Auto cos call for labour law reforms

With growing incidence of worker strikes in the Indian automobile industry, major manufacturers have called for labour law reforms, while trade unions said existing rules must be implemented strictly to avoid confrontations.

On the heels of a 13-day strike at Maruti Suzuki’s Manesar plant, MRF’s Kottayam plant in Kerala was also locked out following a stir by workers, thus raising questions over labour laws in India.

“The rigidity in labour laws has led companies to increasingly resort to outsourcing and contracting of labour. To be very precise, the need of the hour is flexible labour reforms,” General Motors India Vice-President P Balendran said. The contract system gives companies greater autonomy in choosing when to lay off workers, he said.

Balendran said existence of more than one union creates confusion and problems and “in many cases, the unions are politically affiliated and follow the party ideology”.

Expressing similar sentiments, Hyundai Motors India’s Senior Vice-President (Finance and Corporate Affairs) R Sethuraman said, “The labour laws are not problematic, and reforms are always welcome.”

He said when politically affiliated unions take centre stage, the negotiations practically are never conducted with “one’s own workforce”.

“This is not healthy because managements are forced to negotiate with a bunch of people, who, for political reasons, invariably create an atmosphere of distrust and fear in the minds of the workforce. This is not good. Additionally, just as trade unionism is allowed under Indian labour laws, companies have also been bestowed rights under Indian law, wherein they can decide on whom they decide to talk to or negotiate with,” he said.

However, national trade union leaders have an opposite view to the problem and insist that formation of a union, or even multiple unions, and getting political affiliations are workers’ rights and are allowed under the Indian labour laws.

“Most of the auto companies do not respect the Indian labour laws and formation of unions, which is workers’ constitutional right. Our machineries to enforce labour laws are very weak and there is a need to tighten it,” All India Trade Union Congress (AITUC) Secretary D L Sachdev said. There is no need to reform the laws and its up to the management to decide with which union it wants to negotiate in the presence of multiple unions, he added.

Sachdev said the registration process should be “taken away from state labour departments to an independent body” and maximum time to register a union should be fixed at 40 days.

Centre of Indian Trade Unions (CITU) Haryana State President Satvir Singh said: “Indian labour laws are not hindrance to development. Those who are not adhering to the laws, are actually against them. So, the labour laws should be strictly enforced.”

An industry analyst, who wished not to be named, with a leading research firm, said one of the major reasons for having frequent labour problems is excessive deployment of contract workforce and resultant discrepancies.”

The Indian auto industry’s total workforce consists of 70-75 per cent contract labourers. So, obviously there will be wage disparities and this is a major reason of most of the conflicts in factories,” the analyst with a global firm said.

Manufacturers said due to frequent labour problems, the country’s image gets affected as an investment destination, mainly on short-term.

“The strikes and lockouts do create confusion and force the prospective investors to review their decision to invest in the country,” GMI’s Balendran said.

HMIL’s Sethuraman said one of the possibilities for the companies could be to shift from states with problematic labour issues to relatively more stable states. “In the short term such incidents may affect investment decisions but not in the medium term or long term,” he added.

Renault Executive Vice President (Product, Planning and Programme) Philippe Klein said “We see India as the country of development. There may be some ups and downs like labour issues, social problems, political disturbances etc, and it happens with every country. But we feel India will continue to develop and so we will continue to invest.”

In the recent past, numerous instances of labour problems have started haunting the Indian automobile industry. Last week, production was completely affected for four days at tyre maker MRF’s Kottayam plant in Kerala and the company had declared a lockout.

In this month, the country’s largest car maker Maruti Suzuki lost production of 12,600 units, valued at about Rs 630 crore, in a 13-day strike at Manesar facility for recognition of a new union at the plant.

Earlier this year, a 50-day long strike since March 16 by a section of workers at the General Motor’s Halol plant cost the firm to lose production of 2,000-2,500 units. The same plant came to a halt for four days when workers went on a strike from October 29, 2010, demanding wage hikes and the total production losses amounted to 450 units.

Similar labour unrests had earlier cost other auto firms dearly. Companies such as Hyundai Motor, Honda Motorcycle & Scooter India, Hero Honda, Apollo Tyres, Bosch, Rico Auto and Exide Industries had faced severe ire of their employees.