In the fifteen months that have gone by since a Maruti Suzuki HR manager was killed in labour unrest at its Manesar plant, at least three other auto companies have been crippled by strikes by workers.
A demand for better terms for temporary workers, comparable to permanent employees, has been a contentious issue common to most of these disputes.
Auto companies hire temporary workers when demand picks up and release them when sales slump, thus saving labour costs.
On an average, about 40% of the industry’s workforce is temporary, up from 30% a few years ago. Tata Motors, Mahindra & Mahindra and Maruti Suzuki, for instance, have together laid-off almost 4,000 temporary workers recently.
Even as the industry calibrates its temporary workforce in tune with consumer demand, worker angst is also increasing. So is there a win-win solution that can avoid ugly conflicts between companies and their workforce? Companies are trying to find one.
Maruti has discarded the practice of having “third-party contractors” hire and manage such workers. “We are moving to companyowned temporary workers—the tried-andtested people—who are being built as a talent pipeline,” says SY Siddiqui, chief operating officer (human resources and administration), Maruti. He is also quick to add that these temporary workers will be relieved in a downturn.
Others, including Bajaj Auto and Mahindra, are trying to limit hiring of temporary workers only for non-core functions. “We need them for non-core activities like logistics and canteen, which expand as production grows,” says Rajiv Bajaj, managing director of Bajaj Auto.
Maruti is also moving towards using permanent workers in critical manufacturing lines and using contract workers for nonvalue added functions such as loading, unloading, etc. Adds Prabir Jha, senior VP & chief HR officer, Tata Motors: “We see the quantum (percentage) of flexible workforce declining in the near term. We are not in a position to predict the exact numbers, but clearly it will be aligned to the demands of the business.”
“In core jobs, the percentage of temporary workers is expected to come down, but contract labour is here to stay,” says Rajeev Dubey, president, human resource, M&M. “Therefore, there is a need to focus on making contract labour more productive through skilling, higher engagement and innovation, while ensuring fair wages, decent working conditions, etc, for them.” In M&M, contract workers in core jobs is next to zero, he says.
A New Contract?
Workers contend that this is not the case in many parts of the industry. “Companies employ diploma holders to work on production line (on par with permanent workers) as trainees and pay them as low as Rs 8,000 odd per month and lay them off in a year,” says S Damle, secretary, AITUC, Maharashtra State Council.
A permanent employee, working on the same assembly line, could earn Rs 14,000 to 22,000 a month. “Increasing reliance on contract labour to get routine jobs done cheaper, denying benefits like gratuity and provident fund, is causing the recent increase in labour strife,” says a senior labour ministry official, not wanting to be named.
But, governments in country after country, a senior International Labour Organisation official based outside India told ET, are often the main perpetrators of unequal working conditions for temporary workers. Last year, India backed an ILO recommendation to provide a nationally determined social security floor for all workers.
Sometime ago, a proposed amendment to labour laws sought to ensure that contract workers receive the same wages and benefits as regular employees, even if they don’t have security of tenure. But, the government is dithering and unwilling to commit itself fully on this issue.
“The change in law would have allowed companies to hire contract workers, but forced companies to pay them wages and working conditions that are equal to the regular workers,” a former additional secretary in the ministry told ET. But the necessary amendments are yet to see the light of the day, he conceded.
Since 2009, the government has been tossing around the proposal to change the 1971 Contract Labour law to give workers a fairer deal. But a study commissioned by the government— contract workers make up 70% of the staff of some public sector firms—discovered that the incremental costs for government would be Rs 11,000 crore a year, as opposed to just Rs 5,500 crore for India Inc’s contract workers.
It is in the government’s own interest to put the amendments in deep freeze, a senior official explained. Sure enough, a committee of secretaries, headed by cabinet secretary Ajit Seth, has failed to reach a consensus and is unlikely to arrive at one anytime soon, officials admit.
Globally, there are clear guidelines on compensating contract workers. Bajaj Auto has first-hand experience in countries ranging from Austria to Indonesia, which permit downsizing labour with proper compensation. “If such a policy is effective in a developing democracy like Indonesia, why is this considered politically imprudent in India?” he asks. “Such an evolution of the labour law would put an end to this issue overnight. It will enable the competitiveness of companies, while simultaneously ensuring the welfare of individuals.”