UNIVERSITY BUSINESS SCHOOL

The labor unrest at Maruti Suzuki India Ltd (Manesar Plant)

By Rajinder Singh(MBA-HR)

To Ms Vaneeta Aggarval 8/7/2012

The labor unrest at Maruti Suzuki India Ltd (Manesar Plant) The story One more sacrifice by HR professional for the cause he learnt to live for. One more murder of General Manager-HR by workers .One more occasion for all of us to shed tears for few hours or days After that..? I know and you all know. The names of such HR professionals in last seven years who laid their lives for organisations are increasing. But issues came up out of this whole incident committed by persons with criminal mind (Whom we address workers) will remain live and keep haunting us till properly addressed. Avinish kumar dev, General Manager-HR of Maruti Manesar plant was burnt to death by mindless criminal workers while setting ablaze the Adm. Building of the plant on 18th july. Along with him around 100 officers also got injured including two Japanese officials. Issue was neither of any wage demands nor of any "exploitation or arbitrariness". It was a simple disciplinary matter. One shop floor executive when simply expressed displeasure on work attitude of worker and advised him to be more concentrated, that worker slapped the executive and assaulted openly on the floor. Worker was suspended pending disciplinary proceedings which is minimal action in any industry in such a situation. Union made it a point of prestige. Negotiations went on to resolve the matter. Management even reportedly assured that worker will be taken back shortly but union leaders were adamant to revoke his suspension immediately. This inability sparked the violence.It appears to be quite abnormal. Workers of A shift stayed back in the plant. B shift workers were also in plant. Workers used Factory tools and car parts to attack managers and everyone whom they saw. It was riotous. The events of incident suggest it was high level of conspiracy hatched out by workers to attack management officials and lay the fire. Management was caught unawares. Side door beams were used to attack management officials. No worker is reportedly injured. In this fire of Adm. Building, Avinish could not come out as he was attacked brutally and burnt alive to death. BM condemns this organized act of crime by workers and union officials. we have no words to condemn rather feel speechless. Violence in industrial relations can not be justified in any situation whatever it may be. Avinish family is ruined for no fault of him. But through this unfortunate incident we should analyze the basic issues which are raised every time after such incident but appear not addressed properly by organizations to prevent such happenings. The issues which come up are: Was it not a studied calm boiling inside workers since last year labour unrest and were looking for an opportunity to vent out and 'teach' a lesson to management which could not be smelled by the management well in time? Could management not sense the ulterior motives of workers well in advance who hatched the conspiracy to attack and resorted to violence while negotiations were going on the fateful day?
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Should such incidents of organised violence, riot and arson in the industry be investigated to find out the influence of outside trade unions having political affiliations on workers and expose them? Are not international HR consulting firms advising many MNCs in India for devising 'Innovative ways and measures to 'engage ' Y gen employees and keeping 'good and harmonious' employees relations proving to be a big failure and unsuccessful? Are not such agencies always advising organizations to think globally, and not giving proper strategies to equip managements act locally? Is it not that rampant outsourcing/hiring of people without verifying their antecedents could also be a cause of such mindless violence by workers who are not keen to understand and adapt to the industrial culture and discipline? Has time not come to redefine the dynamics of employee relations specifically for blue collar employees and understand the total environmental impact on them in which they have born and brought up? Should managements not invest in developing HR / People management skills in Shop floor executives who are first one to face the heat of estranged relationship with employees? Is it not the high time for the trade unions to introspect as to where their movement is going on? One can read from the history that the workers/ union who have indulged themselves in violence have almost lost ground? Should managements not accept the challenge of educating their workers and union to be on constructive side always and keep away from any act which harms the organization and themselves? Should HR professionals be not fully empowered to decide and execute employee relations strategies and not to look at top managements for decisions? Unless these issues are addressed by organizations, these unfortunate incidents of violence will continue to happen in the industry and HR Person will fall prey to it. This time Avinish has laid his life, next time may be someone else.. History Maruti Suzuki India Limited is a subsidiary company of Japanese automaker Suzuki Motor Corporation. It has a market share of 44.9% of the Indian passenger car market as of March 201. Until recently, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. The BJP-led government held aninitial public offering of 25% of the company in June 2003. As of 10 May 2007, the government of India sold its complete share to Indian financial institutions and no longer has any stake in Maruti Udyog.[7] Labor Problems Since its founding in 1983, Maruti Udyog Limited experienced few problems with its labour force. The Indian labour it hired readily accepted Japanese work culture and the modern
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manufacturing process. In 1997, there was a change in ownership, and Maruti became predominantly government controlled. Shortly thereafter, conflict between the United Front Government and Suzuki started. Labour unrest started under management of Indian central government. In 2000, a major industrial relations issue began and employees of Maruti went on an indefinite strike, demanding among other things, major revisions to their wages, incentives and pensions. Employees used slowdown in October 2000, to press a revision to their incentive-linked pay. In parallel, after elections and a new central government led by NDA alliance, India pursued a disinvestments policy. Along with many other government owned companies, the new administration proposed to sell part of its stake in Maruti Suzuki in a public offering. The worker's union opposed this sell-off plan on the grounds that the company will lose a major business advantage of being subsidised by the Government, and the union has better protection while the company remains in control of the government. Labour unrest has been erupting in the area frequently. Maruti had witnessed troubles on three occasions in the last one year causing a total production loss of about Rs 2,300 crore The Manesar Incident On 18th July 2012, Maruti's Manesar plant was hit by violence as workers at one of its auto factories attacked supervisors and started a fire that killed a company official and injured 100 managers, including two Japanese expatriates. The violent mob also injured 9 policemen.[23][24] The company's General Manager of Human Resources had both arms and legs broken by his attackers, unable to leave the building that was set ablaze, and was charred to death. The incident is the worst-ever for Suzuki since the company began operations in India in 1983 Case Overview The violence at Maruti Suzuki Manesar plant was not a result of a one day agitation, it has its roots far back in 2000 also. Since 2000, many strikes have been carried out by the workers for getting their demands fulfilled. The events in chronological order are as follows: In September 2000, The employees of Maruti Udyog Ltd (MUL) started a relay hunger strike at the company's plant in Gurgaon, near to Manesar. The Maruti Udyog Employees Union (MUEU) members had been protesting against the management's indecision regarding the new incentives package demanded by the employees. The employees and the MUEU felt the company's current incentives package benefitted the top management and senior officials. They started a tool down strike from 3rd October for 2 hours in each shift. The tool-down strike led to production being shut down for a total of six hours on each day. Till 17th October, the

management had suspended 12 employees in retaliation and had also mandated that all employees sign a good conduct undertaking before entering the factory premises. Consequent to the management's demands, production at MUL plant in Gurgaon near here has been at 200 units per day, instead of the usual average of 1,500 vehicles. The management wanted that all employees should sign a `Good Conduct Undertaking' before entering the factory premises. The employees' unions agreed to withdraw their agitation if their three main demands were met. Those included: The withdrawal of the good conduct undertaking reinstatement of 83 suspended workers payment of wages for the period of strike That union was eventually broken by Maruti and replaced by another which also represented staff at Manesar. It was the Maruti Udyog Kamgar Union (MUKU). Over the next year, around 1,000 workers were offered a Hobsons choice of voluntary retirement or termination. In 2001, there was another strike for against the privatisation of MUL. The government wanted to disinvest its shares from MUL. In May, 2000, The Department of Disinvestment (DoD) had suggested offloading of Government equity in Maruti Udyog Ltd (MUL) to 26 per cent from its present holding of 50 per cent during the current fiscal. When the government wanted to sell its shares it held in Maruti in 2001, workers went on strike. They had also pointed out the inhumane working conditions which they feared would get worse once the government sold its shares. A truce was signed with some workers being suspended and the rest reinstated. In August 2005, the employees union sought PMs intervention in sorting out issues with Suzuki Management. The issues pertain to the dismissal of 83 employees during a labour trouble at Maruti in 2000-2001 and several hundred opting for a voluntary retirement scheme, which allegedly, was not exactly voluntary. The memorandum also alleged that Maruti Udyog had replaced over 2000 permanent employees with contract workers, following the September 2000 management-labour dispute. In December 2010, the Manesar workers began discussing how to field their own candidates for a new union instead of being folded into the Maruti Udyog Kamgar Union (MUKU), the only recognised company union. MUKU is viewed as a management- controlled union mainly for the Gurgaon plant workers, whose spirits were crushed during their own agitations in 2000. MUKU has tradi tionally not held elections. Workers know that the time -honoured management tactic is to fire their leaders.
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Wage strike Workers from Marutis Manesar plant protesting for wage hike and better working conditions in October 2011 2011 On 3 June, the Manesar workers formally applied to form a separate union called Maruti Suzuki Employees Union (MSEU). On 4 June, the workers rejected the existing union, the Maruti Udyog Kamgar Union (MUKU) as they believed that it was under the control of the management . But they were denied the right to form a separate union and hence the workers of MSIL went on strike. The workers said the company responded by suspending 11 workers and sending bouncers to force them to sign blank pieces of paper. The Haryana government was quick to point out that the workers could not demand a new union as they were already part of MUKU. Subsequently, an agreement was signed on 16 June with the workers resuming work. Meanwhile, the file to register MSEU in the labour office was cancelle d. Reasons: the employees resorted to an illegal strike; among those whod signed for a new union, many still retained MUKU membership; some signatures didnt match with the registered ones. The revolting workers say theyd all resigned from the old union and these technical reasons merely indicate how hand -in-glove the Haryana government is with Maruti Suzuki. On 28 August, they went on strike again. Maruti Suzuki called a large police backup inside its Manesar plant and suspended 21 workers on charges of sabotaging production and deliberately causing quality problems, and terminated or suspended some others too. The alleged sabotage was of vehicle door not properly clamped leading to doors falling during production, cutting wiring harnesses, dents on the body and critical components not fitted on vehicles. But after one months strike, the company and the government refused to relent. The management tried to instill discipline into their workforce by introducing a good conduct bond, which, among many things, listed such acts like,
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1. Lack of proper personal appearance, sanitation and cleanliness including proper grooming 2. Conduct in private life prejudicial to the reputation of the company 3. Habitual neglect of cleanliness as major misconducts. Having already gone without a salary for the month, the workers agreed to sign the agreement provided all workers be reinstated. The second truce agreement was signed on 30 September. On 7th October, the workers had been on the third round of strike. They alleged that contract workers and trainees were refused work when they reported for duty after the end of one-month agitation, which was a clear violation of the spirit of the agreement reached between the two parties after the end of strike on 1st October. The workers demanded that the casual workers be taken back, as regular workers had resumed their duties. They also demanded the reinstatement of 44 regular employees still under suspension. The contractors tried to convince the contract workers that the permanent workers had left them behind. The 3,000-odd permanent workers who were reinstated did not find themselves in a convenient position either. Their departments were changed forcing them into unfamiliar territory. According to the agreement, the workers were not supposed to willfully cause a drop in production. But when shoved into new departments, they couldnt cope up with the work. The third strike was the most contagious with workers from three other Maruti plants joining the protest. The company obtained an order from the High Court not allowing the workers to strike inside the factory premises. There was high drama as the workers inside the factory were cut out from the world and were locked inside with police present all over the place. With no water and food, the workers then decided to come out and continue with their strike. Finally, the third agreement was signed on 21st October. Under the agreement, the company promised to reinstate 64 out of the 94 suspended workers. The remaining 30 workers remained suspended till further enquiry. The company claimed it had gone through the charges against the workers on individual basis and considered charges against 30 of them to be of serious nature.A Grievance Redressal Committee and a Labour Welfare Committee was to be set up with representatives from both the management and the workers. The workers were not paid wages or salary for the period of the strike. But the company has agreed to take care of the request for transport facilities. In spite of all these promises, the agreement does not mention the original demand of the workers for a union. Nevertheless, permanent as well as contract workers resumed work at all the four Maruti plants from the next day.

The three agreements signed last year didnt mention the workers demand for a union even once. After the June agitations, MUKU perhaps felt compelled to hold its first elections in almost a decade in July 2011. The Manesar workers say theyd have abstained anyway from voting for this pocket union but the elections were designed to happen without their participation. Maruti Suzukis official spokesperson said that since MUKU is a company-recognised representative body of the workers, all workers can channelise their suggestions and grievances through this body. Working conditions at the plant Here is an account of a typical workday at Maruti Manesar by a worker: You catch a bus at 5 am for the factory. Arriving a second late to punch in your card means a pay cut, but you cant leave the premises once youve entered. At 6.30 am, you exercise and supervisors give you feedback on your previous output. Start work at 7 sharp. Everyone does his one task assembling, welding, fixing for a minimum of 8 continuous hours. A car rolls off the line every 38 seconds, which means you cant budge from your position, ever. You get two breathless breaks during the day. At 9 am, a 7-minute break to drink tea or go to the loo, or both. After a while you might, like many of your friends here, end up taking your hot tea and kachori to the bathroom with you. Then a lunchbreak of 30 minutes, in which you walk about a halfkilometre to the canteen, wait in line with everyone, eat and walk back. Returning even a minute late from any break, or leaving the assembly line for any reason even for a minute, means half a days pay cut. Overtime is a compulsion whenever the company needs it and the privilege of paid leave is a fantasy -- Rs 1,500 is deducted for one days leave (even when you intimate in advance) from a maximum possible monthly pay of Rs 16,000 and five days leave for any contingency reduces it to the base salary of Rs 8,000. Out of a workforce of 2,500, 40% are on contracts, casual or apprentice (but do similar work as permanents) and their take-home is around Rs 6,000, with the threat of comparable deductions as regular workers looming all the time and no job security. The situation remained the same in this year, 2012, as well. The registration of the proposed new union at Manesar was being delayed beyond the target timeframe of end-January. After the company forwarded the application and its report to the state labour department of Haryana in end-January, it was this time, the labour department now who delayed the process. It is only in March, 2012, that the Maruti Suzuki Workers Union (MSWU) got registered with the labour department. However, till today, the promised grievance redressal committee and labour welfare committee are yet to be set-up. According to Para 9C(1) of Industrial Disputes Act, 1947, every industrial establishment employing twenty or more workmen shall have one or more Grievance
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Redressal Committee for the resolution of disputes arising out of individual grievances. The fact that Maruti-Suzuki Manesar establishment doesnt have a grievance redressal committee shows the managements total lack of concern regarding discontent of the workers. Even the union that was set-up had clauses that talked about compromises, introduced through managements pressure, which ran counter to the workers inalienable right to form union of their own choice. One such clause states that the MSWU will not be affiliated to any central Trade Union. Certainly affiliation is something which depends upon the democratic decision of the union body. Even after getting the union registered, the workers were naturally disappointed with the managements attitude to sabotage their rightful endeavors. Building up Frustration The immediate task that was in front of the newly formed MSWU was wage negotiations with the management. The wage structure of the workers hasnt changed much as compared to last years. The average wages of different category of workers in the Manesar plant during mid-year 2011 was as follows:

TYPE OF WORKERS

Permanent

Trainee

Contract

Apprentice

Number Workers

of 970 400-500 1100 200-300

Monthly Wage Rate (in Rs.)

8000 + 8000 (v)

[235 per day + 75 per day 6500 + 2250 (v)] X 23 working days a (v) month

3000 (1000) v

The component (v), called as production incentive is a variable one; it depends on (a) production dependent upon sales of the company, and (b) number of holidays taken by a worker. On an average, if a worker takes 3-4 holidays in a month, his entire variable wage component gets deducted. The deduction is irrespective of whether the worker has accumulated casual leave, sick leave or paid leave over time. Any leave leads to a pay cut. The worker resented this pay structure; they demanded that the production incentive be dependent upon (a) the amount of work a worker is willing to do and is actually doing, and (b) that there should be no wage cut if a worker has accumulated leaves.
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However, in 2012, the wage structure and wage deduction practice has remained almost the same. As reported by the workers, there was no change in the wage rates of the permanent worker. The wages of the trainees have been increased by Rs. 300-400 in production incentive component and Rs. 210 in the fixed component. The wages of contract worker has increased by Rs.35 perday on average on health and travel provision/benefits. The fixed component of apprentices wage has been increased by Rs.1000, and the variable component by Rs. 500. So, the present wage structure looks something like this:

TYPE OF WORKERS

Permanent

Trainee

Contract

Apprentice

Monthly Wage Rate (in Rs.)

8000 + 8000 (v)

6710 + 2600 (v)

[235 per day + 35 per day + 75 per day (v)] X 23 working days a month

4000 + (1500) v

The workers were agitated with such token increase of wages. Moreover, the exploitative wage deduction system has largely remained the same. This time, the company has introduced one minor relaxation: if a worker takes no more than four holidays in a quarter, his variable component of salary wont be deducted. However, if it is more than four days in a quarter, his salary will be deducted as before, i.e. even if he has accumulated leaves. And, the calculations of the amount of production incentive remained to be based on production dependent upon sales of the company, and not on the amount of work a worker is willing to do and is actually doing, as the workers demanded. The management seems to be saying that the workers should share both the prosperity and hardship of the company. Sounds reasonable, except for one fact: this year MSILs net-sale has contracted, in contrast to massive increases every year during the last decade, by 3% in end-March 2012 compared to the previous year. However, the component of expenditure on employees remuneration and benefits has increased by 20% (marginally higher than per-year increase post 2005-06) during the same time. If this increase is not on account of wage increase of the workers, which is clear from comparing the above two tables, this must be on that of the white-collar counterparts. This is clearly a double standard of sharing prosperity and hardship and clearly resented by the workers. On the other hand, surprisingly, amid such high tension the management was pushing increasing the speed of production on the assembly line. For the last 2-3 months, the management has
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increased the production speed, without increasing commensurate number of workers or relieving-workers. The management was also curtailing the previous two-time 7.5mins teabreaks into 5mins each. The workers always had dissatisfaction with the original 7.5 mins teabreak time; they had to gulp tea and snacks while standing in toilet-queue or even inside the toilets. Further curtailing that meager break-time added to their frustration.

Unions Demands Since April 2012, the Manesar union had demanded a five-fold increase in basic salary monthly conveyance allowance of 10,000 Laundry allowance of 3,000 A gift with every new car launch And a house for every worker who wants one or cheaper home loans for those who want to build their own houses. In addition to this compensation and normal weekend/holidays, the union demanded the current 4 paid weeks of vacation be increased to 7 weeks, plus each worker have 40 days allowance of sick and casual leave - for a total of 75 day. Pricking The Baloon Union Says- Initial reports claimed wage dispute and a union spokesman alleged the incident may be caste-related.[27][28] According to the Maruti Suzuki Workers Union a supervisor had abused and made discriminatory comments to a low-caste worker.[29] These claims were denied by the company and the police.[24] Management Says - Maruti said the unrest began, not over wage discussions, but after the workers' union demanded the reinstatement of a worker who had been suspended for beating a supervisor. Reasons1. The workers claim harsh working conditions and extensive hiring of low-paid contract workers which are paid about $126 a month, about half the minimum wage of permanent employees 2. The percentage of contract labor hired was about 40 %. And same work was been taken from them as was being done by permanent workers. 3. Bouncers were there in company against the workers. First police report
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The police, in its First Information Report (FIR), claimed on 21 July that Manesar violence may be the result of a planned violence by a section of workers and union leaders. The report claimed the worker's action was recorded on close circuit cameras installed within the company premises. The workers took several managers and high ranked management officials hostage. The responsible Special Investigative Team official claimed, "some union leaders may be aware of the facts, so they burnt down the main servers and more than 700 computers." The recorded CCTV footage has been used to determine the sequence of events and people involved. Per the FIR, police have arrested 91 people and are searching for 55 additional accused

Lockout Maruti Suzuki in its statement on the unrest,[33] announced that all work at the Manesar plant has been suspended indefinitely. On July 21, 2012, citing safety concerns, the company announced a lockout under The Industrial Disputes Act, 1947 pending results of an inquiry the company has requested of the Haryana government into the causes of the disorder. Under the provisions of The Industrial Disputes Act wages, the report claimed, employees are expected to be paid for the duration of the lockout Shinzo Nakanishi, managing director and chief executive of Maruti Suzuki India announced, "we are going to de-recognise Maruti Suzuki Workers Union and dismiss all workers named in connection with the incident. We will not compromise at all in such instances of barbaric, unprovoked violence." Certain practices which increase this Gap between Worker and Management,needs to abolished.
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Like : -Separate canteen for Staff & Workers ( There should be single canteen and similar food for all ) -Seprate sitting place for Management & Workers ( concept of separate Admin Building should be avoided i.e. staff should have office space within the production area and workers seats be alloted in that area, proper connect between staff and workers, involvement of families of workers in HR Initiatives.) -Seprate shift timings for staff and workers ( There should be no G Shift at factory premisis) -Seprate Increments, Bonus shemes and declaration of these Seprately etc.( Everything has to be in similar pattern ) -Role of supervisor should be limited to only production related Instructions to be given to workers and all behavioural and discipline related issues should be dealt by HR / IR Team Inefficient government led to this problem. 1. 2. 3. 4. The percentage of contract labor should be regulated. The minimum wages need to be fixed. Proper working conditions should be supervised. Fixing of basic wages.

Maruti Suzukis role Maruti-Suzuki pays peanuts that is 6000Rs to contract workers in one of the costliest urban centre in India. This wage of aprox 4$ a day is lower then even famed chinese or vietnamese low wages. Contract workers are 40% of total workforce. Being a big employers Maruti-Suzuki are the one which sets the floor for other industrial units in the region. But this is penny wise pound foolish, They should have factored in loss of productivity. Suzuki gets more then 50% of it's revanues from India but does not want to invest much here. In Japan they invest in plant automation but here they want to keep on utilizing cheap labor. Effects of the strike 1. Marutis stocks fell about 9 percent 2. Due to the strike, waiting periods for diesel variants of three models -- Swift, DZiRE and SX4 -- have increased further by up to one month and this has an impact on its sales during this month due to the production loss 3. The loss is not just to Maruti but also to the industry as spillover effect of this unrest 4. Tarnished image of India for new FDIs. 5. Investors may not like to invest in Haryana

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References : http://www.business-standard.com/content/general_pdf/072212_05.pdf http://www.livemint.com/2012/07/19183409/Labour-problems-at-Maruti-a-pe.html http://articles.timesofindia.indiatimes.com/2012-07-19/india/32745786_1_maruti-suzuki-plantmaruti-s-manesar-violence http://www.moneycontrol.com/news/business/why-single-out-auto-sector-for-labourproblems_734269.html http://en.wikipedia.org/wiki/Maruti_Suzuki http://www.citehr.com/421146-maruti-violence-issues-need-addressed.html#ixzz23OqWbFTA http://www.citehr.com/421146-maruti-violence-issues-need-addressed.html#ixzz23OrUn7OK

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