Labour participation in company equity and board- Refurbishing the abandoned vision

By Krishnamurthy V.

Class Identity as work force, and the other, entrepreneurs with a claim of tankful of wisdom, are outdated capitalistic orthodoxy. The age of information has equalised the role of work forces with entrepreneurs.

Keeping the old hypocrisies, pretence of corporate hierarchy and style, the corporate laws and paraffin or waxy administrative structuring are to be erased and a new model to be evolved following European ideals. How the workers have vertically grew up, despite the bureaucracy claims their pseudo-supremacy.

Classic Example, a bank clerk once operated manually ledger accounting system in 1980s, learnt the operations in computer in 1990s and advanced themselves in core banking system in 1995 -2005. They further shifted their strategic operations. Assets managements, insurance, share trading operations, mutual funds and dealing in forex financial instruments entered the frontline counters of branches.

Still 70% preferred to remain in clerical cadres with accountability in operations. Numerically not one or two -ten lakhs work forces had rolled over in private sector as well more in public sector. Their carrier started with a business turnover of the industry of Rs.11000 crores or so in 1969 with manual ledger entries in private corporates.

Nationalisation brought a massive transformation. Lakhs of branches, billions of day-to-day operations, amazingly broke the records of performances. Business turnover is Rs.18,69,000 crores 2022, while major section of these worker forces turned as financial techs- have retired.

This period witnessed a huge expansion, generation of deposits, loans business income and large quantum of provisioning, write off and losses, cover ups, outsourcing scandals, even highest corporate loots.

Protest and resistance of bank employees against frauds of Government-Corporate Allianz, were silenced by the co-conspirators, RBI, MCA, SEBI, IT agencies.

The bank board served their class interest with their corrupt practices. Presence in Board as workers directors and their objections were set aside or they were not allowed to have information to block mal-administrations or decision makings.

It was an experimental failure in the public sectors, manufactured by the bank boards, with the backing of pernicious law of secrecy. The present government is surviving from the downfall by selling public sectors and, but they are hesitant to auction PSBs.

Experts do feel that workers participation will have an incredibly positive impact on the mental and psychological health of the workers, as they are associated with the organization.

According to ILO : ‘Workers’ participation may broadly be taken to cover all terms of association of workers and their representatives with the decision-making process, ranging from exchange of information, consultations, decisions, and negotiations to more institutionalized forms such as the presence of workers’ members on management or supervisory boards or even management by workers themselves” It may also turning to be back bone of various corporates, which lacks floor level equilibrium.

On 16th March 1985, then finance minister Shri.V.P. Singh announced, “Government is also considering the introduction of a scheme of stock option to the employees and workers to encourage their participation in management”.

A few companies ventured to implement the scheme of issuing 5% of the additional equity and 10% of the new issues.

SEBI, exercising its administrative power, while allowing the employees quota, modified the norms on share issues with PREMIUM.

The managers of issues were directed to collect Premium on shares allotted under employee’s stock option i.e., six months average of market value.

SEBI withdrew the LOCK IN PERIOD for such shares. It was a deliberate dilution or silent killing of very Objective of workers’ participation. Indirect purpose of Premium clause was to discourage workers to invest in their company shares. Employees stock option became a boon to the corporate heads. That was an extra bonus for men in High Places.

It is an intentional plot of government, to water down the directive principles of the constitution and state objective, under article 39(c) direct toward securing “that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment…”

Further article 43(a) says, “The state shall take steps, by suitable legislation or any other way, to secure the participation of workers in the management of undertaking, establishments or other organisation engaged in any industry.”

The objectives were reluctantly introduced in the public sectors and not in a private sector. The government is empowered to issue directive to fulfil the constitutional obligations. But it did not. The impasse continued. Primitivity of corporates continues with their power and they a government of their own now is helping for their orthodoxy.

Worker’s participation will drastically change the face of industrial houses, where the entrepreneurs and worker leaders are meeting with their mental maturity and common institutional interest.

Objectives and level of participation may vary from one country to country, state to state, level to level, industry to industry, at the various levels of enterprises in Germany, in Japan and many eastern Europe states, where the concept works with greater success. Floor level participation and board level participation are being part of government directives in various European nations.

Participation of workers in the corporates are constitutional rights in Europe. They treat it as DEMOCRACY AT WORK. Workers’ controlled enterprises, Board level participation, workplace assembly, autonomy, trade unions, collective bargaining, equity, and financial participation, right to strike- all features are part of their legal system. Worker’s contribution to share capital can also be a strategic change with one person one vote to elect the board of directors.

Growing technological miracles are emerging as a major danger to the existing small and medium or even large industries. Outsourcing, maintenance, channelising and marketing strategies have a colossal diversification and not one man show.

Outdated human resources policies, hierarchy obsessions, administrative fallacies may affect the growth rates of many factories and industries. Reduction of Human labour had resulted in more damages, to corporates and to nations. In fact, human labour is costliest in USA and there is no loyalty nor personal attachment to any job or industry.

This culture was the bye-product of hire and fire theory of corporates. Now corporates do face work force detachment to failures or down fall of the factories, as they are not their concern and they find alternative opportunities, by abandoning the ailing institution.

In truth, the untold story is that today cartels of large corporates are against their potential rivals in the market. Repeal of Monopoly and Restrictive Trade practices Act, and dilution of many statues under their direction-opened their gates for market aggression.

This demand may look untimely, because predatory character of large corporates is now slowly shutting down the factories under medium and small.

Unilever, Ambani groups, Adani groups, TATAs or Birlas, these giants are bulldozing the small enterprises, which are having a large work force. So, these big, medium, and small corporates must change themselves by taking the work force as guards of their ventures. They shall revive a culture.

Part of it is “WORKERS PARTICIPATION IN MANAGEMENT.” They can read the success stories, by washing their brains and having a new inputs and novel approach.

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(Krishnamurthy V. is a retired banker from Bangalore and has extensively worked with bank employee unions and other Karnataka based movements.)

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