India has the second largest labour force in the world after China, and a majority of it works in the unorganised sector. Less than 10 per cent of the Indian labour force is in the organised sector, which comprises government and other registered companies.
The automotive workers in India, specifically, are largely unorganised. Hence, labour disputes lead to loss of man hours, which in turn affects productivity adversely.
Many Original Equipment Manufacturers (OEM) and component suppliers in India have been affected by strikes in the past and have had to stop their operations due to the severe labour issues.
The cause
Such incidents give us an idea about the alarming situation that prevails in the Indian automobile industry, with respect to labour disputes. But why do these protests happen so often? Below are some of the causes of unrest.
~ Low wage issue.
~ Unfair and ill treatment of workers by employees. Heavy penalties levied on them for coming in late to work, and absenteeism.
~ Curbing the formation of labour unions.
~ Failure in understanding local culture by senior management team, particularly multinational companies.
~ Use of contractual labour to escape the rigidities in labour laws governing regular employment, and curtailing the power of labour unions.
Can it be addressed?
Yes, it can. The issue can be tackled in the following ways:
~ Labour laws should be amended with respect to the present day industrial requirements and safeguarding the interest of both, the employees and employers.
~ Minimum Wages Act should be modified to include effects of inflation.
~ Trade union laws should be changed so they don’t become extremely powerful.
~ Employment of contract labour should be more regulated — contract labour should be treated on par with regular labour on wages and facilities.
The absence of transparent labour market reforms has led to de facto liberalisation of labour laws, lesser monitoring of existing laws by the state governments, and tinkering with them when required to provide flexibility to employers.
Companies should consider labourers as part of the Company’s asset rather than cost elements. Workers should be educated and made aware of the industrial scenario, and the importance of their contribution to the company’s, and industry’s, progress.
What can be done
India’s labour regime represents a mix of improbably stringent laws, and a failure of implementation, promoting a culture of weak governance that hurts employers, employees and investor sentiment. This, in turn, impacts the economic growth. The labour woes of the auto industry highlight the limitations of this regime.
States should be given the power to amend central legislation related to labour. Once progressive states start benefiting from labour reforms, other states will follow suit.
The establishment of a larger industry-oriented union, similar to United Auto Workers Union (UAW) in the USA, should be considered. A larger union can help develop innovative partnerships with employers, and negotiate for better wages and benefits like job security provisions, comprehensive training and educational programmes. It can help OEMs in product quality improvements as well.
Larger industry-oriented trade unions will have diverse members, who can provide critical industry insights to OEMs as well as labour unions.
The key focus areas should be on cooperation, job security, and sharing of wealth. OEMs should have open dialogues with their workers, which will help address the workers concerns, garner better loyalty and commitment from them. This will result in enhanced productivity and sustainable profits.