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Transcript Maruti-IR-Fiasco

Maruti Fiasco
One is left with the horrible feeling now that war settles
nothing; that to win a war is as disastrous as to lose one
Agatha Christie
Employment in India
An Emerging Workforce Segmentation
Industry Structure in Gurgaon Belt
Economic Environment
Triggers for recent unrest
Twist in the tale
Employment in India
Division into
formal employment in the formal sector,
formal employment in the informal sector
informal employment in the formal sector
informal employment in the informal sector
Dominated by (d)
at around 86%
“Unorganised workers consist of those working in
the unorganised enterprises or households,
excluding regular workers with social security
benefits, and the workers in the formal sector
without any employment/ social security benefits
provided by the employers”.
“The unorganised sector consists of all
unincorporated private enterprises
owned by individuals or households
engaged in the sale and production of
goods and services operated on a
proprietary or partnership basis and
with less than ten total workers”.
Characteristics of segment
Those who have not been able to organise in pursuit of a common objective because of
constraints such as
• Operation on a casual basis or personal relations
• Lack of formal employer employee relationship
• Low scale of organisation
• Harsh working conditions
• Absence of fixed working hours
• lack of housing and access to urban services
• unregulated or unprotected nature
small own account (household) or family-owned enterprises or micro enterprises
ownership of fixed and other assets by self
production expenditure indistinguishable from household expenditures
use of indigenous resources and technology
use of labour intensive technology
Industry Structure in Gurgaon belt
Primarily export oriented
Caters to both domestic
and export markets
Caters to US markets,
primarily service
Mainly migrant labour
working in ‘dormitory
villages’ who hand over to
supervisor middlemen
Production units
connected to many
outsourced suppliers
reaching into workshop
slum-villages or green
field industrial areas
A healthy mix of migrant
as well as local labour
Young, ‘English
speaking’ crowd with
a higher aspiration
Casuality of work force
Economic Environment
In 2008 the Rupee plummeted, but together with it the US and European market
crashed and sent shock-waves into the industrial areas of Gurgaon
Credit crunch for the real estate,
Garment and auto ancillary orders came down
US-banking services slumped
The garment industry in Gurgaon dismissed thousands of workers and shifted
orders to ‘low currency’ countries like Vietnam and Bangladesh.
For sustenance of industry, moved to contractual forms of employment
Hence, loss of formal employment, gross violation of law and pitiable quality of life
led to a melting pot of unorganised labour belonging to different classes and having
different aspirations all existing in a common belt
Burden to defend
• Gujarat emerging as the leading automobile industry hub
• Almost 80% dip in mandays lost due to strike and lockout in 10 years
(3,34,132 to 41,128 mandays)
• Gandhian principle of Trusteeship in spite of wages 20% lower than
rest on the country average
• Haryana Govt/ Labour department colluded
management to protect their industrial interests.
• Take a biased view towards Union in interest of Management
• Subsequent pressure from Management made things unbearable for
• And management says: “we can not recognize union until it is
Fresh-faced workforce
• Average Age ~ 25 Years
• 400 Trainees, 400 Apprentice, 700 Contract Labour and 950
Regular Employees
• Non Regular Workmen Ratio close to 0.38
• Aware of the difference between man and machine
• Life outside factory
– Mostly unmarried or staying alone (w/o family)
– “Gurgaon plant workmen do not have stomach for a fight as they stay
with their family”: Naresh, a Manesar plant workmen on Gurgaon
2000 strike pull off
Factory Standing Order
• 103 defined misconduct
– “spending too much time in the toilet”
– “Chatting” : Even while in queue for lunch
• Punitive measure not well communicated
– Salary goes negative if suspended
– 1 minute late amounting to half day absent
Working Conditions
• Two 7 ½ minutes tea break
– “You have to remove safety equipment, run 150+400 meters for snack
and toilet and come back in 7 minutes”: G sec of proposed MSEU
– Management agrees but says: Tea is served in more than 50 rest
rooms around the workstation itself.
• Half an hour lunch break
• Abusive language by Supervisor: Management denies and
says “Gurgaon plant has operated in identical condition over
25 years”
• Ill treatment even while opting for sick leave – direct impact
on wages (Incentive)
• 18% of CTC as attendance reward
– 25% reduction in 1 day leave (would come down to zero in 3 days)
– A thin line between acceptance and outrage
Right to become collective
• Gurgaon Manesar Belt mainly dominated by AITUC and HMS
• It is no secret that most Management see HMS as the lesser
• One recognized Union for both plants (Gurgaon and Manesar)
– No election in last decade
Urged to become member of the Union on permanency
Lack of support from MUKU
Hovering demands to form a separate Union since end 2010
Conceivable interference from Management in Union Affairs
Initial support of AITUC; a leftist trade union
But soon…gathered lot of popularity becoming a advising
point for all big Trade Unions
• High cost of living
• Variable Component : 50% of salary (on a base of Rs.18,000/- pm for
• Huge difference between permanent employee and contract labour
– “They are treated like sheep”: says one of the Manesar permanent worker
• Skewed manner in which the benefits of rising sales and profits have been
shared between the management and workmen over the years
Net Value Added (NVA)*
NVA/ Worker*
Wages/ NVA
* Rs Lakh; Source: Annual Survey of Industries, MoSPI
Sense of being cheated
“Management took us for granted”
“Had I put my hands to use in my family farm in Hisar, my folks would have
been very happy”
– “But I wanted to do something else”
Company going back on its word to reinstate 44 employees, who were
suspended during previous month’s strike (Even 1200 casual workers were not
allowed to resume work)
Dismissing 11 workmen in June while discussions were on with Govt Officials
Contract workers paid 1/3rd of what the regular workers are paid even for the
same job and that also Contractor pockets the difference between the billed
amount and the actual paid to CL, inspite of:
– Greater flexibility
– Minimum Wages
– No hassle brought by labour law
The new ‘struggle’ model
• Features of the current struggle
– Systemic Indifference and frustration with management, union and
– Presence of an Extensive communication network leading to awareness of
– Infiltration into ‘elite’ media by way of online presence (Gurgaon Worker
– Presence of mature ‘groups’ in the entire industrial belt leading to burgeoning
awareness levels (Faridabad Majdoor Talmel)
– Reduced dependency on NGO’s or social activists, government support
– Ability to take matters into own hands
Essentially, spreading signs of empowerment
There’s a darker back story of Maruti Suzuki unions. Before
MUKU there was the Maruti Udyog Employees Union
(MUEA). In 2001, Suzuki took over the company and won a
case to appoint its own MD, and the Gurgaon workforce
protested subsequent salary cuts and work intensification.
There was a grim three-month battle with water cannons,
mounted police and hunger strikes ending in MUEA leaders’
arrests. The management recognised a new union called
MUKU and insisted — as it is doing now — that all workers
sign a good conduct bond. Many MUEA sympathisers were
terminated. MUEA was derecognised by the government on
charges that still lie in court. Over the next year, around 1,000
workers were offered a Hobson’s choice of voluntary
retirement or termination.
• Impacting not only Manesar Plant but the entire
India Operations
• 7 Strikes in last 16 years:
– Hierarchy of Growing Synergy
More Wages, Single Unit Impact
Independent Union, Single Unit Impact
Surrendering Discipline, Single Unit Impact
Support for Regular Workers, Multiple Sister Unit Impact (Suzuki
Powertrain and Suzuki Motorcycles)
• Support for Regular and Contract Workers, Multiple Units, All
India Operations Impact
Management leniency perceived as
• Post 1st strike, 11 reinstated workers started flouting
all shop floor norms
• Drop in overall production
• %age of Cars passing quality check reduced and
company accused workers for sabotaging cars
• This laid the foundation stone for the need to have a
“Good Conduct Bond”
• But does it has a legal sanctity?
Sonu Gujjar
• When told that the workers can come back to work if they
agree that several others stay terminated, he suggests “Haan
theek hai”, perhaps the management can arbitrarily fire some
executives as well.
• He says when it was suggested that good conduct means
workers should not talk to each other, he replied “Bhai theek
hai” — he’s game if his superiors agree not to talk to each
other too. Just to keep things on par.
• Least Conceived by Management – 99% attendance, awarded
MD’s award for best employee
Twist in the tale
• Sonu and his associates quietly leaving the company
• Full and Final Settlement (!) between 14 to 40 lacs
• And there were rumors around unstated payouts as well
– “He was not serious about our problems. He didn’t know
anything about labour laws. He made some populist demands
and took us all for a ride”: A permanent worker statement.
– The issues died a sudden death
– Accusation at Management
– Never meddle in Union Politics
• Workers have right to form collective
• Convert the ‘vs’ into ‘and’
– Excellence in PR a must, but not to use against employee’s
– Mix Employee Profile (age/ qualification etc) is given;
Therefore, adopt a segmented approach
– As far as possible, bring parity among Contract Labours and
permanent employees
– Share the gains of productivity
– In a complex situation like IR, even the outliers can make a
huge difference/ impact
– Strive for mindset – vision, mission and values
– If you resort to disciplinary actions too often, workmen get
immune to them
• Shifting Onus to Individual
• Move from Controlling to managing discipline
– Anticipate long term consequences while taking short term
– Interact with employees keeping in mind the multiple roles he
plays both at work and life space
– Communicate, communicate and communicate
– If there are too many variables, the factors then start
troubling; have a control %age of variable salary