Article: Labor's love lost

Employee Relations

Labor's love lost

The July 2012 violence at Maruti's Manesar plant showed that good IR with workers will need more than just good labor laws
Labor's love lost

The genesis of most strikes in manufacturing companies is the dispartity over wages between permanent workers and temp staff


In October 2014, the Labor Ministry proposed the Small Factories Bill to govern wages and conditions of work in SMEs


On July 18, 2012, Maruti Suzuki India’s Manesar plant was hit by unprecedented violence, which saw an HR manager being burnt to death. The violence broke out when workers met the management demanding the reinstatement of a permanent worker, Jiya Lal, who had been suspended that morning following an altercation with his supervisor. Lal, a Dalit, alleges that the supervisor made derogatory remarks about him. The workers were protesting about the fact that while Lal was suspended from duty for the altercation, the supervisor was merely asked to take a few days leave. That evening, a mob of workers attacked supervisors and managerial staff at the plant that saw nearly 100 managers, including two Japanese expatriates, injured. The conflict between the workers and the management had been simmering for over a year before the catastrophic events unfolded. In our cover story of August 2012, ‘Shame – Labor Violence, A Blot on Modern India’, we found that the Maruti episode had brought to the fore the challenges of employer relations in the manufacturing industry and reopened the debate on the larger issues of labor reforms. We attempt to capture some of them to showcase that it is an industry-wide trend.

Pfizer: In August 2014, drug maker Pfizer issued a lockout notice to one of its manufacturing facilities in Mumbai on the grounds of indiscipline and threats to management personnel. In a filing to the Bombay Stock Exchange, the company said that the proposed lock-out had been necessitated on account of several acts, as a result of which the company is of the belief that it has become impossible for the management to continue with the operations of the plant in a peaceful and productive manner. The Thane unit is the only unit of Pfizer in India and employs 212 employees.

Hyundai: In January this year, hundreds of employees of NVH India Auto Limited, one of the suppliers for Hyundai Motor India Limited, went on a sit-in-strike, after a South Korean national (learnt to be the company’s managing director) allegedly assaulted an employee. A video, which was uploaded on YouTube, showed a Korean national standing on the victim. However, the authenticity of the video could not be ascertained. The video went viral on the social media. The issue started after the company suspended 15 employees for seeking basic facilities and permission to set up an employees union in the company.

Coal India: Half-a-million workers at Coal India and Singareni Collieries went on strike for five days on January 6, 2015, in the biggest show of union strength in recent years, to protest the government move to invite bids from the private sector for coal blocks through an ordinance that also permits merchant mining and sale of coal in the open market. Following the government’s assurance that they will evaluate the enabling clause in ordinance, which will pave the way for private commercial mining, the workers called off the strike. The unions are apprehensive that the merchant mines will not pay minimum wages or ensure workers’ social welfare.

Bajaj Auto: In 2013, workers at the Bajaj Auto plant in Chakan were on a 50-day strike that ended on August 13. However, the tussle between the management and the workers had been going on for 15 months. The union had demanded reinstatement of 22 suspended workers, wage revision, and shares of the company at reduced prices. The management finally agreed to increase the wages by up to Rs 10,000 a month, but did not allot the workers ESOPs. Both the management and the union decided to withdraw all cases relating to the strike.

Nokia: When the Nokia plant shut down in Sriperumbudur after the company decided to wind up operations in India, its closure has given credence to “perceptions” of labour activism driving industry out of Tamil Nadu, a major industrial state, including suggestions that Apple’s suppliers chose not to make iPads in Chennai. According to M. Vijayabaskar of the Madras Institute of Development Studies the number of strikes in the Sriperumbudur belt dropped from 110 during 2003 to 28 in 2013. The number of workers involved in strike came down by a fifth in the same period.

What problems it brought to the fore

These incidents are just a few examples of issues that have crept up time and again and have become almost impossible to ignore.

Pay: Firstly, the question of compensation parity between management and the workers and also between the permanent workforce and the contract workers has become a sore thumb. The genesis of most strikes is demanding more wages. While companies continue to make record-breaking profits, they do not translate on the ground to its workers.

Permanent vs contract staff: For some industries like auto, the demand waxes and wanes and hence the industry prefers to hire a lot of temp staff. Traditionally, permanent workers were paid more than the contract staff. However, most labour unions allege that the temp staff performs all the tasks that a permanent employee does, but still are not paid accordingly. The Contract Labour Act stipulates that if the temporary workers perform same or similar kind of work as regular workmen, they will be entitled to the same wages and other benefits and service conditions as regular workmen. Hence, the workers are demanding the respective companies also take care of the social security of the contract workforce.

Contract staff not under direct control: The temp staff is never under the direct control and supervision of the establishment because they are indirect employees and report to a contractor. According to the current laws, it is the contractor who has to ensure that the temporary workers are provided with basic facilities like canteen, rest rooms etc.

What’s the status now?

The Industrial Disputes Act (1947) has rigid provisions such as prior government approval in the case of layoffs, retrenchment and closure of industrial establishments employing more than 100 workers. The Act states that if the job content or nature of work of employees needs to be changed, 21 days’ notice must be given. The changes also require the consent of the employees.
In October 2014, the Labor Ministry has proposed the Small Factories (Regulation of Employment and Conditions of Services) Bill to govern wages and conditions of work in small and medium enterprises (SMEs). The Bill envisages rules for wages, overtime hours, social security and appointment of factory inspectors in units employing fewer than 40 workers. The Act will reduce the red tape involved in compliance with the rules. It will allow the SMEs to employ women in night shifts based on the fulfilment of certain conditions.

The Factories Act (Amendment) Bill will allow the States to raise the minimum number of workers employed to 20 where power was used and 40 for others, from 10 and 20, respectively. Based on the suggestions in a June 2011 report by an expert committee under former Planning Commission member Narendra Jadhav, the Bill removes prohibitions on women working on certain machines in motion and near cotton openers and allows the State governments to make rules allowing women to work night shifts in factories upon fulfilling certain conditions. It doubled the permissible overtime from 50 hours in one quarter to 100 hours and from 75 hours to 125 hours in certain cases.

In October 2014, Modi launched a Unified Labour Portal or ‘Shram Suvidha’, a transparent and accountable Labour Inspection Scheme, and portability through Universal Account Number (UAN) for Employees’ Provident Fund members. He also flagged off an Apprentice Protsahan Yojana. Introduction of the labour identification number (LIN) and putting inspection on a unified portal will help bring transparency in the use of labor rules. The minimum wage ceiling for provident fund was also raised from 6,500 to 15,000. EPF and pension schemes are to be ensured for vulnerable groups.
A lot of labor reforms have been undertaken; there is still a long way to go. The question is: Will it be enough to solve the industrial relations problems in India? Most of the reforms are pro-industry and hence workers are worried that their voice will not be heard.

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Topics: Employee Relations, #HRIndustry

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