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COMPANY PROFILE

Honda Motorcycle and Scooter India, Private Limited (HMSI) is the wholly owned Indian
subsidiary of Honda Motor Company, Limited, Japan. Founded in 1999, it was the fourth Honda
automotive venture in India, after Hero Honda, Kinetic Honda Motor Ltd and Honda Siel Cars
India.
The entry of Honda into the Indian market as HMSI began with the launch of the Honda Activa, a
100 cc scooter. A slightly modified trendier version of the Activa was soon launched, as the Honda
Dio. Honda Eterno was launched thereafter to add to the portfolio of HMSI's scooters.
The Honda Unicorn was the first motorcycle released by HMSI. The Honda Shine has since been
released.
Honda was the largest manufacturer of two-wheelers at the global level. HMSI was a wholly-
owned subsidiary of Honda Motor Company Limited (HMCL), Japan. The Tokyo-headquartered
HMCL was one of the leading manufacturers of automobiles and power products and the largest
manufacturer of two-wheelers in the world, with more than 120 manufacturing facilities in 30
countries worldwide. HMCL was known to have excelled in the adoption of the post-Fordist
production system (also called Toyota Production System). HMSI was established on 20th October
1999. Its aim was to achieve this dream through production of world-class scooters and
motorcycles manufactured at its state-of-the-art plant. The HMSI factory was spread over 52 acres.
The initial installed capacity was 100,000 scooters per year, which was scheduled to reach 6,00,000
scooters by the end of 2005.
HMSI operated on principles, which were followed worldwide by all Honda companies.
Maintaining a global viewpoint, HMSI was dedicated to supplying products of the highest quality,
yet at a reasonable price for complete customer satisfaction. It aimed to produce technologically
superior, efficient and reasonably priced two-wheelers, with Honda-tested technology, backed up
with after-sales service of Hondas global standard. Instead of being just vehicles of transportation,
its products were intended to become vehicles of change: change in the way you work, the way you
travel, and change in the way you live.
The company had about 3000 employees in all; of these 2000 were in the worker category1300
were confirmed workers, and 700 were contract workers. About 1000 employees belonged to the
supervisory and managerial staff. Besides, 700 persons were working as trainees and 300 were
apprentices under the Apprentices Act, 1960. Almost every worker or trainee held a certificate from
some or the other ITI (industrial training institute) in India. All trainees normally got absorbed in
the regular workforce after the training; whereas only about 15 per cent of the apprentices were
able to get a job with the company after the apprenticeship was over.
Going by the region-cum-industry considerations, HMSI had the reputation of being a
comparatively good paymaster. During the time when workers waged recent agitation, the company
had increased the wages of each worker by Rs. 3000 per month. Thus, in October 2005, salaries for
workers ranged from Rs. 8,150 for its unskilled worker to Rs. 11,200 for skilled worker, which
included Rs. 2,000 towards house rent allowance.

Employee Relation
For most of its history, Maruti Udyog had relatively few problems with its labour force .The
company trusts its employees to a greater extent and the employees in turn respond by being totally
devoted to the company. Both the managers and workers of Maruti wore the same uniform and ate
at the same canteen even during the period of agitation.
After recovering from the strike Maruti had a perceptible change in culture. A VRS scheme
introduced soon afterwards increased the sense of insecurity amongst employees, but it was all for a
good cause.

Wage Structure
During the 1980s and early 90s the level of employee satisfaction at Maruti was comparatively
higher than most manufacturing companies in the country as they received significantly higher
salaries as compared to employees of other companies.
Generally the Wage rates and earnings of workers at Maruti were result of a series of revisions
based on bilateral negotiations.
The pre-revised (before 2001 strike) labour cost per vehicle in Maruti at Rs. 2,696 compared
unfavorably with Rs. 1,617 of its closest rival Hyundai.
Workers incentive earning had been equal to almost their entire basic and dearness. In 2000, the
average basic and dearness allowance was Rs. 7,000 and the incentive earnings were around Rs
6,500.
With incentives accounting for a more than as usual and sizable proportion of the pay packet,
workers badly needed the incentive scheme. Marutis worked formed part of middle class, not
working class. Over two-thirds apparently owned flats/houses and cars.

Power and Politics


In MUL the control and power is mostly in the hands of management. During the workers strike in
2000 the management refused to agree to the workers demands. The officers ran the plant by
supervising the operations of the plant and hiring contractual labour. This made it difficult for
workers to sustain the strike. They had to call off the strike and were in fact forced them to agree to
some changes laid down by the management.
The power of Japanese has always been there in an implicit manner. The Japanese have acted as
conflict resolvers whenever there have been any conflicts within or between departments. Many
times the departments play politics with other departments by trying to use the referent power
available due to closeness with Japanese management. With the increase in stake of Suzuki Motor
Corp. the legitimate power of the Japanese management has further increased.

Labour Unrest in 2000


The car market in India become highly competitive in late 1990s with almost all major players
entering the Indian market with manufacturing of various models. So company suffered a decline
of market share. As Marutis salary structure comparatively higher than most manufacturing
companies, due to this competition and decline in profit, the company could not live up to the
expectations of the employees. As a result worker unrest started to grow in the company.
In September 2000 the Maruti Udyog Employees Union went on an indefinite strike if their
demands were not met. The employees were demanding a new incentive scheme, improved pension
scheme, better work environment and filling up of supervisory vacancies. However the
management refused to accede to these demands.
Production fell by around 40 % for a period of 3 months. During this period the engineers at the
managerial positions manned the assembly lines to ensure that production does not stop completely.
The top management of Maruti were under some pressure to negotiate with the workers. However,
the government decided not to interfere directly and the management insisted that the workers stop
the agitation and agree to adhere to the code of conduct specified by them.
The strike ended in January 2001 with the union members agreeing to by the code of conduct.
About half of the employees (40) suspended/terminated during the course of the agitation were not
taken back on duty. Thus the management retained the upper hand after the strike ended and the
work culture at Maruti changed significantly after this. Some of the changes which took place were
as follows:
1. The sense of job security that the workers enjoyed at Maruti diminished. In subsequent
years a number of non-performers were asked to opt for a voluntary Retirement (VRS) and by
introducing VRS, 1251 jobs were reduced.
2. De-recognized Maruti Udyog Employees Union (MUEU) by dismissing the union members
and the MUEU was not allowed to conduct a single general body meeting after the lockout and
recognized new union called Maruti Kamgar Union and it was set up in December 2000 with 28
members.
3. The company started relying more on casual (contractual) labor to decrease its costs.
4. The proportion of variable performance based pay out of the total increased significantly.

The major reasons behind labour unrest

In the late 90s, Maruti had begun to feel the effects of competition in automobile industry
and this can be attributed as one of the reason for attack on the workers.
With the change in management in mid- 1990s, when it became predominantly government
controlled for a while, and the conflict between the Government and Suzuki may have been the
cause of unrest among employees.
When Management-Union talks broke down in September 2000, the workers start
agitation: black badges to start with, and later, hunger strikes, tool down strikes etc.
The management introduced a scheme, where incentives paid would be dependent upon the
sales of the company both of cars and spare parts, which are not accepted by the union because
productivity incentive could not be connected with car sales since that were not something the
workers could determine.
Introduction of SCANLON type incentive scheme. The union demanded reinstatement of
the original incentive scheme which had been in place prior to 1995, according to which 65% of all
savings in labour-cost above the norm set (at 41.5 cars per worker per year) was to be distributed to
workers as an incentive bonus.
Death of three persons in October 2000.
Mandatory requirement of signing a good conduct undertaking.
From the whole case study its very apparent that there was lack of collective bargaining and the
absence of convincing response from the management.
The workers lacked the work ethics. Unlike the Japanese and Korean workers, Indian workers did
not care about the impact of their agitation on the viability of the company and the attitude of
customers. Indian management also seem to have failed fully grasp and internalize the Japanese
management.
It would be in everybodys interest if the management were more sensitive to labour and labour
was equally concerned about the product market development.
A win-win situation would be based on the approach where management ceased to insist on good
conduct undertaking and let the workers go to work gracefully and if the union took a long term
view of the companys viability and competitiveness, moderated its scheme based on a composite
criteria of productivity.

EMPLOYEE WELFARE
HMSI had taken several initiatives in the area of employee welfare, which ranged from subsidized
canteen facilities to attractive hospitalization reimbursement for all employees. Some of the key
initiatives in this regard were as follows: Besides canteen, transport facilities to and from workers
residences were provided at subsidized rates. The company had a sports club for employees use at
Sukhrali village in Gurgaon, which had facilities for indoor games. Workers had been organizing
matches with employees of other companies in different games including football, volleyball, table
tennis, chess, carom board, badminton, tug of war and high/long jump. Two sets of uniforms, one
company cap and one pair of shoes were provided to each employee every year; all employees
including the managers wore similar uniforms.

HUMAN RESOURCE POLICIES


The Human resource policies of HMSI were in alignment with the philosophy of its parent
company, HMCL. The latter considered itself as a unique organization as it claimed to have
adopted some distinctive employment and production practices. Respect for the individual
stemmed from initiative, equality, and trust. The company believed that it was the contribution
from each individual in the company that was responsible for companys success, and which would
take the company into the future.
HMSI had a performance appraisal (PA) system for all its employees including those in the worker
category. It involved interviewing of the person concerned by the section head and the shift
incharge, on the basis of which PA was done on a rating scale. For the purpose of increment,
workers were divided into five categories; increments ranged from Rs. 400 to 1400 per month
depending upon the PA grade of an employee. The company announced all PA results and salary-
hikes immediately on the end of the financial year.
Things were going smooth for nearly two years after production started, but for a series of
unpleasant events.

Case Introduction:

The case study focuses on the Human Resource problems faced byHonda Motor Cycle & Scooters
India (HMSI). The case discusses thevarious reasons which led to the dispute between the
management andemployees of HMSI. It elaborates the incidents that led to the strike at the
company that in turn resulted in HMSI workers being severely beaten upby the police. Labor strife
and the management's inability to deal with iteffectively had resulted in huge losses for the
company due to the fall inthe production level at the plant. In addition to this, the company also
received a lot of negative publicity as newspapers and TV channels gavewide coverage to the
violence of the action.

The case highlights the growing number of instances of clashesbetween the employees and the
management of companies in India,which are often guided by external parties such as trade
unions andpolitical parties.
Labor force in India is the second largest in the world after China. Majority of the Indian labor
force is in the unorganized sector. Less than 10% works in the organized sector that comprises of
government and other public and private registered companies.
Labor and labor related issues are not new to India. All the sectors of Indian economy have been
affected by labor disputes and unrest. India had been a country with largest number of labor
disputes for years. Labor disputes leads to loss of man hours which in turn affects productivity
adversely. Many companies have been badly affected by the strikes and had to be locked out due to
the severe labour issues. The legendary strikes in Indian history are that of Railway workers in
1974(largest known strike) and the Great Bombay Textile Strike. India has come along way from
those legendary strikes.
As years passed, the nature and color of disputes and unrest also changed. In 1970s and 1980s,
manufacturing, mining and quarrying sectors were most affected by industrial disputes. But today,
financial services sector and other services sector dominates industrial disputes. But, on a whole,
the number of strikes have decreased tremendously. While the average number of strikes in 1970s
was 7 per day, now it is only one every two days. The major reasons for such a decline in strikes
has been attributed to the change in relationship between workers and employees. This has led to
improved productivity. Another positive aspect for this reduced number of strikes is the better
negotiation strategies and the ways of handling the disputes employed by the employer because of
the better business prospects. The change in global shift in values from collectivist to
individualistic has also led to such a decrease in the number of strikes. Another negative aspect
which is attributed to this is the growing contractual labor employed in factories. They are in most
cases not given freedom to form their unions or to protest against the unjust practices of the
company. Another fact is that the increased growth of service sector firms and private firms
especially the IT, the concept of labor disputes or labor union or employees union is unheard of.
Although there has been a decline in the number of labor disputes in the last decade or so, the year
2012 is slowly becoming an exception. The data from the Labor bureau of the government indicate
an increase compared to last year. The number of strikes might have increased or decreased. But
the effects and impacts have increased. Many incidents of strikes leading to wide destruction of
property and even incidents of murders of officers and managers have been reported from various
parts of the country in the last few years. These incidents have wide effects on the economy of the
country. This article focuses on one of the major sectors which has been affected by strikes in the
recent past the most Automobile Sector
The above exhibits give a general idea about the alarming situation that prevails in Indian
automobile industry with respect to labor disputes. Labor disputes are no longer disputes that end
up in strike, but they are repeatedly crossing every possible limit. It was in 2005 that the agitating
workers of Honda Motorcycle and Scooter India were brutally attacked by police. This labor unrest
was followed by labor unrest at several other manufacturing plants, including Sunbeam, Micro-
Tech, Rico Daruhera, Rico Auto, FCC Rico, Hema Engineering, HMSI, Hi Lux, AG Industries,
Hero Honda, Sona Steering, Bajaj and Denso Haryana
As is evident from the newspaper exhibits, deaths have occurred even before on account of labor
disputes, but it did not catch media attention as much as the recent case of Mr.Awanish Kumar a
General Manager of the Maruti plant in Manesar. It gained popularity mainly because of the brand
name Maruti. Concerns have been raised from all sectors of the country about the increasing
occurrence of such incidents and its impact on the country. Various panel discussions, meetings and
deliberations have taken place on the same. It might be true that laborers agitate because of unfair
treatment. But killing a person cannot be justified on any account. Here we try to analyse different
cases of labor unrest that has happened in the automobile industry and try to draw a conclusion
about the probable causes, impact and future concerns regarding the same.

Why Disputes?
Labor disputes have always happened due to the lack of trust of the employee in the employer. But
at times, it can also happen due to the vested interests of a few people in the trade unions. But in
general, almost all the cases are reported due to the bad employee-employer relation and lack of
proper communication between the management and laborers.
The major cause of unrest or protest has risen from the fact that the companies does not allow the
formation of labor unions. As can be seen in the case of Rico Auto incident which happened in
October 2009, it all started when the company expelled 17 people on grounds of discipline, who are
believed to be victimized for helping form trade unions in the company. The labor strike lead to
violent protests and confrontations between employees and finally ended up in the death of an
employee. Even the Maruti Gurgaon plant issue also had similar problems of trade unions where
company was against formation of trade unions.
Another major cause is the low wage issue. India has one of the most rigid laws for employment.
But it is not still strong enough to meet the requirements of the present day economy. The laws are
archaic. While all laws are aimed at protecting the interests of the workers, it does not always
happen so. One law which protects the workers indirectly paves way to some other practice by the
employer. For example, there are strict regulations regarding the wages, rights and other facilities
which are applicable to permanent employees. To avoid giving them, companies prefer to employ
more contract laborers. Thus law which should protect workers does not always do so. Wage
inequality has been the major cause of labor unrest in Maruti plant in Manesar. The contract
laborers who were almost 40% of the total labor force were given almost half of the salary of the
permanent workers when the work performed by them were similar to the permanent workers. This
is a clear negligence of the Contract Labor Act 1970 which states thatcontract labor cannot be
employed if the work is of perennial nature that is to say, it is of sufficient duration having regard
to the nature of industry, trade, business, manufacture or occupation carried on in that
establishment. Contract Labor Act 1970 prohibits employment of contract labor in any work
similar to that of permanent employees. But the workers were not able to raise the issue because of
the absence of a strong union for contract laborers.
Another cause of many industrial disputes is the unfair and ill treatment of workers by the
employees. It happens not only in case of wages, but also in the nature of work and facilities
provided. In Manesar plant, the work was so hectic that they hardly got time to go to toilet In
between. They were given too short breaks. The pressure on them was so high. They were
penalized heavily for late comings and absenteeism. The facilities provided to the workers was also
inadequate as per the laws. They worked harder every day to increase the productivity of the plant,
but they were not paid as per the work. Half the work force was employed to do the work than the
actual requirement. The same cause can also be seen in the case of the unfortunate and tragic
incident that happened in Pricol, an auto company in Coimbathore. The VP HR was killed in a
labor agitation that happened in September 2009. He was blamed for freezing the salaries of the
workers.
The other cause is the changing economic environment. Consumerisation is the slogan of the time.
Aspirations of the present generation whether a daily wage contract laborer or a CEO is now
comparable. An Apple iPhone is now aspired by anyone irrespective of his financial background.
Hence such aspirations make them restless and they get easily agitated on grounds of unfair
treatment and poor wages. This problem aggravates especially when the company makes huge
profit and the workers feel the same does not penetrate till the lower level. They feel that they work
hard (made to do double the work) to gain such profits, but they does not benefit from the profit
they earned for the company. Similarity can be drawn in the incident at Graziano Trasmissioni,
Noida when the CEO was beaten to death by workers who were retrenched due to a partial lock
out. People are not able to accept such facts like unemployment especially in hard economic
situations of rising prices. The highly competitive economic and business environment creates an
insecurity and uncertainty in the minds of the employees also. This paradigm shift in the cultural
background and the economic conditions also has had an impact on the labor disputes.
Another cause can be the mismanagement and failure to understand the culture of the location by
the top level management. Maruti puts forward the example again. The Manesar plant issue proves
that the entire machinery was a failure to anticipate such an unrest. The new MD who was a
Japanese was no way able to establish a rapport with the Indian machinery. The middle level
management also failed to communicate between the high level management and the laborers. So
the entire machinery was in dire straits within the company. Strikes had been so frequent within the
company, still they were not able to anticipate such an extreme incident. The incident also made
clear the absence of a strong Industrial Relations team in the organization. With the boom of the
services industry, industrial relations has become a neglected space in management education. The
lack of skills and expertise in the industrial relations department became clear with the Maruti
incident and even with similar incidents that took place in the recent past.

Impact
Having seen the various probable causes of the labor disputes in India, it is high time to discuss
some solutions to tackle these issues so that such notorious incidents do not repeat. Although
incidents have occurred in the past, labor and labor related issues have attained much more
attention and research following the Maruti Manesar plant incident.
The highest impact of any labor issue falls first on the affected company. The prdocution gets
affected and the sales come down which in turn affects profits. Manesar plant issue became severe
to such an extent that the company had to think of locking out the plant. The incident also hit the
component manufacturers who depended solely on Maruti. The local economy of the region also
gets adversely affected due to such incident.
Another major impact is on the investment climate and economy of the country. Such incidents
when increasingly reported sullies the image of the country. These incidents would be seen as
alarming signs by many potential investors who consider India as a place for investment. These
incidents would affect the investments at a time when India is becoming a manufacturing base for
many of the foreign automobile manufacturers. India is already ranked bad (132) in the Ease of
Doing Business Index List. These repeated incidents showcase the complex labor scenario to the
outside world.
While it was the suppliers who bear the impact in case of Maruti incident, it was the manufacturer
who got the impact in case of Rico Auto strike. A strike at a factory in India affected the global
value chain and it impacts India in the long term perspective. The Rico strike that extended 45 days
led to closure of factories of Ford and GM abroad since the supply to these factories was affected.
Such incidents raise questions about the credibility of India as a location for industries and many
companies would look for alternate locations like China and Thailand.
The Manesar plant incident has led to serious thoughts not only in the manufacturing industry, but
also in the academic field. Industrial Relations has gained popularity after the incident. It has long
been a neglected field. The top B-schools are revamping their curriculum to give emphasis to this
subject which was forgotten for a long time especially after the economic reforms of 1991. Various
conclaves have taken place in almost every B-school across the country to create awareness and to
emphasize on the increasing need for industrial relations in the present scenario. Companies also
pushed the management institutions to include industrial relations and rebalance the human
resource courses so that those skills are not neglected.
B-schools including IIMs reviewing human resource curriculum after Maruti's Manesar violence
Economic Times, 29th August 2012

How to tackle ?
The Indian economy is growing rapidly and labor related issues should not hinder its growth. It is
high time we revisit our archaic labor laws. Indian labor laws are rated as one of the most rigid laws
in the world by World Bank. Labor laws should be amended with respect to the present day
industrial requirement at the same time safeguarding the interest of the employees and employers.
Minimum Wages Act should be amended to include effects of inflation. Labor laws should be
amended not only to protect workers but also to create more employment in a growing country like
India. Trade union laws also should be amended so that they dont become hyper powerful. It is
necessary to protect the interest of all parties by law.
The major concern still stays with employment of contract labor. Maruti after the Manesar incident
told that it will revisit its contract labor policy. Employment of Contract labor should be
minimized. At present, the contract laborers face lot of discrimination and they are still
unorganized. They do not have unions to represent them. There is a lack of security and social
welfare for them. They do not enjoy rights or facilities at par with permanent employees though
they do the same kind of job. Such discrimination should be stopped. It is this discrimination,
exploitation and deprivation that leads to labor unrest and riots. The laws and legal framework
regarding the contract labor should be clear and straight forward. Bending of laws for cost cutting
should be dealt by law. Contract laborers should not be considered as cost cutting elements, but as
partners in the production process as any other employee of the company. Equal pay for Equal
Work should be the norm.
It is time that we consider laborers as part of the company rather than cost elements. They should
feel empowered. The laborers should be educated and made aware of the industrial scenario of the
country and how important their contribution is to the progress of the industry and nation. The
increasing aspirations of the present working class should be understood by the management. The
HR department should be more proactive in dealing with the laborers. Promotion of trust between
the manager and the managed is necessary. More discretionary power should be given to
employees. The management should have dialogues with the workers. It is not an archaic society
where every attempt to increase productivity leads to disputes and strikes. The industrial set up
should be improved in such a way with the inclusion of employees such that they get incentives for
increased productivity. Capacity development should be given importance not only in the high level
and middle level management, but also in the shop floor level. Such actions would surely make the
employees more empowered and self-valued.
The role of labor unions in the industrial scenario of our country cannot be negated. It is the
approach towards the trade unions that determines how well they are managed. Companies which
always restrict and control the formation of trade unions have always suffered at their hands.
Companies should allow formation of trade unions on democratic grounds. Toyota is an excellent
example for their approach to employees. They are considered as a company which do not build
only cars, but people too. Toyota explains their approach model to HR: Being heard is the
foundation of the Toyota culture of continuous improvement. So, Toyota sets up mechanisms
through the HR department to allow team members to be heard. We saw that even the HR
department can be viewed as biased. The counter measure was to set up a separate I team
representing a cross section of the plant to investigate employee issues. It is time companies learn
from their counterparts and benchmark themselves not only in financial growth but also in
intangible dimensions also. The formation of labor unions can also be considered as a failure of a
company to address the issues of the laborers. If the company pursues proper employee
engagement, employee development and transparent conversations with the employees, they would
not seek the help of an external agency for help like a labor union. So it is required that every
company has a 360o feedback system so that even the lightest issue is addressed before it gets
serious.
It is not only the companies which should revisit their approach to trade unions. Trade unions
should have a second thought on why and what they exist for. They should safeguard the interest of
the workers, but at the same time, they have the responsibility to promote the growth of the
industry and the country. They should understand the changed industrial scenario. Trade unions
should not become franchisees of politicians.
Another area where thrust has to be given is the handling of the labor issues. Whatever industries
do, disputes will continue to occur. But the success depends on how smoothly the company handles
it. Even in cases of disagreement, companies should make sure that a disagreement is reached after
discussions and negotiations. A failed negotiation is always better than confrontation. The ability to
listen and negotiate with patience should be there in every management. The way a dispute is
handled creates an image of the company in the minds of the workers. It is very important to create
a good image because the image persists even after the conflict is over and the worker returns to
work. It is far more important to create an inclusive work atmosphere for workers returning after
strikes. It is a herculean task which might sometimes take years. There are companies which are
still bearing the wound of strikes which happened years ago. It requires an open mind from both
parties to share the blame and the gain of a dispute and the negotiations.

Way Ahead
It is time we retrospect and take swift actions. It is time to stop discussions and take actions. All the
stakeholders the government, industrialists, laborers, society and whoever concerned should
converge their thoughts and focus for the progress of the nation. People should understand that
violence is not the solution for any problem. We want permanent solutions that can take the
industry and the Indian economy ahead. Maintaining a harmonious industrial relation involves
collective effort by all the stakeholders. The fate of Roy, Chaudhary and Awanish should not
happen to anyone again. The whole world looks forward to India since the future of the world is
here. We should not destroy our future by our stupid and heinous acts. India should and will remain
a country of great potential and a country which taps its potential to pave way to growth.

What is Labour Unrest

Labour Unrest:
A labour unrest is a social phenomenon of enormous complexity and it is very difficult to give any
complete explanation of this phenomenon. It is a matter of controversy whether the predominant
factors underlying labour unrest are economic or non-economic. It has been concluded that so long
as income remained the all important means for satisfying human wants and needs, wage would
continue to be major consideration in labour unrest.
Considering the nearing period of labour unrest with the recent cases of Honda and Maruti, it is the
time to do root cause analysis and find out what are the possible reasons which lead to labour unrest
so as to address these issues and untide the tide of labour unrest.

Workers Unrest in Automobile plants in India: Strikes and Occupations at Maruti Suzuki and Bajaj
Auto in 2011/12 and 2013
Jrg Nowak

The new plant of Indias biggest car passenger producer Maruti Suzuki was occupied twice in 2011
and saw widescale rioting in July 2012 as workers set the factory on fire the events got
widespread attention but did not lead to a considerable change of labour relations in India.

Before I move on to a closer description of the two strike movements in 2011/12 and 2013, I
provide for some impression on the way industrial labour is structured today in India.
During the distribution of the workers newspaper Faridabad Mansoor Samachar in the industrial
district of Okhla in New Delhi, the workers that take a newspaper are usually asked where they
work. In earlier times they gave the name of the company, but now many of them respond with a
number: 31, 44 or 142. The vast amount of industrial labour in India is done in supplier companies,
while the product, electronic consumer articles or cars, is assembled by a comparatively small
number of workers in the plant of the main company. The supplier companies employ between 80
and 100 % contract workers that are sacked again after 6 months. This leads to a permanent change
of jobs and so the workers only memorize the number of the factory the number is sufficient in
order to know where they have to go in the industrial cluster. The workers dont memorize the
name of the employer company, because they are an interchangeable force of labor.
Especially the industrial city of Gurgaon south of New Delhi has seen an upswing of factory
struggles since 2005. In 2005 workers at Honda factory occupied their plant. In 2007, again, the
contract workers at Honda went on strike and in the same year Indias biggest motorcycle producer
Hero saw a major strike movement. In 2008 the CEO of the Italian autoparts producer Graziano
was killed by workers after a 1-year-long conflict. The background of that conflict was the
replacement of permanent by contract workers and the dismissal of unionised workers.
Maruti Suzuki is the biggest car passenger procuder in India and was started as a state-run
company. But since the mid 2000s it is controlled by the Japanese company Suzuki. The main plant
of Maruti is in Gurgaon, too. 20 kilometres further south, in Manesar, Maruti opened a new plant in
2007. There are no settlements apart from a small village and the newly hired workers in the new
plant are all aged between 20 and 25. In 2011, 75 % in this factory were contract workers from 60
different contractors, and the wages in that factory are lower than in the mother plant in Gurgaon.
The contract workers earned in 2011 about a half (9.000 Rupies, about 100 Euro in a month) of the
wage of permanent workers (17.000 Rupies/month). 800 workers were permanent at that time and
2700 were contract workers.
But just there, in this new ,model factory`, a three month-long conflict broke out in 2011. The
workers were about to be forced to join the union MUKU that was founded by the management
while the independent union MSWU was denied registration by the state. Usually trade unions are
only allowed to register if the management approves the registration, Of course, this is against all
labour laws, but in general labour law in India is quite good, but is either not implemented, or if it
is, then it is circumvented in a myriad number of ways. A saying in India goes Its just a piece of
paper and it applies here, too. Plus, only permanent workers can effectively join a trade union
contract workers are fired if they join one.
In June 2011 the permanent workers were forced to sign up to the yellow union MUKU, and as a
response 2000 workers organised an occupation of the factory for two weeks. After an agreement
that the independent union MSWU will be able to register, the occupation ended. But, in mid-
August the registration was denied again by the administration and on August 29 the management
used a method that is well-known in India: The workers are locked out with the help of the police
and are only able to enter the factory after they sign an undertaking of ,good conduct` with which
they promise not to agitate against the management again. But this was only signed by 20 workers,
the others didnt enter the factory and held an assembly in front of the factory gates. In the
meantime, the management recruits about 800 new contract workers in order to keep the production
going. Finally, one month later the workers sign the undertaking, and some workers which were
dismissed during the conflict are taken back. As workers want to return to work a few days later,
only the permanent workers are allowed to enter and around 1.100 contract workers are denied
entry. Now the contract workers force the permanent workers to show their solidarity and on the
7th of October the factory is occupied again. At the same day, three other nearby plants of Suzuki
are occupied by the workers employed there and eight more auto plants stage solidarity strikes.
That was the decisive moment in which permanent and contract workers organized a joint struggle
for the second time in the Manesar plant, and in other Suzuki plants workers went on strike out of
solidarity. In the occupation at the Manesar plant many of the contract workers that were newly
hired during the lockout joined the struggle. While Suzuki Powertrain, the plant where the engines
are produced, was occupied, too, the main plant in Gurgaon was affected and had to close down
two days after the occupations for some time. One week later, at October 14, 2000 policemen
evicted the canteen run by workers, and the workers decided to give up the occupations. But in the
four Suzuki plants that were occupied the strike went on for another week until October 21. Finally,
the management took back the locked-out contract workers. The conflict seemed to be settled, but a
few days later the leaders of the independent MSWU union were forced to accept high severance
payments. They were threatened with prison charges and had to leave the factory. That was a heavy
blow for many workers, because they put a lot of trust in their union. Resignation spread and many
said If these people trait us, then everyone would trait us.
That event marked the end of the first period of struggle at Maruti Suzuki. One important change
was that the speed of the conveyer belt was reduced after the conflict: Instead of every 45 seconds,
now one car was produced every 60 seconds.
In the course of spring 2012 the trade union MSWU got registered, but the negotiations about its
demands wage hikes and the integration of contract workers as permanent staff saw outright
rejection by the management. The mood among workers got worse. On July 18 in 2012 a worker
was insulted by a supervisor and subsequently dismissed. Negotiations of the union did not yield
any results and violence broke out. The exact circumstances of what happened that day are under
dispute, but there are many hints that the escalation was at least provoked by the management. In
India, violence initiated by security forces paid by management is a widespread method in order to
get rid of organized workers, because subsequently the blame will be put on them. But initiating or
provoking violence contains risks for the management as the situation might get out of control.
Since 2 pm on that day, 50 policemen were in the factory, but it was only after 6 pm that a fire
broke out in the plant. One manager dies in the flames. It was this manager who played an
intermediate role between the independent trade union and the management.
After the incidents of July 18, the factory remained closed for one month, 546 permanent workers
and 1800 contract workers were arbitrarily dismissed. In September 2012 wage hikes were
introduced, but they widened the gap between permanent and contract workers. In addition, the
management announced that it would restrain from using any contract labour in the future. In the
weeks after the unrest, police arrested more than 150 workers, of which many have not been in the
factory on July 18. They are in jail until the present day without any sentence, they dont get bail
and all are facing murder charges. Protests against the arbitrary arrests are met with violent police
crackdowns and with new arrests, many of the prisoners have been tortured. One of the arrested
workers got infected with tuberculosis and did not get proper medical help. In the end of October
2013, a banned demonstration in front of the jail was held amidst curfew and subsequently a
meeting with the Industries Minister of Haryana state took place. The repression keeps many
activists busy so that there is less time for the agitation and joint action in the factories which is the
locus where workers can most effectively exert their power.
The results of the conflict are met with diverging views. Many of the dismissed workers think it
was good to set a signal despite their individual situation. They think that the uprising spread fear
among many CEOs so that labour relations might improve. In fact, many car factories hiked wages
in Gurgaon after the conflict in Maruti in 2011 in order to prevent labour unrest. Some labor
experts underline that companies use the struggle at Maruti to increase negative sentiment against
trade unions. During a recent strike of airline pilots the strikers were labelled as ,labour terrorists
by management. Another factor are the conditions in the state of Haryana where Gurgaon is
located: In Haryana very conservative and patriarchal social relations prevail, leading many young
people to a rebellious mindset. They leave the rural areas and go to the factories their rebellion
against honour killings and caste rules about marriage is mixing up with rebellion against harsh
factory regimes with a high speed of work and short breaks. In any case, the conflict at Maruti
Suzuki made a lot of waves in India, and particularly in the automobile sector.
As a strike broke out in one of the three plants of Indias second biggest motorcycle producer Bajaj
in June 2013 in Pune, many newspapers compared to the conflict at Maruti Suzuki in the preceding
year. Fears loomed in the corporate world that industrial violence would be on the agenda again.
The area around Pune is another big automobile cluster in India. Many conditions at Bajaj in fact
resemble the ones that could be found in the Manesar plant of Maruti. In 2002, Bajaj Auto opened
an entirely new factory 15 kilometres north of the main plant in Pune and hired new workers, and
closed down the former main plant in Pune in 2007. In the Chakan plant work around 1200
permanent workers and 1000 contract workers. In 2010, the trade union VKKS established itseld
there, a pragmatic but leftist trade union. The old plant was dominated by a yellow union for a long
time, connected to the right-wing hindu party Shiv Sena. VKKS agreed on an unusual long nine-
year contract that was supposed to be renegotiated every three years. The contract contains a yearly
wage hike of 8 percent. If the company is good in sales, the wage hikes can rise to up to 12 %. As
there were renegotiations for the contract for the first time in March 2013, the trade union raised
demands for a wage hike of 25 % and permanent contracts for the contract workers. As there is 10
% inflation in India from 2012 to 2013 and a much higher inflation in simple goods that are most
important for workers, like vegetables, a 25 % wage hike is not as extraordinarily as it seems. Plus,
in October 2012, a more hidden conflict began at the Chakan plant of Bajaj. After repeated
harassment of workers and dismissals of single workers, one shift in the factory started to slow
down the production and managed to do that for nine months. The management reclaims that the
output in June 2013 would have been only 35 % of the normal output. The strike was followed by
almost all the workers but the company managed to hire many new contract workers as scabs in
order to go on with the production. 15 strikers were arrested during the strike with the charge that
they beat up scabs who wanted to enter the factory. Although the company did not have a proper
license to hire these workers, they entered the factory in police vans. The company claimed that it
needed these workers for tasks like gardening that dont require a license. Again, state institutions
acted deliberately in favour of capitalists. Rahul Bajaj, the owner of the factory, stems from one of
the old bourgeois families that run the country since Gandhis time and is closely aligned with the
right-wing hindu nationalists of Shiv Sena. Thus, these close political alignments include a smooth
functioning of both legal and executive institutions in the favour of Indian capital. Finally, the
strike ended after 50 days without a proper result. The company took back 7 out of 22 workers who
have been fired before the strike and agreed to start negotiations with the trade union. As the
relations of forces in India is much in favour of capital it is not unusual that a strike is led in order
to force the company to take up negotiations. So, what could be read as a total defeat, is at least a
partial victory due to the standards of labour relations in India.
Even if the strike did not escalate at Bajaj Auto and the results remain somewhat unclear, there are
important similarities with the conflict at Maruti-Suzuki: The companies in the auto industry in
India saw considerable growth in the last ten years but they still increase the use of contract labour
and open new plants with fresh workers but it is just this mixture intended to provide better
conditions for exploitation that lead to labour unrest. Real wages in the auto industry in India
dropped about 25 % since the year 2000. In Maruti-Suzuki wages are just 2 % of net sales. Laywer
Vikash Barnwal, who represents many of the dismissed Maruti workers in court, emphasises that
violent incidents occur every week in Gurgaon. The working class is very much under pressure and
the conditions are tough, but in the big picture workers struggles experience an upswing. Workers
in the informal sector increasingly get organized. The participation in the general strike in February
2013 was the biggest ever in the history of the labour movement: 100 million workers participated,
almost 10 % of the total population in India. In Noida close to Delhi, textile workers set their
factories on fire at the day of the general strike.

HMCL:
Soichiro Honda, a mechanical engineer, established the 'Honda Technical Research Institute' in
Hamamatsu, Japan, in 1946. His idea was to develop and later produce small two-cycle motorbike
engines.
Honda's first product, an A-type 50cc bicycle engine, was produced in 1947. In 1948, HMCL was
incorporated with a capital of 1 million. Thereafter, the company started to design and produce
lightweight motorcycles. Honda's first motorcycle, the D-type two-stroke 98cc, was produced in
1949...HMSI
HMSI was established on August 20, 1999, and a plant was set up at Manesar to manufacture two-
wheelers for the Indian market. HMCL made an initial investment of Rs. 3 billion to establish the
plant which had an annual production capacity of 200,000.

Labour Unrest at HMSI:


The Gurgaon plant of Honda Motorcycle & Scooter India (Private)Limited (HMSI) had peaceful
labour relations for the first few years afterit was set up in October 1999.
The management entered into labour contracts with individual labourers, which covered the
basic wage structure and detailed parameters specifying the work conditions for workers. In
December2004, the workers at HMSI's Gurgaon plant started demanding that the management
increase their wages commensurate with the company'sgrowth in the market.
The conflict began in December 2004 after a manager allegedly hit a worker, who was said to be
engaged in organising a union within the plant. Another four workers were sacked after they
expressed their solidarity with their workmate. The official justification for the dismissals was
"undisciplined behaviour in the factory. The whole situation came to boiling point when the
management sacked another 57 workers and nearly all the workers in the factory reacted by going
on strike in June 2005. At the end of June 2005 the management replied by officially sacking 1,000
workers and locking out the strikers.
The management and the workers traded allegations and counterallegations on what the root cause
of the dispute was. They blamed eachother for the situation that ultimately took an ugly turn on
July 25, 2005.
The management held the workers responsible for indiscipline andfor slowing down production,
while the workers insisted that there hadbeen no indiscipline on their part and that the management
was bringingup this issue only to prevent the formation of a trade union at HMSI.
Some analysts charged that the incident was fallout of the long term oppression and malpractices
at the Gurgaon factory by the HMSI management. They alleged that HMSI's management had
violated certain lawsrelating to the welfare of workers.

What has been discussed in this case?

The major issues that we have chosen for careful consideration and analysis are to:
Understand the factors that lead to labor unrest at a factory and the impact of such incidents
on the employees and the company.

Study HR policies adopted by organizations to prevent labor unrest at the workplace.


Examine top management's role in maintaining a peaceful working environment.

Analyze the role of external parties such as trade unions; political parties etc., in disturbing
the working environment in a company.

Globalization and Industrial Relations


Industrial Relations paradigm in India had dramatically changed following the adaptation of free
market policy in the early nineties. With the dawn of liberalization, privatization and
globalization (LPG), the country is, by and large, able to preserve a sound and positive industrial
relations climate. This is apparent from the statistical figures of Union Governments Labour
Bureau, which exhibits drastic decline of industrial disputes from 3049 in 1979 to 391 (P) in

Reduced trend in the number of disputes

Liberalization introduced change of business environment, and increased competition among


industries for survival in the global market economy. Globalization, potential market capacity
and availability of workforce led many MNCs, representing the best brands of the world, to set
up their manufacturing bases in India, giving a tough competition to their Indian counterparts.
These MNCs prefer managing labour relations through work committees, which have
representatives from various departments in the company, eventually reducing trade union
activism. The rise of IT industry and the emergence of knowledge workers contributed further

to decline of workers union. Part of the reason was that workers issues and concerns had
changed and change of functional models of industry reduced the area of confrontations.

But following 2008, there is sudden increase in labour unrest in certain industry pockets which
came at a time when strikes have actually been on the decline in the country.

While strikes and protests are common global phenomena, in the recent years India is facing an
alarming situation with the increase in number of unrest, leading to violence and killings which
reminds us of the trade union militancy period of 1970s and 80s. This surge in industrial unrest
has become a concerning situation for all. On September 22, 2008 the CEO of Graziano
Transmissioni India, the Indian unit of an Italian auto component maker, was clubbed to death
by a group of 200 workers. In another incidents, in March 2011, a Deputy General Manager
(Operations) of Powmex Steel, a unit of Graphite India Ltd. was killed after his vehicle was set
afire by irate workers, in November 2010 an Assistant General Manager of Allied Nippon, an
auto parts maker, was stoned to death by angry workers and in September 2009 the Vice-
President (HR) of Pricol was beaten to death by agitating workers.

These surging incidents of industrial unrests are for sure denting investors confidence in the
country being a safe investment destination and a preferred global investment hub. It has also
led to production and financial losses to companies operating in the country. If left unchecked,
this ongoing turmoil will surely send wrong signals to foreign and domestic investors, which will
directly affect the countrys economy and employment generation targets. Today, industrial
relation needs more detailed understanding of the needs and mindsets of workers and
management, to foster harmonious functioning of enterprises to promote growth.

Recent Unrest
Most of the adverse unrests were witnessed in the manufacturing, textile and automobile and
auto auxiliary industries during 2008-11 and names involved Hyundai, Honda, Nokia, Bosch,
Pricol, Maruti Suzuki to name a few - most of which represent the best across industries. Here
worth mentioning is the calamitous case of Maruti Suzuki India Ltd., Manesar Plant the largest

automobile manufacturing company in India. The strike at Marutis Manesar Plant started on

4th June, 2011 and continued throughout the year in three phases, adversely affecting the
companys production and also the State Revenues. The Haryana State Government declared
the strike as illegal and imposed ban by passing prohibitory orders and referred the matter to
the local labour court. But even this could not stop the workers from striking. As per estimation,
Maruti Suzuki made a loss of Rs. 400 million or roughly $9 million a day in revenue because of
the strike, with 1,200 vehicles a day in lost output. The striking workers were demanding the
registration and recognition of a new union at the Manesar plant, besides retaining contract
labourers for the two upcoming new units inside the complex and withdrawing disciplinary
action against the 11 office bearers of the new union. The strike not only affected Maruti Suzuki
but also directly affected the supply chain of vendors supplying auto-parts directly to Maruti.
Over 100 units suffered a virtual shutdown, while 300-odd manufacturers, which were indirect
vendors were reported a daily loss to the tune of 15-20%.

Moreover, there were numbers of strikes that took place throughout the country during 2011.
About 900 workers launched a wildcat strike on 16 March that continued for more than a
month at General Motors India Ltd., Halol plant at Gujarat, opposing the working conditions in
the factory and demanding wage hikes, making the company suffer a production loss of above

1,500 units. This was the second such incident at Halol in five months.

The leading tyre manufacturer MRF was compelled to declare lockout at its Kottayam plant in
Kerala following labour unrest due to suspension of a worker on disciplinary ground. The
management of the Hindustan National Glass Industries Limited had to issue suspension of
worker for an indefinite period after violence erupted in July at Rishra factory premises in West
Bengal over a wage revision demand, leading to the closure of the factory. Tata Group firm
Voltas also faced a similar issue with its workers protesting against the companys recruitment
policy and wages. The Hindalco Industries, Kochi had to declare lock-out of its plant for about

10 months, for an odd number of 200 employees went on strike demanding an upward revision
in monthly wages. Workers at Moser Baers Noida facility workers struck a weeklong strike in
October demanding a revision in wages and bonuses.

Over all, in 2008-11, an increased number of strikes were witnessed in India. To name a few -
Satari based Automobile Corporation of Goa Ltd., Nestle, Mahindra & Mahindra, Hyundai
Indias Chennai plant, Rico Auto Limited, Honda Motorcycle and Scooter India (HMSI), Honda
Siel Cars, Haldia Dock Complex of Kolkata Port Trust, Bosch, Toyota Kirloskar Motors, Pepsico
etc.

Looking into the adverse industrial unrests scenario in the country, some enterprises were even
planning to shift their base out of the country or to restructure their business operation. As for
instance, the Rs. 743 crore automotive instruments maker Prical, which was recovering from a
labour strife that claimed the life of a senior executive at its Periyanaickanpalayam unit in
Coimbatore, Tamil Nadu in September, 2009 was working on a restructuring plan from
automotive business. In another case, frustrated with the continues recurring of labour unrest,
Japanese auto major HMSI had threatened to shut operations at its wholly-owned two-wheeler
plant in Haryana and has petitioned the Punjab and Haryana High Court for relief or else it may
shut operations in India if the situation persists. Earlier the Honda power had moved out from
Uttrakhand and shifted its base to Noida following serious labour problem. Even, Toyota
Motors, Bangalore in 2006, following a strike, went on to say that it will stall its future
investment plans in the state.

It is very often noticed that some of the industrial belts are quoted as strike prone zones, due to
frequent re-occurrence of industrial unrest which can be evaluated from the disputes recorded
during the last few years. The Gurgaon-Manesar belt of Haryana is often referred to as
notorious belt because of the number of recurring continues labour disputes during the last five
years impacting the industrial environment in the state. Though there are no concrete figures
on the estimated losses due to the unrest, it is believed that they are to the tune of Rs 800-

1000 crore, the biggest brunt being borne by Maruti Suzuki India Ltd. and Honda Motorcycle
and Scooter India (HMSI), which has seen production falling by above 65% and non-operation of
a new third production line. A leading newspaper in 2011 stated that an economic survey has
quoted Gujarat at the top of labour unrest chart due to highest number of strikes and other
forms of labour unrest on accounts of various financial and disciplinary issues despite of
favorable industrialization policy.

Analysis of Strike Causes and its Changing Trends


pre-globalization era, the causes for strikes were mainly confined to issues like wages, bonus,
working conditions and inter-intra union rivalry, having external influence. The causes and
issues have shifted today in diverse directions with gradually diminishing external connections.
It is observed that the major causes of unrest in the recent years were mostly related to wages,
indiscipline, service conditions, recognition of trade unions and contractualisation of work.

Following 2008, there is considerable increase in the number of industrial unrest leading to
violence and killings. Out of approximately 30 odd industries, those faced industrial unrest
during the year 2005 2011, it was found that about 25% of them had faced violence in one
form or the other. Moreover, it is noteworthy that most of the violence were carried out by the
workers of the respective industries.

The strikes that took place after 2008 have altogether taken a new dimension having more than
one issue. As shown at the graph above, about 65% of the strikes that occurred in this period
were due to wage related issues like wage increment and equal wages for equal work, 30% for
service conditions, 28% for formation and recognition of new union, whereas 34% for
contractualisation of work.

Statistical Puzzles

The intensity of industrial unrest in India has increased during the year 2008-2011. But still the
numbers tell a different story. According to Labour Bureau the total number of man days lost
because of strikes and lockouts in January-November 2011 was 4.3 million. In the same period of
2010 and 2009, the numbers were 18 million and 13 million. If anything, this should show a huge
decline in the incidence of strikes and lockouts. The catch is that these figures are still provisional;
data collection and compilation in India moves at a glacial pace. The final figures for
2004, 2005, 2006 and 2007 paint a somewhat different picture. The Labor Bureau numbers for
these years are 23 million, 29 million, 20 million and 27 million respectively.

The number of mandays lost has gone up in compression to the intensity of disputes that took place
during the recent years. When compared with the number of disputes, involvement of workers and
mandays lost during 1980 and 2010, it is interesting to note that the number of disputes recorded
during 1980 was 2856 and 431 in 2010, but the number of recorded mandays lost was 21 million in
1980 and 18 million in 2010.
From the above table we can perceive that despite of the number of reduced disputes during

2010 in compression to 1980, the rate of workers involved and mandays lost has really
increased. The ratio of mandays lost during 1980 : 2010 is 1 : 5, in contrary to 6 : 1 ratio in the

number of disputes took place. It is also evident from the figures that the involvement of workers
has also gone up leading to more mandays lost and productivity loss.

The reason probably could be due to sector specific flash strikes and mass general strikes that took
place opposing Governments proposed policies and current economic scenario. The general
strike that took place on February 28, 2012, millions of workers throughout sectors of all political
hues have gone on strike across India expressing their anger at rising inflation rate and to back
demands for improved rights for employees, trade unions and political activists. During 2011, 10,
09, 08 all public sector bank employees repeatedly went on nationwide strike protesting the
Governments proposal of issuing new bank licences to private sector banks, demanding non-
privatisation of nationalised banks, no reduction of government stake in public sector banks,
demanding an increase in the number of public sector branches etc. Another nationwide strike by
was observed during 2010 due to price rise and many more by various
political parties.
The above chart shows the trend of mandays lost during 1980 to 2010. In 1982 there was a sharp
rise of 74 million mandays lost but by and large the number of mandays lost has been consistant
throughout during 1985 to 2010. It is worth mentioning that during the post

liberalisation period, the number of disputes recorded have gradually decreassed but the
number of mandays lost is compertively higher than that the country had in 80s.

The table below shows the number of disputes, workers involved and mandays lost during last ten
years as notified by the Labour Bureau.

Disputes have gone up since 2008 with increased number of mandays lost and the number of
disputes during 2011 was much higher in comparison to 2008, 09, & 10 but still the statistics
reflected are provisional and are still being compiled for that period. This demarcates the slow
pace of data compilation of Indian authorities.

Legislative Provisions & Governments Stand

The increase in labour unrest during the recent years has many a time raised Governments
concern. The Prime Minister of India at various occasions has appealed to the social partners to
maintain cordial relations to pace economic growth and employment generation. The Union

Labour Minister of India at the 77th Annual General Meeting of the All India Organisation of
Employers (AIOE) firmly stated that violence and confrontation has no place in a growth
oriented economy and violence of any form in Industry cannot be accepted.
Despite the concern towards industrial harmony, it is evident that many a times, the Governments
initiatives are limited to introducing steps for privatization and liberalization to manage the
economic changes due to globalization, but resist introducing progressive reforms in the existing
plethora of laws governing labour and employment, making the country less competitive in the
global market. There are close to 44 central labour laws and above 100 state labour laws, enacted 4
to 8 decades back which are antiquated and do not address the concerns of the globalised
economy. The matters related to industrial relations, is at present regulated by three main
central enactments: The Trade Unions Act, 1926, Industrial Employment (Standing Orders)
Act, 1946 and Industrial Disputes Act, 1947.

Today, most of the countries, especially the developing countries like India, are dependent on
foreign investment and under these circumstances, it is necessary that countries who seeks
foreign investment must keep some safeguard in their respective industrial laws so that there will
be no misuse of right to strike. In India, right to protest is a fundamental right under Article
19 of the Constitution of India but, right to strike is not a fundamental right rather, a legal right with
statutory restriction attached in the Industrial Dispute Act, 1947.

During the colonial regime, to prevent and settle industrial disputes the Trade Disputes Act,

1929 was enacted by the colonial ruler after considering the recommendations of the Royal
Commission on Labour which included the need to deal with trade disputes and also the
importance of intervention by the conciliation officers. This act was amended twice and, in
1938, it provided for appointment of conciliation officers and extended the scope of the Act to
cover more trade disputes and public utility services. As the functioning of the Trade Disputes Act
revealed certain inherent defects, the government of India replaced it by a comprehensive
legislation and accordingly the Industrial Disputes Act, 1947 was passed.

Under the Industrial Disputes Act, 1947, grounds and conditions are laid down for legal strike and
if those provisions and conditions are not fulfilled then the state can impose reasonable restrictions
by declaring it illegal. But, these restrictions have its own limitations and are exclusively
applicable to industries declared as public utility services.

India is perhaps the only country, where the requirement of strike notice, barring public utility
services, is totally lacking. Under Chapter V, Section 22 of the Industrial Disputes Act, 1947,
strike notice of six weeks is required to be given by the striking workers in the case of public utility
service industries. In the verdict of Mineral Miner Union vs. Kudremukh Iron Ore Co. Ltd., the
Karnataka High Court on 19 February, 1985 held that the provisions of section 22 are mandatory
and the date on which the workmen proposed to go on strike should be specified in the notice. If
meanwhile the date of strike specified in the notice of strike expires, workmen have to give fresh
notice. Lack of this provision in the case of establishments and industries not covered under public
utility services, does not give adequate times to the parties to take pre- emptive steps and avert the
situation through negotiations, making them more vulnerable to strikes.

In addition to it, in most of the cases workers are unaware of the causes for strike and many a times
they are compelled to join the strike against their will, creating a question on the validity of the
strike. The Indian legislative framework does not provide for any measures for assessing the need
for strike and its legitimacy.

The recent spread of industrial unrest is seriously underscoring the need for a comprehensive
review of labour laws, which should be an instrument for promoting harmonious industrial
relations, investment and employment generation. Witnessing the authenticity of these
turmoil, the Government had introduced preventive measures to avoid unrest in future by
incorporating Section 9C in the Industrial Disputes Act, 1947 on September 15, 2010 for setting up
of one or more Grievance Redressal Committees with equal representation from employers and
workmen, in every industrial establishment employing twenty or more workmen for the resolution
of disputes arising out of individual grievances. Even though, this initiative is unable to bring a halt
to the prevailing industrial unrest.

Required Changes in the Existing Legislations


India is perhaps the only country, where the requirement of strike notice, barring public utility
service, is totally lacking. Therefore, Section 23 of the Industrial Disputes Act, 1947 be suitably
amended to provide atleast a compulsory three weeks strike notice. Further, to democratize the
functioning of trade unions, the Strike Ballot should be supported by at least 75% of the workers
working in the enterprise. Even the Second National Commission on Labour in its report
suggested that strike should be called only by the recognised negotiating agent and that too only
after it had conducted a strike ballot among all the workers, of whom at least 51% support the
strike.

Go-slow and work to rule are the most pernicious forms, even worse than strike. The economic loss
caused by go-slow is far graver than strike. It has not yet been prohibited in our legislation. It
should be recognized as a strike. To make illegal strikes more deterrent, it can be proposed to
provide for 8 days deduction of wages for each day of illegal strikes.

The Trade Unions Act, 1926 provides for the registration of trade unions and in certain aspects
defines the law relating to registered trade unions but, it does not provide for recognition of trade
unions for the purpose of collective bargaining. Provision for recognising Bargaining Agent under
the Trade Unions Act, 1926 may be introduced to strengthen the collective bargaining machinery.
A union with 51% membership should be recognized as the Sole Bargaining Agent. In case, no
single union has 51%, the top 2-3 unions with more than 25% membership may come together to
form Joint Bargaining Council. A union with less than 25% membership should not have a right to
challenge a collective agreement nor raise a collective dispute.

The number of outsiders in the Trade Union Executive should be restricted to a maximum of two
persons as against 50 percent in the legislation and out of the two top positions of
'President' and 'General Secretary', at least one post should be held by the internal employee.
Section 22 of the Trade Unions Act should be amended accordingly and adequate arrangement
should be done including amending section 16 of the Trade Union Act, 1926 to insulate trade
unionism from politics.
Even though union density is gradually getting lower by international standards, India loses more
days every year as a result of strikes and lockouts than any other country. However, the number of
workers involved in strikes and lockouts is considerably lower in India than in Brazil, Italy or
Spain. This raises the classic question of whether conflict reflects existence of union or
representation of workers. Therefore, a provision for verification of membership of the Trade
Unions through the check off system and all critical decisions affecting the operation of the
industry should be taken by a secret ballot.

Strikes can never be hoped to yield any satisfactory solution to pressing labour problems. In fact, if
handled without proper care, they could only compound the problems. Given this context,
labour would be well-advised to choose from crafty negotiation skills or arbitration for settling their
outstanding issues with management. (Dr. G Sajeeva Reddy, President, INTUC)