Labour the issue

It’s déjà vu time at the country’s largest car maker. Almost 11 years after a three-month industrial action led to a compromise between striking workers and the management, Maruti is being forced to deal with dour workers once again. They are demanding better working conditions, less monetarily punitive action and a new union.

The industrial belt in Manesar, Haryana, is on edge, as is indeed manufacturing in the rest of the nation. The restlessness seems more a reflection of the growing divide between the haves and the have-nots, and an increasing sense that collective action can force a change. In the current economic environment in India, brace for more such action. Here’s what is ruining the party.

There’s a drunk at the gathering — disruptive inflation. We seem to have as much control over inflation as we have over what the drunk will do next. He may pray to the parrot, run amock or even do a bottom-display that will leave us all looking away. In short, he is the one person we don’t want to meet at the bash, but refuses to leave. In an environment where the cost of living has gone up almost double digits in a year, do expect workers to demand much higher wages and chafe when disciplinary action amounts to wage cuts.

Now the diva — the diamond-dripping, name-dropping, cleavage-popping gal who seems to have a limitless appetite for spending and that Hermes bag stuffed with enough cash to last her shopping sprees. It’s the in-your-face show of wealth which leaves those with no bags, cheap zircons and a limited budget asking themselves why they can’t have more. While there has always been a class of haves and have-nots in India, never before has the display of wealth been so vulgar and hard to miss. As that gulf widens, so will the impatience with it, and those who have less will demand far more, in a more vocal fashion. Ratan Tata was cited in a newspaper article as saying it could lead to growing unrest in society.

Finally the biggest disappointment has to be food that’s gone stale. In short, India’s draconian labour laws that haven’t kept with the times either in the context of a rapidly-growing economy or a global manufacturing marketplace.

A World Bank report says that India has the most rigid labour laws in the world that protects jobs, not workers. It estimates that there are some 47 central laws and 157 state regulations that directly affect labour markets, making it complex for workers and employers to settle disputes and improve productivity. And that 30 per cent to 40 per cent of formal manufacturing jobs are lost due to stringent regulation.

India’s manufacturing sector often sets up multiple units and shifts jobs to the informal sector — just so they can skirt these laws.

Dispute resolution in India can take anything from a decade to two, and as of five years ago, there was a backlog of an estimated 500,000 labour cases pending in courts. To avoid the pitfalls, manufacturers have resorted to increasing the number of contract workers — making hire-and-fire easier, especially in lean times when the shop floor isn’t running to capacity. The result is that workers have little protection against unemployment.

India’s ambitious new manufacturing policy, which is looking to create 100 million jobs by 2025, needs to work hard to make sure that there is greater flexibility in employment and more protection for those who could be out of jobs.

The first two spoilers at the party — inflation and the show of wealth — are a lot harder to change.