Page 17 - DCOM207_LABOUR_LAWS

Labour Laws

Notes the same uniform and ate at the same canteen even during the period of agitation. After
recovering from the strike Maruti had a perceptible change in culture. A VRS scheme
introduced soon afterwards increased the sense of insecurity amongst employees, but it
was all for a good cause.
During the 1980s and early 90s the level of employee satisfaction at Maruti was comparatively
higher than most manufacturing companies in the country as they received significantly
higher salaries as compared to employees of other companies. Generally the Wage rates
and earnings of workers at Maruti were result of a series of revisions based on bilateral
negotiations. The pre-revised (before 2001 strike) labour cost per vehicle in Maruti at
` 2,696 compared unfavorably with ` 1,617 of its closest rival Hyundai. Worker’s incentive
earning had been equal to almost their entire basic and dearness. In 2000, the average basic
and dearness allowance was ` 7,000 and the incentive earnings were around ` 6,500. With
incentives accounting for a more than as usual and sizable proportion of the pay packet,
workers badly needed the incentive scheme. Maruti’s worked formed part of middle class,
not working class. Over two-thirds apparently owned flats/houses and cars.
In MUL the control and power is mostly in the hands of management. During the workers
strike in 2000 the management refused to agree to the workers demands. The officers ran
the plant by supervising the operations of the plant and hiring contractual labour. This
made it difficult for workers to sustain the strike. They had to call off the strike and were
in fact forced them to agree to some changes laid down by the management. The power of
Japanese has always been there in an implicit manner. The Japanese have acted as conflict
resolvers whenever there have been any conflicts within or between departments. Many
times the departments play politics with other departments by trying to use the referent
power available due to closeness with Japanese management. With the increase in stake
of Suzuki Motor Corp. the legitimate power of the Japanese management has further
increased.
The car market in India become highly competitive in late 1990s with almost all major
players entering the Indian market with manufacturing of various models. So company
suffered a decline of market share. As Maruti’s salary structure comparatively higher than
most manufacturing companies, due to this competition and decline in profit, the company
could not live up to the expectations of the employees. As a result worker unrest started to
grow in the company.
In September 2000 the Maruti Udyog Employees Union went on an indefinite strike if
their demands were not met. The employees were demanding a new incentive scheme,
improved pension scheme, better work environment and filling up of supervisory
vacancies. However the management refused to accede to these demands.

Production fell by around 40 % for a period of 3 months. During this period the engineers
at the managerial positions manned the assembly lines to ensure that production does not
stop completely. The top management of Maruti were under some pressure to negotiate
with the workers. However, the government decided not to interfere directly and the
management insisted that the workers stop the agitation and agree to adhere to the code of
conduct specified by them.
The strike ended in January 2001 with the union members agreeing to by the code of
conduct. About half of the employees (40) suspended/terminated during the course of the
agitation were not taken back on duty. Thus the management retained the upper hand after
the strike ended and the work culture at Maruti changed significantly after this. Some of
the changes which took place were as follows:
1. The sense of job security that the workers enjoyed at Maruti diminished. In subsequent
years a number of non-performers were asked to opt for a voluntary Retirement
(VRS) and by introducing VRS, 1251 jobs were reduced. Contd...

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