India can’t afford labour unrest

By: |
May 26, 2021 5:00 AM

Renault-Nissan episode shows firms must be mindful of workers’ safety, but workers also must behave responsibly

It may be true the lockdown rules exempt manufacturers from shutting down their operations, but they probably need to pare operations significantly, purely on humanitarian grounds.

The dispute that has arisen between factory workers and the management of Renault-Nissan Automotive in Tamil Nadu is unfortunate and ill-timed. Given how the infections are surging across the state, the management needed to have taken more steps to safeguard the health of workers. Now, the situation has taken an ugly turn with the workers’ union filing a suit against the company. One can appreciate the workers’ anxiety, and while the companies may have taken all precautions—making arrangements for transport and vaccinations—one can never be too careful when the virus is spreading at this pace.

It may be true the lockdown rules exempt manufacturers from shutting down their operations, but they probably need to pare operations significantly, purely on humanitarian grounds.

In this instance, Renault Nissan has told the courts it needed to fulfil an export order and was running two shifts rather than three. Given the potential danger to workers’ lives it should be running just one shift and while it’s unfortunate, the company should be willing to take the hit on the export order. This is hardly the time to worry about financial losses. Auto manufacturers across the country have halted production to rein in transmission; at Maruti Suzuki and Ashok Leyland, production has been scaled down and Hero Motocorp has halted production for some time across plants.

Labour unrest is best avoided. As this paper reported last week, there has been a fairly big decline in strikes and lockouts over the past six to seven years, and that has resulted in better productivity. Given how India’s business environment isn’t an easy one—we rank 63 on the ease of doing business rankings—it’s critical that management-labour relations remain cordial. In the six years until August 2020, under the NDA regime, the number of person-days lost due to labour unrest and industrial lockouts had reduced to 2.89 crore, while the UPA -II government had seen a loss of over 4 crore person-days in just three years (2011-2013).

The data makes it evident the NDA dispensation has prevented labour strikes turning into industrial lockouts much more successfully than the UPA dispensation. It’s not clear whether the improved climate is the result of trade unions wielding less clout with managements or within their organisations. Some union leaders do concede younger workers today are less inclined to be affiliated to one political party or another. Fortunately, we haven’t seen any serious worker unrest for many years now; the last violent incident took place in the Maruti Suzuki factory in Manesar in 2012. The strike at the Bajaj Auto’s Chakan unit in 2013 ran into 50 days, with employees making some irrational demands such as allotment of the company’s shares to them, but was finally resolved. While it did revise wages, the management held its ground on other issues.

The reality is that automation is allowing more companies to reduce manpower—several have rolled out VRS schemes in the past year—while the collapse of the economy has seen thousands of small units shuttered. An analysis by the Centre for Economic Data and Analysis (CEDA), based on the CMIE monthly time-series of employment by industry, showed manufacturing employment in 2020-21 was nearly half of what it was five years ago. The decline was particularly sharper in 2020-21 when the sector employed 32% fewer people over 2019-20.

Consequently, unions too need to be reasonable in their expectations; the new Industrial Relations Code 2020, introduced the concept of ‘negotiating union or a negotiating council” with a view to reining in the number of unions. While it is undoubtedly the management’s responsibility to safeguard the health of workers, the latter too should behave responsibly. One hopes the stand-off between the management and workers at Renault is soon resolved; it helps neither party to up the ante in these troubled times.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Relook XII scoring formula: Lower XI-score weight, increase XII-internal assessment weight
2Navigating the complexities of ESG compliance in India
3Govt must respect contracts, arbitral awards