Hard times for auto sector employees

The employment-related problems at Honda’s Manesar plant are symptomatic of the crisis India’s workforce will face if the Industrial Relations Code, with its provision for fixed-term employment, becomes law.

Published : Dec 26, 2019 07:00 IST

Workers of Honda Motorcycle and Scooter India Private Limited protesting against the laying off of contract workers in the Manesar industrial area.

Workers of Honda Motorcycle and Scooter India Private Limited protesting against the laying off of contract workers in the Manesar industrial area.

ONE of the steps the Bharatiya Janata Party (BJP)-led National Democratic Alliance government took soon after assuming office for the second term in 2019 was to declare its intent to amalgamate and organise 44 labour laws under four codes. Central to the discussion relating to the need for this simplification was the argument that such codification would attract greater investment by industry.

In 2018, the government introduced the concept of fixed-term employment (FTE) in specific sectors, which angered all trade unions. To give the move statutory backing, on November 21, the Union Cabinet cleared the way for FTE to become part of the Industrial Relations (IR) Code, 2019.

The IR Code itself was introduced in the Lok Sabha on November 28 in spite of objections from trade unions, including those affiliated with the Sangh Parivar such as the Bharatiya Mazdoor Sangh. Legislators cutting across party lines opposed the introduction of the Code, averring that no trade union had made a demand for such labour codes. The IR Code amalgamates features of the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947, with the aim of improving the ease of doing business. The government turned down the opposition’s demand that the Code be sent to a parliamentary panel.

The standard narrative of the government continues to be denial that there is an economic and employment crisis in the country so much so that a BJP legislator from Ballia in Uttar Pradesh stated in Parliament that the presence of traffic jams indicated that there was no reduction in automobile sales and hence there was no slowdown in the auto sector. He said that such things were being said to defame the government and the nation.

On December 9, while speaking at the Federation of Indian Chambers of Commerce and Industry Young Leaders Summit, Chief Economic Adviser Krishnamurthy Subramanian stated that the government was taking steps to create a favourable environment for investments and to increase growth. He said that private investment was a key driver of growth and consumption a force multiplier. Steps such as the corporate tax rate cut were intended to create a more favourable environment for investments, which are required for sustained growth. The slowdown, he said, was more cyclical than structural, a theory that the government has been pushing.

Overall, the government also continues to deny that there is a decline in consumer expenditure. It withheld the release of the Household Consumer Expenditure Survey (July 2017-June 2018) of the National Sample Survey Office citing discrepancies in the data. Replying to a question in the current session of Parliament regarding the unemployment situation being the worst in 45 years, Union Minister for Labour and Employment Santosh Gangwar said that he would not like to get into a debate over figures but claimed that the government was doing a lot. He listed out the various schemes through which many youths had been given jobs and loans. He was clearly oblivious to the plight of hundreds of workers who had recently been laid off owing to the crisis in the auto sector.

While briefing the media on Cabinet decisions, Finance Minister Nirmala Sitharaman explained that workers under a fixed-term contract would be employed for seasonal work but would be treated on a par with regular workers. This was the biggest feature of the Code, she said. One of the central features of this kind of employment is that workers would be employed for a period ranging from three to six months, after which they would be let go. In the brief period of their employment, they would receive the same benefits as regular workers. What the Minister did not mention was that FTE was “fixed” for a very short term, with hiring and firing done at the discretion of the employer even in that limited period.

All central trade unions have opposed this kind of short-term employment, which is in the process of getting legitimised in the IR Code. FTE was introduced first in the textile sector and then extended to other sectors despite vehement opposition from unions. As part of the IR Code, once Parliament passes it, it will become mandatory in all sectors.

Appreciation for FTE appeared from predictable quarters. D.K. Aggarwal, president of the PHD Chambers of Commerce and Industry, hailed the Cabinet decision allowing companies to hire workers on fixed-term contracts for any duration. In a statement, he said: “[I]t was a long-standing demand of industry that would create scope for immense employment opportunities for the growing workforce in India.” The statement emphasised that FTE would be beneficial to companies in seasonal businesses. “The codification will be highly beneficial to MSMEs [micro, small and medium enterprises] as they are constrained by a complicated regulatory environment and labour market rigidities, especially with no fixed-term employment clause to deploy workers as and when required. This impacts the ease of doing business for MSMEs and limits their potential for employment generation,” it said. The reform measures, Aggarwal added, would go a long way in further improving India’s position in the World Bank’s ease of doing business ranking.

Dismal tidings

On December 6, Deepak Jain, president of the Automotive Component Manufacturers Association of India, pronounced dismal tidings for the automotive component sector as a whole. Presenting the findings of the “Industry Performance Review” for the first half of 2019-20, he said that the automotive industry was facing a “prolonged slowdown” and vehicle sales in all segments had continued to plummet. The 15-20 per cent reduction in vehicle production had “adversely impacted” the components industry’s performance and investments. He identified “subdued vehicle demand, investments made for transition from BS IV to BS VI, liquidity crunch, lack of policy on electrification of vehicles” as some of the reasons for the negative impact on the sector’s performance.

The admission of concerns of a prolonged slowdown contradicted the Union Finance Minister’s persistent optimism vis-a-vis the economy. According to the Society of Indian Automobile Manufacturers (SIAM), there has been a growth of minus 15.92 per cent in two-wheeler sales in the April-October 2019 period over the same period last year. The latest press release of the SIAM states that while the festive season brought “some cheer” to the passenger vehicle segment, the other segments continued to be in “negative territory”. The worst casualty in all this are the workers, about whom neither the government nor industry seems to be concerned.

The problem is that the primary issue behind the economic slowdown is deflated demand more than anything else. The lack of consumer demand prompted auto majors to cut down on production. Companies resorted to the time-tested mechanism to cut costs: lay off workers. This has been one of the main reasons for the unrelenting workers’ protests in the auto-manufacturing hubs in Haryana. Neither the newly installed BJP-Jannayak Janata Party coalition government in the State nor owners of companies are keen to resolve the issue. Trade union leaders said that this was the first major protest involving an auto major in the aftermath of the slowdown. Auto majors such as Honda, they said, were letting their contract workers go in a big way, which is a cause of the present discontent.

On the one hand, the Union government denies that there is a recession or a depression in consumer demand and defends its growth figures; on the other, companies are laying off personnel on the grounds of depressed consumer demand and reduced profit margins.

On November 27, nearly 5,000 automobile sector workers, affiliated to a cross section of unions, marched to the Deputy Commissioner’s office in Gurugram, Haryana, protesting against the lay-offs. Taking part in this march were nearly 2,000 workers of Honda Motorcycle and Scooter India Private Limited (HMSI), a leading two-wheeler manufacturer, who have been on strike since November 5 because of the lay-offs in the Manesar plant in Gurugram. On November 22, the HMSI workers walked 20 kilometres from their plant to the Deputy Commissioner’s office with a charter of demands, which included reinstating some 700 workers who had been let go.

The protest has been against the management’s policy of forcibly giving contractual employees “clearance” after 11 months of work and then asking them to rejoin or return after three months. “Earlier, they used to ask us to rejoin after a 10-day gap. But now they are asking the contract workers to leave and rejoin after a gap of three months. There is no guarantee they will take us back. They might hire new people in our place,” said Ashok Kumar Dalai, an office-bearer of the union.

Several workers Frontline spoke to said that the management was using the slowdown as an excuse to lay off workers while managerial staff and other officers were being given the usual incentives, increments and variable pay. The policy of “clearance” itself was illegal according to labour laws, they averred.

There were an estimated 2,500 contract workers and 1,900 regular or permanent workers. There was no one in the plant who had worked for less than 10 years, and yet for the same work, there was a marked differentiation in the salaries of regular and contract workers. The “settlement” of permanent employees too had been pending for the last 16 to 17 months. “Before Diwali this year, they said that they would make a policy for retaining workers instead of having long clearance periods. This was because we struck work just before Diwali as they had sacked 50 of our colleagues. Diwali passed, and they did not keep their word. They began to shunt out workers, citing economic slowdown,” said a union office-bearer. The day the workers were “cleared”, their colleagues went on a hunger strike and were supported by the permanent workers.

Even though the Union government and the Finance Minister believe that there is no recession but only a slowdown in growth, the manner in which auto majors are laying off workers, mostly from the contract workforce, is alarming.

Right to form a union

In 2005, when HMSI workers streamed out on to the streets demanding their right to form a union, the State police brutally caned them. One worker died. The protests continued for over a month. The workers finally formed their union, and today they are once again on the streets, this time protesting against the removal of around 700 contract workers. “We were the first to protest in 2005 demanding the right to form a union. Today, many workers have got unionised. The government and the managements obviously do not like it,” a HMSI worker told Frontline at the site of protest. There has been no turning back for workers in the industrial areas of Gurugram and Manesar. Trade unions, including the Centre of Indian Trade Unions (CITU) and the All India Trade Union Congress (AITUC), have been jointly conducting meetings and protests to help workers realise their justifiable demands.

If worker consciousness has gone up, so has the level of repression from government agencies. Talks with State Labour Minister Dushyant Chautala proved futile, as have multiple discussions with officials of the Labour Department. Workers of HMSI have had no option but to continue with their protest. There was concern about the new IR Code because it significantly dilutes the clauses relating to the formation of trade unions and trade union membership.

‘Settle your dues’

On December 2, two manpower contractor companies, Kamal Enterprises and Kaycee Enterprises, that had contracted workers out to HMSI sent a letter to them saying that they should settle their dues and accept a severance package of Rs.15,000 for every year of service. The companies referred to the strike as illegal and stated that workers had been misled into joining it. These are some of the subtle ways of putting pressure on workers to break the strike. Satbir Singh of the CITU and Anil Kumar of the AITUC said that the workers were in no mood to call off the strike.

It was learnt that the company had increased production in its other three plants in order to make up for the shortfall in the Manesar plant. “The workers there are doing overtime to complete production and for the same money. These are ways of breaking worker unity. Accepting the settlement means workers accepting their retrenchment, and they will have no option but to return to their villages,” a union leader said.

The company had taken back the 2,000-odd permanent workers who had earlier joined the contract workers in the protest. The mother plant at Manesar had the largest number of regular, permanent workers compared with the other plants, which employ more contractor-supplied workers. There was also resentment that only the workers and not the managerial class of employees were bearing the brunt of the slowdown.

“We have helped the company grow. I evolved a method to reduce the temperature in the process involving the manufacture of cylinder heads. I got a certificate for that, but the department head took credit for my work and got a promotion. I continue to be a helper. Everyone is a master in his line of work but is not paid commensurate to his talent,” said Akhilesh, who joined HMSI in 2009. The management assured the union in 2012 that each year it would make 50 contractual workers permanent on the basis of a test. That arrangement was discontinued in 2015. “[Prime Minister Narendra] Modi said that the contract system of employment would go. He has done nothing. None of the national media or TV channels are interested in covering our protest,” said Manish Pandey, another worker.

The workers have another reason to be upset as their long-term settlement, arrived at on August 1, 2018, was yet to be implemented. Ramesh Pradhan, general secretary of the union, told Frontline that the equal pay for equal work principle was being violated. “If the GM gets a variable of around Rs.3 lakh a year, where is the slowdown in profits? The slowdown is only for the workers,” he said. There were around 1,100 managerial staff, none of whom had been removed. Nearly 200 vendor companies of HMSI were shut down following a reduction in demand from the commissioning company. Production had been halved, Pradhan said.

“When we joined, we were told we would be shareholders. Now only the directors are shareholders,” said Pankaj, another worker. They were promised housing colonies and cars. Most of them had not graduated beyond motorcycles.

The protest continues. There have been three long marches to the Deputy Labour Commissioner’s office where the striking workers were joined by workers from other auto companies. They are holding out for this long with the support of their colleagues and the trade unions. But with winter advancing, it is a challenge for them. Workers are apprehensive that if the HMSI protest dissipates, retrenchment will go on and have a cascading effect in the industrial belt. Employers and the government are wary that the continued protest will embolden others to take to the streets.

There is no doubt that unrest in the industrial areas of Gurugram and Manesar is growing and will spread outside Haryana if workers alone are made to bear the brunt of the slowdown and the fallout of the labour codes.

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