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Taken for a ride

Thousands of contract workers who drive India's automobile industry are often paid less than domestic servants. They may work in a booming sector, but their lives remain in the shadow of insecurity

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This is the story of Suresh, Saravanan, and the hundreds and thousands of faceless who have helped build one of India’s flagship industrial sectors in the decades since liberalisation. This is also a concise chronicle of countless young men from the hinterland, some educated and even graduates of the Industrial Training Institutes (ITIs), who wanted to become part of India’s economic rise. This, then, is the sordid tale of how India Inc. used Bharat to build a world-class automobile sector, but meted out to these young Indians, in return, third-class treatment.

There is hardly a better place to begin than Manesar, the industrial belt adjoining Haryana’s Gurgaon, where recent violence at a factory of Maruti Suzuki, the country’s largest car maker, left one dead and scores injured. In a private-owned workers’ hostel, a short walk away from the factory, Pathak describes his achievements as a contract worker for more than a decade in India’s automobile sector. “In 2001, I was a contract worker with Force Motors in Pune on a monthly salary of Rs 7,500,” says the ITI graduate from Bihar’s Arrah district. “Now, at (Suzuki) Powertrain, I earn Rs 8,500 every month.” That’s an annual increment of Rs 100. Production has to be brought down at Suzuki Powertrain, which supplies diesel engines and transmissions to the Maruti factory, after the lockdown at Manesar. Pathak is among those who were asked to leave.

In Sriperumbudur, on the outskirts of Chennai, Saravanan has been working for Hyundai Motors for the better part of a decade. “I started as a trainee at Rs 1,090 a month, almost seven years ago,” he says, “Now I am working as a contract worker at Rs 6,000 per month.” A permanent worker with an ITI diploma and 10 years’ experience at the same plant, the company says, can earn between Rs 42,000 and Rs 45,000. Hyundai asserts that it “does not engage contract workers directly but through reputed firms like TVS” and that “a contract worker’s (cost-to-company) is Rs 14,000” with all statutory benefits. Maruti, too, says that its contract workers are not paid less than Rs 12,000 per month, although conversations with present contract workers indicate they get lesser. Who do you believe? A part of the discrepancy can be explained by the middlemen or labour contractors. They bring the contract workers to the factories and take a cut from the salaries of workers. Still, the unrest caused by discrimination is not something that can be ignored any longer.

* * *

It makes perfect economic sense for car makers to use cheap contract labour. “The wage bill for an automobile manufacturing company should be 10-15 per cent of its overall cost, but by using contract workers it can be brought down to as much as 7-8 per cent of the total cost,” explains Amitava Ghosh, senior vice-president (regulatory) at Teamlease Services, India’s largest HR services company. There are two factors at work here. One, the market is extremely competitive, especially in the mass category, and car makers need to squeeze every ounce of profitability out of operations. And two, the country’s inflexible labour laws make it impossible to adjust the workforce in tune with the ups and downs in the market. “Contract workers are used largely because companies require flexibility,” says Maruti’s chief operating officer (administration) S Y Siddiqui. “Business has become so competitive that industry has stumbled upon this per force.”

India’s car makers employ around 250,000 people. Almost 40 per cent of these are estimated to be contract workers. The charge against car makers is that they use contract workers in key functions, whereas they are supposed to be employed only in non-critical areas. The car makers deny this. Legally, this is a grey area. The Contract Labour (Regulation and Abolition) Act, 1970, says Mumbai-based lawyer Mohan Bir Singh, helps industry to engage contract workers in “need-based” employment. But this ‘need’ remains undefined.

Existing legislation allows for any temporary worker who has been in the same job for over 240 days to claim permanent status, says Singh, which prompts car makers and their contractors who manage these workers to replace them within six or seven months. “And if you’ve worked under 240 days, there’s no case,” adds Singh, “There is no legal protection.” The result, says the former Indian head of one of India’s largest foreign car makers, requesting anonymity, is that contract workers are misused by the extensively. “They push workers on things like attendance. If a worker is absent due to a death in the family, he can lose the attendance bonus for the previous months straightaway.”

* * *

Car makers have created jobs for contract workers, there’s no doubt, but at bare-minimum salaries. “We get paid between Rs 7,000 and Rs 8,000 a month. It is not enough. We have to send money home after fending for ourselves here,” says a worker at the plant at Halol in Gujarat, “The work we do is nothing different compared to that of a permanent worker, but the pay is less. We are asking for Rs 10,000 to help us lead a comfortable life.” Comfort isn’t part of a contract workers vocabulary. In Manesar’s Suzuki Powertrain plant, workers say, a usual shift can last between eight and nine hours, with a 30-minute meal break and two seven-and-a-half-minute tea breaks. All that for a monthly salary of about Rs 7,500!

A typical worker’s hostel is a warren of rooms, spread across a couple of floors alongside narrow corridors. Meals are cooked on small stoves inside bare rooms; electricity is erratic, an inconvenience after hours on the shop-floor; bathrooms are shared by up to 50 men; and vermin roam freely on the un-swept floors. This is home for hundreds in Manesar. Yet, for all the work that these men put in, there is no job security. Resentment is palpable. Across Manesar, Sanand, Halol, Sriperumbudur and Pune’s Chakan, there are endless accounts of contract workers who have lost their jobs for missing a day or two of work.

That’s because there is more demand for work than supply, so if a worker is absent or shows any form of dissent, he can be immediately replaced. Ravi Jadhav, 27, was in his second seven-month stint at Volkswagen’s Chakan facility, one of the 300 contract workers there, he claims, when he was called by the HR department to gather along with the others at the end of June. “He asked us to leave the plant immediately,” he says, “We don’t have any kind of job security. We don’t get any facilities like PF, gratuity or annual bonus benefits and neither do trade unions fight for us.”

One of the conditions for joining any of these unions is to be a permanent employee, says Singh, making it difficult for contract workers to open any lines of communication with the management. Ajit Abhyankar, Pune city head of Centre of Indian Trade Unions, admits that “in the present scenario even trade unions are helpless and not able to protect workers’ rights.” So it is not without reason that Hyundai Motor’s Saravanan feels that he has been dealt a rough deal after working with the car maker for seven years. “We have been cheated by these companies. They would appoint us trainees, saying that you would be made permanent worker in three years,” he says, “But you can’t ask to be promoted as a permanent worker because they will simply fire you. I am not alone. All the contract workers are like me. We dream of a permanent job.”

The problem is there aren’t enough jobs in the manufacturing sector. Who is at fault? Some of it may have been caused by the meltdown in the West, but policy makers who have brought industry to a standstill also need to share the blame. Till then, hundreds and thousands of young men like Suresh, Saravanan and Ravi will get jobs where they are treated like children of a lesser god.

Names of contract workers have been changed to protect their identities.


T E Narasimhan & Gireesh Babu in Chennai, Sohini Das and Vinay Umarji in Ahmedabad, and Hrishikesh Joshi in Pune contributed to this article

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