Needed: Synergy between profit and worker welfare

India must reimagine a future of business where profits on the top of the business chain are not enhanced by compromising the rights and well-being of informal workers

When the Covid-19 pandemic broke out in 2020 and we all witnessed the humanitarian crisis that affected millions of our fellow citizens, I felt that we had failed as leaders. Could we take pride in being successful business leaders if we could not create value for those who add value to our businesses all along the supply chain? Could we even call ourselves leaders if we had allowed so many Indians to live on the brink?

Could we even call ourselves leaders if we had allowed so many Indians to live on the brink?(HT Photo)

According to a working paper by the International Labour Organization, India is home to more than 200 million non-agrarian informal workers such as temporary workers in the construction and manufacturing sector, security guards and household help who don’t have formal contracts of employment and workers who engage with industry as fixed-term, contractual or supply chain workers. They lack basic social security and have negligible legal protection.

Driven by the desire to never feel helpless again, immediately after the first lockdown, in May 2020, business leaders, including Forbes Marshall, Godrej Properties, Pradeep Bhargava (of Cummins India) and Thermax joined forces with non-governmental organisations such as the Aajeevika Bureau, the Centre for Social Justice, and Dasra to form a multi-stakeholder platform called social compact (SoCo) to ensure greater dignity and equity for informal workers, not through corporate social responsibility (CSR) funds, but through daily business practices in order to mainstream the idea that a responsible business is a successful one.

We chose the word “compact” and not “contract” because it implies collective will and support. The vulnerabilities of informal workers were addressed through six corrective outcomes that ensured access to living wages, adequate health care, adequate safety measures specific to the type of work, government entitlements such as e-SHRAM, Aadhaar, PAN, ration, local domicile proof, growth opportunities through upskilling as well as gender equity. The idea is to help companies progress on a reflection and a remedial action journey by helping them examine their practices for temporary, contractual and supply chain workers, and integrate recommendations into their businesses

At Thermax, as we went through the SoCo reflection journey, we realised that we are often unaware of the working conditions of our informal workers. In one case, it was noticed that women workers at the factories and sites do not have toilets available. While it was distressing to learn about this, it also gave us the opportunity to rectify it.

As more companies join SoCo, the initiative is moving towards forging industry-wide partnerships with bodies such as the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI), to achieve a nationwide impact and mainstream the Compact’s aspiration that a responsible business is a successful one.

Most industries operate from a mindset that they need to bring down costs and become compliant with regulatory considerations. This is necessary, but not sufficient. Two years after the pandemic, industry leaders must think of building sustainable businesses and business chains rather than focus on rebuilding business ecosystems that are volatile and can implode in case of adversity or uncertainty, just like they did during the pandemic.

Let us remember the realisation that Covid-19 brought about the interdependence of businesses with their workers and supply chains. Those who looked after the most vulnerable workers in their system were able to restart work when the lockdown lifted, while the rest struggled and even had to pay higher wages to bring their workers back.

This synergy between a profitable business and the well-being of all workers is not altruism but a central component of the Environment, Social and Governance (ESG) paradigm, which encourages businesses to make profits in a sustainable manner while also upholding their duty towards the environment, social inclusion and governance.

This has gained even greater traction post-pandemic, as the global opinion and even national platforms like SEBI’s Business Responsibility and Sustainability Reporting, increasingly emphasise greater business accountability towards practices in one’s own sites as well as in one’s contractual and supply chain ecosystems.

As business leaders, we have the responsibility to build a society that is more equitable and humane, and creates a sustainable future for all. I also know that business leaders might find this worrisome: They have invested so much to build the reputation of their companies and what if the SoCo journey unearths something that might tarnish that reputation? Then, there’s the question of cost: What if taking corrective action results in a company falling behind its competition?

To this, I can only say, it is time to rise above fear and embrace the intent of finding a synergy between profit and the workers’ well-being. This is an opportunity to reimagine a future of business in India that is not myopic, but where profits and growth on the top of the business chain are not enhanced by compromising the basic rights and well-being of workers informally engaged all along these chains.

Anu Aga is former chairperson of Thermax whose philanthropic arm supports several causes pertaining to education and other issues. She was an early funder of Dasra’s initiative on Informal Workers 

The views expressed are personal