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IT Employees Suffer! Share Markets Party! Governments Fiddle!

Blood bath  in IT companies, the governments do nothing

Paul Singer

Elliott Management plan for Cognizant pushes employees off the cliff. (Founder of Elliott Management Paul Singer)

What about the central and state governments which are supposed to protect the interest of employees by enforcing the labour laws? They remain mute spectators to the suffering of IT employees.

CTS dances to Elliott Management’s tunes

To understand what is going on, let us look at the role of Elliott Management, a venture capital fund holding about 4% of the company’s shares in pushing the CTS employees into crisis.

Elliott Management Group took up Cognizant (CTS) shares worth $1.4 billion (about 4% of company’s valuation) in November 2016 and sent a letter to Cognizant outlining a value enhancement plan, a euphemism for ensuring still higher returns to the financial big cats.

Bowing to Elliott and other investors’ pressure, in February 2017 Cognizant announced an agreement with Elliott management which included returning $3.4 billion to shareholders among other things. Some highlights from the agreement in corporate jargon and how they translate for the employees are given below:

  • “expand margin targets”
    “further optimizing operations”
    “drive long-term shareholder value”
    [retrench existing employees, keep hiring new recruits in place of experienced employees, increase work load for everyone]
  • “robust new capital return program”
    “returning capital to its shareholders”
    “deliver compelling value to shareholders”.
    [$3.5 billion (Rs 22,750 crore) being returned to share holders]

Corporates and Finance Capital

Cognizant, TCS, Infosys, Wipro, IBM and many others are on the same path, lopping off career of employees and swelling the coffers of financial big wigs.

  • Wipro had effected the biggest buyback by a private sector firm buying shares worth Rs 2,500 crore in June 2016.
  • Infosys decided to pay Rs 13,000 crore to shareholders via dividend and share buyback.
  • TCS announced buy back of 2.85% shares worth Rs 16,000 crores.
Modi - Trump

Corporates thirst for more and ever more profitability to fuel the money accruing to the super-rich. The governments happily oblige. (Indian Prime Minister Narendra Modi and US President Donald Trump – Champions of Corporate interests)

This explains the party which is going on in share markets. The Bombay Sensex crossed 30K mark for the first time on April 26, 2017 which is an all time high. Commercial dailies predict and push for the index to cross 32K mark by year end.

Yes, the corporates thirst for more and ever more profitability to fuel the money accruing to the super-rich. The governments happily oblige.

Austerity for People and Tax Bonanza for Corporates

In US, On April 27th President Trump announced new tax cut plan to reduce corporate tax rate from 35% to 15%. Immediately, corporate spokespersons in India demand a similar cut in India too. They say that corporate tax rates of 30-40% are increasingly being considered too high.

On another front, the finance capital/corporate rulers in pursuit of ever higher profitability goals want the labour laws to be diluted or done away with as much as possible. These rights were won after years of bitter struggle and sacrifices by thousands of workers. Under these laws the rights of workers (including IT employees) against arbitrary termination, unreasonable demand on working hours etc are guaranteed.

We know that the corporates follow the labour laws more in violation as we have seen in the case of TCS layoff in 2014 and now in CTS’s case. Now the governments want to do away with even these rights on paper, depriving working class of the space to take up legal fights.

BJP Governments At the Service of Corporates

Vasundhara Raje Scindia

Rajasthan government headed by Vasundhara Raje Scindia of BJP amended labour laws in 2014 to better suit the corporates.

Rajasthan government headed by Vasundhara Raje Scindia of BJP amended labour laws in 2014 to better suit the corporates.

  • Industrial establishments employing up to 300 workers are now allowed to retrench employees without seeking prior permission of the Government. This relaxation wipes out every single labour protection rule within the medium industrial establishments in India by enabling the capitalist to fire anyone who claims any rights whatsoever.
  • The threshold of the number of employees required for the purpose of applicability of the Factories Act has been increased from 10 to 20 (in electricity-powered factories) and from 20 to 40 (in factories without power) thereby putting small factories in Rajasthan outside the purview of the Factories Act.
  • Membership of 30 per cent of the total workforce needs to be recorded for a union to obtain recognition. This one is meant to weaken unions and workers voice in large establishments.

This three layered ‘tetra pack’ is indeed air-tight or rather union-tight meant to stiffle the meagre rights of working masses existing in our law books.

The central government led by Narendra Modi of BJP plans to impose the Rajasthan model on the whole of India. Unions like New Democratic Labour Front fight these changes in legal courts as well as in the court of public opinion.

Bangalore garment workers

The way to resist these changes and safeguard our rights was shown by women garment workers of Bangalore in 2016

Don’t Touch Our Rights!

The way to resist these changes and safeguard our rights was shown by women garment workers of Bangalore in 2016. When Modi government dared to restrict withdrawal of PF amount by workers, these Bangalore women workers literally set the streets of Bangalore on fire and made the government back off.

But the corporates know that their profits are directly proportional to the exploitation of working class. More the rights of employees are crushed, better will be stock market performance of the company’s shares. For example, Maruti Suzuki violently suppressed the union movement in its Manesar factory, illegally sending off 2300 workers and foisting false cases on 148 workers with active connivance of the Haryana state government. 14 workers were awarded life sentence by the trial court. Now, the company is having a joyride in the share market. The Maruti Suzuki India’s stock has gained 65% over the past 12 months.

Yes, the rise of share market is in direct proportion to the suffering of working people.

Let us be very clear. The corporates look after the share markets, and the governments look after the corporates, employees are left to fend for themselves. We can safeguard our rights and livelihoods only by collective fights as a union.

Let us join hands and unionize.

Permanent link to this article: http://new-democrats.com/it-employees-suffer-share-markets-party-governments-fiddle/

3 comments

  1. Vijayakumar K V

    Time to take next steps.

  2. Kp

    What a bloody useless article. Do you even understand that the industry as a whole is “changing” causing these shifts? Instead, you just blamed it on the companies and the government’s. Came here hoping to see some thought-provoking analysis, and all I got was garbage rants. Total waste of time.

    1. newdemocrats

      Hi Kp,

      This article was just to point out the political and commercial dimension of the issue while all talk was about HR and appraisal rating which were only immediate causes. We will write a more indepth article about the current layoffs issue soon.

      You are welcome to provide specific critique of what we wrote and other arguments you have for the cause of the shifts in the industry. We all will learn and move forward.

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