CLOSING A FACTORY IS NOT LIKE CLOSING A LAPTOP

The vegetable cutter in a famous restaurant was not getting overtime and also lost the benefit of having dinner free as his timings got over by 6 p.m. Since recession was felt by the IT industries when Obama became President of USA there were fewer crowds in costly hotels. I was intrigued by the economics where when the rich cut on luxuries the poor has to lose on his necessities.

While this was the effect of a reduced salary in an industry that pays the highest   with matching perks and onsite visits that earns in dollars, what would be the effect if a factory that pays the lowest (minimum wages) with no perks decides to close down? I looked at the closing down of both Nokia and Foxconn in that perspective.

When people who are not educated or skilled enough do not have a job they do manage a living by odd jobs that become even regular over a period. When factories open and offer jobs the people who join as unskilled or semi skilled workers take comfort on fixed time and regular income and also the medical cover thro ESI to entire family and choose to leave the odd jobs in which they might have even picked some proficiency. This apart the regular income helps the individual worker to plan improvement of his social, educational and living conditions.

With this backdrop if suddenly factories are closed what would happen to not only their livelihood but also future plans? When the investors/entrepreneurs decide to open factories they do bring in capital or investments whether they are Indian or global companies. What they forget is there is also investment from the local government in the form of concessional power, allocation of land and infrastructure that is abbreviated as SEZ. In other words the incoming industry partners with the government who brings in capital through resources.

Productions do not happen without the workers and hence the return on those investments too is dependent on the labor. The labor too invests his prime of youth as most factories adopt twelve hours of working to save on labor cost with overtime replacing the burden of additional labor with ESI, PF etc resulting in no quality time for labor to acquire additional skills or knowledge. This apart the economic, social, cultural environment of the surrounding location of the factory undergoes drastic transformation almost revolutionizing the scenario. Though monetizing such changes in terms of cost has not taken foothold as a parameter in the accrual of benefit to the factory the loss caused by the sudden withdrawal of the unwritten partnership with labor is a beating to the weakest of the participants in a group effort. 

It is very casually uttered by some of the retreating entrepreneurs that the labor should have upgraded his skills or gone for multi skilling (with 12 hour working). Such preaching is actually applicable much more vigorously to the entrepreneur who with his knowledge of global economy and market condition is expected to be more equipped and well set for product diversification to ensure continued employment to people. The intention and attempt should be to sustain running of an enterprise more so having taken governmental support for personal growth and leased profession and livelihood of labor that had more trusted income and employer before the advent of this adventurism.

The government has the ultimate responsibility to ensure that "LABOR" the link between the investment and dividend and also between the raw material and finished product is not left in the lurch. They should capture, grab and seize the wealth of these retreating entrepreneurs to ensure that they do not misunderstand the positive slogan "COME MAKE IN INDIA" as an opportunity to have a picnic of production experiment. 

            ********************************************