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Maruti Suzuki Strike: The formation of Unions

(Management versus Labor Unions)

Case Study
"At least 2 million workers work in hundreds of units situated in the vast industrial belt in and around Gurgaon. There is around 1 million workers work in the units of automobile industry alone. These workers who produce auto parts for companies from all over the world in modern factories have to work in very bad conditions. More than 90 percent of these are contract workers who work for 10-12 hours for 4000-5000 per month. The workload and speed is extremely high and they have to face verbal abuse and even beatings by the supervisors and security guards. Most of the factories do not have unions and where the workers have managed to form a union, they have to face constant harassment. The established big unions do nothing except paying lip service to the issues and in many cases have ditched the workers in favor of the management. In this scenario, the issue of the right to form a union is a common and universal issue in the Gurgaon industrial belt. The pamphlet distributed by the Bigul Mazdoor Dasta says that not only the workers of Maruti Suzuki but workers all over the country are being denied the right to form their unions so that they can raise their voice unitedly against their exploitation. Thats why the demands of Maruti workers find resonance across the region. All other views were mostly supporting the Management. "In many ways, the 13-day strike at Maruti Suzuki India Ltd, Indias largest automobile manufacturer, was a wake-up call for the Indian corporate sector. Not only did it illustrate the unity among the companys workers, but with workers and unions across states voicing support, it threatened to flare up into a wider industrial dispute, giving strong signals of a resurgence of trade union activity in the country. It wasnt a wage hike or improvement in working conditions but the right to form a unionsomething of a rarity in the new industrial ecosystem in Indiawhich saw 3,000 employees of Marutis Manesar plant in Haryana striking work on June 3. The plant workers wanted to register a new unionthe Maruti Suzuki Employees Union (MSEU)and had already applied for registration, something the management was opposed to. Maruti officials were not available for comments when contacted. Managements do not want to have unions. They want to make the unions subservient to their interests. Union activities of yore, like the long-drawn Bombay textile strike in the 1980s, had of late seemed a thing of the past. In the last decade or so, due to new management practices of hiring employees on contract and not putting them on the rolls, the number of industrial disputes and strikes in the manufacturing sector had scaled down from around 250 in 2004-05 to fewer than 100 in 2010. In 2011, this has been the only major strike so far.

Organization Behavior/PGDM 11-13/VVSB/R.RaviKishore

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Labour leaders contend the lack of union activity in the industrial sector is because of large-scale suppression of labour rights and union voices. Says Gurudas Dasgupta, general secretary of the CPIsupported AITUC, Managements do not want to have unions. They want to make the unions subservient to their interests and compel the workers to be part of a union controlled by them. Adds Dipankar Mukherjee, secretary, CITU, Post-1991, all companies, be they mncs or Indian, have not wanted unions to be formed. Its a pattern among new companies also; they either do not want unions or have pocket unions who support the management. The fact that incidents of flash strikes or even violent attacks on members of the management have not yet dissipated is testimony to the fact that all is not well on the labour front. The corporate sector, however, disagrees with this view, contending that best management practices are being followed. As Y.K. Modi, chairman and CEO of the Great Eastern Energy Corporation and a former FICCI president, puts it, The very fact that industries everywhere are generally having uninterrupted activity without labor trouble illustrates that there have been good practices mostly. Since the issue at Manesar was amicably settled through discussion, theres no reason to react on this matter.... I do not see the emergence of an era of nationwide militant trade unionism. The fact that 65 unions in the nearby industrial belts of Noida, Dharuhera, Manesar and Gurgaon had voiced their support and about one lakh workers from 50-odd industrial units in these areas had decided to go on fast last Friday reflects a different workers perspective. Interestingly, many of these companies are associated with the automobile industry. Although the strike at Maruti has been called off and the matter resolved for the time being, there are hushed discussions across companies on the way managements handle workers and trade union issues. Says BMS spokesperson Amar Nath Dogra, A strike is not the first but the last option for workers. If it happened, it was because there were issues with the way the management dealt with workers demands. There is a mechanism where workers and management recognise unions and decisions are taken with mutual discussion. We are concerned about the way the company handled the situation. Experts stress that the trend of hiring workers on contract rather than taking them in as permanent employees gives company managements the right to hire and fire on issues of performance or in times of recession, something not easy in case of permanent employees under Indian laws. According to rough estimates, over 50 per cent of workers in most of the large companies are on contract and do not have rights to join unions or can only join one that is recognized, even suggested, by the management. The general view among workers is that managements cannot dictate which unions workers should get affiliated to as it is their right to register or join a union. Says Mukherjee, Employees have the right to form unions. Labour laws do not give managements the right to dictate which union the workers should join or what their political leanings should be. The demand for a new union at Marutis Manesar unit may be a signal of discontent amongst workers regarding management practices and their own rights and the lack of a redressal mechanism. Coen Kompier, labour standards specialist with the International Labour Organisation (ILO), says, In general and compared to many other countries, the industrial relations system in India is very confrontational,

Organization Behavior/PGDM 11-13/VVSB/R.RaviKishore

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which harms the interests of all parties....A new era in the trade union movement will happen only if unions can operate in full freedom. The employers havent acted intelligently here. Their actions harmed Marutis productivity. Questions: 1. What is the main reason for the Maruti Suzuki Workers to go for strike and as a Supervisor of Maruti Suzuki, how would you manage the situation? 2. Right to form Union. Why the worker at Maruti Suzuki wants to form a Union and as an Organization how will Maruti Suzuki would respond to this? 3. Managements do not want to have unions. They want to make the unions subservient to their interests. Analyze and give your answer. 4. How should the Management handle the workers and Trade Union issues? 5. How did the Behavior of workers affect the Maruti Suzuki and its production? 6. Relate the Case Study with the OB model and Perception? Instructions to be strictly followed : 1. Analyze the case thoroughly and write a brief about the case from your perspective and submit a hand written document of three pages maximum (6 Sides). 2. Write your name, regd no, submitted to 3. All the students are mandated to submit the case study on or before 28/2/2012 by 9.30 Am through class coordinators. No student should come directly to submit and if anyone does so it will not be considered. 4. Do not copy for your classmates, analyze on your own and solve the questions mentioned above. 5. For any clarifications one can meet me in college.

Organization Behavior/PGDM 11-13/VVSB/R.RaviKishore

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