The multinational refuses to be sensitive to the grievances of its Indian workforce, which generates the greater proportion of the company's profits.
The workers of the Maruti Suzuki India Limited's (MSIL) plant in Haryana's Manesar have been agitating since August-end against the dismissal and suspension of more than 60 of their colleagues and the management's insistence on their signing a ‘good conduct bond' before they are allowed to enter the plant. The MSIL management's obdurate refusal to recognise the MSEU lies at the heart of the dispute.
The stand adopted by the MSIL management in the ongoing dispute was endorsed by the Chairman and CEO of Suzuki Motor Corporation, Osamu Suzuki, during his recent visit to India. He said: “Indiscipline is not tolerated…not in Japan, not in India.” Mr. Suzuki seems to have completely missed the larger picture.
Over the past three years, MSIL has emerged as the most productive and profitable subsidiary of the Suzuki Motor Corporation. Its Annual Reports show that while Suzuki's car production and sales in Japan registered absolute declines in 2008 and 2009 following the recession, MSIL's production and sales in India have registered steady growth during this period. Could this be achieved by an ‘indisciplined' workforce?
As per the latest Annual Report of the Suzuki Motor Corporation, its global car sales amounted to 26,41,634 units in 2010-11, out of which 5,88,395 units were sold in Japan and 20,53,239 units sold overseas. Out of this, MSIL's total sales in 2010-11 amounted to 12,71,005. This implies that Maruti Suzuki's sales accounted for 62 per cent of Suzuki's overseas sales (outside Japan) and 48 per cent of its total global sales in 2010-11. Between 2009-10 and 2010-11, Suzuki's car sales fell by 5.4 per cent in Japan while its overseas sales increased by 18.8 per cent. MSIL contributed the most to this by registering sales growth of 24.8 per cent between 2009-10 and 2010-11.
It is clear that a multi-national corporation like Suzuki is benefiting immensely from its operations in a developing country like India. On the one hand, the workers are delivering high productivity growth. On the other hand, the expanding Indian market is ensuring fast growth in sales. As a result, profits are soaring in India, at a time when markets in developed countries like Japan, the United States, and those in Europe are in the doldrums.
Our calculations from its Annual Reports show that the contribution of the Indian subsidiary of the Suzuki Motor Corporation to its global net sales of automobiles (in monetary terms) has grown from 12 per cent in 2005 to 27 per cent in 2010, and the contribution to its global operating income has grown from 42 per cent in 2005 to 55 per cent in 2010.
Despite this, Suzuki bosses continue to view the Indian workers as spoilt brats who need to be ‘disciplined' through ‘good conduct bonds' and summary dismissals. They refuse to be sensitive to the grievances and concerns of their Indian workforce, which generates the greater proportion of their profits.
MSIL's annual sales has increased from around Rs.900 crore in 2001-02 to over Rs.36,000 crore in 2010-11, i.e., an increase of 400 per cent. Profit after Tax has increased from Rs.105 crore in 2001-02 to Rs.2,289 crore in 2010-11, i.e. an increase of almost 2,200 per cent. But what have the workers got?
According to information provided by the workers during a recent field visit (verified by examining salary slips), the current wage and employment structure at the Manesar plant is roughly as shown in the Table.
For a permanent worker, Rs.8,000 is the fixed component of his wage. This fixed component differs with the seniority and skill level of the workers, and goes up to a maximum of Rs.14,000-15,000 per month for senior workers. The component (v) is a variable one, depending on how many days of leave the worker takes in a month. There is a deduction of Rs.1,500 per day of leave for a permanent worker. Thus, if a permanent worker takes more than five days of leave in a month, the entire (v) component is exhausted and he receives a wage of Rs.8,000 only. For senior workers the component (v) can be up to Rs.10,500 per month, which would be exhausted if seven days of leave are taken in a month. This happens irrespective of whether the worker has accumulated casual leave, sick leave or paid leave over time. Any leave leads to a pay cut. The case is similar with the other categories of workers. Rs.800 per day of leave is deducted from the (v) component of trainees' wage. For contract workers and apprentices, two days of leave in a month exhaust the entire (v) component. Understandably, the workers deeply resent this exploitative wage structure.
Moreover, the majority of the workforce at the Manesar plant (65 per cent) is non-permanent. These irregular workers — trainees, contract workers and apprentices — are made to do jobs of a regular nature in brazen violation of labour laws. The management saves significant labour costs by employing these non-permanent workers, dividing them into different categories and underpaying them.
A comparison of the wages received by the workers of the MSIL's Gurgaon plant in 2007 and what they earn currently (wage structures at the Gurgaon and Manesar plants are similar) reveals the movement of wages over time. If a senior permanent worker at the Gurgaon plant had not taken any leave in a year, he would have earned a maximum of around Rs.2.80 lakh in 2007. Today his maximum yearly earnings would be around Rs.3 lakh, i.e., an increase of around 5.5 per cent only. The consumer price index (for the Faridabad centre, Haryana), however, has gone up by over 50 per cent between 2007 and 2011. Therefore there has been a squeeze on the real wages of the permanent workers. In fact, the real wages of all categories of workers in MSIL have been squeezed during this period.
By contrast, the annual remuneration of MSIL's CEO has increased from Rs.47.3 lakh in 2007-08 to Rs.2.45 crore in 2010-11, an increase of 419 per cent. The annual remuneration of the Chairman of MSIL has also increased by 91.4 per cent during this period (figures are from MSIL's Annual Reports). This clearly shows the deeply skewed manner in which the benefits of rising sales and profits of MSIL have been shared between the management and the workers over the years.
It should come as no surprise, therefore, that the workers of MSIL's Manesar plant want to form a union that is independent of the management. The demand for the recognition of the MSEU is very much in keeping with India's labour laws as well as ILO Conventions on freedom of association and collective bargaining (C 87 and C 98) that Japan has ratified. Yet the intransigence of the MSIL management and its resort to hire and fire at will is leading to a worsening of the industrial environment.
The Haryana government has also played an anti-worker role by turning a blin d eye to the persistent violation of labour laws in employing contract labour for regular jobs and siding with the management in repressing the workers, going to the extent of arresting and slapping cases against the elected office bearers of the MSEU. This undemocratic approach has to be abandoned forthwith and the legitimate demand of the workers accepted. The MNCs operating in India have to accord the right to the workers to form unions of their choice.
(The authors are researchers in economics. Prasenjit Bose is the convener of the Research Unit of the CPI (M). Sourindra Ghosh is an executive at Policy Development Alternatives, New Delhi.)