Nitin Pai correctly points out that the brutality in Gurgaon is a case for labour reforms, not against.

And by the way, all those who are trying to link the decline of trades unionism in India with its economic reforms, please stop. You are displaying not only your youth (which you may not mind), but also your appalling ignorance, which you might, unless you are a journalist.

I saw the decline of trades unionism in India sitting at my mother’s knee, and let me assure you, I was too old to sit at her knee in 1991. Every year at Diwali time, we used to hear of some company that had declared a huge bonus. The news was recounted to me in mournful tones, not out of envy, but because we knew that the company would not exist the next year. Usually, the company had succumbed to pressure from the union and had given away more than it could afford, in the desperate hope of keeping its factories running for another year. The union leader who secured the workers’ “rights” was usually the person known as Datta Samant. I recommend you look him up. He was single-handedly responsible for the destruction of Bombay’s industry. He was shot dead eventually, but it was too late.

I have an uncle who suffered through the long textile strike started by him- around 1981. The strike achieved jack for the workers, but weakened the textile mills so much that they spent much of the next decade shutting down, one after the other. Under India’s labour laws they couldn’t lay-off a single worker, so the mill-owners simply shut down the mills and opened new ones elsewhere, where they didn’t have to deal with strikes every single year.

Trades unions were taken over by gangsters – and this was a direct result of labour laws. The “Union Leader” could beat up the managers and still get away with it. That was because any attempt to sack them would be met with strikes, which, however illegal, were invariably upheld by the courts. This meant that the most thuggish union leaders got the best results – in the short run. In the long run, of course, the companies shut down. Incidentally, I highly recommend the movie Aghaat for a realistic depiction of how things were. I must point out that the movie was made in 1985, much before anyone had heard of liberalization.

The only way factory owners could run their mills, other than succumbing completely to the unions, was to hire thugs themselves. I won’t get into a discussion of who started the thuggery first. It was a en escalating spiral as each side resorted to more and more thuggery.

All these could not continue for ever of course, and it didn’t. The managers started realising that there was a world outside Bombay. They started their plants outside the city, in far-flung areas, where people were hungry for jobs. Chastened by their experiences, they tried hard to ensure that unions did not form – and they largely succeeded. Then they simply abandoned the factories in Bombay. They declared a lockout and, well, what could the unions do? The lockouts were often illegal, but given how well our courts function, there was no hope of a successful prosecution. Remember what I wrote once about the legal system? That the poorest are hurt the most from the delay. This is where I gained the insight. Rich company owners could wait out the long court cases. The poor workers could not. The latter succumbed and compromised. This pattern was repeated in company after company, including where my mother worked.

From what I gather about the Honda case, it is following the pattern. No one is clear about it, but I understand that Honda doesn’t want a union to enter its premises, the communists are trying to get their union in, and both sides are resorting to thuggery. Deja vu.

If you really want to get a better deal for workers, unions aren’t going to get them. They might for some workers, but it will be at the expense of other, non-unionised workers – like contract labourers. If you force the industry to compulsorily allow unionisation, you will end up retarding industrial growth and causing massive unemployment, as they have managed in Kerala and West Bengal.

Here’s an idea – do away with our awful labour laws. If we need to have them, they should only provide for enforcement of contracts between workers and the management. Make the right to form unions and the right to strike presumptive rights – i.e. valid unless the workers agree not to do so, as a condition of employment. You will find that the lot of workers will improve from the only cause it has ever done – a tight labour market.