LABOR UNIONS STYMIE PLAN TO CLOSE STATE-OWNED COMPANIES IN INDIA

LABOR UNIONS STYMIE PLAN TO CLOSE STATE-OWNED COMPANIES IN INDIA

Trade unions have stalled the government's bid to close chronic loss-makers among state-owned companies, a key plank in the program to revitalize industry.

At a meeting called by Labor Minister Purno Sangma, the unions refused to discuss a document prepared by the government on a compensation fund for workers. The budget last July included creation of a US$78 million (2-billion rupee) kitty to take care of workers affected by structural reforms.The government has identified 58 state-owned companies as "chronically -sick" and plans to refer 50 of them to the Bureau of Industrial and

Financial Reconstruction for sick treatment. If that fails, which seems likely, the companies are to be closed.

Mr. Sangma said these companies have notched up cumulative losses of 100 billion rupees, and would require 150 billion rupees to bring them out of the red. The 58 companies employ 470,000 workers.

India has 244 state-owned companies, 98 of which are poor performers.

Without yielding much ground, the trade unions managed to extract some concessions from the government. The government offered to hand over sick public sector companies to workers, and write off their past liabilities.

The meeting decided to set up six industrial committees to review the performance of each loss-making unit individually. The committees will study companies in the textiles, chemicals, fertilizer, engineering, transport and power sectors.

The government also agreed to consider a suggestion from the unions that surplus workers be identified in each company. These companies would then work round-the-clock seven days a week, while workers will have a five-day week. This would enable the company to use surplus labor and avoid layoffs.

M.K. Pandhe, general secretary of the Center for Trade Unions, said organized labor will not allow the government to carry out policies that would hit workers.

Monday's meeting marks yet another setback to the government of Prime Minister Narasimha Rao, which has failed so far to introduce a policy that would allow a losing company to be closed or to retrench labor easily.

There is considerable pressure on the government to come up with an exit policy for ailing companies before the budget is presented late next month.