By: Annavajhula J.C. Bose, PhD; Department of Economics, SRCC (University of Delhi)
Anthropological and sociological research is based on fieldwork, which involves interviews with individual actors and visits to the places they live and work. By contrast, economic research is usually done using econometrics and mathematical modeling. Economists have the arrogance to look down upon anthropological and sociological work.
Economists have not followed the advice of Alfred Marshall, a founder of modern economics. Marshall had urged economists to go into the factories to understand the micro-management of the economy. Much earlier, Adam Smith, a pioneer of classical economics, visited a pin factory and described the division of labour and specialization therein as the supreme principle by which humanity has learnt to produce more and become wealthier.
In this posting, I give you a bit of concrete flavour of how, in tune with Marshall and Smith, I had researched labour discontents and industrial conflicts in the auto industry by fieldwork during 2000-2010 as part and parcel of my comprehensive study of work organization and worker participation; skill formation and development, remuneration and compensation, job security and staffing arrangements, and enterprise governance, worker organization and labour-management relations in the auto companies in India and abroad. I had relentlessly trawled the factories and villages of Gurgaon, Noida and Faridabad and interviewed workers to understand the working and living conditions of workers in one of the largest automobile clusters in India. Managements (barring some lower managers) were secretive and hostile towards me as a doctoral researcher even as many workers opened up to talk about their state of affairs. It was impossible to get into factories and make observations. Further, in the National Capital Region, on the one hand there were too many skirmishes between the workers and the managements, and on the other there was local as also global propaganda that modernization of the auto industry by way of Japanese management techniques would make the auto industry the bellwether of generous employment conditions and exemplary labour-management relations.
In the movie Modern Times, Charlie Chaplin’s job as a factory worker involves tightening nuts on a piece of machinery on the assembly line. After a few hours, as the line accelerates and work picks up a frenetic pace, Chaplin suffers a nervous breakdown, creates terror on the shopfloor and ends up in hospital. More than three quarters of a century later, nothing seems to have changed. As I had found, the auto worker goes through severe stress when he has to do the same task over and over again for more than eight hours a day and for over 350 days a year. Repetitive functioning, along with a punishing work environment and ridiculously low wages, saps a worker mentally and physically. It is no surprise that the auto factories need young guys who can slave that much. But by the time the workers are 35 years old, they are done. This is the downside of the division of labour and specialization that Adam Smith could not talk about.
During the golden era of capitalism in the 1960s and 1970s, all top Japanese companies ensured job security, wages based on seniority, enterprise unionism and consultative decision making—components that make up labour-friendly working conditions. But they quickly junked this system when economic recession set in the 1990s. What they then proposed instead was a restructuring in the name of ‘Japanese style of management in a new era’. By this they meant throwing job security and seniority-based pay system out of the window. According to the new system, each firm should figure out how to separate ‘stock’ and ‘flow’ workers and decide pay strictly on the basis of performance in the subjective eyes of the supervisors and the managers above them.
This new system of Japanese management led to the rise of exploitation of contract labour. On the pretext of maintaining a flexible workforce, employers would create a fake contractor from among the supervisors and managers. The contractor is not registered as it would entail valid records, regular wages and other entitlements. He then informs the labourers that they are contract workers, pays them a pittance and never makes them permanent. Everywhere the number of contract workers was maximized and the number of the permanent or regular workers minimized. Several companies got trainees to do regular work for years, but without proper training. This was dangerous and against labour laws of the land. The contract workers claimed to perform better than the permanent ones. Yet, the latter were paid three to four times more than what contractors paid the former. This led to severe resentment among the contract workers, and it flared up as the managements refused to deal with their unions. Unions were not permitted where there were no unions and the existing unions were busted sooner or later. The accumulating anger among the auto workers was like tinderbox waiting to explode and it did explode many a time but was brutally repressed by the state machinery and managements.
When you come to the college and open the economics textbooks, you are told “People respond to incentives”. This is a principle of modern economics that is drilled into your head. Be that as it may, I had set out to examine the incentives that were actually given to workers by employers in India and the global automobile industry as against what they are supposed to offer for obtaining commitment maximizing labour relations. I observed that there was neither coherence nor consistency in the package of incentives that were offered in the real world. In fact, I had found that it is impossible to give a consistent set of incentives due to the contradictory goals of the employers. Implicit in the workers’ taking of whatever substandard incentives that were given them and in their compliance with the arbitrary and high-handed labour control mechanisms of management was the fear of losing job in depressed labour markets almost everywhere, which have tilted the balance of power away from labour towards capital.
Let me put it in a better way. How to induce appropriate behaviour from the employees and get more productivity has been a perennial botheration for employers and personnel professionals. A multitude of different mechanisms are used to induce workers to act in the interests of their employers. This is the subject of Human Resource Management as part of MBA education. But there is no single set of ideal incentives consistent with one another that is favoured by the employers. The theory associated with these mechanisms is not useful to resolve the contradictions of implementation and get the desired outcomes. All that one can safely conclude is that the chaos on the employers’ side in this regard does not matter to workers simply because they are on the receiving side without bargaining power due to oversupplied labour markets. In any case most of the workers work with low road incentives as they face the choice of take them or leave to join the jobless. The incentives that they want are opposite to the incentives that the employers want to give. For example, from the workers’ point of view high wages and effective protection against arbitrary dismissal are an essential factor for the maintenance of a decent life. From the employer’s viewpoint, high wages increase production costs and therefore reduce the competitive position of the enterprise on the market, and limitations by law or collective agreement on management’s power to hire and fire reduce the area of managerial decision making, and consequently management flexibility and adaptability to changing conditions and market fluctuations. Thus it seems that it is impossible to design and implement an incentive system that is agreeable to both the parties, statically and dynamically. At the end of the day, however, the employers gain and the workers lose most of the time.
[You will have to read my PhD thesis or book to appreciate the above conclusion.]
Annavajhula J.C. Bose. 2018. An Inquiry into the Nature and Causes of Contemporary Labour Relations. eBook. Blue Rose Publishers. New Delhi. February 7. ISBN 978-93-87538-97-9.
Susan Helper. 2000. Economists and Field Research: “You Can Observe a Lot Just by Watching”. The American Economic Review. Vol.90. No.2. May.