COMMENTARY

Bajaj Auto Workers Agitation

Withdrawal and Triumph
Abhishek Shaw, Lina Mathias

Workers at the Bajaj Autos Chakan unit in Pune stopped work for 50 days before unconditionally withdrawing the agitation on 13 August. The union made a controversial demand cheap equity shares for its members. This article looks at this demand, the questions around the issue of going on strike (in the current economic atmosphere), the ability to sustain it and the lack of adequate state intervention.

hen 950 workers at the Chakan (Pune) plant of Bajaj Auto struck work on 25 June, among their demands for improved wages and work conditions was one that generated much controversy the union asked for equity shares, or what is called employee stock ownership plan (ESOP), at Re 1 a share. While a number of information technology (IT) companies and a few in other elds are no strangers to ESOPs in India, this was the rst time that workers from the assembly and production oor made the demand. The demand for ESOP was dismissed in no uncertain terms. No one, not even the chairman, has got free shares in the last 50 years, and we are not about to start now, Rajiv Bajaj, managing director (MD) of Bajaj Auto, told the media. He added for good measure that if the workers demand is like that of a wayward child, the company, as a parent, had to be fair but rm. In another media interview, he said, This is a public limited company, not a kirana (grocery) shop that I can handle (company) shares like that (Gupta and Baggonkar 2013). Bajaj also made it clear that his company did not believe in buying the loyalty of people by throwing them shares. ESOPs are okay for the IT industry or where capital is an issue, and even the automobile companies that issue shares do so only to the top management in their research and development (R&D) division and not to workers, he said. Bajajs almost indignant response to the demand and the unions justication for making it shows the chasm between how managements view workers role and how the latter see it. Share in Prot The Vishwa Kalyan Kamgar Sanghatana (VKKS), the local union that led the strike at the plant that makes the auto giants popular Pulsar motorcycle and
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has a capacity of 3,000 units a day, claried that it was not on strike, but had stopped work. Dilip Pawar, president of the union, explained the reason behind the unique demand for cheap equity shares. We are the ones producing the wealth, why should we not have a share in it? Since the management is not paying us fair wages and is refusing to review the wage agreement, we thought shares via the share dividends of the company are a fair exchange, he said (personal interview). He claried that the union was demanding individual, not group shares. The latter would have given the workers a stake in the management and it would not be easy to sell them off, as in the case of individual shares. Fair Compensation Bajaj Auto has been offering gradually higher dividends to its shareholders over the years. A dividend of Rs 45 per share was announced for 2013 compared to Rs 22 per share in 2009. The company is considered the worlds most protable two-wheeler manufacturer (Philip 2012). The VKKS, in a document circulated via email, alleged that the compensation paid to workers has not kept up with the companys prots, which have been rising over the past decade or so. It claims that for every Pulsar motorcycle produced, the workers as a whole get only Rs 300, while management staff and shareholders get Rs 16,700 and the government and dealers Rs 10,000 each. Further, in Pune, ination as measured by the consumer price index for industrial workers grew by 11.7% in 2010 over 2009, and by 10.5% in 2011 over 2010 (Labour Bureau 2012). It was even higher in other towns and cities of Maharashtra. The workers demand for shares in the company, they said, was mainly to ensure proper compensation for work, which has been inadequate in the wage agreements negotiated from time to time. The last wage agreement was for a period of nine years (ending 2019), with a revision every three years. The workers nullied this agreement and asked for shares in the company. This demand
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Abhishek Shaw (abhishek@epw.in), Lina Mathias (lina@epw.in)

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COMMENTARY

was uncommon, but not so outrageous as some sections of the business newspapers made it out to be. Other Experiences In the early 1990s, the Bharat Electronics Limited Union in Bangalore sought shares for workers. In the context of this, Bhowmik (1994) raised some pertinent questions on worker-shareholders and how it could potentially alter workermanagement and worker-union relationships. It was the fear of a changed workerunion relationship that has made some unions apprehensive of such schemes. Also, they see the sale of shares to workers as a way of privatising publicsector companies through the back door. Bhowmik has also looked at the worker-shareholders experience in other countries. ESOPs have been successful in the US in terms of the number of companies that have implemented such plans, and the number of workers who have become shareholders in the companies they work for. In India, however, the question

of worker-shareholders was most debated with respect to public-sector companies which through the 1990s (it continues even today) offered shares to their employees at discounted prices. In the US, ESOPs have been largely successful in small and medium enterprises, which, according to Bhowmik, provide the bulk of employment to American workers. A more recent article in the Nation (Mackin 2011) says that about 11,000 companies employing nearly 12 million workers and operating in all sectors of the economy have workershareholders. The number of employees in each of these companies range from 50 to 1,50,000. The US experience has been made possible by the laws in place. Companies are offered tax incentives for enrolling in the ESOPs scheme, and workers are allowed to form trusts and borrow capital to purchase shares collectively. These two critical provisions make ESOPs lucrative for companies and possible for workers. However, Bhowmik argues that this had little bearing on the decision-making

in companies with ESOPs, as there was a clear distinction between ownership and control, and this has been a bone of contention between workers and companies. For example, the United Auto Workers (UAW), one of the largest unions in the US, owns substantial portions of major corporations and is itself valued in billions of dollars. It has been many a times accused of acting against the interests of workers. The UAW owns a large number of shares in Ford, Chrysler and General Motors, among others. It is a big player and has been accused of allowing anti-worker policies in these companies because it has a direct interest in their prots (White 2010). The UAW has supported the policies of the Barack Obama administration to restructure the auto industry, for which it has been severely criticised (White 2013; Jones 2013). Further, ESOPs in the US have not led to any sea change in the hierarchy within factories. The various methods used to exclude workers from decisionmaking have ensured that they continue to have limited information about or

Decentralisation and Local Governments

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The idea of devolving power to local governments was part of the larger political debate during the Indian national movement. With strong advocates for it, like Gandhi, it resulted in constitutional changes and policy decisions in the decades following Independence, to make governance more accountable to and accessible for the common man. The introduction discusses the milestones in the evolution of local governments post-Independence, while providing an overview of the panchayat system, its evolution and its powers under the British, and the stand of various leaders of the Indian national movement on decentralisation. This volume discusses the constitutional amendments that gave autonomy to institutions of local governance, both rural and urban, along with the various facets of establishing and strengthening these local self-governments.

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V M Sirsikar Nirmal Mukarji C H Hanumantha Rao B K Chandrashekar Norma Alvares Poornima Vyasulu, Vinod Vyasulu Niraja Gopal Jayal Mani Shankar Aiyar Benjamin Powis Amitabh Behar, Yamini Aiyar Pranab Bardhan, Dilip Mookherjee Amitabh Behar Ahalya S Bhat, Suman Kolhar, Aarathi Chellappa, H Anand Raghabendra Chattopadhyay, Esther Duflo Nirmala Buch Ramesh Ramanathan M A Oommen Indira Rajaraman, Darshy Sinha Stphanie Tawa Lama-Rewal M Govinda Rao, U A Vasanth Rao Mary E John Pratap Ranjan Jena, Manish Gupta Pranab Bardhan, Sandip Mitra, Dilip Mookherjee, Abhirup Sarkar M A Oommen J Devika, Binitha V Thampi

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limited say in managerial decisions (Russel et al 2004). Canadas experience has been different. Workers, with the support of the government and unions, have established cooperatives. Ownership via cooperatives has been more meaningful, according to Bhowmik. Further, the cooperatives have continued to enjoy the support of unions. This has exposed workers to management techniques and built up their awareness, both of which are important if they are to eventually organise production. In India, ESOPs, in general, have been mainly offered to middle and higher management employees at a discounted price or as bonuses. This is a common practice in the IT sector, which sees giving shares to employees as a way of retaining talent. Companies like Infosys have been able to do this with some success (Kumar 2001). But most shareholderemployees have no real say in the management of the companies. ESOPs do not mean collective bargaining. They are still largely viewed as plans for individual shareholding. But the only way employees, with or without ESOPs, can have a meaningful say in matters of management and company policy is when they unite, or collectivise. Maintaining Workers Morale While the VKKS unexpected demand for ESOP became a talking point, the unconditional withdrawal of the 50-day agitation on 13 August raises a number of questions. Apart from the Shramik Ekta Mahasangh (SEM), representing 88 unions in the Pune industrial belt, the New Trade Union Initiative (NTUI) and some other unions had supported the strike. Many had hoped that with the Maruti Suzuki workers in Manesar carrying on a tenacious struggle, this agitation would also pave the way for a vigorous debate on labour reform. The VKKS pointed out that the speed of assembly lines has gone up a good deal in the last six years from 42 seconds per motorbike to 28 seconds, resulting in 1,028 two-wheelers being produced daily. Pawar said that many of the young workers suffered from kidney stones because of the unrelenting pace and a fall in the number of relievers. From the
Economic & Political Weekly EPW

ve to seven relievers needed for every 75 workers (so that the latter can go to the toilet or to drink water), the number has come down to three. There is also the issue of contract labourers. The VKKS alleged that the company was using contract labourers and the learn and earn diploma holders to try and break up the agitation. Pawar said production-line workers never got an opportunity to talk to the top management and had to deal with the middlelevel management members who could not be relied upon to give a fair assessment of the workers problems and issues to the higher-ups. The VKKS says that the Bajaj Auto management was upset with Pawar because workers at its Pantnagar (Uttarakhand) unit approached him to resolve their issues. When Pawar attempted to organise the workers in a state not known for workers movements, it led to allegations that he was provoking them, it says. Workers of the Pantnagar plant, established in 2007, had approached the VKKS to take up their demands. In 2012, they went on strike, mainly for the right to form a union and the VKKS supported the agitation. The VKKS alleges that it was after this episode that relations at the Chakan plant became strained. According to VKKS, the Bajaj Auto management suspended 22 workers in Chakan after June 2012. It also refused to revise the wage agreement. The agreement of 2010 stated that in case employees of Bajaj Auto were given a higher increment than that mentioned in the wage agreement, this higher increment would be applicable to those covered by the agreement as well. The management violated this clause, according to the VKKS. The VKKS was only recognised in 2007 after a prolonged struggle. The Bajaj management had responded by shutting down its Akurdi plant (where the union was rst established) and shifting production to Aurangabad and Uttarakhand in September 2007. Finally, after a court order, the Bharatiya Kamgar Sena (backed by the Shiv Sena) was derecognised and the VKKS was recognised as the majority union that would represent workers (Menon 2007).
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Drawing a parallel with the Maruti Suzuki workers struggle, N Vasudevan of the NTUI observed, In both places young workers, most below 35 years, have health issues because they have to work at tremendous speed that makes them into machines rather than human workers. Interestingly, when asked about these allegations, Bajaj said that the company followed the Kaizen technique of constant improvement. There used to be seven relievers, which was reduced to six, ve, four, and so on. At Bajaj Auto , we are constantly improving our standards and reducing wastage (Byatnal 2013). Winners and Losers For Indian workers and especially for their leaders, the real dilemma is keeping up their morale at a time when the prices of essentials are skyrocketing, jobs are scarce, and managements are threatening to shift production to other plants (as Bajaj did) instead of negotiating. Having called a strike, keeping internal dissent in check and knowing when to call it off calls for skill and strategy. For now, on the face of it, it seems that the VKKS has got nothing to show for the 50-day agitation. Media reports also suggested that the workers had gone on strike at the wrong time when the automobile sector in that region was staring at production cuts and job losses (Gupta and Joshi 2013). While the SEM did support the VKKS, there was no industry-wide strike or action, and no show of solidarity from civil society. Even the media coverage was restricted to daily follow-ups with hardly any discussion of the issues raised. The state government too remained a mute spectator, with the labour minister having called just one unsuccessful meeting. But as Ajit Abhyankar of the Centre of Indian Trade Unions (CITU), Pune, says, That this union was able to keep the young workers united and carry on the struggle for 50 days is itself a triumph and a victory. The practice of offering ESOPs may be here to stay, or at least this can be a reasonable assumption after a recent ruling by a special bench of the Bangalore income tax appellate tribunal. Following
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an application led by Biocon, it ruled that discounts under ESOPs are an employee cost and that it should be eligible for a tax deduction (Kably 2013). This may prove to be an incentive for private companies to give discounted shares to employees, including shop-oor workers.
References
Bhowmik, K Sharit (1994): Workers as Shareholders: Case for Closer Examination, Economic & Political Weekly, 29(40). Byatnal, Amruta (2013): Bajaj Protests: Talks Aim at Job Security for Suspended Workers, The Hindu, 11 August, viewed on 16 August 2013, http://www.thehindu.com/business/Industry/ bajaj-protests-talks-aim-at-job-security-forsuspended-workers/article5011023.ece Gupta, S D and H Joshi (2013): How Downturn Helped Bajaj Quell Chakan Strike, Business Standard, 15 August, viewed on 17 August 2013, http://www.business-standard.com/article/ companies/how-downturn-helped-bajaj-quellchakan-strike-113081501009_1.html

Gupta, S D and Swaraj Baggonkar (2013): This Is Not a Kirana Shop that I Can Handle Shares Like that: Rajiv Bajaj, Business Standard, 28 June, viewed on 16 August 2013, http://www. business-standard.com/article/companies/thisis-not-a-kirana-shop-that-i-can-handle-shareslike-that-rajiv-bajaj-113062700840_1.html Jones, Shannon (2013): UAW and Fiat Battle Over Unions Multi-billion Dollar Stake in Chrysler, World Socialist Web Site, 23 May, viewed on 16 August 2013, http://www.wsws.org/en/articles/2013/05/23/veba-m23.html Kably, Lubna (2013): Companies Can Get Tax Breaks on Employee Stock Option Plans, The Times of India, 18 July, viewed on 16 August 2013, http://timesondia.indiatimes.com/business/ india-business/Companies-can-get-tax-breakson-employee-stock-option-plans/articleshow/ 21130684.cms? Kumar, Nagesh (2001): Indian Software Industry Development: International and National Perspective, Economic & Political Weekly, 36(45): 4278-90. Labour Bureau (2012): Consumer Price Index Numbers For Industrial Workers Annual Report 2011 (Shimla: Labour Bureau). Mackin, Christopher (2011): Employee Ownership: The Road to Shared Prosperity, The Nation,

8 June, viewed on 16 August 2013, http://www. thenation.com/article/161255/employee-ownership-road-shared-prosperity#axzz2bjVkUL00 Menon, Sudha (2007): Biggest Bajaj Auto workers union gets court recognition, LiveMint, 17 October, viewed on 16 August 2013, http://www. livemint.com/Companies/wHNEgoPH4oOFHB8IHByoUK/Biggest-Bajaj-Auto-workers-union-gets-court-recognition.html Philip, Lijee (2012): Hero Powers on Minus Honda, Beats TVS; Bajaj Auto Takes the Race to Global Tracks, The Economic Times, 25 March, viewed on 17 August 2013, http://articles.economictimes. indiatimes.com/2012-03-25/news/31234304_1_ pawan-munjal-splendor-hero-and-honda Russell, John D, Mark Dirsmith and Sajay Samuel (2004): Stained Steel: ESOPs, Meta-Power, and the Ironies of Corporate Democracy, Symbolic Interaction, 27(3). White, Jerry (2010): UAW Membership Continues to Plummet, World Socialist We Site, 1 April, viewed on 16 August 2013, http://www.wsws. org/en/articles/2010/04/uawm-a01.html (2013): UAW Sanctions Elimination of the Eight-hour Day at Chrysler, 2 March, viewed on 16 August 2013, http://www.wsws.org/en/ articles/2013/03/02/auto-m02.html

Hot Air from Jackson Hole

K Subramanian

The 2013 Jackson Hole symposium lacked the star power of earlier years with US Federal Reserve Chairman Ben Bernanke and European Central Bank President Mario Draghi keeping away. From the viewpoint of developing economies, the most relevant paper was presented by Helene Rey of the London Business School. She not only raised critical issues generally glossed over by neoclassical and monetarist economists, but also cautioned against the hegemonic role of the Fed.

K Subramanian (subrabhama@gmail.com) retired from the Union Ministry of Finance.

his year, the air blowing from the annual symposium at Jackson Hole, Wyoming, was less hot. In recent years, the symposium had turned into a much-publicised, glittering affair with Alan Greenspan as the centrepiece. The 2005 symposium was on The Greenspan Era and the participants lavished praise in adoration of the maestro.1 Invariably, the wise men representing top ofcials of the western worlds central banks and a group of likethinking economists used to sing in praise of the miracles performed by Greenspan. They would engage in an exhibition of exotic algorithms and econometric models, seeking to establish how monetary tools worked through their interface with transmission mechanisms and achieved their objectives. They created an impression that they were masters of the universe who deed the demon called ination. Unfortunately, their universe collapsed in 2007 and, with the demise of Lehman Brothers in 2008, the process was complete. Sadly, many of them had not even anticipated the coming collapse and continued to sing in praise of the efciency of
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nancial markets. Since then, the efcacy of monetarist tools has been questioned and the Jackson Hole confabulations have lost their glitter. This year, Ben Bernanke, the chairperson of the US Federal Reserve, disappointed acolytes when he said he would not be attending the symposium on 22-24 August. Bernanke retires in January 2014 and his keynote address could have been his swan song, marking the end of his eight-year stint as the Fed chief. In keeping with his low-prole, self-effacing style, he chose otherwise. Indeed, it robbed the event of much of the aura attached to it. There were some other absentees like Mario Draghi of the European Central Bank (ECB). Janet Yellen, one of the two contenders to succeed Bernanke, was present, while the other, Lawrence Summers, was not. The Federal Reserve Bank of Kansas City holds this annual symposium and keeps the agenda a closely-guarded secret until it opens. However, as reported by the Wall Street Journal, the Bank of America Merrill Lynch leaked the agenda.2 All the subjects included were highly technical and monetarist, and dealt with such issues as Interest Rate at the Lower Zero Bound, The Transmission of Unconventional Monetary Policy, Global Liquidity, and Cross-border Capital Flows. A panel
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