Employees expect increment every year. But a machine attracts depreciation which is a tax-free saving to the employer for eventually acquiring a new one

Every time wages and salaries of unskilled and semi-skilled workers are increased by the Government, my first reaction is one of gladness. The Government has raised their dearness allowance. For long, I have believed that teachers, especially at the school level, are the makers of the quality of our future society. As a consequence, the better the quality of society, the higher would be our civilisation. The same logic does not apply to the wages of common workers in India at its present stage of economic development. The reason is if we raise wages statutorily, the employers, especially of small and medium businesses and industries would be scared away. They can't all afford to pay more, most of the time.

Regardless, we must realise that industry or manufacturing is an employer of machines, not of men or women. True, it generates employment down the line in the shape of transport, of canteens, of dealers of shops and generally pushes the economy forward. But an efficient employer is in constant search of reducing the number of heads per machine. The intent is to control the unit cost of his product. The raw materials, packing, and electricity are supplied by others who control their respective cost of production. But the man to machine ratio, perhaps the employer is able to keep some control. The reality is that anyone who is skilled and can get a job at Rs 20,000 would not work for Rs 19,000. The Government need not worry about his wages and welfare. The scheme of minimum wages that the Government tries to ensure, if not enforce, is for those who are not easily employable; they do not have either the motivation or the skills to get a job on reasonable terms. By laying down a minimum, the Government obstructs his prospects of getting a job.

The next thing that happens is a communal consensus among entrepreneurs — that it is safest to avoid labour intensive activities. For one, such enterprises are expensive, and worse, one cannot easily separate workers when the industry runs into a slum. On top of the statutory wages are the trade unions. What the unions can be, one would know if one has worked in Kolkata or in Kerala. In the latter State, even the class IV workers know what the  law says. They do not need the union leaders to argue for them.

If we prefer full employment, a change of policy is required. A lot of labour policy has come from the Industrial Disputes Act 1947, possibly the last legislation left behind by the British Government before it left after Independence. An extreme left winger called Aneurin Bevan was in charge of Health and Labour. He gave Britain its national health service which is supposed to provide total health care to every citizen free of charge. Indians got the Industrial Disputes Act on which the entire labour ethos has grown. He did not realise that India was not Europe and we desperately needed employment as all underdeveloped countries do. He visited Mumbai before he demitted office in 1952, and I have heard him speak for an hour at the Grant Medical College.

This legislation added by the communist trade union attitude led to an anti-employment formula for India. A job is better than none is our need. A person’s skill and qualification will ensure him/her an adequate employment in any case. For the rest, there should be a free market. Between a person and a potential employer there should be freedom of negotiation of salary. So that the employee is not treated unfairly, there should preferably be a minimum monthly contract and a monthly notice of termination. With his salary packet, he/she should get a nationalised bank draft payable exactly five years, hence for 25 per cent of his wage. This would represent his savings like provident fund, gratuity etc. So that the employee is assured of his dues for his work life. The employer can terminate his services with one month’s pay in lieu of notice. The salary would be free and depending on how much the employee is prepared to accept.

No other complication should come in the way of an appointment. With the size of our population and the number of young men and women seeking employment every day, this kind of a free market for labour is required. Remember, that agriculture would be freeing more and more workers who are likely to come to industry and service for jobs. At the rate we are progressing, anything like full employment would remain a pipe dream. If the licence to set up an enterprise is free, why control the wage level? That not only discourages employment but also creates an atmosphere of minimum employment.

An employee would expect an increment every year. Whereas a machine attracts depreciation which is a tax-free saving to the employer for eventually acquiring a replacement machine. This practice alone shows a preference for a machine over man from an employer’s point of view. More need to be said to advocate wages that favour free appointment without any impediment.

(The writer is a well-known columnist, an author and a former member of the Rajya Sabha. The views expressed are personal.)