Learning from the Maruti impasse

The recent unrest in Maruti's Manesar plant should not be seen as an aberration or a mere industrial dispute. It is, in fact, an indicator of a new set of challenges facing the Indian industry — challenges which both the Government and the industry can ignore only at their peril.

The National Manufacturing Policy calls for an increase in the contribution of manufacturing to GDP from 16 per cent to 25 per cent. The policy will remain only on paper unless it takes into account some of the social aspects, as reflected in the Maruti unrest.

ROLE OF ASPIRATIONS

At the core of this unrest is a heady cocktail of a number of ingredients. A young labour force (reflective of the country's demography), with aspirations shaped by the environment around them, is an important factor. An affluent Gurgaon co-exists with stark living conditions in villages around Gurgaon, which is where the bulk of the workforce resides. These aspirations are accentuated by rising consumerism. The young workforce is not willing to wait for five or ten years for the prosperity to be shared with them. They further feel discriminated against when their wages are compared with that of workers in Maruti's main factory near Gurgaon, where wages are in the vicinity of Rs 40,000 per month, albeit achieved after 25 years and numerous wage settlements.

These aspirations and a sense of unfairness are further fuelled by political parties and their trade unions. These so-called self-appointed ‘guardians of the working class' find it easier to leverage the articulate 8 per cent of the working population in the organised sector, rather than the 90 per cent-plus unorganised labour.

Incidentally, the average gross compensation of Rs 25,000 per month, paid to regular workers by Maruti at a relatively new unit in Manesar to a new workforce, is by no means an amount to be scoffed at!

The Government is also silent on the piquant issue of amending the Trade Union Act. The laws on union recognition; role of outsiders (read ‘non-employees') in trade unions, holding union leadership accountable for violence by members/illegal strikes, gheraos, and so on; bringing in transparency and democracy in the functioning of unions — are issues on which the Labour Ministry is hesitating to act, for fear of antagonising the trade union leadership.

CASUAL LABOUR FORCE

Another contributory factor to labour unrest is the growing practice of employing a large number of casual/contract employees on regular jobs. A practice which started in response to rigid labour laws and obdurate trade unions, has now become an easy way to get cheap labour. A number of companies, particularly the new ones, ensure that a large percentage of the workforce remains in the contract/casual category and is paid much lower wages than that of permanent workers. The Sriperumbudur belt near Chennai is a classic example of this.

The Central and State governments find it easier to ignore this with a view to attracting new investments rather than take up the more difficult task of moderating rigidities in the current labour laws. For employers, this is an easy and convenient alternative not only for ensuring flexibility but also for keeping labour costs low.

Never mind the inherent inequity of one segment being paid sustenance wages as against another that is paid three-to-four times for doing the same work — clearly, a recipe for unrest. Globally, it is becoming clearer that competitive advantage merely through labour cost arbitrage is only temporary and unsustainable.

LABOUR AND COMPETITIVENESS

Competitiveness is a function of many other factors: Ease of doing business, management capability, governance and transparency both at company and country levels, infrastructure, skill sets, productivity and work culture, technological innovation, approach to quality and many other factors (witness Germany which, in spite of high labour and social security costs, remains a highly competitive manufacturing economy).

If the manufacturing sector has to increase its share in the economy to 25 per cent and also generate more employment, clearly some of the issues emerging from the Maruti strike and other similar industrial disputes have to be seriously addressed.

A young workforce, rising aspirations, increasingly visible disparities in lifestyles, obdurate unions with vested interests, short-sighted employers, want of adequate opportunities for improving skills, rigid and outdated labour laws, and a government incapable of (or unwilling to) either bringing about a consensus or giving direction, cumulatively, do not bode well for the manufacturing sector.

The Planning Commission is aware of these issues but the question is: Will the Central Government muster political will to tackle them? In this scenario, the industry needs to take a proactive stance. Most industry captains look on industry relations as something best left to operating managers. Other than during work disruption, this aspect ranks is low down on their priorities. Clearly, this has to change.

Apart from appropriate culture building within the organisation, industry captains need to reach out to key trade union leaders and political parties and work towards consensus, initially on issues where there are ideological differences like reforms in the Employees' State Insurance Corporation (ESIC) scheme, skill development and employability, and then move on to more contentious matters.

Industry associations can similarly educate and influence their members to develop a fair and equitable workforce policy so that the bogey of ‘exploitation of workmen' by industry can be said laid to rest.

To sum up, the need of the hour is a multi-pronged approach towards developing a comprehensive policy framework which outlines the way ahead, and an integrated and resolute implementation process with the involvement of all key stakeholders.

(The author is Director, Ashok Leyland John Deere Construction Equipment Company. The views are personal. )