Editorial: Lessons from Maruti

By: |
September 29, 2015 12:40 AM

It’s ok for temps to have different salary structure

Industrial relations at Maruti Suzuki’s Manesar plant appear to have stabilised with the management assurance that temporary workers would also be getting a hike—regular workers got a 38%-over-3-years hike. Whether the peace will last remains to be seen since this is usually the time when troublemakers like to bring up the equal-work-equal-pay issue. That is a bogey temporary workers would do well to ignore. Lot of professions, such as reporting for instance, have different people at different salary structures doing what, to the lay eye, seems like the same job—the levels of expertise being brought to bear, however, are vastly different. In Maruti’s assembly line, or that for any manufacturing plant, similarly, the criticality of functions differs across people with more experience, across regular and contract workers.After the last labour strike, in which one supervisor lost his life, Maruti has in any case revamped its hiring practices at Manesar, away from contract workers to temporary workers directly employed by the company—in the contract structure, contractors tend to pass on less to workers. A fresh recruit gets the same salary on joining either as a temporary or as a regular employee—later, with experience and different types of jobs, the salary structures change.

It would be easy to blame Maruti for having different categories of employees, but this is in keeping with the needs of industry, and this is what the proposed labour code recognizes and tries to fix. A look at the peak-to-trough production cycle is instructive. In the case of Maruti, July was the peak month this year, with a production of 1.33 lakh versus 93,337 in June. For the 4-wheeler segment, production in July was 3.02 lakh versus 2.58 lakh in June—that’s a peak-to-trough ratio of 1.4% in the case of Maruti. Apart from the obvious loss in terms of paying workers during the trough, what is a company to do with so many employees for these months? It is in recognition of this reality that the labour code proposes many progressive steps, from fixed-term employees to automatic conciliation once a strike notice is issued and classifying gheraos and go-slows as coercive action. It would be a pity if all of this came to naught if, under pressure from the trade unions, the government raised the minimum wages by so much that it rendered manufacturing uncompetitive. A lot of mechanisation of the shop floor, it is true, is driven by safety needs—a robotic weld is stronger than one by a human being. But, if wages rise faster than productivity, robots are also more economical—the implications of that for employment growth are frightening.

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