Calls for trade union transparency following automobile strikes

Author: | Published: 1 Aug 2012
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On October 21 2011, a major labour strike ceased when automobile company Maruti Suzuki agreed to reinstate 64 permanent staff and 1,200 casual workers at its factory in Manesar. The strike raised concerns about the transparency and recognition of the present system of trade unions in India, and this has subsequently been the subject of much discussion between employees, employers and the Government of India (GOI).

Maruti Suzuki India (MSI) suffered a series of strikes from June 2011, when workers went on a 13-day strike demanding the recognition of a new trade union. MSI did not respond to the demand and, in September, workers went on a 33-day walkout.

On October 7, MSI workers called for yet another strike and on October 13, when the strike entered its seventh day, the High Court prohibited workers from conducting a sit-in strike within 100 metres of the premises of MSI's factory at Manesar. Striking workers at the plant were ordered to leave, but they ignored the High Court ruling.

Following MSI's decision to reinstate the 64 permanent staff and 1,200 casual workers that were suspended because of their participation in the strikes, the company's management said it would improve the industrial relationship in the near future. However, it remains unclear whether MSI management and workers will reach agreement on the formation of a new union.

Labour minister, Mallikarjun Kharge, says the system will need to evolve for better industrial relationships

MSI suffered an estimated loss of Rs 15 billion (US$306.7 million) as a result of the continuous labour strikes in 2011. And the company's share price dropped 2.14% to Rs 1,033.80 on the Bombay Stock Exchange on October 14 2011, when the labour strike entered its eighth day.

The MSI joint venture accounts for a 50% share of India's car market, and legal practitioners say that the labour dispute has had a strong impact on the country's automobile industry. Trilegal partner Ajay Raghavan says: "The automobile industry is suffering great loss because of this labour strike. They are seeking measures to reduce the possibility of strikes in the future."

The strike has raised concerns about the present system of trade unions in India. The Ministry of Labour has called for further discussions between the GOI, employers and employees on improving the transparency and recognition of trade unions. Labour minister Mallikarjun Kharge told the Economic Times that the present system would need to evolve for better industrial relationships. "The present system of verification, such as secret ballots and check offs, needs to be closely examined further for evolving an important system that is more transparent and brings out proper representation."

The Ministry of Labour did not interfere in the MSI labour dispute as much as it had done in previous large scale labour strikes. For example, Hindustan Unilever (HUL), which has 35 factories across India, suffered a labour strike at its Bombay factory five years ago. The labour commissioner, Maharashtra, required the company to pay wages to its workers until their retirement date, even if they were not working. HUL posted an HR manager at every factory after the labour strike to improve communication and transparency between management and the workers.

In recent years, some legal practitioners have noted that the regulators and the courts in India have been coming up with more balanced decisions whereas previously they were overwhelmingly pro-labour.

However, Raghavan says that it is too early to say if this is indeed the case. "The labour tribunals have still shown a pro-labour attitude in most of their judgments," he says. "On the other hand, we are seeing the judgments from the High Court and Supreme Court taking a more balanced stand. At the moment, it is perhaps too early to say that the courts have been moving towards a more balanced stand, but at least we see employers' rights being recognised in some cases."

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