An orchestrated mob violence - The Maruti Episode

GYANENDRA KUMAR KASHYAP

It is deplorable that a tiff over an alleged caste based slur would snowball into one of the goriest incidents of recent times. The mass violence at Maruti’s Manesar plant on July 18, 2012 brings to the fore the ugly face of industrial unrest and labor violence. Is it not shocking as to how workers who supposedly staged a sit-in post their shift could arrange iron rods, which actually fit into the car door, and distribute it amongst themselves? Perhaps there is more to it then what meets the eye; how else can one explain the brutal way in which Awanish Kumar Dev  - General Manager, Human Resources was charred to death and over 90 others who have been injured.  If this is not a case of well orchestrated mob violence, then what is it? There can be no justification that a casteist remark against a permanent worker, who belongs to the Scheduled Caste category, led to what is being described as spontaneous mob violence.

For the last one year, Maruti has been grappling with problems related to trade unions. In fact what started as a 13 day strike in June 2011 and apparently seemed to be a settled issue in October 2011, after the signing of a tripartite agreement between the Maruti Suzuki management, workers and Haryana government representatives, seems to have been a temporary nine month lull. In 2011, three separate strikes at Maruti Suzuki caused a total production loss of approximately 83,000 units worth more than $500 million. However the recent mob fury questions the very basic tenets as to why trade unions exist – to help in effective communication between the workers and the management so that differences of opinion do not turn into major conflicts. While condemning the violence, there have been a few commentators who have succinctly used the veil of social inequity and impatience of the new generation young workers at Maruti’s Manesar plant to in a way justify the deep rage and yes the brutal murder too. Even if we accept that with changing paradigms trade unionism is losing its clout or that in virtual absence of unions companies have become either too paternalistic or too dictatorial; rioting and setting to fire the very properties that are the source of their very own bread and butter, is no greatness to prove a point, their identity or relevance. Isn’t maintaining a cordial relation between management and labor a fundamental pillar of trade unions?

While labor unrests are not uncommon in India, the frequency and level of violence seen at Maruti plant over the last one year raises concerns on the viability of business environment in the long run in the region. According to reports; workers armed with iron rods and wooden sticks rioted through the plant in Manesar, attacking managers, smashing equipment and setting fire to parts of the factory. Reports in media also state that when all these happened, the police remained mute spectators. The workers have a different tale to tell, however true that might be, in no way does it justify their inhumane behavior.  The company for its part alleges that the violence was an orchestrated act of mob. In its statement the company shares, “The sequence of events began in the morning with a worker beating up a supervisor on the shop floor. The workers’ union prevented the management from taking disciplinary action against the worker. As part of their protest, they prevented executives and managers from leaving the factory after working hours. They blocked the exit gates and held the executives hostage.”

Can this be a cause?

Can the wage differential between the permanent and contract employees – the permanent employees at Maruti earn Rs.18, 000 per month while the temporary workers are paid 6000-7000 per month – be a reason for the outburst?  Well a few commentators who have looked at the current problem purely from a social inequality prism; for them perhaps this could be a plausible reason. Or is it because the company run unions (yes at Maruti – the unions are widely believed to be a company run union) wants to break free and associate themselves with larger nationally recognized unions? For the records, Maruti Udyog Kamgar Union is not allowed to associate with any national level recognized unions.  Whatever be the underlying reasons; violence and killing innocent people is void of any sane logic and is highly condemnable.

While nobody can support this kind of mindless violence; the pertinent question is: Why were the workers driven to such extremes that they took the risk of losing their jobs and indulged in mayhem?

The Action

Surprisingly, out of the 3000 odd workers who led the rampage, a mere 97 employees have been arrested – and yes none of them are trade union leaders.  Those who have been arrested and produced before a local magistrate have been accused of various charges including rioting with weapons, murder, attempt to murder, unlawful assembly, assault and trespass. While the police continue with their inquiries; Maruti – which has till date maintained silence on who the perpetrators are -  for its part will conduct its own independent probe into the events at their Manesar plant to determine the issue that lead to the current problem.  The Centre too is looking into the labour unrest at the Maruti Suzuki’s Manesar plant. The corporate affairs ministry will soon take up the matter with other related ministries including the labor ministry to examine the case and address the issue in a structured manner. The Centre’s action has become all the more important as the incident would further dent India as an investment destination. In fact the large scale violence by workers that rocked Maruti Suzuki’s Manesar plant has led the Ministry of Home Affairs to alert the Intelligence Bureau (IB) to probe whether there is any Maoist influence on trade unions in industrial belts in the National Capital Region (NCR). There are reports which state that at least three trade unions active in the region are either fronts of the CPI (Maoist) or are Naxal sympathizers who want to destabilize the economic environment and create industrial unrest.  In response the Left parties have been quick to term it as a “bogus theory” floated to hide the nexus between the government and the management. For now, the central intelligence agencies and the Haryana police have not found any evidence so far to link the violence at Maruti factory at Manesar to any Maoist organization.

 

The Reactions

Since last October, there have been news that Maruti is planning to relocate; the recent unrest just escalated such news gaining more ground. At a press conference in New Delhi, the CEO Shinzo Nakanishi clarified the company’s stance in terms of expansion and relocation.  R C Bhargava, Chairman, Maruti Suzuki, laid to rest the view emerging from some quarters that the company may move out of Manesar. He said, “There is no question of moving out of Manesar. This thought of us moving out of here is complete fiction.”  Further as fallout of this episode, Maruti will stop hiring contract employees. At present contract employees constitute 50-55 percent of the workforce at Maruti. "We will not have any contract worker in the core areas of manufacturing after March 2013. We have decided to change the mode of employment and all future recruitment would be done through the HR department to remove all distortions," said Bhargava.

There have been no concerted reactions from industry bodies such as FICCI, CII, ASSOCHAM and human rights activists. It is apparent that human rights activists swing into action only when there are instances of communal rights. It seems that the violations of human rights of working middle class is not glamorous enough and does not need to be raised. Nonetheless there have been a few voices here and there condemning the act of violence and the senseless killing of a wage earning employee – a well intentioned mediator who was responsibly carrying out his duty to bring about a rapprochement between the feuding groups. The HR community is of the opinion that the industrial relation practices and supporting government/trade union institutions are still time wrapped and woefully inadequate to extend a meaningful walking partnership, and that association bodies must play an important role to sensitize such gaps and help in bridging them.  “At NHRD Network we strongly condemn such deplorable acts of violence. Infact we are extremely concerned at the increasing frequency of such incidents in the recent past, be it at Pricol, or Madras Cements or Regency Ceramics or Honda Motorcycle. Such incidents would have a severe impact on the brand equity of India, and also impact long-term competitiveness of Indian industry,” said Prince Augustin, National Secretary, NHRD Network. 

Interestingly the mahapanchayat held by over 100 villages at Dhana in Manesar, alleged that the July 18, 2011 incident was politically motivated to hamper the industrial growth and requested Maruti to stay in Gurgaon. The request makes economic sense too, for the company has generated employment and is a source of steady livelihood for villagers around the industrial belt. If this industry moves out of here, it will mean shifting out of 350 smaller industries directly associated with it thereby hurting the livelihood of villagers in and around the IMT belt.

The result…

An innocent life is no more, a few are still in the ICU and the share price of the auto major has hit two years low after violence shutdown factory. It is estimated that Maruti which lost around $15 million per day in missed production during the strikes last year stands to lose $12-$16 million per day during the current shutdown.

Flights of Fantasy: AI – IA merger saga

Gyanendra Kumar Kashyap

The latest twist to the Indian aviation story is provided for by the stir called upon by the pilots of Kingfisher over non payment of salaries for the last five months. This has masked, the not so much in news now, the agitation being staged by IPG. With the agitation staged by IPG entering its 57th day, (the longest being in 1974 when IPG’s agitation lasted for 90 days on account of cost cutting measures) is not only causing financial losses, but is also causing a lot of embarrassment and harm to brand ‘Air India’

In July 2006, the high-level panel consisting of officials from Air India, Indian Airlines, ministry of civil aviation, and ICICI Bank chairman emeritus N Vaghul were zeroing upon a consultant to chalk out a roadmap for operationalizing the mega merger between two state run carriers. The well intentioned overwhelming thought then was to create a competitive national airline on the lines of British Airways and Singapore Airlines. Air India and Indian Airlines were merged on March 1, 2007 to create a new company called National Aviation Company of India Ltd, later changed to Air India Ltd. However five years post the mega merger, it is apparent that the amalgamation was ill – conceived, whimsical and a marriage of two incompatible individuals. In the lack of oversight and of leadership Air India has literally slipped into an abyss.

In the present context, the agitation called by the Indian Pilots Guild, IPG, which represents the Air India pilots’, started on May 8, 2012 when the pilot members took mass leave protesting the move to provide Boeing -787 Dreamliner training to pilots from the erstwhile Indian Airlines. Now in its sixteenth day, the so called agitation has lead to a loss of over Rs. 600 crore. The pilots have made four demands which include exclusive flying rights on Boeing 787 aircraft, payment of arrears from 2007 onwards, travel on first class when not working, and the right to be promoted as commanders within six years. The agitation in itself is not new, even last year in March, a group of pilots from the erstwhile Indian Airlines under the banner of Indian Commercial Pilots Association, ICPA, had adopted the same strategy to make their dissenting voices and demands  heard. The rivalry between the two wings of the merged entities has not only derailed the operations of the national carrier but has also caused a lot of embarrassment and harm to brand ‘Air India’. As a matter of fact the market share of the once dominant Air India has reduced from over 60 percent to just about 17 percent. Ajit Singh, the minister for civil aviation, has often in his media interactions specifically mentioned that the merger of the two erstwhile airlines in itself is the root cause of the crisis.

It is critical to delve deeper and see beyond the superficial and analyse as to what are the underlying reasons for the agitation – is it merely the exclusivity of flying rights and issues of career progression or are there inherent malaise that has gradually led to the mega merger not working out as planned. Why is it that the benefits as advocated by the consultants, Accenture with Ambit Corporate Finance, in terms of synergy, economies of scale and profitability not happen? Synergy is a far off cry for this merger. To this day, the merger is only 70 percent complete. Significantly, critical Human Resource functions, which go to the core of the problems over the clash of cultures, haven’t been merged. The truth is that there are several human resources issues unresolved among the pilots of both the sides. There are differences in their salary structures, work schedule, perks, training & orientation programs, and even promotion schedules. Even to this date, Indian Airlines employees are always given orientation towards domestic operations while Air India employees are trained for international operations. The differences are not just with the pilots; the case is similar for the engineers, cabin crew-in-charge, cargo managers, and other functionaries of both entities. They too are voicing the same resentment over the merger.

Talking of profitability, in Air India’s case the merger was expected to result in a saving up to Rs. 1200 crore from 2010. It is an all together different issue that the merged entity is neck deep in debt and losses; the net loss for Air India in 2010-11 was Rs. 6,994 crore and the provisional loss figures for 2011-12 stands at Rs. 7,853 crores. This wide gap between what was projected and the reality raises the question as to whether it was indeed a merger or a murder; critics however prefer terming it a murderous merger. Interestingly both Air India and Indian Airlines were making cash profits till fiscal 2006-07 but have been witnessing losses soaring thereafter. As of now the total debt for Air India is a whopping Rs. 44, 000 crore while the accumulated losses turn out to be Rs 20,000 crore. The underlying truth is that the merger hasn’t spawned the promised benefits primarily because till date the merger has merely remained on paper.

Justice Dharmadhikari Committee Report

Post the agitation staged by ICPA and the fact that the stop gap solution for pay parity did not find many buyers; the ministry set up Justice D R Dharmadhikari committee in March 2011, with the task of studying and making recommendations on matters of HR integration, level-mapping and pay parity of the two organisations that were merged to create the 28,500 employee Air India in 2007.

The committee submitted its report on January 31, 2012. Reports in the media state that the committee has recommended a voluntary retirement scheme, VRS, to prune the workforce at Air India; implementation of a ‘no work no pay’ concept and a comprehensive analysis of the pay structure across the airline to bring it on par with other public sector units. The committee advocates that both sets of pilots should get uniform salaries. Further the report recommends cross-utilisation of pilots, which means Indian Airlines pilots can fly Dreamliners, and Air India pilots can fly Airbus aircraft after obtaining requisite endorsements and training. Cross utilization would imply that neither set of pilots get monopoly over a particular aircraft type or on international routes. IPG would certainly not be happy with this recommendation as they claim that the pilots’ career progression is under threat, and that they alone should fly the new Boeing 787 Dreamliners. With computerization of pilot duties, which until now was done manually at the behest of pilot unions, would mean that erstwhile AI pilots lose their hegemony over lucrative long-haul flights to Europe and USA.

Why now?

It can be reasoned that the strike is an expression of all the prejudices against the merger; the present agitation by IPG and the previous one by ICPA are telling examples of their animosity, reasons enough as to why the merger of the two erstwhile airlines - AI and IA- matter little to either of them.  Experts and independents observers alike have condemned the agitation calling it untimely and premature. This is so because the recommendation of Justice D R Dharmadhikari committee is with the government and it will soon be implemented. However, the myopic vision of IPG can be gauged from the fact that at a time when the bailout package to the tune of Rs. 30,000 crore was approved by the government and with Dreamliners joining the fleet would in effect help reduce operational cost & optimise capacity on routes; the union has opted to agitate.

What next?

The civil minister did lend his ears listening to the grievances of 13 unions (excluding IPG) and said that there would be no victimization of the agitating pilots. However, till date the Air India management has sacked 101 of the agitating pilots bringing to open the clear disconnect between what is said and what is done. The agitating pilots union also claim that the management is yet to respond to its overtures. In their second press conference, IPG minced no words in stating that they are willing to talk to the minister and that they don’t want their core demands to be met right now. What they want is the reinstatement of the sacked pilots and an assurance that their demands would be discussed. They went on to the extent of stating that they are willing to join the duty ‘right now.’  Well now they want the PM and UPA chief to look into the matter...

Thus it is amply clear that the ball is in the government’s court. While no union should be allowed to dictate terms; the ministry as in past should reinstate the sacked employees, listen to the demands of the union, explain to the agitating unions the larger picture and benefits that can be derived from the merger and come to an amicable solution. Procrastinating the issue will help none. The AI – IA merger should not be allowed to go down in history as a FAILURE.