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International Journal of Applied Research and Studies (iJARS)

ISSN: 2278-9480 Volume 2, Issue 10 (Oct - 2013)

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Manuscript Id: iJARS/653 1

Research Article

Gloomy Episodes of Labor Turmoil: A Story of Industrial Unrest in Indias Automobile Industry

Authors:

1 Hiteshwari Jadeja *, 2 Dr. Meeta Mandaviya

Address For correspondence:

1, 2 Assistant Professor, Faculty of Management, Marwadi Education Foundations Group of Institutions, Rajkot,

Gujarat, India Abstract Labour clashes are rampant in the auto industry of India. India has austere labour laws, but their solicitation is extensively circumnavigated by contracting low-wage contract workers. Labour transformations is a long-pending concern and yet another indicator of policy paralysis that has swamped the extensive polity. Manesar viciousness event swells to India's recent episodes of labour arguments revolving to ferocity. The need of the

hour is personal touch between the management and workers and judicious amends of grievances. Societies must craft a workplace milieu based on translucent dialogue so that employees do not have to pursue help from unions. Labor laws may take one more decade to constrain but HR fraternity has to be proactively and diplomatically well competent with undercurrents of Unions.

Keywords- Labour Issues, Autombile Industry, Trade Unions,

Violence,

Lets come together to make this bandh successful A scene from Shop No. 19 near Gaushala market on Mata Road Gurgaon, A table loaded with papers written

Hamari Mange Poori Karo!. where thousands of leaflets leveling of invigorating the cloak on the status quo

and the potential for workers sovereignty that it devours, starting from the example of a significant strike which took

place three times (June, September and October

2011).Underneath the chair, the photo was a slogan in Hindi

that loosely translates to Lets come together to make this bandh successful. Yes, it is the Gurgaon headquarters of the All-India Trade Union Congress (AITUC), Indias most powerful trade union. A darkish, dressed in a dirty white shirt with the first two buttons off, black trousers and no

footwear speaking very strong Haryanvi accent who doesnt really have a job. His actions turn out to be worst with, a 33-

days labour strike at Maruti Suzukis Manesar, Awanish Kumar Dev, General Manager-Human Resources was burnt

alive to death, 91 workers were arrested and with a figure

which state loss of thousands of crore in production.

Reacting to the development, shares of the company

dropped by over 4.32 per cent on the Bombay Stock

Exchange and more than 4.18 per cent on the National Stock

Exchange to early lows of Rs 1,065 and Rs 1,066.60, respectively. The stock, however, later recovered some of

the lost ground and was trading at Rs 1,082.30 on the BSE,

down 2.77 per cent, and at Rs 1,083.75 on the NSE, down

2.65 per cent, at 1045 hours.

The D- Day was 3rd of June, 2012 where all 11

representatives of MSEU (Maruti Suzuki Employees Union)

from the Manesar plant, went to meet Ministry of Labour of

the State of Haryana in Chandigarh in order to carry out the

formalities of registering the new trade union. To sabotage

this management decided to take signature on blank pieces of paper, in errand of the company union (the MUKU12) to

try to interference the establishment of the new union and

sacked those eleven MSEU members. And this made all

workers provoked to begin a strike with an occupation

inside the factory. On 5th June, The management seal off

the gates of the factory and put a line of security guards in

front of them, with aim of preventing any contact between

the workers still inside and those on the outside that is, the workers, their sympathizers and the media. The strike is

declared illegal by the government of Haryana. Two lorry

loads of additional police arrive on the scene. Under this

pressure, 250 workers decide to stop the occupation. Because of the lack of storage space and as a consequence

of the strike, 200 to 250 suppliers of the factory have to

reduce or stop their production through lack of deliveries.

The Maruti Suzuki management proposed taking back five

of the eleven sacked workers, but the MSEU refused,

arguing all, or none! This is not the first time Maruti Suzuki facing unrest. Since its inception its being encountered with many issues but yet things are burning!

[email protected] *Corresponding Author

Email-Id, for any consultation/ discussion



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Blood everywhere on the floor!!!

Today He would be alive .vigilance and intelligence officials esoteric the plant could not evaluate the threat

discernment... No security was provided to the officials at

the facility. It was failure on their part as they should have

known that... Such a level of anger was there. We want

justice for him. Whosoever has done this to him should be

brought to justice." said in grief and anguish Suparna Dev

widow of Awanish Kumar Dev ( The Indian Express; Wed Aug 01 2012)

He had no chance of escape, attackers broke his arms and

legs and being trapped inside and burnt alive, Deputy Police commissioner Maheshwar Dayal told media. The body of the plant's human resources manager, Awanish

Kumar Dev, found charred beyond recognition in a burned-

out conference room, was identified by a tooth implant. But

this wasnt the first incident. In the past, worker protests in India often descended into violence, but deaths used to be

rare and killings even more so.

In the last decade, there have been many 'labour homicides, from Kashmir to Kanyakumari. Jan 27, 2012 Workers at

regency ceramics Yanam (Pondicherry) unit killed the companys president (operations) after their union leader died in a police charge. On Nov 13, 2010, a senior official

of Ghaziabad-based Allied Nippon was beaten to death by

protesting employees after he allegedly brandished a

weapon. Sep 21, 2009, The VP(HR) of Coimbatore-based

pricol ltd was attacked by a group of terminated workers. He

died the next day. Sep 22, 2008, Graziano Transmissioni

Indias MD and CEO was killed by dismissed workers at its Greater Noida Plant.

Why and How authoritative and ubiquitous the

workers disapproval towards the Indian automobile

industry!!!! A country that President Obama has

proudly called the worlds largest democracy facing its darkest, most undemocratic moments. The

circumstances didnt unexpectedly appear but on the contrary, the automobile industry in India has seen and suffered this since ages. List below is recent events:

Mahindra (Nashik, Maharashtra), May 2009 and March

2010; Sunbeam Auto (Gurgaon, Haryana), May 2009;

Bosch Chassis (Pune, Maharashtra), July 2009; Honda

Motorcycle (Manesar, Haryana), August 2009; Rico Auto

(Gurgaon, Haryana), August 2009, accompanied by a one-day strike of the whole of the car industry in Gurgaon;

Pricol (Coimbatore, Tamil Nadu), September 2009; Volvo

(Hoskote, Karnataka), August 2010; MRF Tyres (Chennai,

Tamil Nadu), October 2010 and June 2011; General Motors

(Halol, Gujarat), March 2011; Bosch (Bangalore,

Karnataka), September 2011; Dunlop (Hooghly, Bengal),

October 2011; Caparo (Sriperumbudur, Tamil Nadu),

December 2011; Dunlop (Ambattur, Tamil Nadu), February

2012; Hyundai (Chennai, Tamil Nadu) April and December

2011-January 2012; and Maruti Manesar June 2012 and so

on.

The Manesar plant episode has headed to somber



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considerations not only in the manufacturing industry, but also in the academic field. Industrial Relations has gained

popularity after the incident which was been a derelict field

since decades. Top B-schools are titivating their syllabus

and curriculum to give emphasis to this subject which was

forgotten for a long time. Seminars, conclaves, International

meet and conferences have taken place in B-schools

crosswise the country to craft and construct awareness on

prerequisite for industrial relations in the contemporaneous

scenario. To rebalance the human resource, companies also

pushed the management institutions to include industrial

relations through training.

Research said that 55 percent of the labour forces in India are

on contract basis only and most of the companies are

following Hire and Fire Flexibility (see Chart) rule to

escalation competitiveness and mend the lucrativeness along

with increase shareholder value. Every 6 months, the

employees are removed and reappointed; reason being

beyond 6 months of continuous employment-medical

benefits and provident funds should be provided. Indias automobile sector employs just over 7 percent on a permanent basis. Rests are on contract. These grey areas in

the labour contract (regulation and abolition) act1970 have

led to the unfair wage practices and hostile work

environment. In Maruti Suzuki where a permanent employee

gets INR 23,000/month, the contract labour for the similar

skill and job profile is paid just about INR9500/ month. At

Hyundai Car plant in Chennai, an ITI diploma holder with

about 10 years experience permanent employed would take home INR 45000/ month. (ILO Report, 2012 & A Watson

Wyatt (2012) study report). India is being ranked bad (132)

in the Ease of Doing Business Index List. These repeated

incidents showcase the complex labor scenario to the outside

world.

The auto industry has grown very rapidly in the last few

years: From 8.5 million vehicles (including two wheelers,

three wheelers, passenger vehicles and commercial vehicles)

in 2004-05, production has risen to 20.4 million in 2011-12.

Passenger car production has risen from 1.2 million vehicles

in 2004-05 to 3 million in 2010-11 (and probably further in

2011-12). The auto industry is a well-known success story of the rapid growth of the last decade, and the Government is

set on making India a global manufacturing hub for automobiles, with the help of large State subsidies.

STATISTICS OF THE LABOUR UNREST

On the other hand, it is a well-kept secret that real wages in the auto sector i.e., after discounting for inflation actually fell continuously in the period 2000-01 to 2009-10.

(The latest data available from the Annual Survey of

Industries [ASI] are for 2009-10.) True, annual wages in the

motor vehicles industry rose in nominal terms from Rs 79,446 in 2000-01 to Rs 88,671 in 2004-05 to Rs 109,575 in

2009-10.

However, the Consumer Price Index for Industrial Workers

(CPI-IW) consistently rose more steeply than wages. So real wages in the auto industry fell18.9 per cent between

2000-01 and 2009-10. (See Chart 1.) On the other hand, net

value added2 per auto worker has been rising, barring a dip

in the years of the slowdown in the economy. Each worker

added value of Rs 2.9 lakh in 2000-01; this figure rose by

2009-10 to Rs 7.9 lakh (see Chart 2). Naturally, wages as a

share of value added have been falling, as can be seen in

Chart 3. In 2000-01 workers wages were 27.4 per cent of

value added. By 2009-10, the ratio had fallen to 15.4 per

cent. To put this in Marxist terms, let us think of the



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working day as made up of two parts. In one part the worker works to generate his/her subsistence (and that of his/her

family, thereby ensuring there will be workers in future as

well). In that time, the value the worker adds to the inputs is

equivalent to the wage he/she gets. But the worker cant stop working at that point, because the capitalist has bought

his/her capacity to work (labour power) for the full working

day. (And the worker, owning no means of production, has

no choice but to sell that labour power in order to survive.)

He/she continues to labour for the rest of the working day,

whether it be a day of 8, 10, 12, or 16 hours. The additional

hours are surplus labour time, which we can also express in

money terms. This goes to the capitalist. Of course, the capitalist also may pay, out of the surplus, interest to banks,

rent to the owner of the land, wages to management

personnel, and so on, but all these others take a share of the

surplus through the capitalist.

In these terms, we can say that in 2000-01, an auto worker

spent 2 hours 12 minutes of an 8-hour shift working for

his own subsistence and that of his family. He spent most of

the remaining 5 hours and 48 minutes generating surplus for

the capitalist (and the banks, landowners, management

personnel, and so on). By 2009-10, the ratio had

deteriorated: The auto worker now spent just 1 hour 12

minutes working for his own subsistence and that of his

family, and the remaining 6 hours 48 minutes working

largely for the capitalist.

How did this deterioration take place? It was not merely a

story of growing worker productivity, the ability to produce

more per hour with new technology. As we saw above,

workers wages actually fell in real terms by almost one-fifth. Active class struggle was being waged by the employers against the workers.

Contract workers have been worst hit by price rise, since

their wages are not indexed. They have seen a steep fall in

real wages. They have reached the limit of their tolerance, and are now fighting back. It is the attempt of workers to

make up a part of their real wage losses over the last decade,

and particularly the last few years, or at least to prevent a

further slide, that accounts for their current increased

militancy. Of course, auto workers are merely an

outstanding instance of a general trend.

This unprecedented scenario demands that stakeholders gain

a better understanding of the ground situation and make far-

reaching changes. It is high time we revisit our archaic labor

laws. As per the World Bank, Indian labor laws are rated as

one of the most rigid laws Labour laws need to be

simplified. Currently, there are more than 250 laws - 45

central and the rest state laws. Companies need to have

flexibility in hiring and terminating employees. Society has

changed. Values have changed. Business has changed and so has the economy. But the labour law is obsolete. The role

of labor unions in the industrial scenario of our country

cannot be negated. It is the approach towards the trade

unions that determines how well they are managed.

Companies which always restrict and control the formation

of trade unions have always suffered at their hands.

Companies should allow formation of trade unions on

democratic grounds.

In the October, 2012 issue of Policy Watch, its monthly

publication, The Confederation of Indian industry has said that "a holistic relook at existing labour legislations is

required to align the legal framework with the dynamic

requirements of globalisation, competitiveness, and

productivity".

"Companies can have CII, Assocham and FICCI, but

workers can't have a union. Is that fair,'' asks A.K.

Padmanabhan, President, Centre of Indian Trade Unions,

and a member of the Communist Party of India (Marxist)

politburo. The state governments that had rolled out the red

carpet for these companies remained silent. Non-acceptance of the demand for a union at Hyundai Motor, Maruti Suzuki

and many others in India's led to a strike. "These companies

respect trade union laws in their own countries but ignore

them in India,''

Way Ahead

Its now high time for us to retrospect and take instantaneous actions. All the stakeholders the government, industrialists, laborers, society and whoever

concerned should converge their thoughts and focus for the

progress of the nation. People should understand that

violence is not the solution for any problem. We want

permanent solutions that can take the industry and the

Indian economy ahead. Maintaining a harmonious industrial

relation involves collective effort by all the stakeholders.

The fate of Roy, Chaudhary and Awanish should not happen

to anyone again. It is time that we consider laborers as part

of the company rather than cost elements. They should feel empowered. The laborers should be educated and made



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aware of the industrial scenario of the country and how important their contribution is to the progress of the industry

and nation. The increasing aspirations of the present

working class should be understood by the management.

The HR department should be more proactive in dealing

with the laborers. Promotion of trust between the manager

and the managed is necessary. More discretionary power

should be given to employees. The management should

have dialogues with the workers. It is not an archaic society

where every attempt to increase productivity leads to

disputes and strikes. The industrial set up should be

improved in such a way with the inclusion of employees

such that they get incentives for increased productivity. Capacity development should be given importance not only

in the high level and middle level management, but also in

the shop floor level. Such actions would surely make the

employees more empowered and self-valued.

Toyota is an excellent example for their approach to

employees. They are considered as a company which do not

build only cars, but people too. Toyota explains their approach model to HR: Being heard is the foundation of the Toyota culture of continuous improvement. So, Toyota

sets up mechanisms through the HR department to allow

team members to be heard. We saw that even the HR

department can be viewed as biased. The counter measure

was to set up a separate I team representing a cross section of the plant to investigate employee issues. It is time companies learn from their counterparts and

benchmark themselves not only in financial growth but also

in intangible dimensions also. The formation of labor unions

can also be considered as a failure of a company to address

the issues of the laborers. If the company pursues proper employee engagement, employee development and

transparent conversations with the employees, they would

not seek the help of an external agency for help like a labor

union. So it is required that every company has a 360o

feedback system so that even the lightest issue is addressed

before it gets serious.

Ashok Leyland is making an innovative attempt to tackle

the problem by building a "classless workplace" at its new

facility in Pant Nagar, Uttarakhand. It tackles many of the challenges on the shop floor today, with uniform work and

pay scales for all the workers. A blue collar worker has the

same opportunities as a white collar executive to grow and

head the company. "We want to break this norm - once a

workman always a workman," says Leyland's Arora.

It is not only the companies which should revisit their

approach to trade unions. Trade unions should have a

second thought on why and what they exist for. They should safeguard the interest of the workers, but at the same time,

they have the responsibility to promote the growth of the

industry and the country. They should understand the

changed industrial scenario. Trade unions should not

become franchisees of politicians. Another area where thrust

has to be given is the handling of the labor issues. Whatever

industries do, disputes will continue to occur. But the

success depends on how smoothly the company handles it.

Even in cases of disagreement, companies should make sure

that a disagreement is reached after discussions and

negotiations. A failed negotiation is always better than confrontation. The ability to listen and negotiate with

patience should be there in every management. The way a

dispute is handled creates an image of the company in the

minds of the workers. It is very important to create a good

image because the image persists even after the conflict is

over and the worker returns to work. It is far more important

to create an inclusive work atmosphere for workers

returning after strikes. It is a herculean task which might

sometimes take years. There are companies which are still

bearing the wound of strikes which happened years ago. It

requires an open mind from both parties to share the blame

and the gain of a dispute and the negotiations.

Questions:

1. What are the various factors which are effecting strikes at

Automobile industry in India?

2. Which immediate steps should be taken by leaders of

Automobile sectors in India?

3. What should be the government intervention to solve this

issue?

References

1. Durai, Pravin (2011), Case Study About Worker Unrests in Indian Automobile Industry; International Business and Management, Vol. 3, No. 2, 2011, pp. 74-78,

DOI:10.3968/j.ibm.1923842820110302.7Z0132



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2. Padmanabhan A. K., Interview Abstract; President, Centre of Indian Trade Unions, and a member of the

Communist Party of India (Marxist) politburo; Indian

express; wed Sep 2012

3. Narayanan, K. (2004).Technology Acquisition and

Growth of Firms: Indian Automobile Sector under Changing

Policy Regimes. Economic and Political Weekly, 39(6),

461-470.

4. Badrinath, M.N. Labour Dissonance At Maruti Suzuki India Limited A Case study on Industrial Relations Senior Lecturer, Dept of BBM, PES college of Business

management, BSK 3rd Stage, Bangalore

5. Mathew, Babu; A Brief Note on Labour Legislation in

India. Asian Labour Update, Issue No.46, January to

March 2004

6. Business standard, Labour Reforms are here, Saturday,

March 10, 2001, Chandigarh.

7. ILO Report, 2012 & A Watson Wyatt (2012) study

report), Business Index List

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