January 6 1962. THE ECONOMIC WEEKLY. Joint Management Councils. How
Have They Been Working? MUCH has been heard in this country about joint ...
January 6 1962
THE ECONOMIC WEEKLY
Our Delhi Letter
Joint Management Councils How Have They Been Working? MUCH has been heard in this country about j o i n t management councils but how have these councils been f a r i n g in actual operation ? A recent survey of these councils throws some l i g h t on this question. Joint management councils, w h i c h were introduced in 1957 f o l l o w i n g the recommendations of the Study C r o u p on W o r k e r Part i c i p a t i o n , are at present in operat i o n in 27 i n d u s t r i a l units — 10 in the public sector and 17 in the private sector. Besides, schemes f o r j o i n t consultation, w h i c h w i t h some modifications can be b r o u g h t i n t o line w i t h the scheme for j o i n t management councils, arc in operat i o n in two p r i v a t e sector units. T h e L a b o u r M i n i s t r y is proposing to extend the scheme to 100 more units this year. The survey of existing j o i n t management councils has revealed that in no i n d u s t r i a l u n d e r t a k i n g in w h i c h a j o i n t management council is f u n c t i o n i n g has there been any dispute resulting in w o r k stoppage since the setting up of the C o u n c i l . Even i n undertakings i n w h i c h joint management councils had been set up but were suspended later (one u n i t in p u b l i c sector and four units in private sector) there have been no w o r k stoppages except in one case in Calcutta where in December 1960 there was a strike. Besides good industrial rela. tions. in most of the units where j o i n t management councils have been set up, the rate of labour turnover has deceased i n d i c a t i n g thereby the establishment of a more stable labour force. Some Cain in Productivity One of the most significant gains of the scheme has been in the field o f production and p r o d u c t i v i t y . I n a large m a j o r i t y of eases production and p r o d u c t i v i t y have i m p r o v ed since the setting up of the j o i n t management councils, though it is difficult to determine to what extent the improvement is due to other factors such as i n t r o d u c t i o n of new machinery, new processes,, or better management practices. In a few eases it has been possible to exa-
mine the increase in fixed assets, namely gross and net block and plant a n d e q u i p m e n t d i r e c t l y responsible for p r o d u c t i o n . It has been f o u n d t h a t even in cases where there was no increase in fixed assets there has been increase in productivity. For instance, in the I n d i a Pistons. Madras, it was stated by the management that whereas their renovation p r o g r a m m e commenced only in the m i d d l e of 1960, product i o n and p r o d u c t i v i t y had steadily increased since the t i m e of the sett i n g up of the j o i n t management council. S i m i l a r l y in several rases where close relationship could be established between the product and the in-puts it was f o u n d that prod u c t i v i t y had increased since the setting u p o f the j o i n t councils. Profits o f the units h a v i n g j o i n t councils are also on the increase. However, the most remarkable result of the setting up of j o i n t management councils has been a closer understanding between the management and the workers in regard to several aspects of their day-to-day relationship. Management and workers have come to appreciate the difficulties and problems of each other. Management has become more sympathetic to the workers and is more w i l l i n g to consider their views.
Why the Councils Have Failed These beneficial results have, however, been achieved o n l y in few units. In a m a j o r i t y of the cases the councils are not f u n c t i o n i n g satisfactorily. For instance, it is f o u n d that in most cases workers' representatives are more concerned w i t h the enlargement of amenities and facilities and the redressing of grievances, than w i t h larger p r o b lems such as increasing p r o d u c t i v e t y . reducing absenteeism, effecting economies and suggesting methods for more efficient u t i l i s a t i o n of p l a n t and equipment. One council had even adopted a resolution to the effect that no w o r k e r shall be discharged or d i s m i s s e d w i t h o u t the p r i o r a p p r o v a l o f the j o i n t management council. 6
Employers on their p a r t are also not c o n t r i b u t i n g f u l l y to the success of the j o i n t management councils, They do not take the councils into confidence in regard to amendments of standing orders, i n t r o d u c t i o n of new methods of p r o d u c t i o n and manufacture involving re-deployment of men and machinery and reduction i n , or cessation of, operations, despite agreement to this effect. Communication of sharing of i n f o r m a t i o n w i t h the workers has not been adequately developed. In fact, in Simpson and Co the j o i n t council came to a standstill on account of the management's refusal to f u r n i s h certain details of expenditure demanded by the workers' re. preventatives. I n agreements setting u p j o i n t management councils, managements have conceded the p r i n c i p l e of transferring to the j o i n t councils some administrative responsibility i n regard to welfare measures, safety measured, vocational t r a i n i n g and apprenticeship schemes, p r e p a r a t i o n of schedules of w o r k i n g hours and holidays and payment of rewards for suggestions received f r o m the workers. In actual practice, however, there is no real transfer of administrative responsibilities in these matters. In no case has the j o i n t council or its appropriate subcommittee been left the choice to determine. w i t h i n the financial resources available, the p r i o r i t i e s reg a r d i n g welfare measures to be provided or the allocations to be made in respect of these facilities. In regard to safety measures also the role of the council is more often purely advisory.
H M T : Glaring Failure One of the g l a r i n g failures of the scheme of workers' p a r t i c i p a t i o n has been in the H i n d u s t a n M a c h i n e Tools, a model public sector under. taking. For sometime the scheme worked w e l l and produced results, p a r t i c u l a r l y i n the f i e l d o f product i v i t y . The management a n d the u n i o n clashed on the question of wages and p r o d u c t i o n norms. A n d this resulted in the end of the scheme. T h e Government fights shy
THE ECONOMIC WEEKLY of e n q u i r i n g the reasons f o r the f a i l u r e o f the scheme i n the H M T . T h e shortcomings and l i m i t a t i o n s of the scheme are n o t peculiar to this c o u n t r y . T h e y have been noticed in other countries as w e l l . W h e r e v e r s i m i l a r schemes were attempted in a m i x e d economy they d i d not produce results of any consequence. An observer connected w i t h Conservative f i n a n c i a l circles i n B r i t a i n analysed f o u r m a i n reasons f o r the f a i l u r e of the scheme i n his c o u n t r y . F i r s t , whereas the m a i n interest of employers is to find ways of raising efficiency, workers are, at least i n i t i a l l y , almost exclusively interested i n w e l fare questions. Second, j o i n t com. mittees are handicapped by the fact that they are precluded f r o m discussing the subjects w h i c h are of most immediate interest to the workers — wages and w o r k i n g conditions. T h i r d , by c u t t i n g across the n o r m a l channels of command and c o m m u n i c a t i o n i n i n d u s t r y , j o i n t consultation can and does arouse the antagonism of p o w e r f u l forces in management. Foremen and supervisors and the l o v e r managerial staff frequently feel that they are being by-passed and their a u t h o r i t y weakened by direct contact between top management and representatives f r o m the factory floor. F o u r t h , too often a g u l f develops between workers and their re-
January 6, 1962 presentatives a n d if the latter accept the management's v i e w , they are labelled as "bosses", "stooges' or "yes men'". The j o i n t consultation scheme d i d not make any headway even in the nationalised industries i n the U K . An e v a l u a t i o n of the scheme was made by the A c t i o n Society T r u s t , w h i c h concluded that "there have been m a n y cases where transactions of a committee have been confined Lo d r i n k i n g a cup of tea, d r a w i n g the attendance fee, a n d a r r a n g i n g the date of the next meeting'*. W o r k e r s p a r t i c i p a t i o n i n management has been attempted in v a r y i n g degrees in a number of West European countries. B u t it is Yugoslavia w h i c h leads i n this f i e l d . I n fact experience of that country inspired the framers of labour policies in I n d i a to launch on the scheme of j o i n t management councils. I n Y u goslavia, however, workers" councils are supreme. In the i n d u s t r i a l hierarchy, the director of an undertaking is accountable to the managi n g board f o r his w o r k and must abide by its decisions w h i l e the managing board is accountable to the workers' council. T h e board's decisions must conform to the conclusions of the workers 1 council. The, Yugoslav experience cannot, however, be physically transplanted in this country, as conditions here differ vastly.
Undoubtedly the scheme of j o i n t management councils is a laudable one. A n d S h r i G u l z a r i l a l Nanda, who is responsible for p r o m o t i n g the scheme, has noble intentions. B u t can the combination of these two facts make the scheme a success? Management is interested in the scheme to the extent it helps to increase p r o d u c t i o n and produc. t i v i t y . B u t it resists workers" p a r t i c i p a t i o n i n management. W o r k e r s o n their p a r t are interested in using every o p p o r t u n i t y to further their interest. There is, nevertheless, a possib i l i t y of m a k i n g this scheme a success. T h e large and developing public sector, w h i c h is not r u n for p r i vate p r o f i t , can give a lead in this d i r e c t i o n . A l l efforts should be made to set up j o i n t councils in p u b l i c enterprises and to ensure that these councils work successfully. Simultaneously w i t h this, works committees — w h i c h are the first stage to f o r m i n g j o i n t management councils — should be set up in the private .sector. F o l l o w i n g the example of the p u b l i c sector, the p r i v a t e sector could then be persuaded to take to the scheme of labour p a r t i c i p a t i o n i n management. Only w i t h a systematic policy — and not by overzealousness a i m i n g merely to increase the number of units having j o i n t c o u n c i l — can the scheme be made a real success.
From the London End
Difficult Year for Britain T H E economic prospect for B r i t a i n in 1962 does not seem p a r t i c u l a r l y b r i g h t . The position at the end of the y e a n put in a nutshell is that output is f a l l i n g , exports arc static, imports are tending to rise and the investment b o o m looks as if it has passed its peak. The t w o nostrums prescribed by the Conservative Government are s t i l l i n the a i r . T h e N a t i o n a l Economic Development Council has appointed its D i r e c t o r General, S i r Robert Shone, but the T U C , w i t h a m p l e reason, has declined to make up its m i n d o n the question o f j o i n i n g this b o d y . Britain's application for e n t r y to the C o m m o n M a r k e t may also be held up because of the present difficulties among 'the S i x ' A w a r d i n g the a g r i c u l t u r a l provisions o f the T r e a t y , U n t i l these have
been sorted out, it w i l l not be possible for the C o m m u n i t y to enter its second phase w h i c h it should have done on January 1, 1962. F r o m the latest figures that have been published, those f o r October, there appears to have been another sharp f a l l i n i n d u s t r i a l p r o d u c t i o n . Seasonally adjusted, the index of m a n u f a c t u r i n g output has fallen f r o m its peak of 127 in August, by two points a m o n t h for three months. T h i s represents a f a l l of nearly 5 per cent in a single quarter. One of the reasons f o r this f a l l was the two strikes in Roots and the Steel Company of Wales, both of w h i c h occurred in October. Other c o n t r i b u t i n g factors were the continued slackness in the sales of most electrical appliances and cars. Most d i s a p p o i n t i n g of a l l were the out-
p u t figures for the engineering i n dustry w h i c h so far had tended to offset slackness in other sectors It appears that output is down not only when compared w i t h the figure- for the summer but also when compared w i t h the level a year ago, The order books of companies p r o d u c i n g engineering and electrical goods, r a i l w a y equipment, heavy commercial vehicles and tractors, which were s h r i n k i n g slowly d u r i n g the summer, started to shrink faster in September and October. The volume of orders for the home market reached a peak in May. and between then and October, dropped by 8 per cent. The volume of export orders in hand changed l i t t l e . This decline is a result, p a r t l y of increasing deliveries, and p a r t l y ' of a slackening in the
