You are here: Home » Companies » News
Business Standard

Battle for the jewel in the auto belt

AITUC will benefit greatly from gaining control at Maruti Suzuki

Surajeet Das Gupta & Sharmistha Mukherjee 

The clout of and other unions in Haryana’s automobile heartland will depend crucially on whether they manage to get a foothold in the country’s largest car company

For politically affiliated trade unions, control over workers in the country’s largest car maker, Limited, could be their jewel in the crown. After all, MSIL sells one out of every two cars in the country, and with its large vendor base, it virtually holds sway in Haryana’s Gurgaon-Manesar-Bawal auto belt.

So, when the 2,500 striking workers at the company’s retracted after agreeing to sign a peace agreement on Monday, the management said an “outside hand” was scuttling the negotiations.

The identity of the “outside hand” is no secret. The CPI-backed All India Trade Union Congress (Aituc) has openly backed the striking workers and is playing a key role in the negotiations. The Maruti management has conceded the workers’ demand for a separate plant union but has made it clear that it cannot have members from outside the company. This stance however has not been acceptable to the workers, who have struck work for over 12 days. Instead, the workers have proposed a new union in which one-third of the members will be outsiders, giving entry into the closed portals of the company.


June 3: A group of workers from Maruti Suzuki goes to Chandigarh to register a new union Maruti Suzuki Employees Union 

June 4: Maruti Suzuki management refuses to recognise a second union in the company. Workers at goes on strike

June 6: The management sacks 11 workers who were responsible for instigating the strike at the Manesar facility

June 12: Maruti Suzuki management agrees to recognise an individual entity to manage plant level issues at the Manesar facility but says the body should not have any political affiliation or outsiders as members

June 13: Talks between management and workers’ representatives collapse as employees demand a second union and not modifications in the structure of the existing union

June 14: All India Trade Union Congress postpones a two-hour strike it had organised in the Gurgaon-Manesar region with participation of workers from 65 union following an appeal of Hayana Chief Minister Bhoopinder Singh Hooda

June 15: Strike enters 12th day. Production loss stand at 11,400 units

Says D L Sachdeva, secretary of Aituc: “Our fight is about the right of workers to form a union and to decide among themselves whether they want to be affiliated or not. Management cannot talk this right away from them.”

For over a decade has been trying to muscle in the country’s biggest auto belt, which accounts for over 50 per cent of the country’s automobile production. Labour analysts say that the move by the left unions to expand in this northern auto hub is partly due to its weakening base in the east, where factories have closed down regularly and militant unionism is on the ebb.

Analysts also say that this move will only intensify with the left losing its political bastion in West Bengal (where unions had earlier worked closely with the government) to Mamata Banerji’s And the fact that over 60 per cent of the 3.6 lakh workers who work in auto and auto ancillary are contract workers with short tenures makes them easy targets for unions looking for recruits.

Aituc first tasted blood in 2005, when it was able to intervene in wage negotiations in Japanese two-wheeler major Honda Motorcycle & Scooter India Ltd (HMSI), where workers went on a violent strike. It was also able to foist a union backed by them – a move that the management initially resisted. After that HMSI has faced three more strikes in 2007, 2009 and in December 2010, one because of wage disputes and another because of an assault on a contract worker. In all instances Aituc has played a key role.

Its growing clout was reflected again in October 2009, during a strike at RICO Auto – a vendor for Hero Honda – when it organised (along with other unions) a day-long strike of over 100,000 employees involving 70 and brought production to a grinding halt in the region.

But controlling workers of MSIL – who have an independent union, with a constitution where there is no scope for any political affiliation – is a different ballgame all together. The company management has always resisted, and successfully at that, any attempt by political parties to back a second union – and union leaders say the management has kept a tight leash on its leaders. In the late 1990s an Om Prakash Chautala government-backed union tried to get itself recognised, but failed to make any headway.

But labour union leaders also admit that without MSIL’s over 8,000 workers and the labour force of its vendors, no one can really claim to have sway in this region. After all, Maruti accounts for over 50 per cent of the turnover of the region. It also supports over 125 Tier 1 vendors, leave along the smaller Tier 2 and Tier 3 component suppliers who supply a majority of their products to the Japanese giant. Maruti also has a power train facility that is located in the same Manesar compound. Most of these have independent unions without any political affiliation –so an entry into Maruti would also provide an entry into all the others.

Sachdeva admits: “The Maruti vendors are not affiliated to us but if the Maruti union gets affiliated, then they can also help the workers in the vendor units to join us.” That entry could also mean control over reasonably rich unions. A Maruti insider says that the unions are cash-rich, as each worker in the company forks out Rs 360 a year for membership of the union.

This is not the first time that Aituc and the left are trying to muscle in on Maruti. Insiders say that in 1997, union leaders in Maruti supported by Aituc and Gurudas Das Gupta, its leader, had openly demonstrated in favour of making RSSLN Bhaskarudu the managing director of the company after the tenure of R C Bhargava ended. The left unions and Aituc also elicited the support of some of its leaders who were key members of the UDF Government. “Bhaskarudu’s climb as MD of the company also saw the rise of the union in Maruti which had backed his candidature. And Aituc was always behind it,” says a senior Maruti executive.

But in 2001 a new management under Jagdish Khattar as managing director came in and was confronted with a big challenge – a three-month strike by the unions, who demanded a wage increase and better working conditions. But after the strike ended, the union’s tryst with political affiliation also ended, at least for a while.

Aituc is back again, this time in Manesar. The management says that the proposed new union which the workers were planning to register cannot be accepted, for two reasons: one, the constitution is planning to allow one-third of its members from outside the factory – the classic way in which left unions get into companies. “If we allow one more union with political affiliation, we will see the other political parties also wanting to do the same. Multiplicity of unions does not help workers at all, and that is what we are trying to impress upon,” says R C Bhargava, chairman of Maruti Suzuki.

The left unions have also taken up the issue of contract labour to garner support. The Manesar workers have demanded that the 700-odd contract workers in the plant should be absorbed in the two new plants that are coming up in the same compound in Manesar. With their commissioning, the two plants will virtually be equal in size in terms of production.

Surprisingly, most of the companies that Aituc has targeted provide workers the best wages in the industry. But the key problem is that a large chunk of the contract workers do not get absorbed as permanent workers, even after working for several years. As a result, their remuneration remains stuck at the same levels, creating a yawning disparity in the wage structure of regular and contractual employees. That becomes even more glaring in companies where permanent workers are paid handsomely and can to the position of deputy managers and even managers.

Says Sachdeva: “The difference between the wages received by a contractual employee and a permanent employee is three to four times. Contract workers stay in one company for a limited time and when they are not absorbed by a company as a permanent employee they move on to other organisations intermittently. So they continue with similar salaries even after working for two-to-three years.”

But Maruti’s head of human resources, S Y Siddiqui, says that as much as 60 per cent of the contract workers have been absorbed into the company. With two new plants coming in, they will absorb more contract workers and are ready to look sympathetically at the demands of the workers, adds.

But he points out that the entry-level salary of a contract worker in the company is Rs 11,000 (for freshers from an ITI), and it goes up to Rs 12,000-13,000 – three times more than the minimum wage in the region. A technical trainee who is a permanent employee also gets around Rs 12,500, but his wage-cum-incentives can go up to Rs 25,000 per month after three years of service. Siddiqui explains that many of the contract workers can also be absorbed as full-time employees after one or two years, as technical trainees with similar pay-scales and growth opportunities.

Siddiqui also cites more numbers to explain how well the workers are paid compared to the market. For instance, the average age of a worker at the company’s Manesar plant is 26 years and his average salary is Rs 25,000, while in Gurgaon the average age of a worker is 40 years and his average salary is a comfortable Rs 39,500. “We have also told all our vendors that they cannot pay contract workers the minimum wages – they have to be paid at least 40 per cent more,” he adds.

But despite all these measures, the workers in Manesar are not relenting. And the clout and muscle of AITUC and other unions in this belt will crucially depend on the outcome of the final negotiations between the striking workers at Manesar and the management, and on whether they manage to get a foothold in the country’s largest car company.

First Published: Thu, June 16 2011. 00:22 IST