There is a growing sense of disquiet in auto companies across the country. While the labour unrest at India’s largest car maker Maruti Suzuki is grabbing headlines, it seems symptomatic of a deeper problem. In a CNBC-TV18 special report we find the principal of equal pay for equal work has been ignored and contract or temporary employees may not be getting a fair deal.
Maruti Suzuki is not the only one facing a labour problem. Honda's two wheeler arm HMSI's Gurgoan plant has been witness to bloody battles since 2005. Other Gurgaon based companies like auto ancillary makers Ricoh Auto and Munjal Showa have also been witness to labour unrest.
Far away from Gurgaon, in Chennai, companies like Hyundai have also faced production losses due to labour trouble. While auto companies have been quick to blame political vested interests, workers say India Inc has ignored the issue of wage parity spcecially since there is a high percentage of contract or temporary workers.
CNBC-TV18 spoke to a few leading cars and component makers and we learn of ratio of permanent to temporary employees in auto comapnies is as high as 60:40.
Also the price differential between the permanent and temporary worker is a minimum Rs 10,000 or higher but the delivery expectations for the two are almost the same.
Auto companies blame market volatility for the large number of temporary workers. However, an industry veteran who did not wish to be named says, "Indian auto industry uses cheaper, contract labour, often comprising of up to 50% of the workforce, which inturn decreases costs for the auto maker by as much as 50%. The auto maker also benefits by having greater autonomy in choosing when to lay-off workers in times of a slump"
Workers at the Maruti's Manesar plant say the working conditions between the permanent and contractual workers differ vastly. Of 2,500 workers, 1,100 are permanent, rest are on contract, apprenticeship and training. According to the Shiv Kumar, the President, Maruti Suzuki Employee Union, “An unskilled contract worker is paid Rs 5,500 a month and a skilled contract worker (with an ITI diploma) gets Rs 7,000; a permanent worker's pay is around Rs 18,000.
In Haryana, the minimum wage of an unskilled worker is fixed other than salary, a contract worker is not entitled to benefits like medical or transport.
Abdul Majeed, India Automotive Practice, PwC explains, "There is significant difference. To put in context, what I have seen, the difference could be as high as 100%. If you pay a typical temporary worker 5000, you pay a permanent worker 10,000-12,000."
While there are laws to ensure that the rights of the contract labourers are protected they are often ignored. Experts say industry must engage with unions and also work on enhancing benefits given to temporary employees. Following the principle of equal wage for equal work may be the solution to end the current strife.
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