Download the latest issue of Business Today Magazine just for Rs.49
India Inc grapples with growing labour unrest

India Inc grapples with growing labour unrest

A large proportion of the workforce today in the Indian factories is young. It has high aspirations but low patience. Widespread disparity in compensation and positions is pushing blue collar workers towards violence.

Damaged cars outside Maruti's Manesar plant in Haryana. Maruti's Manesar plant saw violent protest by the workers on July 18, 2012. Damaged cars outside Maruti's Manesar plant in Haryana. Maruti's Manesar plant saw violent protest by the workers on July 18, 2012.
"…armed with iron rods and door beams, the mob spread out in groups in the factory area and targeted supervisors, managers and executives. In simultaneous attacks in different parts of the factory, the mob beat the managers on the head, legs and back, rendering many of their victims bleeding and unconscious. They also ransacked offices, broke glass panes and wantonly damaged property. Finally, they set the offices on fire."

A worker at Maruti Suzuki's plant in Manesar, Haryana
A worker at Maruti Suzuki's plant in Manesar, Haryana. Protests at the plant turned violent on July 18 this year, resulting in the death of an HR manager
This is not the script of a violent film but the management version of what happened at carmaker Maruti Suzuki's Manesar, Haryana, plant on July 18, 2012, as detailed in the company's press release. That day, Awanish Kumar Dev, Maruti's General Manager for human resources (HR), was burnt to death, and close to 100 other executives were hospitalised. The plant had to be shut down for over a month and 500 workers were dismissed.

The incident in Manesar points to a worrying trend among factory workers. In the past, worker protests in India often descended into violence, but deaths used to be rare and killings even more so. Not any more; in the last four years, there have been at least six 'labour homicides' , from Coimbatore in Tamil Nadu to Nagpur in Maharashtra to Ghaziabad in Uttar Pradesh. In five of the six instances, a manager was killed by workers. On October 13, that changed, when the owner of a Marathi newspaper in Nagpur allegedly shot dead a worker.

This willingness to go to extreme lengths points to the high levels of frustration and desperation among workers on the shop floor today. "Except for a few incidents, the labour movement in India has not seen a homicide. The recent events are disturbing and call for introspection," says Santanu Sarkar, an associate professor who teaches industrial relations at XLRI, Jamshedpur.

The labour function has undergone a dramatic change in India over the last two decades. "Today a large proportion of the workforce in the factory is young. It has high aspirations but low patience," says Prince Augustin, Executive Vice President for Group Human Capital & Leadership Development at auto maker Mahindra & Mahindra. Young workers, who are at the vanguard of this change, are turning many an established value on its head. Surveys have found that loyalty is not very high. Instead, workers want good salaries, status and empowerment.

They want to be on par with white collar workers. The inability of managements, governments and even labour unions to cope with this change has led to simmering discontent, warns Sarkar. The advent of multinational companies, following the 1991 reforms, led to the creation of a new working culture, with some organisations having no labour unions. "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 India's Chennai plant led to a strike. "These companies respect trade union laws in their own countries but ignore them in India,'' adds Padmanabhan. Hyundai Motor India finally recognised an apolitical union earlier this year.

There is a strong sense of being exploited, particularly among contract workers . According to government data, they account for 45 per cent of the private sector's workforce. Activists allege that since they are not organised, employers have taken advantage of them. In some cases, contract workers are in the same jobs as permanent staff at half the pay. The long pending demand to ensure equal pay for equal work by contract workers has not been accepted by the government.

Padmanabhan cites the case of Maruti, where "1,400 of the 3,000 workers are contract employees, many of whom are paid less than permanent staff doing the same job". This sort of inequality has led to tensions on the shop floor. The Contract Workers Abolition & Regulation Act does not provide for equal pay for equal work. However, it stipulates that companies cannot engage contract workers in an area of work that is permanent in nature.

Companies have been flouting this norm while the government looks the other way, say workers and activists. Compounding the fallout of all these changes, disputes still take years to be resolved. "Young people are warm blooded and impatient. They want quick solutions and if that does not happen they end up doing things they repent later,'' says Mahindra's Augustin.

This unprecedented scenario demands that stakeholders gain a better understanding of the ground situation and make far-reaching changes. Labour laws need to be simplified. Currently, there are about 250 laws - 45 central and the rest state laws - that govern labour in the country. 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," points out Shekar Arora, Executive Director (HR Strategy) at Ashok Leyland, India's second-largest maker of trucks and buses. Companies need that flexibility to stay competitive in a globalised world. In the October 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".

Equally, the government needs to ensure that the law is amended to ensure contract workers get equal pay for equal work, say experts.

Labour unions, too, could benefit by being more proactive. "Emergence of the young workforce of today needs a new kind of leadership for engagement and education," says S.Y. Siddiqui, Chief Operating Officer for HR and Administration at Maruti Suzuki. Today, union leaders do not inspire confidence in either the management or the workers they represent. Equal opportunities for advancement across the length and breadth of an organisation will keep most problems away, say experts on industrial relations.

Shekar Arora, ED (HR Strategy), Ashok Leyland (in foreground)
Society has changed. Values have changed. Business has changed. The economy has changed. But the labour law is obsolete: Shekar Arora Photo: Shekhar Ghosh
Managers need to walk that extra mile to solve a problem rather than getting legalistic about every issue. "HR has been divorced from industrial relations (IR) for the past two decades," says Jerome Joseph, Professor, Personnel & Industrial Relations, Indian Institute of Management, Ahmedabad. "There has been more investment in middle management and its performance than in building relationships with workers. There is an IR capability deficit in organisations today."

B. Santhanam does not see labour homicides as a pattern but as isolated incidents. "But the worry is that they can lead to a copycat effect if we do not get our act together,'' says the former president of the Employers Federation of India, and Managing Director of Saint Gobain Glass, South Asia.

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.

The company calls it the 21st century factory credo. It could well be the first step in finding that elusive solution to settle industrial disputes in India.