoor Sabha and UTUC. The Trade union Act, India‟s central piece of labour legislation has undergone many overhauls. 9 The principal act has been amended 34 times. 8Acts that are more than 100 years old are retained in Indian central labour laws. Even after the years of amendments and state reforms, the laws are highly protective of the workers. 6

Beseley Timothy and Burgess Robin, “Can Labour Regulation Hinder Economic performance? Evidence from India”, http://econ.lse.ac.uk/staff/rburgess/wp/indreg.pdf, 2004

7

“AITUC and the Split in the Communist Party”, op.cit.

8

“The Industrial Dispute Act, 1947”, http://labour.delhigovt.nic.in/act/html_ida/introduction/introduction.html

9

The Fatal Accidents Act 1855

3

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

The period after independence witnessed rapid unionisation. During 1947–1965 there was rapid growth of unionisation. The membership in the unions was also trebled and public sector emerged as a major hub of unionisation. This period was comparatively a peaceful period as there was a dip in the level of industrial disputes. 1966–1977 was characterised by low employment levels and stagnation of industrial activities. There was a dramatic increase in the levels of Industrial disputes following the lesser demand in the labour markets. In 1980s, independent, industry-based unions started forming, in spite of the prolonged existence of political party based unions (Exhibit II). In India, political parties play very important roles in the formation and functioning of the trade unions. In many of the cases, the union leaders are often outsiders and are affiliated to the political parties. Number of disputes, however, kept increasing during the decade. In 1989, Indian Chief Justice A. M. Ahmadi‟s ruling that “The right to strike is an important weapon in the armoury of workers, recognised by almost all democratic countries as a mode of redress,”10 supported employees‟ right to strike.

Exhibit II Indian Trade Unions and Political Lenience Trade Union

Political Party

Year Established

All India Trade Union Congress

Communist Party of India

1920

Indian NationalTrade Union Congress

Indian National Congress

1947

Hindu Mazdoor Sabha

Janata Dal

1948

United Trade Union Congress

Communist Party of India (Marxist)

1949

Bharatiya Mazdoor Sangh

Bharatiya Janata Party

1955

United Trade Union Congress- Lenin Sarani Communist Party of India (Marxist)

1959

National Federation of IndianTrade Unions Naren Sen (Former Indian National Congresspolitician)

1967

National Labour Coordination Committee (West Bengal centre formerly affiliated to INTUC)

Indian National Congress

1969

Centre for Indian Trade Unions

Communist Party of India (Marxist)

1970

Compiled by the author from Christopher Candland, “The Cost of Incorporation : Labour Institutions, Industrial Restructuring, and New Trade Union Strategies in India and Pakistan”, http://www.candland.info/incorp.pdf and Crouch Harold , “AITUC and the Split in the Communist Party”, http://www.jstor.org/pss/4356954, 1966

10

Venkatesan V., “The judicial response”, http://www.hinduonnet.com/fline/fl2018/stories/20030912005302000.htm, August 30 th 2 0 0 3

4

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

In June 1991, Indian Government decided to implement the International Monetary Fund‟s (IMF) stabilisation and structural adjustment programme. Reduced involvement of government in dispute settlement and increased flexibility in labour front reduced conflicts during 1990s (Exhibit III).

Exhibit III Indian Trade Unions and Lost Workdays 12 Member per Union (hundreds) Union Workers (millions) Workdays Lost (tens of millions)

10

8

6

4

2

0 1950

1960

1970 Year

1980

1990

2000

Source: Christopher Candland, “The Cost of Incorporation : Labour Institutions, Industrial Restructuring, and New Trade Union Strategies in India and Pakistan”, http://www.candland.info/incorp.pdf

Reduced employment generation remained a stumbling block in India‟s way to development and this was majorly caused by the archaic labour laws of India. “A recent study estimated that in 1997, India could have had more than 1 million more jobs in the textiles and clothing sector alone if its labor regulations had been less restrictive.” 11 Overall the country could have had 2.8 million more good quality formal sector jobs – a startling 45% of existing employment in the organised manufacturing sector on that date. 12 11

Devarajan Shantayanan and Ahmed Sadiq, “Labour Laws, To create Good Jobs, Reform Labour Regulations”, http:// www.worldbank.org.in/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/INDIAEXTN/0,,contentMDK:21235163~ th menuPK:295589~pagePK:2865066~piPK:2865079~theSitePK:295584,00.html, February 20 2 00 7

12

Ibid.

5

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

By 2000, besides workers, supervisors, managers, bank employees and white-collar employees also formed unions to protect their interests. There were both registered and unregistered unions and the existence of more than one union in an establishment was common. Union rivalry was an expected consequence of this. Protecting the interests of the union members was the priority for the union than the protection of organisational interests. However, the membership significantly reduced from 1990s to early 2000s. But still, according to the rights of trade unions, the members could indulge in strike and there by affect the operations of the organisation. In 2003, Supreme Court ruled that government employees have no right to indulge in strikes 3 since it „inconvenienced citizens and cost the state money‟ .1The essential Service Maintenance Act passed back in1968 had already banned strikes in essential services. Though there were a few disputes in certain sectors, the number had gone down and was relatively low. Since 2008, the disputes were relatively low. 2008, the year marked with global financial crisis and head count reductions gave a new found enthusiasm to the labour union activities. However, what motivates individuals‟ decision to unionise is still unknown, but it is sure that various factors affect the decision (Exhibit IV).

Exhibit IV Various Factors Affecting the Individual decision to Unionise State Level Variables

Industrial Level Variables Personal

Industrial Characteristics

Reach of Communist Parties Gender

Establishment size

PoliticalActivism

Marital Status

Sector- public or private

Unemployment rate

Social-group

Type of industry

Per capita NSDP

Religion Education Labour Market experience Employment status Occupation

Source: Pal Rupayan, “Estimating the Probability of Trade Union Membership in India: Impact of Communist Parties, Personal Attributes and industrial Characteristics”, http://www.igidr.ac.in/pdf/publication/WP-2008-015.pdf, July 2008

Not only are the workers from the lower income strata earning meagre sums attracted to unionism of the modern era, nevertheless employees from financially well-to-do industrial sectors are also finding the trend of unionisation interesting and necessary. Even the IT and ITES industry, mainly the Business Process Outsourcing (BPO), which never had any unions, are waking up to the realities.

13

“Annual Survey of Violations and Trade Union Rights”, http://survey08.ituc-csi.org/survey.php?IDContinent=3&IDCountry= IND&Lang=EN, 2008

6

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

As BPO industry becomes one of the largest employment providers, protecting the democratic rights of the employees demanded attention. With some critics charging that the young workforce of BPO industry is often treated as indigent workers, the need of unionisation in the industry gained momentum. Though the industry lobbies fear that the unionisation in the industry might be counter productive, Indian BPO industry alreadyhas enough unions. When industrial relations become fragile, protecting the workmen‟s interest becomes the priority of the unions. Trade unions‟ roles are often interpreted and understood in different ways by different interest groups. While many think a union has no morality but only exhibits brutal power, some think it is the workers‟right to form union and protect their interests. Atrade union is a continuous association of the wage earners to maintain a healthy relationship between the management and the working class. Trade unions try to restrain labour abuse and establish necessary economic and legal conditions by industrial (strikes andprotests) and political (influencinggovernment policies) actions. Mismanagement of workers can often lead to a rift between the management and union. However, whether the growing labour unrest in India can be termed as militancy is altogether another question. Militancy means extremism. But in the context of unions, it means struggle, not extremism.14 However, the recent developments in the Indian trade union front would leave no doubt about the meaning of extremities (Exhibit V). The „fighting for right‟ kind of labour unions have given way to more strong, politically flavoured battalions that can act on impulse and even murder someone as an evidence of the power. The murder of a CEO of Italian MNC Graziano Transmissioni‟s unit in Noida and murder of auto parts manufacturer Pricol‟s vice president (HR) in Coimbatore might be indicating the increased adoption of violence as a tool of protest.

Exhibit V Labour Disputes in India is on a Rise 20 08 February 25th

Bank Employees Strike for two days

August 27th

BSNL employees strike against disinvestments

September 24th Bank employees strike against privatisation and M&As September 28th CEO of GrazionoTransmissioni, an Italian auto parts firm, killed by sacked workers at Delhi plant October 1st

Strike by Cineworkers‟Association

December

Jute workers of West Bengal goes on a strike for unpaid compensation Contd...

14

Pandhe M.K., “Have trade unions become more militant?”, http://business.rediff.com/report/2009/oct/07/have-trade-unionsbecome-more-militant.htm, October 7

7

th

20 09

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

20 09 January 5th

Coal workers demand higher wages

January 6th

Truckers demand lower diesel prices and tax cuts

January 7th

Oil workers at IOC, BPCL, HPCL and GAIL strike for higher wages

February 25th

NTPC stir for better pay packages

April 30th

Airport workers threaten strike against transfer of 4,000 workers from Mumbai and Delhi

April 20th

CITU-led workers at Hyundai strike demanding union rights

May2nd

Nestle workers at Pantnagar strike after removal of probationers

May 4 th

10-day tool-down strike at M&M in Nashik

May 9 th

Sit-in strike at MRF

May 12th

Two-day strike by workers of JNPT. Strike at Paradip and Cochin Port

May 19 th–20 th MTNL employees demand wage hike May 20 th–21 st Mine workers‟ strike at Bailadila mines May 25th

Goa PWD workers demand wage hike

May 28th

Bharat Electronics employees call for strike on wage issue

June 12th

Bank employees to go on strike

August

Go-slow strike at Honda Plant Gurgaon causes productivity fall 50%

September 8th JetAirways pilots Strike causing much inconvenience to passengers September 23rd HR head of Pricol, auto parts manufacturer, killed at Coimbatore plant Compiled by the author from Singh Gurbir, “The Summer Of Discontent”, http://www.businessworld.in/index.php/ Corporate/The-Summer-Of-Discontent.html, June t5h 2009

Year 2008 meant disastrous fear for employees across the world, with US financial crisis forcing the companies to downsize and India was not spared. Especially, the airline sector was terribly affected with immediate slash down in air travel, both from corporate executives and leisure travellers. Many airlines downsized their workforce, increasing labour discontent in the whole aviation sector. Could unions have saved the jobs put on block? The pilot‟s strike at Jet Airways seems to be a genuine case of mismanagement of a consequential labour issue and the labour reaction.

JetAirways:AWrong Take Off The rift between the Jet Airways management and the pilots started with the formation of NAG, which is a union of Jet Airways pilots. The services of two senior Jet Airways pilots, D Balaraman and Sam Thomas, were terminated without any explanations by the Jet Airways management at the 8

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

end of July 2009. NAG said the termination was only because of the pilots‟ active participation in the formation of the union. On August 22 nd 2009, the management received a strike notice from the union, NAG. The same notice was also sent to the labour commissioner. “The pilots were sacked because they formed the guild. The guild is not illegal and is registered with the labor commissioner‟s 15 office. Our only demand is they take the two pilots back. Otherwise there will be indefinite strike,” said Captain Girish Kaushik, president of NAG. But the management remained undeterred about their decision. The labour commissioner, who received the strike notice, called both the parties for a conciliation meeting onAugust 31st2009. The labour Commissioner asked the management to come with a satisfactory reply for terminating the services of the pilots by September 7th 2009. The Commissioner also directed the NAG not to go on strike while the hearing was on. However, the NAG was persisting they get a satisfactory reply, possibly that favours them, by September 7th else they would continue with their plan to go on strike, though it is illegal to go on strike when the talks are on. When there was no favourable move from the management, the pilots went on with the strike, but in a legally acceptable way. The pilots went on a massive sick leave, which led to high chaos in airports especially in Delhi and Mumbai. The chairman of Jet Airways, Naresh Goyal (Goyal) said he was open to talks but blamed pilots for the massive troubles the airlines caused passengers. “They are behaving like terrorists. They cannot hold the country, passengers and the airline hostage,” 16 said Goyal. The management sacked two more pilots. On September 9 th 2009, nine central trade unions – Hindu Mazdoor Sabha, Centre for Indian Trade Unions, Bharatiya Mazdoor Sangh, AITUC, INTUC, All India United Trade Union Centre, United Trade Union Congress, All India Central Council of Trade Unions and Self Employed Women‟s Association – extended their support to the striking Jet Airways pilots. In a letter to Jet Airways CEO, Wolfgang Prock Schauer, the unions said, “By preventing the pilots to form a union, you are violating their legal right to pursue legitimate trade union activities and infringing their fundamental right to freedom of association guaranteed to them and all citizens of India by the Constitution.” 17 The mass sick leave continued till the management and the NAG reached an agreement on late night of September 12 th2009. The management agreed to take back the dismissed pilots on board and a consultative group was formed to resolve the issues. Though the strike ended, it left the ailing airline with more damages. Cancellation of the scheduled flights led to massive loss. Even after the flights were resumed, a reduction in the average daily revenue and the number of passengers clearly indicated that the damage was difficult to repair. The company lost INR 20 crore ($4.5 million) on an average on the days of strike owing to the cancellation

15

Chowdhuri Anirban, “Jet Airways Faces Pilot Strike Threat”, http://online.wsj.com/article/SB125118907876356279.html, August 25 th 2009

16

“Jet pilots behaving like „terrorists‟: Naresh Goyal”, http://economictimes.indiatimes.com/News/Politics/Nation/Jet-pilotsth behaving-like-terrorists-Naresh-Goyal/articleshow/4990346.cms, September 9 20 0 9

17

“Jet Air-pilots standoff continues; passengers suffer”, http://business.rediff.com/report/2009/sep/11/jet-airways-pilots-maycall-off-strike-today.htm, September 11 th 2 0 0 9

9

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

(Exhibit VI) and a drop of 30% in the ticket bookings. 18 The developments were deepening the trouble as the company had lost INR 225.3 crore in the quarter ending June 2009.19 India‟s largest private sector airline also has a debt of INR 16,000 crore. 20

Exhibit VI Jet Airways: Number of Flights Cancelled Date

Number of Flights Cancelled

September 8th

186

September 9th

170

September 10th

198

September 11th

150

September 12th

180

After the 5-day‟dispute, Jet Airways‟daily revenue of $8 million reduced considerably and the number of passengers dropped from 23,000 per day to 7,500. 21 The 5-day long protest of pilots has created new problems for the struggling company. All that Jet Airways got was bad publicity, cancelled flights, angry and upset passengers and a deep hole in the already draining pocket.

The strange fact is that even after repeated advice and appeal to not to go on strike, both from the labour commissioner and the management, even after an order from the Mumbai high court calling the strike illegal, the pilots have not retreated from their stand. They continued to be on sick leave, leaving no chances for the management or government to claim it to be a strike. No law could blame the pilots as they were doing nothing against the law and still it was a strike and everyone including the legislatingbodies, the management, and the pilots participating in the strike knew it, still there was nothing that the legislation could do (Exhibit VII). Compiled by the author

Exhibit VII An Excerpt of the Interaction between Management and Sacked Pilot Q:

Let me ask you a simple direct question: 360 pilots absented themselves yesterday, 432 have absented themselves from work today claiming sickness. Is this a strike or an epidemic?

Thomas: Probably an epidemic. We are not on strike. I reiterate the fact that we are not on strike. Q:

If it is an epidemic, don‟t youthinkyou should be urgently seekingmedical attention?After all, something like 60% of your colleagues have fallen mysteriouslyill.Your lives could be at threat? Contd...

18

Bhas Ramiya, “Jet Airways in losing Rs 20 Cr revenue daily”, http://www.dnaindia.com/mumbai/report_jet-airways-is-losingrs20-cr-revenue-daily_1288909, September 10

th

2009

19

Ibid.

20

Phukan Sandeep and Chopra Shaili, “Financial Cost of Jet Pilots‟ Strike”, http://www.ndtv.com/news/india/ th financial_cost_of_jet_pilots_strike.php, September 8 2009

21

“Jet Airways pilots end strike, flights to resume immediately”, http://beta.thehindu.com/business/companies/article19498.ece, September 13 th 2 00 9

10

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

Thomas: We are very thankful to the company. They are taking care of it. They are sending doctors to everybody‟s house. Q:

And you are refusing to see the doctor, which makes it rather strange doesn‟t it?

Thomas: Yes. They are coming at 2 and 3 in the morning. So, that is going to be a problem. Q:

So you mean to say you will onlysee a doctor during visiting hours and daylight regardless of the fact that you are so sick that 432 of your colleagues out of 760 cannot go to work? Are you fooling the country by trying to suggest that this mass sickness is a reality and not a strike? Are you trying to make – forgive my colloquialism – an ass out of the rest of us?

Thomas: The issue is very clear that there are laws in the country. The law tells us when a pilot is capable of flying and when he is not. What we are saying here is that a constitutional right to form a union cannot be trampled upon. As far as the passengers are concerned, we apologise to them. Q:

No one denies that you have a constitutional right to form a union. I am not suggesting by any means that you haven‟t been stopped by the airline. The airline is suggesting they haven‟t stopped you. You have been told by the Bombay High Court that you must not go on strike. You have tried to get around that by declaring mass sickness. You are really assuming that the judges of the court are – forgive my colloquialism– fools who won‟t see through your ploy. This is dangerous potential contempt of court. Is it mature for airline pilots to behave in this way?

Thomas: That is the way you look at it. The Federation of Indian Airlines, which our management was a part of, also did the same thing and issued a strike notice. But as far as we are concerned, we are going by the law. What is more pertinent here is that it has been 14 days.We have tried every possible avenue. We have contacted the CivilAviation Minister, anybody who is even remotely connected. It is not that we went on strike overnight. Q:

When you talk about waiting 14 days and when you suddenly absent yourself, you are clearly suggesting byyour language that this is a strike. Everythingsuggests this is a strike except for the fact that you insist on calling it mass sickness?

Thomas: No, I think you are putting words in my mouth. We have very clearly withdrawn the strike notice. Now if you want to come and visit the pilots yourself or when the pilots en masse individually stood up for, I don‟t think that you could term it as a strike. By terming it as a strike, it is misrepresentingthe issue. There has been gross injustice. Would you not like it if you had been done the same? Source: “Pilots union, Jet slug it out on live TV”, http://www.moneycontrol.com/news/business/exclusive-pilots-unionjet-slug-it-outlive-tv_414865-0.html, September t9h 2009

But whether the problem lies with pilots alone is another question to be asked. Sam Thomas, in another interview pointed out the flaws of the management (Exhibit VIII).

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HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

Exhibit VIII Excerpt from the Interview with Sam Thomas Pilots are highly paid, about Rs 600,000 a month, which makes people wonder why they should want to form a union or a guild. You are hardly workers in that sense. If highlypaid people are not workers and can‟t formunions, the Constitution of India should mention it. We don‟t cease to have the right to form unions just because we are highly paid. Tell me, if all journalists are paid Rs 600,000 a month and asked to do domestic work, would you not form a union and fight for your rights? But why did you form a union now? We had a good association for the last ten years. We also have the Society for Welfare of Indian Pilots. But the expatriate management from the Arab countries is not used to workers having any rights. They are used to Indians coming to their countries and working like slaves. The association and the management had several agreements on working conditions but the expatriate management is going back on most of them. What is the proportion of expatriates in the management? Our management is completely expatriate. Our CEO is from Australia, the COO is from Bahrain, two top officials are from Ireland, while another is fromAustralia. What was the immediate provocation? There were many provocations during the last two years. The latest was regarding our career progression and promotions. No promotions were happening and all our allowances were cut. We understood that it was because of the recession. But if you are cutting our allowances, you can‟t hire foreigners at double salaries. The foreign management was making Indians wait indefinitely for promotions. If your office gets taken over by foreigners, what do you do? We want dignity and not money. Money can‟t be a substitute for dignity. The government feels that you are workmen under the law and you have the right to form a union. But it also feels that you have no right to go on strike when the conciliation process is on. You should have gone to the labour commissioner instead? I know what the idea is. The management will find a legal way to keep us down. They will say that the talks are on but the next hearing will be after three months and the subsequent one after five months. So, we will keep flying as we cannot strike work when the talks are on. But that is how it is. You can’t go on strike. Ok . But who says we are on strike? We are not on strike.All of a sudden, 400 people can fall ill due to food poisoning. We can get medical certificates to prove our illness. Source: Menon Sreelatha, “We want dignity and not money”, http://www.business-standard.com/india/news/we-wantdignitynot-money/369897/, September 13th 2009

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HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

Whether the public are made fools or the management is taught a lesson, the strike could only bring dissonance. Both the sides were trying to prove their power and the ones who suffered were the customers. Though the pilots were disrupting an essential service, there was no action taken against them. Though the management is accused of discrimination, no action was taken. Even while a strike during conciliation process is a punishable offense, masking their protest in mass sickness, pilots used the loopholes of Indian labour laws well.

Labour Relations: Time to Rethink? In a way, the global financial crisis and the reactions of firms towards it subtly contributed to the growth of labour unrest in India. The disputes since 2008 would give a clear picture about the level of unrest. Just a cross view of Indian labour sector would give the impression that the unrest is growing for sure. India‟s age old labour laws have become fragile enough to control the labour unions. The contradictory fact is that it was the Indian labour laws which gave power to the labour unions by supporting their activities. The lack of maintaining proper labour relations had become a curse on India.Apart of it, however, is blamed on the industrialisation and privatisation that have changed the business front of India. Pandering to labour unions‟ demands no longer became an option in the highly competitive field of business. More over, employees too did not feel the necessity of forming a union in an industrious world. The industrialisation also left many unions with lack of vision and zeal. More than ten unions in a single plant or industry, fighting for recognition is not a rare scene in the modern day scenario. There is a tremendous increase in the number of unregistered unions that have nothing to do with the interest of the organisation. Moreover, the increase in the contract labour has also reduced the union activities. A labour scenario which breeds informal labour has a high chance of erupting labour discontent in violent ways. “The decline of militant unions is an unintended consequence of an undesirable decline of 22 organised employment,” says Manish Sabharwal of TeamLease, India‟s leading staffing company. What causes the labour unrest is a fear psychosis, say experts. Both the management and the workers are suffering from it. Militancy might be too strong a term to be used as far as Indian trade unions are concerned but the fear is real. There is a growing unrest, which may or may not go down with the general improvement of the country‟s economic health and improved labour statistics. One question, however, remains unanswered on the Indian labour front. Do the labour laws need an urgent renovation? The answer is not known and not so-easy to find. The need to make labour reforms come from the changing times and mode of business and industrial establishments. In a democratic country like India, development depends on the flexibility of labour markets. But contrary to the expectation, labour relations are fragile in the country and they often break, unable to withstand even the slightest pressure. While being more flexible remains the motto of every industrial establishment globally, in India, things take an unfavourable twist. The labour laws which are basically meant to enforce the acts which are age old are not strong enough, as there are a lot of loop holes. 22

“Labour Pains: Is Industrial Unrest Growing or Slowing?”, http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4392, July 2 nd 2009

13

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

Indian labour market is known for its inflexibility that arises from the nature of the labour laws in India. Counting to more than 50 central acts and more than 150 state variances that affect the labour market, Indian scenario of labour remains rigid (Annexure I). It is to be noted that these laws overlap many a times. “Many common items like workman, wages, employee and factory are defined differently in differentActs pertaining to the same sector. Provisions under the FactoriesAct, do not match with provisions under the Minimum WagesAct. Provisions under the BeediAct are at variance with those under the Contract Labour Abolition Act,” 23 said Dr. Manmohan Singh, Indian Prime Minister and well known economist, citing the flaws of labour laws. The intervening and overlapping labour laws that have no standard definitions and terms remains the major problem of Indian labour front. Even the major acts on the labour regulations have flaws that would harm the over all growth prospects of the country (Exhibit IX).

Exhibit IX Flaws in Laws? The Industrial Disputes Act (1947) According to the central legislation of India, The Trade Union (Amended) Act 2001, a registered trade union in India needs to have at least 10% or 100 of the workers as its members. Out of this, a minimum of seven people must be engaged or employed in the establishment. The rest can be outsiders. The Act concentrates on the organised labour (as all the Indian Labour laws) and has arguably restricts the rights of the organisations to hire and fire the workers. This rigidity has forced manyof the organisedplayers not to hire on the first hand foreseeingthe future difficultyof offloading a worker, even if he is useless. The jobless growth of economy in India was a result of it. The Contract Labour (Regulation and Abolition) Act (1970) It is said that contract labour allows flexibilityand permits outsourcingbut provisions of the Contract 24 Labour Act was never meant to protect contract labour. The Supreme Court ruling in 1972 which says „if the contract labour essential to the main activity then it should be abolished‟, spoiled the flexibility of contract labour. Employees still cry out that the law is oftendisobeyed by the employers. Employers argue that they should be allowed to contract the peripheral work in order to increase the efficiency. But for that the act should be scrapped. Contd...

23

“Prime Ministers Address to the 40th Indian Labour conference”, op.cit.

24

Datta R.C. and Sil Milly, “Contemporary Issues on Labour Law Reform in India”, http://atlmri.googlepages.com/RCD_MILI.pdf, 2007

14

HRM0049 Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

Trade Union Act (1926) The Trade Union Act, which allows outsiders to be the office bearers and members, is heavily criticised. Through this, employees who are not directly working under the company would also turn against the company when disputes arise. An act that allows outsiders to intervene in the company 25 matters does not exist in any other countries in the world. Lack of democracy in the unions is also a problem in India. While trade union policies in countries like Singapore aims at the overall 26 development of the country, in India, these policies restrict the economic growth and productivity. Compiled by the author

Problems are many for the Indian labour sector; growth of unorganised sector, alarming increase in lost workdays, tensedrelation betweenemployers and employees, lackof trust, political intervention, overlapping labour acts, lack of proper enforcing bodies, increasing labour unrest, „jobless‟ economic growth and many more. It can be easily observed that the plethora of problems stem majorly from the labour relations and the governing labour legislation. For example, while there are only a handful of inspections in factories of China, often not more than five, Indian factories are inspected by 30 inspectors on an average, under various laws and rules and regulations. 27 The inspector raj should end if the industries are to prosper. It is not that the Indian government is unaware of the problems. “…the time has come for us to take stock of our labour laws and see how best we can in fact serve the interests of our working people, especially the vast mass of low-skilled, unemployed youth 28 who are looking for jobs in the manufacturing sector,” said Dr. Manmohan Singh on the 40th Indian Labour Conference, 2005. After 4 years, India is nowhere near the reforms that it intended to make. The situation in India is more challenging as the political interests and bureaucracy are intimately related and a major reformof an important legislation can become deadly.There is little doubt about the negative effect of labour laws on growth and development, including employment creation. However, an immediate take on labour reforms would be out of question as there are several factors that determine the kind of reform the country is intending to take. Creating awareness about the benefits of labour reforms is one option, but is a herculean task in a country like India. Moreover, effectiveness of such an awareness programme would be questionable as it is the decisive factor of its success. Labour reforms are happening, but not in the expected scale and level. In September 2009, IT 29 and ITES establishments were exempted from the provisions of Industrial employment act (1946). But until the parts of labour legislation that actually hurt the working class‟ interests are changed, investments in labour-intensive sectors would be discouraged. With India‟s labour force growing at a rate of 2.5%, and an employment growth of only 2.3%, leaving 1million² million jobless every year, India would struggle to find the growth of if it does not give importance to labour reforms. 25

“Contemporary Issues on Labour Law Reform in India”, op.cit.

26

Ibid.

27

“Prime Ministers Address to the 40th Indian Labour conference”, op.cit.

28

Ibid.

29

Kumar Anil M., “IT companies free of Labour Laws for two Years”, http://timesofindia.indiatimes.com/NEWS/Business/ st India-Business/IT-companies-free-of-labour-laws-for-2-years/articleshow/4957075.cms, September 1 20 0 9

15

16

The Fatal Accidents Act

Accident

Social Security

Industrial relations

Deprived and Disadvantaged Sections of the Society

Wages

Others

War Injuries

War Injuries

1

2

3

4

5

6

7

8

1855 Compensation to families for loss occasioned by the death of a person caused by accident

Year Purpose of the Act

1926 Provide for the registration of Trade Unions and in certain espects to define the law relating to registered Trade Unions

The War Injuries (Compensation Insurance) Act

The War Injuries Ordinance Act

The Weekly Holiday Act

The Payment of Wages Act

C ontd ...

1943 Compensation to workmen sustaining war injuries and to provide for insurance of employers against such liability

1943 Employers liability to pay compensation to workmen sustaining war injuries and to provide for the insurance of employers against such liability

1942 Grant of weekly holidays to persons employed in shops, restaurants and theatres

1936 Regulate the payment of wages to certain classes of employed persons

The Children (Pledging Labor ) Act 1933 Prohibit pledging of the labour of children

The Trade Unions Act

The Workmen‟s Compensation Act 1923 Provide for the payment by certain classes of employers to their workmen of compensation for injury by accident

Name of the Act

Sl. Law Related to No .

Annexure I India’s Central Labour Laws

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Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

17

Industrial Relations

Wages

11

12

The minimum Wages Act

The Industrial Disputes Act

The Mica Mines Labor Welfare Fund Act,

Conditions of Service The Mines Act and Employment

17

The Employees‟ Provident Fund and Miscellaneous Provisions Act

Conditions of Service The Plantation Labor Act and Employment

16

Social Security

Conditions of Service and Employment The Shops and Establishment Act

15

18

Social Security

The Employees‟ State Insurance Act

Conditions of Service The Dock Workers and Employment (Regulation and Employment)Act

14

13

Social Security

10

The Industrial Employment Act

Conditions of Service and Employment The Factories Act

Industrial relations

9

C on t d .. .

1952 Institution of provident funds (family pension fund and deposit-linked insurance fund) for employees in factories and other establishments

1952 Amend and consolidate the law relating to the regulation of labour and safety in mines

1951 Welfare of labour, and to regulate the condition of work, in plantations

1948 Registration of the establishment and employment conditions

1948 Provide certain benefits to the employees in case of sickness, maternity and employment injury

1948 Regulating the employment of dock workers

1948 Consolidate and amend the law regulating labour in factories

1948 provide for fixing minimum rates of wages in certain employments

1947 Investigation and settlement of industrial disputes

1946 Constitute a fund for the financing of activities to promote the welfare of labour employed in the mica mining industry

1946 Require employers in industrial establishments formally to define conditions of employment under them

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Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

18

Conditions of Service The Merchant Shipping Act and Employment

Employment & Training

Conditions of Service The motor Transport Workers Act and Employment

Equality and Empowerment of Women

Employment & Training

Personal Injuries

Personal Injuries

21

22

23

24

25

26

27

1961 Regulation and control of training of apprentice

1961 Regulate the employment of women in certain establishments for certain periods before child birth and to provide maternity benefit and certain other benefits

1961 For welfare of motor transport workers and to regulate the conditions of their work

1959 Compulsory notification of vacancies to employment exchange

The Personal Injuries (Compensation Insurance) Act

C on t d .. .

1963 Employers liability to pay workmen sustaining personal Injuries and to provide insurance of employers against such liability

The Personal Injuries (Emergency) 1962 Grant of relief in respect of certain personal injuries sustained Provisions Act during the period of emergency

The Apprentices Act,

The Maternity Benefit Act

The Employment Exchanges (Compulsory Notification of Vacancies) Act

1958 Foster the development and ensure the efficient maintenance of an Indian mercantile marine in a manner best suited to serve the national interests, establish a national Shipping board to provide for the registration of Indian ships, tamend and consolidate the law relating to merchant shipping

1958 Fixation of rates of wages in respect of working journalists

Wages

20

The working Journalist (Fixation of rate of wages) Act

Conditions of Service The working Journalists and Other 1955 Regulate certain conditions of service of working journalists and and Employment Newspaper Employees‟ (Conditions other persons employed in newspaper establishments of service and misc. provisions) Act

19

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Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

19

Conditions of Service The Contract Labor and Employment (Regulation and Abolition) Act

Social Security

Social Security

Others

Conditions of Service The Sales Promotion Employees and Employment (Conditions of Service) Act

Equality and Empowerment of Women

Deprived ad Disadvantaged Sections of the Society

Social Security

30

31

32

33

34

35

36

37

The Beedi Workers Welfare Fund Act

The Bonded Labor System (Abolition) Act

The Equal Remuneration Act

The Coal Mines (Conservation and Development) Act

The Limestone & Dolomite Mines Labor Welfare Fund Act,

The Payment of Gratuity Act

Conditions of Service The Beedi and Cigar Workers and Employment (Conditions of Employment) Act

29

The Payment of Bonus Act

Wages

28

C on t d .. .

1976 Financing of measures to promote the welfare of persons engaged in beedi establishments

1976 Abolition of bonded labour system with a view to preventing the economic and physical exploitation of the weaker sections of the people

1976 Payment of equal remuneration to men and women workers and for prevention of discrimination , on the ground of sex , against women in the matter of employment

1976 Regulate certain conditions of service of sales promotion employees in certain establishments

1974 Conservation of Coal and development of coal mines

1972 Constitution of fund for financing of activities to promote the welfare of labour employed in the mica mining industry

1972 Scheme for the payment of gratuity to employees engaged in factories , mines, oil fields, plantations, ports , railway companies, shops or other establishments

1970 Prohibit the employment of contract labour and wherever this is not possible, to improve the conditions of work of contract labour

1966 Provide for the welfare of the workers in beedi and cigar establishments and to regulate the conditions of their work

1965 Payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity

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Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

20

Social Security

Conditions of Service The Inter State Migrant Workmen and Employment (Regulation of Employment and Conditions of Service) Act

Conditions of Service The Cinema Workers and and Employment Cinema Theatre Workers (Regulation of Employment) Act

Social Security

Conditions of Service The Dock Workers and Employment (Safety, Health & Welfare) Act

Deprived ad Disadvantaged Sections of the Society

40

41

42

43

44

45

The Child Labor (Prohibition & Regulation) Act

The Cine Workers Welfare Fund Act, 1981The Cine Workers Welfare Cess Act

The Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines Labor Welfare Cess Act

The Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines Labor Welfare Fund Act

Social Security

39

The Beedi Workers Welfare Cess Act,

Social Security

38

C on t d .. .

1986 Prohibition of engagement of children in certain employments and to regulate the conditions of work of children in certain other employments

1986 Safety , health and welfare of Dock workers

1981 Provide for the financing of activities to promote the welfare of certain cine workers

1981 Regulation of the conditions of employment of certain cine workers and cinema theatre workers

1979 Regulation of the employment and conditions of service of inter-state migrant workmen

1976 Provide for the financing of activities to promote the welfare of persons employed in iron ore mines (Manganese ore mines and Chrome ore mines)

1976 Provide for the financing of activities to promote the welfare of persons employed in iron ore mines (Manganese ore mines and Chrome ore mines)

1976 Provide for the levy and collection, by way of cess, a duty of excise on manufactured beedis

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Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

21

Conditions of Service The Dock workers (Regulation of and Employment Employment) (inapplicability to Major Ports) Act

50

Compiled by the author

Social Security

Conditions of Service The Building & Other Construction 1996 Regulate the employment and conditions of service of building and and Employment Workers (Regulations of other construction workers and to provide for their safety health Employment & Conditions and welfare measures of Service)

49

51

Social Security

The Unorganised Workers‟ Social Security Act

The Employment of Manual Scavengers and Construction of Dry latrines Prohibition Act,

2008 Social security and welfare of unorganised workers

1997 To provide for inapplicability of the Dock Workers (Regulation of Employment) Act, 1948 to Dock workers of Major Port Trusts

1993 Prohibition of employment of manual scavengers and as well as construction or continuance of dry latrines and for the regulation of construction and maintenance of water seal latrines

1991 Immediate relief to persons affected by accident

48

The Public Liability Insurance Act

Others

1988 Exemption of employers in relation to establishmentsemploying a small number of persons from furnishing returns and maintaining registers under certain labour laws

47

The Labour Laws (Exemption from Furnishing Returns and Maintaining Register by Certain Establishments) Act

Others

46

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Jet Airways‟ Labour Dispute: Trade Unions and India‟s Labour Conundrum

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