HResonance: Maruti Suzuki Settlement: An Unanswered Question

There were many expressing opinions on Maruti Suzuki’s settlement. Too much is being made out of it.

There is, however, one point that deserves discussion.

Maruti watchers are asking ‘Isn’t this too much of an increase and way of buying peace? Aren’t they trying to create a divide between Gurgaon and Manesar workers by giving Gurgaon workers such a hefty increase?’

The facts, as we are aware, are that Manesar Plant workers resorted to strike and have suffered badly. Gurgaon workers in the meantime have got a bounty. But this is a plain reading. If one plant shows a rather strong proclivity for breakdown of industrial relations, it is natural for the employer to ‘fortify’ himself by ensuring peace at the other location. He can’t have two battle fronts. This should be obvious to all. Moreover Maruti Suzuki is in business and they must make every effort to remain in business, and adopting even appeasement [as long as it is within the bounds of law] cannot be objected to. Let us appreciate that it is a very natural reaction.

Maruti Suzuki’s official statement is “The Wage Settlement arrived with Gurgaon Union and the same offer communicated to Manesar Technicians on 25th Sept. 12 through a Power Point Presentation. The Communication to all 620 regular technicians at Manesar Plant will be completed. If they also give their individual acceptance in writing then the same Salary/Benefits will be offered to them as well after due legal process. Minimum of 2/3rd population’s acceptance will be required to complete the Legal process through Labour Dept Haryana.”

So there is no need to look at the settlement with suspicion.

Maruti Suzuki has stated that their competitiveness will not be compromised as a result of the wage increase. They have mentioned further that their “Labour Cost will continue to be between 2.40% to 2.50% of annual Sales Turnover which is highly competitive as other Auto Companies Labour Cost is in the range of 4% to 6% of Sales Turnover.” In other words, Maruti Suzuki spends Rs. 2.50p on employees [it includes executive pay which forms very large chunk of that cake!] to earn Rs. 100 in sales revenue. The same figure for many FMCG companies stands in the range of 4 to 7%.

If that be so, what were they trying to achieve by employing contract labour in their plants indiscriminately and paying them minimum [actually bare subsistence] wages? That will remain a good question - it either does not have an answer or nobody wants to answer it.

Vivek

But there is an interesting development on Housing. And let us talk about it in our next blog-post.