What The Maruti Suzuki Strike Exposes

So much has been written on Maruti strike. This blog is not an exception too. I was avoiding writing one more post on Maruti - I have already written two – but the strike has highlighted too many nagging issues in Industrial Relations, and it is difficult not to write yet again.

In this series of posts [this is the first one, more to follow] is my list of issues and thoughts:
The widespread employment [and accompanied exploitation] of contract labour is a symptom as well as a disease.

You may ask me ‘If it is a symptom then, what the real disease is.’ The real disease is that the firms are not allowed to resize their operations depending on business exigencies. The Indian Government made changes to the Industrial Disputes Act in the seventies when populist measures were order of the day.

The amendment is preventing employers from downsizing their establishments without permission of the Government which was [then], as a rule, never given, and actually expressly denied. The natural reaction is to engage few workers in permanent cadre and a large number of contract labourers so that they can be removed without much problem. This is not to say that the engagement or exploitation of contract labour was not prevalent earlier. But it would be correct to say that even good employers started acting with great caution [read paranoia], because there was completely irrational, nay idiotic, implementation of the policy of the Government to control retrenchments and closures.

Justice Mr. Rama Jois’s judgement in the case of Stump, Schuele and Somappa [this was later over-ruled] makes good reading in which he has discussed the arbitrary rejection of application for closure.
[To quote: “To make the point more clear, I shall refer to paragraph 25 of the judgment in the case of Excel Wear case (supra). Wherein the Supreme Court posed the following questions:
 (i) Is it possible to compel the employer to manage the undertaking even they do not find it safe and practicable to manage the affairs ?
(ii) Can they be asked to go on facing tremendous difficulties of management even at the risk of their person and property ?
(iii) Can they be compelled to go on incurring losses year after year ?
The answer is implicit in the questions, an obvious NO. The further discussion in the paragraph would show that if one of the above grounds constituted the real basis for an application seeking permission for closure, not according of permission would be unreasonable and the fact that closure results in unemployment of workmen would also be not a valid ground to deny the permission.” Unquote.]

The fact is that industrial establishments must be allowed to adjust their size according to business exigencies; the need is now more when the vicissitudes of economies and business environment is the order of the day post-globalisation and liberalisation unlike in the past.

If you employ 99 persons the restrictions do not apply to you [the Chapter V-B of the Industrial Disputes Act applies if one hundred workmen are employed] but if you employ one more, then it does! This is completely irrational. Pakistan has found a better answer to this issue and perhaps we may do well to copy them in this matter. In Pakistan,  the permission of the Labour Court is required only if the employer is terminating the employment of more than 50% of the workmen. Now the debate can be about the number, but undoubtedly it makes a better system!

I said that contract labour was a symptom as well as a disease. What’s this disease? It is one of exploitation. With so much unemployment – remember that Maruti was able to recruit workers during the recent strike too – unscrupulous employers have been taking advantage and employing contract labour in the jobs where normally permanent employees should be employed. They save money and escape the legal restriction of applying for retrenchments, closures.

You find this so rampant in the industry that unfortunately some HR Managers have stopped thinking of it as a wrong practice. And now we also have another category called ‘temps.’ There are firms that are thriving on this malpractice! They employ literally a million in this way. That is what a firm recently announced.
Added to this is the phobia MNCs have about Indian labour laws [not unjustifiably]. I know of one international hotel chain that has prescribed to its Indian avatar that they will not employ more than 900 permanent staff. But the hotel is doing exceedingly well. Net result – about 600 ‘permanent’ contract employees, this excludes estimated 300 more ‘temporary’ contract employees. If you visit a service industry, you will add to your vocabulary – there are permanent contract employees, temporary contract employees, there are temps and so on.

One inspection visit to Gujarat’s [in]famous industries in Surat and Silvassa will tell you that almost every industry is employing contract labour in the ratio of 1:10. There are reports of engaging child labour.

How does one resolve this extremely complicated situation? The answer, to my mind, lies in making laws which recognise the realities of business and allow them to adjust size. That cannot be escaped. Adopting the Pakistan model is also not a bad idea. And implementing those laws well.

Unfortunately we have reached a situation in which laws seem to be made for the right thinking, conscientious members of the society and enforcement of law is nobody’s responsibility.
Maruti Suzuki strike has brought forth many ills of Industrial Relations in India. More about it in the posts that follow......

But in the meantime, Maruti Suzuki workers are on strike again! It is a different kind of ‘Chakka Jaam.’  


Labels: , , , , , , ,