Has the economic slowdown affected labour unions' bargaining power?
It does seem so if we look at the fact that the Toyota Kirloskar Motor Employee Union (TKMEU) has within two days of the lockout announced by the management appealed that it should be lifted.
However, the union has put up a brave face and said they stood by their demand, and would be back on the negotiation table after the lockout is withdrawn.
It does seem so if we look at the fact that the Toyota Kirloskar Motor Employee Union (TKMEU) has within two days of the lockout announced by the management appealed that it should be lifted.
However, the union has put up a brave face and said they stood by their demand, and would be back on the negotiation table after the lockout is withdrawn.
Toyota locked out two of their plants on Sunday as it felt the safety of its equipment and staff was at danger.
For the past 25 days, the employees at both the plants of Toyota were observing a go-slow strike, which resulted in a loss of production of 2,000 cars. The union, however, counters it, saying that it is the management which has reduced production because sales was falling.
For the past 25 days, the employees at both the plants of Toyota were observing a go-slow strike, which resulted in a loss of production of 2,000 cars. The union, however, counters it, saying that it is the management which has reduced production because sales was falling.
It is a fact that Toyota has been affected by a slowdown, especially in its lower segment products like Liva and Etios. The thought might have crossed the management's mind to use the lockout to reduce inventory. But it is the safety of both the plants and machinery which would have been on the top of its mind, especially after the tragedy in Maruti Suzuki's Mansear plant where the General Manager (HR) was burnt to death.
More From This Section
The economic slowdown has taken the bargaining power away from the unions. When TKMEU sat on the negotiation table for a wage revision, their initial demand was a hike of Rs 8,000 per month. The management was willing to offer Rs 2,400 per month. After a series of negotiations, the management has increased its offering to Rs 3,050 per month, while the unions have come down to Rs 4,000 per month. The negotiations are still on, but with the present lockout, it is likely that the final figure might be close to what the management wants.
This is not the first time that the company managements have used the slowdown to their advantage. Bajaj Auto's threat of shifting its production to its other sites resulted in the workers joining back after striking for 50 days. Not only did Bajaj Auto not pay the workers for the 50 days they were striking but also refused to take back suspended employees.
The Chakan belt, where Bajaj Auto has its plant and where the employees were striking, had been severely affected by the slowdown.
The Chakan belt, where Bajaj Auto has its plant and where the employees were striking, had been severely affected by the slowdown.
Both Bajaj Auto and Toyota have more than one plant and can use it to their advantage in negotiation. The same advantage was not available with Maruti Suzuki during the Manesar crisis. A sharp jump in unexpected demand caught Maruti offguard, and the company had to increase production at its existing units. Employees worked in extremely stressful conditions, producing 350,000 cars from a plant meant to produce 250,000 cars.
Apart from the slowdown, various state governments have also realised they need to maintain a pro-industry stance in order to attract investments. In the Toyota case, state labour minister Parameshwar Naik is actively involved in the negotiations between the two parties.
Similarly, in 2012, Hyundai management, along with the help of Labour commissioner of Sriperumbudur, Tamilnadu, ensured that a 10-day strike was called off with the employees joining back work on the terms of the management.
Similarly, in 2012, Hyundai management, along with the help of Labour commissioner of Sriperumbudur, Tamilnadu, ensured that a 10-day strike was called off with the employees joining back work on the terms of the management.
The state governments are competing against each other to attract investment. After Tata Motors was thrown out of West Bengal, no major investment has taken place in the state. A pro-labour stance is one of the biggest disincentive for investments.
While the days of labour unions might be far from over, the current slowdown and governments desperation for investment has clearly tilted the balance in favour of industrialists.