HUMAN RESOURCES AND LABOUR RELATIONS

Enterprises can no longer compete on price alone. They have to be quick, on time, with the right quality. And they have to improve constantly. This places a new premium on the human factor.

The stylized pattern that emerges is the following :
 

Phase One

• While enterprises have an ample supply of cheap labour involved in simple assembly they often treat it like a renewable resource, making workers work harder and longer until they burn out or leave. Shifts get longer and longer, with ten hours a day being the norm and many workers putting in substantial amounts of overtime, voluntary or otherwise. This is particularly true of labour intensive, low value added and low skill production processes.
• The workplace tends to be oppressive, intimidating, and not fulfilling.
• Production is inefficient and error-prone with high wastage rates.
• Labour turnover, late-coming and absenteeism are high.
• There is generally no consultation with workers or appreciation of their needs.
• The intensification of work reaches a plateau beyond which it becomes counterproductive, with falling productivity, deteriorating quality and labour unrest.

Phase Two

• Management decide to motivate workers. They introduce cash incentives for higher output and productivity, regular attendance and long service.
• Companies tackle the problem of late coming by offering free breakfast to workers who come on time. This has the added advantage of ensuring that they are strong enough to work a solid shift.
• Some companies offer free transport to and from work to help ensure that workers arrive and to reduce the fatigue of having to walk long distances, often early in the morning or late at night.
• Many firms provide medical and dental services to improve the health of their workers and to reduce time-off for medical reasons.
• Firms employing workers who come from other regions may offer housing assistance.
• Some enterprises supply creche facilities in the plant, inside the zone, or in the community. This takes a major worry of the minds of feeding mothers and reduces the time and money they would otherwise be spending on securing child care. The in-plant creches allow mothers to feed a number of times during the ten or twelve hour shift.
• Plants install airconditioning to increase productivity.
• A number of companies we visited had set up consumer cooperatives for their workers in order to buy better quality food more cheaply than that available in local stores, and savings cooperatives have brought about major improvements in working womens' lives in a number of developing countries, particularly in cultures where women turn most of their earnings over to male members of the family.
• Some companies worried about losing skilled and experienced workers have introduced provident funds which mature after ten or fifteen years. This gives workers a lump sum with which they can start some income generating activity after leaving the zone.
• A particularly innovative approach to providing many of the above services to workers is to invite NGOs specialising in those fields into the plant.
• These incentives however also reach a plateau and the requirements of improving SQCC oblige management to look further for productivity and efficiency gains.

Phase Three

• Management seek to involve workers in meeting the SQCC challenge. This may be a planned or un-planned shift in labour relations. We found a number of plants which had taken this step in reaction to a crisis situation to which management either did not have the answers or could not put them into operation without worker agreement and support.
• Typical measures are the introduction of teams, their gradual empowerment, increased sharing of information, joint problem solving and target setting and the encouragement of worker innovation.
• The most successful companies have developed a tangible sense of partnership between labour and management and given workers a real sense of ownership of the outcomes.
• Such plants have set a new pattern of labour-management cooperation. Management reshapes its training programme to cultivate the leadership and decision making qualities of team workers and begins to see the role of management as one of supporting and coordinating worker initiative.
• Team work is not a new concept, but its popularity is growing and teams are increasingly self-directed. The most advanced use of this approach is in the highly capital intensive electronics plants where management need to amortize their investment quickly by operating non-stop at very high rates of productivity. In order for teams to be effective workers and management require considerable amounts of training and attitudinal change. Skills such as problem identification, analysis and solution need to be learned, along with the dynamics of working in groups, the nature of leadership, and the importance of evaluation. On a different level, workers need to be taught statistics in order to collect and analyse production data. In the Philippines we found companies sending workers on the sort of outward bound survival courses normally reserved for top management in order to enhance their decision making capacity.
• The state-of-the-art at present involves career pathing, upgrading and multi skilling in such a way as to reduce the number of skill layers, increase the value added by each layer, and deepen job satisfaction. Training is the key to achieving this and is actively encouraged by the enterprise.
• This involves a process of phasing out less skilled functions and moving the occupants up the skill ladder. Operators have been upgraded to manufacturing technicians, combining the functions of operator and technician by running several machines, doing the repairs, maintenance and troubleshooting. Supervisors are being eliminated as teams are "empowered". Technicians are being trained to replace the assistant engineers who are in turn being sent to university to become full engineers. The professional engineers move into management or R&D (mostly customization rather than full-blown R&D). The result is a flatter structure with more value added by each individual. Workers appreciate the possibilities for personal advancement, greater earning capacity and job satisfaction.

This leaves many zones with two distinct classes of enterprise, one which is innovating human resource utilization and labour relations in order to improve performance and remain competitive, and another which is intent on sweating its labour force to meet production requirements. Policy measures are required in order to encourage and assist enterprises to make the shift from working harder to working smarter.

The ILO found that the major aspect of labour relations which was not being properly addressed was the issue of workers rights to organize and negotiate collectively. The lack of workers representation, and repression of workers organization has caused extensive conflict in the past, and indeed continues to provoke significant disruption from which all concerned stand to lose. Governments, employers' and workers' organizations need to do more to move towards a stable system of workers representation and labour-management relations.

There are a number of variables which affect the way in which human resource and labour relations issues are handled. These are:

• the origin of the investment, since most companies bring with them a certain style of labour-management relations and often demonstrate an amazing ability to recreate it in the most unlikely environments;
• the origin of the management, particularly the HR Director, which often results in a certain degree of customization of the companies approach to suit local conditions. We found a number of companies which had replaced expatriate managers with locals after experiencing a strike or other labour relations problems due to cultural differences.

• The industrial sector, in that sectors with intense competition, high quality requirements and short product life-cycles demand greater cooperation, commitment and motivation from their workers. The issue of quality is critical here, in that we found many labour intensive, low skill operations which were nonetheless highly innovative, but they were invariably competing on the quality of their product rather than, or in addition to, its price.

• The nature of the production process and the degree of capital intensity matter because they dictate higher levels of skill and productivity in order to optimize their use and amortize the expensive investment.

• The national labour relations system and tradition which inevitably influences, and may even impose itself on, the labour relations style of foreign investors.
• The prevailing labour market situation, in that tight labour markets oblige enterprises to offer better wages and working conditions, and better career prospects, in their efforts to attract, retain and reward workers. Many companies we visited in Malaysia for example, had realised that they could no longer rely on better pay alone to retain workers, and had devised ways of making work more rewarding in order to gain an edge in the tight labour market.