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Clash At Maruti Suzuki Car Factory Reflects Failures Of India, Inc.

by Freny ManeckshaCorpWatch Blog
July 30th, 2012

Worker rally at Maruti factory. Photo: Radical Notes. Inset photo: Maruti model at Auto Expo 2012. Photo: vm2827. Used under Creative Commons license.

Hundreds of workers at a factory for India's biggest carmaker - Maruti Suzuki - are being rounded up by police after a violent clash at the plant on July 18. Company offices in the state of Haryana were set on fire resulting in a manager meeting a gruesome death.

In 1983, Maruti, which is an Indian subsidiary of Japanese multinational Suzuki, became the first major foreign manufacturer to enter the Indian marketplace after three decades of independence from Britain. Maruti now controls just under half of car sales in the country - this year it sold its 10 millionth vehicle- making it a showcase for India's booming new manufacturing economy.

However the company also has a history of troubled industrial relations, not unlike many other auto manufacturers in India. Indeed some commentators say that the incident is just a symbol of the broader labor troubles at Indian factories that have been brewing for years because of unequal development.

"(A)fter twenty years of enormous liberalization, India is on the threshold of a gigantic working class unrest," writes Amaresh Misra, an independent historian, author and novelist, in the online edition of Times of India. "Indian people regard economic reform and the English speaking managerial elite with disdain. They have tasted wealth-but they also know that, foreigners and their lackeys have amassed riches a thousand times over."

The Manesar Incident

The Maruti factory where the incident took place is in Manesar in the Gurgaon district of Haryana, about 30 miles from Delhi. There contract workers were paid just Rs 7,000 a month ($155) while salaried workers were paid Rs 17,000 a month ($376) notes Misra.

Salaries at the factory increased by just 5.5 percent between 2007 and 2011 at a time when the consumer price index for the region went up over 50 percent. Meanwhile profits for the Maruti Suzuki company have increased by 2,200 percent over the last decade.

Unrest at the factory began surfacing in December 2010 when workers expressed their unhappiness with the Maruti Udyog Kamgar Union which had not held elections for years and which was seen as management controlled. In June 2011 workers attempted to create a new union for both contract and permanent workers.

On August 28, 2011, a large police force entered the factory and 21 workers were suspended on charges of sabotage. A lockout was declared and workers were told they would have to sign a "Good Conduct" bond that would give management the right to fire anyone that took part in a "go slow" or intermittent stoppage of work.

In April 2012, the new Maruti Suzuki Workers Union was set up, according to a press release from Ram Meher Singh, the union president. A charter of demands was presented to management and negotiations were under way.

The exact sequence of what happened on July 18 continues to be shrouded in controversy. This much is clear - a floor supervisor made derogatory remarks about Jiyalal, a worker from a lower caste. When Jiyalal protested (the police say he slapped the supervisor), he was suspended and a confrontation began. Hundreds of hired security officials poured into the factory and blocked the exit.

In the ensuing melee, Awanish Kumar Dev, a company human resources manager who had been involved in negotiating with the union, was beaten up. (Dev did not make the original remarks) Many others - including workers - were also injured. A fire then broke out, although it is not clear who started it. An autopsy report says that Dev was unable to move to safety, because both of his legs were fractured, so he died in the fire.

Haryana police have started to comb the villagers around the factory to hunt down workers that they believe were involved in the incident. So far, over 90 workers have been rounded up and taken to Bhondsi jail without being charged before a magistrate as in the normal custom. Section 144 of the Indian Penal Code has also been invoked for a two kilometer radius around the plant, making any assembly of more than five persons unlawful.

Battlelines have hardened. Village panchayats (local governing bodies) around the factory have refused to support the Maruti workers, but other workers in nearby factories - such as at Hero Motocop and Suzuki Powertrain - have declared solidarity with them.

In recent days, government officials have also announced that they intend to investigate the possibility that the violence was pre-meditated and part of a larger plot by Maoists to infiltrate trade unions in the industrial belts of central India.

Gurudas Dasgupta, a member of parliament from the Communist Party of India (Marxist) says this is not true. "What's happened in Gurgaon is the continuous anger of workers against the suppressive actions of the management," he says.

Violence in the Workplace

It is certainly true that the situation at the Maruti factory is not unique. Factory managers across India have been replacing the permanent workforce with contract and casual labor. India's traditional unions have floundered in recent years, unable to keep their grip on this new work force that is young, local, ambitious and impatient. New factories are exploiting this and attempting to negotiate with individual workers  instead.

The absence of a collective bargaining system is cited by some as the cause of a number of deadly incidents of July 18 in recent years. For example

* On July 25, 2005, police beat up thousands of workers at the Honda Motors and Scooters factory, which is also in Gurgaon. (The clash happened after a supervisor reportedly kicked a worker)

* On September 22, 2008, Lalit Kishore Chowdhary, the CEO of the CEO of Graziano Trasmissioni, an Italian multinational gear factory, died after a clash with workers on the factory premises in Greater Noida, also just outside Delhi. (Some reports say he was bludgeoned to death, others that he jumped to his death.)

* In September 2009, Roy George, the human resources head of Pricol, an auto-instrument panel manufacturer in Tamil Nadu, died in a clash with workers after he froze their salaries.

* Ajit Yadav, a worker at Rico, a gear and brake parts manufacturer, also based in Gurgaon, was beaten to death in October 2009 during a protest against management, reportedly by company security.

* On March 1, 2011, RS Roy of Graphite India Ltd, a senior manager at an Indian steel factory, died from injuries sustained in a fire after a clash with workers in the eastern state of Orissa.

To see these incidents as merely an issue of 'crime and militancy' would be "a gross dereliction on one's responsibilities and blatant criminalisation of labour," writes Rakhi Sehgal, vice president of Hero Honda's workers' union, in the Economic and Political Weekly.

"There are many voices commenting on the lack of maturity among these workers, the expression of their demands and their discontentment, their youth, their lack of experience as many are first-generation industrial workers, their supposed hotheadeness and impatience, their aspiration to be upwardly mobile and to have the capacity to indulge in consumerism, and their demands for better wages (why not?)," she adds.

The Decline and Fall of Indian Workers

Indeed Indian workers are actually much worse off in the today’s economy, than their unionized predecessors, note labor observors. “Today, Indian workers are paid less in real terms than they were fifteen years ago, have less job security, and yet are less likely to strike,” writes Aman Sethi in the Hindu. “The incident at Maruti Manesar signals the end of the all-powerful union capable of controlling the factory floor, rather than its return. Instead, industry’s reliance on casual workers has created informal leaderless networks that operate outside the framework of strikes and settlements that undergird union activity.”

Sethi illustrates his comments with the following numbers:

* Almost 300,000 strikes were called between 1973-74. In 2010, just 429 strikes were called, according to data from the V.V. Giri National Labour Institute

* Real, inflation-adjusted wages for workers increased by nearly 40 percent in the 15 years from 1981-82 to 1994-95, and then fell 15 percent in the next 15 years, according to numbers from the Annual Survey of Industries

* Wage payments, as a percentage of the net value created by companies, have dropped from 30.3 percent to 11.6 percent over the last 30 years

* Meanwhile, profits have increased from 23.4 per cent of net value to 56.2 percent over the last 30 years

* In 2000, casual workers accounted for 38 per cent of employment in the organized sectors, such as manufacturing and construction, according to National Sample Survey data; but by 2010, they accounted for 58 percent.

* Manufacturing has shed 5 million casual jobs in the last five years

* In 2011-12, “India Inc.” owed its workers at least Rs. 711 crore ($128 million) in unpaid wages, according to parliamentary data, not including casual workers or instances wherein the matter never reached a labour court.

* Last year, labor courts had a backlog of 13,527 cases, which rose to 13,642 this year.

In order to confront the slow loss of workers rights and to prevent violent clashes in the future, Rakhi Seghal concludes that the labor movement itself has to evolve. To that end, a Facebook page for a "Citizens Front in Support of Maruti Suzuki Workers" has been set up, where Seghal, among others, have gathered to organize online.

Her first demand is simple: "We agree that rule of law should be enforced. Start with the companies first - prosecute them for violation of our laws."