Reflections: Employee Relations (Part 3): Unrest and Closures in 2014

Reflecting on past events is essential. It enables us to understand trends and varying points of view. It also lays out issues clearly before us. And hopefully it helps us to learn and find a better way, moving ahead.

"Follow effective action with quiet reflection. From the quiet reflection will come even more effective action”, said Peter Drucker. So let us review ‘Employee Relations’ in 2014. This is the first part of a three part series of blog-posts. I have divided this note according to subject. The current blog post focuses on ‘Strikes and Lockouts in 2014’

I have not drawn conclusions. Often it is unnecessary to draw conclusions – particularly when they are obvious. And specially when facts are put forth to well informed readers like you!

Trouble at Toyota Kirloskar
This is what I wrote in my blog on this case: “The issue involved in the present strike or lockout is reported to be a wage dispute. Toyota has offered an increase of Rs. 3050 to the workers, while they are demanding an increase of Rs. 4000. If this is the real issue, then it sounds funny that the parties are breaking negotiations over a gap of mere Rs. 950. Obviously there is something more than meets the eye.”

What was that?
Remember that when you create a boundary, you also create a battle line! Toyota says “Managing Toyota Way and establishing a Toyota culture is non negotiable. That’s where the boundary is!

The issue is also how skillfully managers can handle these boundaries. Toyota Kirloskar has always had a bad record of industrial strife. Almost since inception, there have been repeated strikes and lock-outs.

The EPW article provides a plausible explanation. It says [quote]

“Another important aspect of TPS is the element of labour control that is inherent in its production system. The control is so intense that it takes every single movement of workers into account and categorizes these movements as those which “produces added value, produces no added value but necessary and produces no added value and unnecessary”. There are supervisors in every work group to monitor and regulate the movements of workers. These “value-added/subtracted movements” of workers also constitute an indicator in their performance appraisal by their supervisor. The lower performance points could lead to punitive actions like reduction of a salary and even to termination of jobs on the grounds of “non-performance”. Completion of a particular piece of work under the TPS is determined by production demand without taking into consideration the availability of workers, so as to minimise the cost of production. Studies conducted in Toyota units in India and other parts of the world also showed that TPS is the major cause of health concerns for workers (George 2006). The workers at TKML interpret the unique system of Toyota production to be “less hands, more work and less pay”.

Workers who were locked out in March went back to work in the third week of April, when ordered by the Government to do so. So, what was achieved in this period of lock-out? This is what the news report says:

"While the union has yet to drop its demands for higher wages and better benefits, it has agreed to end its strike and take its demands to the industrial disputes tribunal of Karnataka. The wage and benefits and holidays are the key issues referred to the court for adjudication," Shekar Viswanathan, vice chairman of Toyota Kirloskar, said.

Bajaj Auto and Maruti Suzuki take positive steps towards reconciliation
I have blogged several times about the Industrial Relations situation in Bajaj Auto. The IR situation there is marked by some ‘interesting’ clauses in settlement. This is what I wrote:

The BA management and VKKS had entered into a long-term agreement. The VKKS and BA signed the settlement on 21st May 2010 covering the wages and service conditions of workmen at Chakan Plant. It stipulated an increase of 12%, 8% and 8% for the first, second and third year respectively.

However, the settlement also stipulated that if the annual increment awarded to any other similar category of employees across Bajaj Auto Ltd. at any other plant is higher than the above mentioned planned increments, in that case the higher % of increment will be made applicable to the workmen covered under the said settlement. The management had in that year, granted a hefty increase to Pantnagar workers, so they were now victims of their own game. Obviously BA refused to do increase in wages automatically. VKKS then alleged violation of the relevant clause (no. 17–C) of the settlement. Thereafter, VKKS has filed an unfair practice complaint before the Industrial Court, Pune.

There were some hidden issues also. Workers hated the way they were being treated and there was a high level of animosity. Simultaneously, the management obviously feared loss of control if the union organised the Pantnagar workers. Finally both sides saw reason and came to an agreement. A hefty increase of Rs. 10,000 was granted to the workers.

All is well that ends well! But the Union made some very positive moves in this case.
Maruti Suzuki had an equally tough job on hand. Repairing relations within the plants and repairing the public image which had taken severe beating. PUDR had published a report titled ‘Driving Force’ in May 2013 focusing on labour unrest at Maruti Suzuki. The newspapers carried other stories also, that did not put the auto giant in good light.

That was followed by the International Commission for Labor Rights publishing its report titled ‘Merchants of Menace.’ [Both reports are available as free downloads on Internet]. It hit out at Maruti Suzuki badly; some say it was well deserved.

About 200 workers are still in jail, and they are forgotten men in the game played by the Press, Maruti Suzuki, the partisan State Government and political leaders. So a PR exercise was essential.

“The old system, it has come to realise the hard way, was an unreliable and unjust way of hiring and retaining workers. A contract worker cannot possibly have any commitment," explains RC Bhargava, chairman of MSIL. "He doesn't see a future for himself in the company. Instead of motivation and accountability, we have suspicion and witch-hunting. It impacts capacity utilisation and performance adversely."

As the contract system is being phased out, MSIL is aiming at a mix of 70% permanent and 30% temporary workers. Today, the mix is around 50:50. "Given our experience of the last two decades of business cycles-the peaks and troughs - this would be an ideal mix of workers," says Siddiqui. [News Report ET Apr 1, 2014]

We wish them well! They have a long ground to cover.
Before we stop here in this first part, here is some food for thought: This is what Frank Dane says about Unions – ‘A system devised to protect the inept from the unconscionable.’

And we will reach out to you in the second part to continue this review.


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