Synopsis: Communication For Productivity Letters written to some 7500 Workers / Managers / Union Leaders, following a period of strike / Go slow / Murders (1979 - 1987), at Mumbai factory of Larsen & Toubro Ltd. This direct / open / honest communication led to a remarkable atmosphere of trust between Workers and Management, which, in turn, increased productivity at 3% per year (ave).

12 Feb 1986

To:

Dear Friends                

PRODUCTIVITY AND UNEMPLOYMENT

Does  increasing  productivity  increase unemployment?  Let's look   at  the   fundamental   definition   of  Productivity.

Productivity is equal to    Output                           

manpower

Let us take an example of our famous MK-1 starter.

In 1979-80, we  used to take 167 manhours  for final assembly of 1,000 nos. MK-1 starters.

Today, we take 133.8 manhours  for final assembly of the same number of MK-1 starters.

1979 productivity is equal to  1,000 starters =     5.98                                

167 manhours

1985 productivity is equal to  1,000 starters =     7.49                                

133.8 manhours

That means with  one manhour,  we are  able to assemble  7.47 starters in 1985 as compared with 5.98 in 1979.

Therefore, rise in Productivity = 24.8%

During the  same period, (1979-85) the wages of  the Assembly Worker  (working in MK1-Final Assembly)  went  up by  282%!!!

But CPI Index went up by only  179% in the same period.

So you have seen  that Productivity - increase, means  "doing same with less manhours".

That means, we  require less men than before  (to produce the same quantity).

That means, "surplus" people.

That means, unemployment!

Seems so  simple!  Some people  (the surplus-ones)  must lose their job !!

By now, you are itching to ask!

"If that is so, why  the hell must we  increase productivity?

-      If that means throwing some people on the roads?"

The answer is equally simple.

If  we do  not throw  some of  our  people on  the road,  the competitors will throw all of us on the road !!

If our productivity does not increase  (even at the cost of a few jobs),  our cost will  keep going up and  we cannot  sell our products in the market.

And, if we cannot sell our products, we do not need anybody.        

-      the Managers        

-      the Engineers        

-      the Accountants        

-      the Stenographers        

-      the Store-keepers        

-      the Workmen        

-      the whole lot  !!

And this is what seems to be  happening in Europe & elsewhere right now.   To  give you an  example, please  see the  chart below  showing   number  of  employees  shed   by  8  reputed companies.

Name of Company		Employees shed or proposed to be shed (Nos.)
1.	AT & T's information System Division	24,000
2.	Ford Motor Co.	10,000
3.	Union Carbide Corpn.	4,000
4.	C B S	2,000
5.	Motorola Semi-Convertor Group	9,200
6.	Du Pont	11,200
7.	Kodak	9% of its workforce
8.	Warner-Lamber Co.	21,000
Source            :      Fortune (international) Magazine October 28, 1985

Compared  to America,  and Japan,  the European  productivity continues  to be  low.   Hardly  a day  passes  without  some European  factory  closing down   (because they  cannot  sell their expensive products), throwing hundreds  of employees on the road.

This is especially true of  the European Automobile Industry. This is why  I have made some notes from a  recent article in time magazine,  which I am  reproducing below.  Now,  I would like you to answer the question,

"How   come,   Europe,   whose  productivity   has   remained static/stagnant over the last 8/10 years, has  a rising level of  unemployment, whereas  America, which  has increased  its productivity has  created 18,00,000 new jobs during  the same period?"

Did  you  say, "  ...  increased productivity  means  losing jobs?"

H.C. PAREKH