Dr Rajen Mehrotra holds a Masters and a PhD in Management from Jamnalal Bajaj Institute of Management Studies (JBIMS), Mumbai. A former ILO official with over 25 years of industrial experience including many multinational companies, Dr Mehrotra was recently in Nepal to participate as a resource person in a conference entitled Ethics in Business for a Prosperous Nepal organised by the World Forum for Ethics in Business. New Business Age caught up with Dr Mehrotra on the sidelines of the conference. Excerpts: While India seems to have resolved the problem of, frequent labour strikes. These are still one of the major challenges in Nepal. What can Nepal learn from the Indian experience?
India faced the same challenge after it got independence. There were periods of strikes. There were strikes even in the1960s and 70s in India. In Nepal, democracy has come comparatively recently. So, Nepal is going through this phase of strikes. Once people understand that strikes necessarily don’t give the answers, they learn to resolve problems amicably. We need a mechanism to resolve disputes rather than fight on the disputes. To a large extent, both trade unions and employers in India have been trying to find answers. But, there will be some places where answers are not found and strikes take place or lockouts take place. But, the idea is to resolve the issues amicably.
Many Nepali companies complain that they are not getting the right candidate for the right job whereas thousands of people are jobless. What do you suggest to address such an anomaly?
Basically, there are two things. One is that the people who are jobless necessarily don’t have the competencies that are being looked where people want jobs. So, it is about matching the skills and competencies of the requirement. When you educate people, you need to consider the requirements of the labour market as well as of the candidates.
Industrial strife seems reduced now not only in India but also across the world. What international efforts helped to achieve this situation?
One is the International Labour Organization, which was setup after the First World War. It is a tripartite organization consisting of employers, trade unions and governments. This organization comes out with various conventions to be followed globally. However, we must appreciate that every country is sovereign and that it is for a country to decide the laws that it would like to have and the methodology in which it would like to implement them. Industrialization takes time when a country has coalition politics. There are aspirations of both the unions and the employers and in this we have to find answers which satisfy both sides.
Talking about ILO, it is often criticized for trying to impose on developing countries the same standards for child labour and workers’ representation on the Board of Directors that are in practice in the developed countries. What is your view on this?
In 1998, ILO came out with the fundamental principles and rights at work. The ILO has certain core conventions, which deal with the freedom of association and the right to collective bargaining. It also has core conventions on the abolishment of child labour, bonded labour and on the diversity and equality in remuneration. It is for a country to decide whether it wants to ratify these conventions or not. Nepal has ratified them. Once you ratify them, you become liable to it. However, countries are free not to ratify them. So, it would be unfair to say that ILO has been pushing this.
The workers’ representation on Board of Directors issue is totally different. The workers must first participate in their own unions. I have very clear views on this. One has to see what roles they can play in the management to collaborate. But, I think workers’ participation in management is not required. Let workmen run their own organization and let management run their own organization. But, there is definitely a need for a dialogue on either side to solve the problems.
How can companies manage industrial relations in the best way?
In order to manage industrial relations, one needs to understand the aspirations of the workmen and also make the workmen realize the limitations of the employers. The methodology is that there is a need to build internal leadership within an organization apart from the external leadership in trade unions. This involves doing a lot of trainings jointly between the management as well as the unions and building a confidence of trust and openness and transparency on either side.
Trust is only built on trust; it cannot be built on mistrust. If I don’t trust you, I don’t trust you. I start with trust and if you deceive me, I mistrust you. Then, it becomes exceedingly tough to build relationships. But, if you are open or prepared to talk, it is possible to solve problems through dialogue. Businesses also go through cycles: sometimes they do well and sometimes they don’t do well. Workmen are predominantly looking at job security; it is one of their needs. They want their remuneration to take care of inflation.
At the same time, the employers’ interest is to see that the enterprise runs continuously without any trouble. They want to see their goods and services to generate a surplus for the business. No one can be doing a business at loss. So, both need to understand that there are phases when businesses don’t do well and phases when there are problems on either side. So, it is all a matter of understanding
How have industrial relations practices evolved in South Asia? Where do they stand now?
The reality of South Asia, except Nepal, is that it was under the British rule before it became independent. So, the industrial relations model of South Asia is more or less the British model. The types of legislations were of the British type. But, South Asian countries became free anywhere between1946 and 50. Bangladesh was born later. South Asia represents coalition politics. In coalition politics, you have to learn to respect that the other party as an opponent and not an enemy. In coalition politics, you cannot have a single party agenda; it has to be a common minimum programme. Whether it is in the sphere of industrial development, labour management or fiscal policy, I clearly see South Asia as coalition politics.
There are many sick public enterprises in Nepal that have been incurring losses for years. The government bureaucrats are reluctant to privatise them and the trade unions provide the bureaucrats a strong backing. What is the best way out in your opinion?
I think that nobody wants an enterprise to be born sick. Businesses have to be profitable whether it is in the private sector or public sector. But, if a unit becomes sick over a period of time and you can’t revive it, then the painful process is to close it down; rather than making it live in coma. A sick unit living in coma is only possible with the government, which gives subsidy and has a lot of leftist trade unions that argue that you cannot close it down. But I clearly see that businesses that are sick cannot remain functioning continuously under sickness.
Based on your experience, what makes a successful manager?
It is transparency in what he does and his own competency and ability to take the team along and operate.
Is the South Asian market liberalized enough?
South Asian Market has opened up in certain sectors, but it is not a totally free market like that of the western world. Everybody wants to safeguard their domestic market because when you permit imports and if the imported items are cheaper than their domestic counterparts, the domestic market gets affected. The role of the government is make a market friendly intervention so that the domestic industry gets adequate time and does not die. At the same time, the domestic industry has to become competitive. It cannot survive on inefficiencies when the consumers can get cheaper imported goods. At the same time, countries should be vigilant about dumping which needs to be tackled. There is a provision for anti-dumping duty under the WTO.
Nepal is the most liberalized economy in South Asia. Yet it has failed to attract enough FDI. Why?
Nepal needs a stable government as well. Anybody investing money is also looking for security. Secondly, it must be clear in which sector the FDI is required - in manufacturing or trade or some other sector.
Nepal is a landlocked country. Businesses in a landlocked country from an export perspective need to be items of high-value-low- density. There is scope for pharmaceuticals type of businesses where the product price is high.
