IT boom spells doom for `old economy'

CHENNAI June 26. The "totally unanticipated explosion of employment potential and high wages" in the Information Technology (IT) sector in India has created a new situation for the "old economy" industries such as engineering and textiles which they could least afford to face, according to the president of the Employers Federation of Southern India (EFSI), R. Vishwanathan.

"Nevertheless, we (old economy and new economy industries) have to co-exist, but this may be possible only if the old industries are allowed to reform the labour force and improve productivity.

In today's context, this cannot be done without facing stiff labour resistance and in many cases closure of the industries", Mr. Vishwanathan said here today.

Addressing the 83rd annual general meeting of the EFSI, he regretted that the long-overdue reform of labour laws, which was crucial to enable Indian industry to face the post-1991 economic environment and which had been recommended by the Second National Commission on Labour, had been "consigned to the archives, if not to the dust bin" in the wake of resistance from organised labour and absence of a "political will" on the part of the Government.

"However, thanks to their ingenious methods and imaginative practices, employers have found a way out of the mess to the extent possible so that they can continue to exist".

He hoped that pressure on the Government to effect changes in labour laws would be kept up by employers' organisations and chambers of commerce, though "there is a question mark whether this (labour law reform) can happen before the next general elections to Parliament, as elections and politics have a close relationship with organised labour and their attitude towards legislation and policies", he said.

N. Kumar, industrialist and former president of the Confederation of Indian Industry (CII), said growth in the agricultural sector was important in a country like India because of the high level of unemployment and absence of a national social security system, which, if left unaddressed, would lead to discontent.

He said unions in industry should realise that there was a downturn in the economy and companies could not continue to pay high salaries and still survive and that at high costs new jobs would be slow to materialise.

As for employers, they should understand that flatter (as against hierarchical) organisations, where decision-making was moving to lower levels, meant better employer-employee relationship.

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