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BUSINESS
Strikes could hurt India’s investment
climate
Devajit
Mahanta
Strikes
are a strategy used by a group of employees in an
attempt to force the employer to meet their demands. But this strategy must
be the weapon of last resort because if this right is misused, it will
create a problem in the production and financial profit of the industry and ultimately affect the
economy of the country.
There are mainly two hypotheses on the effects of strikes on economic growth. First, a negative
effect of strikes on economic growth as assumed to be a part of the rent
seeking activities of trade unions and political parties
and, second, strikes are considered to be the most
effective mechanism to curb excessive use of managerial powers and
discretion. Very few studies have examined the effects of strikes on
economic performance. Now is the time for our academicians and policy makers
to think about reconciling both conflicting objectives.
Of all the issues surrounding strikes, the biggest question resolves around
the issue of legality of strikes. Much of the
debates on the legality of strikes under the Indian Constitution have been on
the issue of the right to strike. Constitutionally, strikes may be analyzed
through fundamental duties under part IVA of the
Constitution. A strike is defined in Employments Rights Acts (ERA)
1996 as, “a concerted refusal, or a refusal under a common understanding of
any number of employed persons to continue to work for an employer in
consequence of dispute”. Everyone has the right to protest, but when it
hampers the growth of the nation and mass people, they need to decide
what’s more important.
The history of labour legislation in India is
naturally interwoven with the history of British rule, but there is “no
right to strike” as such in British rule. In USA, most of the state
government employees and medical professionals’ strikes are illegal under the
common law. In Marxist-Leninist regimes such as the former USSR or the China, striking is illegal and
viewed as counter-revolutionary.
In India,
state and company employees strike is already having an impact in several
agencies like health, transport, and agriculture. Based on some recent
findings, I try to analyze how strikes effect the economic growth. On
January 5 when thousands of truckers stayed off the roads after talks broke
down with Indian officials to cut taxes and diesel prices ultimately pushed
up prices of food and commodities across the
country. According to the All India Motors Congress, due to the truckers’
strike, Rs10,000 crores per day loss was incurred by the country’s overall
business. To protest against rising prices of essential commodities, the
main Opposition National Democratic Alliance (NDA) will form a human chain
to observe a countrywide strike. The question arises now whether the
BJP-ruled states will also observe the shutdown.
In case of a strike at a healthcare facility, the third party consists of
patients who may have neither the ability to switch to another provider nor
the power to apply pressure on the employer and employees. Recently, the
Jet Airways pilots’ strike was hogging the limelight in most newspapers. Just
after 24 hours of the pilots’ strike, both the Left parties and the BJP
came out in support of the strike and tried to inject politics. They tried
to politicise a purely legal matter relating to the enforcement of
contracts.
However, in every civilised society the right to strike is an important
element of human rights, but at the same time the objective of economic
growth is equally important. Thus, trying to avert costly strikes seems
only reasonable. Strike as a weapon has to be used sparingly for redresses
of urgent grievances when no other means are available or when available
means have failed to resolve it. It is indeed ripe for the Government to
enact legislation so that strikes in any sector may be banned, if deemed
essential.
(devajitmahanta@gmail.com)
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