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.
‘Indisciplined' workforce?
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.
Workers' woes
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.
Conclusion
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.)
Keywords: Maruti Suzuki unrest, workers' struggle
The article had a profound impact on my thinking when I read it first in the hard copy of the paper.Somehow, I cannot escape the impression that India has become a haven for the unscrupulous who after investing a few hundred crores salt away thousands of crores on a year to year basis to their extremely private coffers. The irony is that when the developed world has started to wake up to the ills of the large corporations, Indians appear to justify too strongly the actions of such unscrupulous corporates in private sector. No wonder that good conduct undertakings are required only from the workers who earn a pittance and not from the corporates who from all accounts have apparently made a mountain of ill gotten wealth through various scams like 2G scam and various evasions of all kinds of well meaning taxes by using some loophole or employing high profile professional help.
This article is written by two left winged economists, one of whom is also associated to a political party. They have not written anything about how the workers unions have gone back on their promises, nor have they given a comparison of salaries to that in private companies. Frankly speaking, any laborer earning similar amounts in any other company would be more than happy. Labor unions are the reason why India's progress was hampered in the 80s, and I hope the same situation does not arise again.
correction, from 900 crore to 36000 croore sales is 4000% increase not 400%. which augment your point more.
Firstly, my congratulations to The Hindu for publishing this article. While multinationals are welcome to reap the benefit of cheaper labour, they should not be allowed to 'exploit' it and treat them as 'expendables'. The governments have forgotten that they are supposed to ensure that it does not happen - not be a part of the exploitation coalition!
Thanks to the Writers and the Hindu for unveiling the glaring exploitation of labour in our coutry by the MNC Zusuki Motors India Limited. Are we dating back to pre-1917 period in matters of labour and management relations. Should we have such an industry to run in our sovereign democratic socialist Republic. In the name of inviting foriegn investments to our country shouls we forget the long fought and won labour relations and welfare measures? What hurts us most is that what the labour Ministry in Hariana in particular and N.Delhi in general are doing for the welfare of work force in the country who are only responsible for the industrial development in our country ? Severe wage cut when eliible leave is availed by an employee is barbarious attitude of the Management. Why and how the management is permitted to blatantly violate the national and inter-national labour laws in the name of maintenance of descipline is nothing short of pulling history back to centuries ago.
Somebody had once told me crime rates and unhappiness is directly proportional to the disparity in incomes. I am not sure how far it is true but I was told that in a country like Israel, the income disparity is very small. Hence the difference between the salary of a CEO and an ordinary worker is not huge and this is the reason for relatively low crime rates. If I compare my experience in a city like Bangalore, I think 10 years ago, Bangalore was a much better place. However, the disparity of income between the software professionals and other people became wider by the year. The natural tendency when there is huge inequality is bring in equality. So it starts with things like the auto drivers charging you more to jacking up the price of real estate. I am not sure why often mental ability is deemed superior to physical ability and therefore huge salaries to CEOs justified. It does not make sense.
Its very shameful for Maruti management. Maruti management is not trying to understand the problems of workers who work hard day and night.Maruti management is working as despot .it seems govt. is under complete control of these companies .its very shameful.
Nothing new about this at all. This struggle has been going for time immemorial. The same old story..over and over. We all know the solution to it..and it is not called "market reforms" or "labor regulations". Its not even called parliamentary democracy aka bourgeois democracy of the present era.
@SS Ray - You might be a management guru and big fan of privatisation , but not a good human. And about corruption , your so called non-corrupted private giants are behind all the curruption in the whorld. There is atleast little transparency present at govt level and that is why we are coming to know that there is curruption . In corporate world everything happens behind the curtain and whoever peeps inside is dead. May be we can think of privatising the govt itself and fire all the non profitable human beings from our country !!!
Who frames labour laws and who are the people who see that whether they are followed or not ? If our own people are corrupt, there is no point in putting the blame on MNCs. Businesses are run for profit and not for charity. It is the govt.'s responsibility to see to it that labor laws are followed by not only MNCs but also with local companies. It is not correct to compare the salary of a MBA graduate with that of a 10th fail worker. How would you feel if you and the peon in your company are rewarded similarly ?
well giong through the article two things which have been missed as per my knowledge are 1) 7% of equity shares of MSIL Belongs to gandhi family who have been the epicentre of politics in india since last six decades and the second thing is that when under the regime neo liberalism every public sector unit is meant to be privatised, an elected union may be strong barrier in order to ensure this course of action.
To turn a blind eye towards the widening wealth divide as suggested by Sirajudheen [Sirajudheen Nellur: Posted on: Sep 28, 2011 at 12:31 IST] would lead to unimaginable inequality. I completely agree that for any industry to thrive enterprenuers must be rewarded according to the risks they face, hence yes higher management gets rewarded more, agreed. But the brazen neglect of wages and harsh employment contracts is almost equivalent to slavery. Some would argue that 'no-one is forcing them to work with Maruti, that they can leave whenever they fancy', but what choice do they have? Maruti is shamelessly exploiting their very lack of choice.
Maruti has to recognise the Employee Union, which looks after the welfare of its workers and be bold enough to let a union member be part of the boardroom and set an example. Although, this might be a flightful wish, I hope it will be true.
Its not worth comparing the salary of CEO and other employees. Its normal for the CEOs to get paid much higher. Its not just in Suzuki but companies all over the world. Instead see if the exployees can work an extra hour and increase their pay by negotiating with the managment. This will help bringing more Multinationals to invest in India and it would create more demand for the same technicians/workers. The other option is to allow these companies to open branches in China or another country where they are comfortable and loose the current job.
The article,' Workers' struggle in Maruti Suzuki', revealed some of the truth that many people are not aware about on going agitation at Manesar plant of MSIL. Introducing ‘good conduct bonds' will always be beneficial but something that need be noticed and reviewed are disparity in salary at different plants, despite of showing positive returns in global market why creating scuffle and above all government silence on the entire issue.
Labor is a matter of supply and demand. It is sad to see to some comments advocating government intervention and reminiscing about golden days of GOI controlled industries. Have we not learnt by now that economy and industries flourish in the hands of private than the govt..\ Govt. interference encourages corruption, nepotism and in general lead to ineefficient allocation of capital.
In the case of MSIL, if the workers are unhappy with the wages and conditions, they are free to leave and find work somewhere else. It is employment at free will not bonded labor. But I somehow doubt the workers will leave because MSIL pays them better than the other options available to them.Please do not go begging to the govt to solve every problem. It is time we start thinking about fending for ourselves rather than expecting the govt to come bail us out.
The difference in the wages between 2007 and 2011 clarifies the whole scenario. Also the wage cut margins for each day of leave are really shocking. This is truely and exploitative in nature. Atleast in the present world economic scenario, we can start being tough on such things and try to bring social-economic justice for our labour class. Thanks Hindu for publishing such an eye-opening article.
Left obviously does not want to intervene and be branded as an anti-growth and anti-industrial organization. The Hindu's effort in gathering facts regarding MSIL has been most revealing. An enquiry panel need to be setup to report on MNC's actual contribution to the market(India) that provide the most revenues and that are the lifelines for them.
The article once again brings out the ugly picture of liberalization. To spur the growth rate of economy the government have blindly welcome all the non-sense of investing companies. It forget that mere economic growth does not bring prosperity in nation. A nation has variety of stakeholders whose interests are to be caterred well. The Maruti employees' agitation is a wake up call for government to review its industrial policy where 'Management-employee equation' is heavily tilted towards management. If this issue is not sorted out amicabely we might soon see such agitations a common feature of industrial arena which would ultimately slow down the national growth. So employees' association, Maruti Ltd. & government should act in concert for a better and long lasting solution. Moreover, companies in general should take into consideration the fact that the pay package of its employees should be commensurate to the company's financial health.
I like to say that what the coporate is doing to the workers may seem unfair but if shown too much of sympathy to this union thing will affect the nation like a cancer. Capitalism result in always growth of the fittest and the capable but communism will result in masculitnity of this union leaders and gradual destroyal of this great company too.
The article focuses on a lot of numbers favoring the trade unions like spike in profitability etc. Competitive landscape of the auto sector has changed the pricing pressures are very great. Koreans/Japanese management under no circumstance will tolerate Indian "jugaad" work which could be the case here as it is observed in several other industries and any action against it is taken personally and strikes ensue.
The authors instead of comparing the pay rise of CEO with that of workers could have compared it with that of workforce in similar industries, that would have been more appealing and rational. It is irrational to compare the salary of unskilled labors with highly qualified and skilled senior management, who might loose their job even at the slightest of their fault. Had some of the managerial staffs in were sacked at MSIL, It wouldn't be a news at all. It is true that the pay rise of workers is not in tune with the inflation, so is the case with managerial/administrative staffs of all companies, including govt. officials. Only government policies can tackle both. However, the leaves structure at MSIL seems exploitative. I wish labor ministry will take cognizance of the same and issue orders in favor of the workers. I appreciate the effort made by the authors to learn about the situation.
Liked the article. The government is made for the people. But their insensitivity towards public issue disappointing. Solution to this will be the local government should bring both party to the table and have a fruitful discussion and outcome that should be under the law of the land and acceptable by both party.
well the writers comments are one sided. For sure Maruti has its own point but i agree should pay heed to workers problem too.! I think Maruti should offer some drastic change in the wage pattern and at the same time the workers should sign the good conduct bond "you give some and take some ".
Shame on the Chairman,CEO and management of MSIL for resorting to such repressive tactics..
I tend to strongly disagree with S. Sitaram. The article has clearly spoken about how skewed the profit sharing is between management and the workers. There are also gross violations of the law of the land. This a crime as per the laws of our country and if someone violates the law, we do not sit and discuss to reach an amicable solution, we punish.
The huge difference in wage growth between the working class and management exists in every industry. Except for software industry, everybody in India has found the decline in real wages every year. Managers exploit workers (including service industry); show lower costs for their business unit and get hefty bonus. After a stage unless one enters management there is no way to get real growth in wages. This is exactly why freshers and trainees have become highly valuable in Indian job market. Experience is a disadvantage.But it is not so in developed countries. One can choose to work life long and still earn enough. There should be strict rules about percentage of contract workers and trainees in a company. They should also be paid according to the work they do. With our huge population it is always possible to get low cost trainees forever. So either enter management and screw people or else try to go and live in a developed country.
This calls for immediate action. The results before us have already made it clear to the brazen violation of the labour laws by MSIL.It would have been prudent to examine the issue holistically and call for soft negotiations, if the strike started a few days back or so, but this is going on from August, almost a month of no work, no salary added with rising costs and to top it all, the management's lack of concern for their own labourers.Now the only way out is for MSIL to recognize the MSEU and accord some if not all benefits demanded by them in their own interst and the company's future. It's a competitive market out there.
I think India Inc. and Indian Government in it's zeal to be globally competitive and to encourage Foreign Investment is starting to neglect the workforce for which it is responsible. The article very elaborately mentions the perspective of the workers and the comparison of inequitable sharing of company's good fortunes is saddening. Coincidentally, the MSIL woes have been continuing for many years now and there have been incident of lathi charge on workers in past years. Moreover, MSIL worker unrest was unheard of during GOI controlling stake era. We appreciate MSIL to create a win-win situation in India. However it needs to be honest in creating a conducive environment for economic development of society - Management employees shouldn't develop at the cost of the Labour/workforce. The Govt. of India Ministry of Labour and Government of Haryana has the power to initiate and should therefore initiate an independent inquiry and lay bare all the facts to everyone.
I think India Inc. and Indian Government in it's zeal to be globally competitive and to encourage Foreign Investment is starting to neglect the workforce which it is responsible towards. The article very elaborately mentions the perspective of the workers and the comparison of inequitable sharing of company's good fortunes is saddening. Coincidentally, the MSIL woes have been continuing for many years now and there have been incident of lathi charge on workers in past years. Moreover, MSIL worker unrest was unheard of during GOI controlling stake era. We appreciate MSIL to create a win-win situation in India. However it needs to be honest in creating a conducive environment for economic development of society - Management employees shouldn't develop at the cost of the Labour/workforce. The Govt. of India Ministry of Labour and Government of Haryana has the power to intiate and should therefore initiate an independent inquiry and lay bare all the facts to everyone.
This has been going on for a very long time and it is suggestive that the govt. is keeping quiet while the Left couldn't care less!t
Congratulations to The Hindu for publishing such a wonderfully researched article on India's largest car maker.It is not surprsing know that workers in the factory are underpaid.If Suzuki cant do without India's car sales why dont we atleast hedge our bets and help our workers a little. Flexible and disciplined work force is an euphemism for exploitation.It is extremely unfortunate that the government has done nothing to exmaine and take corrective measures.By bringing aspects of International image being tarnished,we might not get investments if we interfere too much into how a company is being run etc , we ar eonly forgetting the fact that there is no company that can do without being in the indian market becuase of its sheer numbers. Please help them see that even we can get tough.
There is an urgent need to reform MNCs for their anti-labour attitude. In developed countries the Government itself take care providing equitable and just climate for the work force and management, sadly in India the management of these companies are given a free hand to run their affairs without bothering the suffering workforce. The GOVT. of Haryana is guilty in the whole episode.
Well,although the article seems logical and reasonable,it looks to be produced from the caves of a trade union supporter.While the argument that MUL is a strong bread winner for suzuki,japan is ok, it cannot be a prime reason for all the demands put forth by the labour.Instead of taking a onesided and partisan view of the problem,it will be in the interest of all the parties concerned to study the situation in detail and come to an amicable solution acceptable to all.
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