Focus: Labour strife in India's manufacturing hubs may undermine Modi's jobs push

Pricol

15/10/2018 10:01

* Yamaha, Royal Enfield most affected by strikes near
Chennai
    * Workers want higher pay, job security, right to form
unions
    * Higher fuel prices affect sales, add to living costs for
workers
    * Companies under pressure from rising costs, weak rupee
    * Maruti Suzuki, others faced protest at plants near Delhi

    By Sudarshan Varadhan and Aditi Shah
    CHENNAI/NEW DELHI, Oct 15 (Reuters) - Labour unrest is on
the rise at two centres in India where motorcycles and
components are manufactured, underlining the problems Prime
Minister Narendra Modi's government faces in creating new
manufacturing jobs that are sustainable and pay attractive
wages.
    Motorbike makers, such as Japan's Yamaha  7272.T , and
India's Eicher Motors  EICH.NS  - maker of the iconic Royal
Enfield motorcycles - have been hit hard by walkouts, although
major carmakers have been largely unscathed. 
    The workers are mainly demanding higher pay and job
security, particularly by getting employers to reduce the use of
contract labour, who are paid less than permanent employees and
can often be fired at will.
    Modi, who has to call elections by May next year, has
promised to create new jobs by boosting manufacturing in Asia's
third-largest economy, but has failed to match aspirations
despite rapid overall economic growth. Those who have jobs feel
left out of the growth story because of lagging wages.
    Around the southern Indian city of Chennai, often dubbed the
"Detroit of South Asia", there have been a series of work
stoppages at the motorcycle makers, mainly over union
recognition, contract labour and wage issues.
    Workers at several other companies in the area, including
makers of auto parts and tyre manufacturers, have protested in
recent months against lower wages, and for more secure jobs and
the right to unionize. 
    In Gurugram, on the outskirts of the capital New Delhi,
hundreds of workers from companies, including car maker Maruti
Suzuki  MRTI.NS , staged a day-long protest on Oct 7 over
demands for job security and higher wages.
    The labour unrest "exposes the vulnerability of the
workers," said K.R. Shyam Sundar, professor of human resource
management at XLRI, one of India's top management schools. 
    Contract workers don't have the same path to the middle
class as employees - they are, for example, much less likely to
get access to formal credit markets and their purchasing power
will therefore be restricted, Sundar said.
    Underlying the militancy is a mixture of pressures facing
the workers and their employers, including rising living costs
and sluggish sales.
    India's domestic passenger vehicle sales fell 5.6 percent in
September from a year ago, data from the Society of Indian
Automobile Manufacturers (SIAM) showed on Friday. The sales were
hurt by rising fuel prices and higher interest rates.
    A wave of labour stoppages could put additional pressure on
the profitability of companies affected at a time when they are
already grappling with increasing input costs and uncertain
demand.
    
    DEBT TRAP
    On a recent visit by a Reuters reporter to the industrial
belt of Oragadam, more than 50 km (32 miles) southwest of
Chennai, hundreds of workers wearing Yamaha uniforms sat metres
(yards) away from the factory gates.
    Besides them were placards with slogans like "Do you know
kindness?" and "Let us put an end to oppression" written in
English, Japanese and Tamil.
    Apart from higher pay and permanent jobs, the workers also
want the right to form unions to collectively bargain. They went
on strike after some employees were fired for forming a union.
    "Nobody can tell us we can't fight for our rights," said one
of the union leaders, E Muthukumar, to a crowd of cheering
protesters.
    The Yamaha workers, who have now been on strike for about
three weeks, earn up to 17,000 rupees a month ($229) and say
they want substantially more to meet rising living expenses.
    Full-time workers at the nearby Royal Enfield motorcycle
plant earn about 25,000 rupees every month on average and are
demanding at least double that amount. They, too, have been on
strike for most of the past three weeks after resuming work for
a few days but then walking out again.  
    "We are in a debt trap because of the low wages. We can't
imagine getting through our days without loans. We have no
savings," said Rakesh, a 30-year old employee who has worked at
Royal Enfield for 11 years.
    Royal Enfield dominates the higher-priced market for
motorcycles in the 250-500 cc range, while Yamaha focuses on the
lower-end of the market. Each have about a 4 percent share of
India's booming two-wheeler market, which grew 15 percent to
cross 20 million motorcycles in the last fiscal year.
    Yamaha India, which filed for police protection after
hundreds of its employees sat inside its premises in protests,
declined to comment, but said in an affidavit filed with the
Madras High Court it was "not averse to legitimate trade union
activities".
    Some employees have assembled to "make demands that are way
beyond the practices prevailing in similar industries," it told
the court, adding that a wage revision demanding a three-to-four
fold increase in wages was being sought by the workers.
    Yamaha sought and got the court to order the strikers to
stop occupying the company's plant.
    Eicher Motors said in a statement that "all employees are
treated equally without differentiation by level or location."
    
    FACED BACKLASH
    Modi was voted into power in 2014 on promises to reignite
growth and provide jobs. But his flagship "Make in India"
initiative to lift the share of manufacturing in India's $2.6
trillion economy to 25 percent from about 17 percent and create
100 million jobs by 2022 has shown little sign of progress.
    He had also promised to reform labour laws, including
lowering the threshold to hire workers for shorter tenures. Ease
in hiring and firing people would give companies the flexibility
to expand while keeping costs low, but the government faced a
backlash and was forced to shelve its plans.
    Some states like Haryana, which is also a major auto hub,
have created their own sets of labour laws.
    In Haryana's Gurugram city, thousands of workers from 
motorbike and scooter makers Hero MotoCorp  HROM.NS  and Japan's
Honda Motor  7267.T  as well as carmaker Maruti took part in a
one-day protest last week against new state labour laws that
make it easier for companies to close factories and lay off
people. 
    The companies in Gurugram did not respond to requests
seeking comment.
    "There is a lot of pain among workers in Gurugram. The
companies take away our jobs so easily," said Kuldeep Janghu,
general secretary of the Maruti Udyog workers union.

 (Reporting by Sudarshan Varadhan and Aditi Shah
Edited by Martin Howell and Raju Gopalakrishnan)
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