Just four or five years after the big bang reforms of 1991, a market survey company asked me to rank job preferences among fresh graduates and MBAs. My list, based on my constant recruitment struggles at the time, ran thus: IT, finance, engineering, marketing and advertising (alas, journalism remained low on that list). The surveyor’s next question was indicative of how radically the nature of the white-collar job market had changed in a short time. What about the civil services, public sector jobs and the defence forces, he asked. I suggested that their attraction was fading if only because of the significantly enhanced earning capacity that the private sector offered (it turned out that the survey had been commissioned by the army to figure out ways of bolstering the quality of its officer cadres).
Just one decade before, this would not have been the case. Part of the reason then was that the private sector may still have outpaced the government sector in terms of remuneration but jobs in this competition-hobbled sector were hard to come by in the first place. Besides, it rarely matched the iron-clad job security that the public sector offered. By the new century, shaky job security remained an issue (recall the widespread executive joblessness after the dotcom bust of the early 2000s) but the opportunities presented by an expanding private sector more than compensated for that shortcoming.
Now ask any blue-collar worker what jobs he covets and the answer would be unhesitating and unchanged from the pre-reform years: a government job, and precisely because of the superior salary and perks and the job security (including the freedom to be willfully idle). The near stampedes whenever the Railways or defence forces hold recruitment drives are testimony to this.
The enduring popularity of government/public sector jobs at the bottom of the employment pyramid in sharp contrast to their declining popularity at the top is one reflection of the widening gulf between the rich and middle class on the one hand and the poor on the other. The reason private sector employers need to seriously consider ways of bridging this odd dichotomy is this. Public sector employment has shrunk, whereas private sector employment has steadily expanded.
Between 1983 and 1994, annual organised sector employment expanded 1.2 per cent. Of this, the public sector grew 1.53 per cent and the private sector 0.44 per cent. In the next 14 years (1994 to 2008), organised sector employment grew just 0.05 per cent a year. This slowdown was on account of shrinking public sector employment (-0.65 per cent a year). The meagre expansion in overall employment was solely on account of a strong surge of 1.75 per cent in private sector employment. True, the organised sector accounts for a minuscule fraction of jobs in India but these numbers are a good proxy for what’s going on in the 400-million-odd unorganised sector.
In other words, it is the private sector that will increasingly shape society in India and, on current evidence, it may be falling short on this score. The frequent spikes in labour unrest are one indication of the growing gap between management and labour. The rise of parties like the MNS with its hugely popular slogan of Maharashtra for Maharashtrians is another — with state job opportunities shrinking, Bihari and UP workers employed for years by private companies have suddenly become usurpers.
Much of the commentary among HR professionals on the recent crisis at Maruti is striking for how little blame it accords to unions, once everyone’s favourite villains of industrial relations crises. Some weeks ago, my colleague Devjyot Ghoshal had reported the waning demand for industrial relations at B-schools. At Jamshedpur’s XLRI, for instance, less than 10 per cent of students want to pursue a career in IR. Several others have suggested a moral detachment by crorepati executives, intent on chasing bonus-boosting revenues, from the labour they have to manage.
The private sector will argue that these observations are unfair. After all, they continue to struggle with inflexible labour laws and a critical shortage of skilled manpower. Besides, they might add, it is the government that is distorting things at this end of the labour market with its ultra-generous remuneration. These are not invalid arguments but it is equally true that the private sector hardly enjoys a benign reputation among the aam aadmi for a range of practices from poor work conditions to appalling living facilities and amenities and an increasing predilection to establish “tame” unions.
Sure, these shortcomings reflect poor vigilance by government — Centre and state — and unions to enforce and, indeed, pass laws that would improve the lot of India’s blue-collar workers. But the private sector has — unilaterally — played a significant role in enhancing the standard of living of the average Indian executive. No government regulations have forced it to pay executives crores and add on lavish perks. So why can’t it raise standards for the labour it employs? Or should the brute laws of supply and demand always dominate?