The strike threat that loomed over the hotel industry has passed for now. Employee unions have decided to put away for later the indefinite strike that was to have begun on 19 November-but only until 11 December.
But there's a complication though. Both the hotel owners and the unions say that the commission formed by the government to find a lasting solution to the fight over service charges was done without consulting the parties in conflict. The said commission is to submit a report in three months and recommend a concrete solution to the problem that has seriously threatened the hotel industry.
Earlier this week, union representatives said the strike was postponed because they had received a "sympathetic response" from the government on the 10 percent service charge they are demanding. The decision was reached in the presence of representatives from the government and the Employer's Council of the Federation of the Chambers of Commerce and Industries (FNCCI). The final compromise was hammered out in the presence of the tourism minister. Hotel owners stayed away from this meeting and instead called upon the Prime Minister to form a high-level commission to look into the issue and settle the matter once and for all.
The unions argue that owners have nothing to lose because they can pass on the service charge to tourists. They say the charge would also force hotels to maintain transparent accounts-something that could also be in the interest of the government for taxation purposes. Presently, only the larger corporate hotels are said to maintain open accounts.
The 10 percent service charge is something workers have been demanding for over as many years, and many hotels privately admit that they would have no problem with it if the government says OK. "The unions should agree to postpone the next bi-ennial collective bargaining if they are to get it," one hotelier told us. "Both sides should be ready to give and take something." But the smaller family-run hotels that comprise the majority oppose the charge because it would force them to open their books to their employees, and ultimately to the taxman.
The dispute would not have been as threatening had the hoteliers decided to engage the workers in talks and not warned lockouts, a union source told us. He also said that all the hotels wanted was that they be declared "essential services" when they went around meeting top politicians-who ironically had trade union backgrounds and were not ready to listen their "anti-democratic" demands.
Hoteliers point out that India's Taj Group of hotels is the only major chain that currently add the service charge. The Taj, however, is also said to be the worst paymaster in the Indian industry. The unions want hoteliers to come to an agreement within the month-long deadline, while HAN maintains it would need at least a year to work out a deal.
The unions also have their own list of hotels all over the world that levy the charge and say that they are even prepared for removal of the charge in a year if that actually hurts the tourism industry, as claimed made by the hotels.