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The unhappy worker

October 30, 2007

India’s white-collar workers are an unhappy lot. Despite a shortage of skilled workers pushing up salaries to new highs and employers bending over backwards to make the workplace fun, the Indian office worker wants more. Most significantly, the Indian employee is unhappy with his compensation.

He wants to be paid more. And this is not a phenomenon specific to the super-profitable IT companies, but manufacturing companies are reporting this as well.

In fact, that is the leitmotif of our Best Companies to Work for in India survey this year. There is almost no company on our top 15 list where employees are happy with what they are making. Don’t forget, these are not just the best employers, but invariably the best paymasters. Why are employee expectations surging? Why do they think they ought to be paid more, or ought to get more than the 25-30 per cent hike they have been getting in India? The survey itself doesn’t answer the questions, but some of the reasons are evident.

As Mercer experts write elsewhere in the issue, one of the fundamental reasons is that the workplace has become a lot younger. As companies expand, they are recruiting younger workers at a phenomenal rate, and putting them in responsible positions. Evidently, younger employees are very different from the older ones.

They aren’t averse to voicing their opinions, challenging conventional wisdom or authority, or aspiring for things their parents wouldn’t have. It’s not surprising, therefore, that the younger employees polled in our survey seem less happy with just about everything—pay, leadership and even image of their employers—compared to their older colleagues.

For employers already losing sleep over high rates of attrition, this is worrisome. Unless such employees feel connected with their employer, they will not stay on. What is the employer to do? One, they have to communicate much better with their younger employees; there is no reason why, for instance, a poor quarterly performance should not be explained to employees down the line.

Two, companies must get smarter about pay for performance; just as not every employee contributes equally, not every employee should be compensated alike. Three, line managers must become more responsible not just for performance of their units or divisions, but also for happiness of their subordinates. The managers must become the company’s vehicle of communication with the younger employees. Until then, even the best employers will have disgruntled workers to deal with.

Blinkered vision

These are bad times to be an indian exporter. The appreciation of the rupee against the US dollar has had a debilitating impact on their businesses. Many are being forced to consider drastic measures, like reducing their workforce, to rein in costs and stay competitive.

Officials concede that it’s very unlikely that the export target of $160 billion (Rs 6,40,000 crore) for the current financial year will be met; there have been reports that they will be satisfied if the figure somehow manages to nudge the $140-billion (Rs 5,60,000-crore) mark.

The government should have seen the writing on the wall and taken proactive steps to mitigate the crisis, but as usual, it acted late, and when it did, it did too little. The Commerce Ministry has now shaken off its complacency. Reacting belatedly to frantic SOS petitions from exporters, it has announced some measures, including a refund of service taxes on some services and payment of interest on exchange earners foreign currency accounts.

But this is not enough to stem the tide. It’s now becoming clear that exporters will have to take steps on their own to ride out the storm. On the anvil are steps to streamline their operations to boost margins through enhanced productivity and efficiency.

Then, many of them are now trying to move up the value chain to products that fetch better margins. Yet, others are importing cheaper raw materials from low-cost destinations like Thailand, Bangladesh and China, thus, providing a natural hedge against a rising rupee since the invoicing is done in dollars.

But the results from these measures will begin to show only after a time lag. Exporters, and workers depending on them for their livelihoods, will, meanwhile, continue to suffer. A number of global factors are responsible for this situation, but it was aggravated by the government’s, and RBI’s, inept handling.

Their strategy of focussing on containing the rising inflation rate to the exclusion of all other factors, has been a major contributor to the rupee’s rise. The goal was obviously political — with several important state elections scheduled over the next year, the government could ill-afford to alienate the common man.

But the appreciation of the rupee — the price paid by the economy for RBI’s blinkered approach to inflation — and the consequent job losses, can be as costly politically as inflation. Since the only thing that politicians are scared of is the wrath of the electorate, maybe, the Finance Ministry will now nudge the supposedly independent RBI to do more to rein in the rupee and make Indian exports competitive again.

Beware of the dragon

Yes, India does, indeed, have a lot to learn from China. And as Congress President and UPA Chairperson Sonia Gandhi has said during her visit to that country, “pragmatism and mutual self-interest” are a sound basis for the future development of Sino-Indian relationships. Primary among these should be a concerted effort to emulate China’s pursuit of Big Power status on the back of its sustained and steroidcharged economic growth.

Over the last 30 years, the Chinese leadership has successfully transformed a primitive, agrarian economy into the economic powerhouse of the world. In the process, it has given short shrift to orthodox Marxist theory. Deng Xiaoping, the late supreme leader of China and architect of its economic resurgence, once famously commented that: “It doesn’t matter if a cat is white or black, so long as it catches mice,” to prove the irrelevance of ideological dogmas in the pursuit of economic emancipation.

That, and China’s ability to conceive of and execute gigantic projects, is what India should try and emulate. Then, Indian companies can make use of low-cost Chinese technologies in the metals sector, particularly in the iron and steel space, and India Inc. can also use the near laissez faire policies in Chinese export promotion zones to produce cheap goods that can be exported across the world.

Beyond that, one wonders if there’s really much scope for meaningful cooperation between the two countries. Statements by Indian and Chinese leaders are routinely full of platitudes that talk of “civilisational congruence” and “ancient cultures” but seldom go beyond that. On the ground, there’s a huge chasm between the two over Tibet, Arunachal Pradesh, Aksai Chin, Myanmar, Pakistan and any number of other issues on which China follows policies that are designed to project its hard power and show up India as a weak, subordinate member of the global power elite.

It is following a “string of pearls” strategy and building a chain of naval bases ringing India—from Pakistan to Myanmar — to undercut Indian pre-eminence in the region. And it routinely extends a “hand of friendship” to India without ever budging from its hard line nationalistic positions on outstanding bilateral issues. Strategic experts call this a policy of co-operation and containment. The Indian reactions to all of these provocations have been either to take them lying down or to pretend that they don’t exist.

This didn’t matter earlier, when India was too weak to look beyond its borders. But now, as this country strives to take its rightful place in the comity of nations, it may be time to rethink this strategy and become more assertive. And ironically, here, the Government of India can actually take a leaf out of China’s book on how to do it.

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