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

Content

Employment in India

An Emerging Workforce Segmentation

Industry Structure in Gurgaon Belt

Economic Environment

Triggers for recent unrest

Twist in the tale

Learning

Employment in IndiaDivision into

a) formal employment in the formal sector,b) formal employment in the informal sectorc) informal employment in the formal sectord) informal employment in the informal sector

.

Dominated by (d) at around 86%

“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”.

“Unorganised workers consist of those working inthe 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”.

Characteristics of segmentThose who have not been able to organise in pursuit of a common objective because of constraints

such as

– EMPLOYMENT SECURITY• Operation on a casual basis or personal relations• Lack of formal employer employee relationship• Low scale of organisation

– WORK SECURITY• Harsh working conditions• Absence of fixed working hours

– SOCIAL SECURITY• lack of housing and access to urban services• unregulated or unprotected nature

– OTHER FACTORS• 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 beltGarment Automobile IT/BPO

Industry Structure

Primarily export oriented Caters to both domestic and export markets

Caters to US markets, primarily service oriented

Workforce Composition

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 areasA healthy mix of migrant as well as local labour

Young, ‘English speaking’ crowd with a higher aspiration level

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

Triggers

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 with

management to protect their industrial interests.• Take a biased view towards Union in interest of Management• Subsequent pressure from Management made things unbearable for

workmen• And management says: “we can not recognize union until it is

registered”

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

evil!• 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

Sharing• High cost of living• Variable Component : 50% of salary (on a base of Rs.18,000/- pm for

Skilled)• 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

* Rs Lakh; Source: Annual Survey of Industries, MoSPI

Overall 1998-99 2008-09Net Value Added (NVA)* 14,546,105 52,776,558

Wages* 2,652,895 5,977,184

NVA/ Worker* 2.29 6.01

Wages/ NVA 18% 11%

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 Government

– Presence of an Extensive communication network leading to awareness of grievances

– Infiltration into ‘elite’ media by way of online presence (Gurgaon Worker News)

– 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

2001There’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.

Synergy

• 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 weakness

• 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

Learning – 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 interests.

– 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

Learning Cont… – 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 decisions

– 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– WALK THE TALK

Thanks…