Time to Re-Think ?
Among many problems being faced by India
these days ,are :
> World - wide slowing down of
economy
> Rapidly rising workforce /
unemployed
> Resistance to Labour Reforms by
Unions
> Chinese currency devaluation
> Rapid decline in our Exports
Even as Central Government Ministers sit
down today, to listen to ,and address the Charter of Demands of Labour Unions ,
may be they need to articulate , in no uncertain terms , what the Unions must
" Give " , in return for what they expect to " Take "
At this stage , the only thing that can
save our country going the way of Greece , is :
Make India , a " Low Cost Economy
"
I hope what I wrote to 7,500 employees of
L&T Powai Works , some 31 years back , provides some clues
with regards,
hemen parekh
27 Aug 2015
----------------------------------------------------------------------
16 AUG 1984
To: All Employees at Powai Works
-------------------------------------
Dear Friends :
SCALA - MOBILE ESCALATOR
In America they call it...... COLA ( Cost of Living
Adjustment )
In India we call it.......... D.A. ( Dearness Allowance )
But everywhere, it means the
same thing to the employees.
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 ( CPI )
Whenever C.P.I, goes up, D.A. goes up, putting more money in the
hands of an employee.
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.
Rising prices raise the " Cost of Living "
.
So the experts thought :
"Let us put more money in
the hands of an employee - to take care of
the rising prices - to neutralize the rise in the
," Cost of Living "
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 " !
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 !
Every time 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 )
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 !
"
He means dangerous for us
- for L&T !
Let me assure you, VGD
has 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.
And he wonders :
How the Italians ( even
Japanese ) would love to get a copy of this chart !
Does Indian Industry
have the "Italian Option" ( of stopping or
slowing down the D.A.) ?
If not , can people
of Powai, possibly increase
their productivity quickly enough to neutralize the
following increases in the wages ?
|
Increase/ Employee
Rs / Month
|
||
|
A.
|
Jan. 1979 Settlement
(Average)
|
200
|
|
B
|
D.A.Increase (Jan1979 -July 1984)
|
475 to 1114
|
|
C
|
April 1984 Settlement (Average)
|
550
|
|
TOTAL
|
1225 to 1864
|
|
How shall we respond to these
questions ?
h c parekh
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