INTERNAL ASSESSMENT(I)INDUSTRIAL RELATIONS

A CASE STUDY ON LABOUR UNREST AT HONDA MOTORCYCLES AND SCOOTERS

SUBMITTED BY: Mayuri Das Enrol. No. 10bsp1061

Labor Unrest at Honda Motorcycles & Scooter India (Private) Limited

1. What, according to you, led to the problems at HMSI? Perform a root-cause analysis of the incident at HMSI. Ans. A labor unrest is a social phenomenon of enormous complexity and it is very difficult to give any explanation of this phenomenon. It is a matter of controversy whether the predominant factors underlying labor unrest are economic or non-economic. It has been concluded that so long as income remained the all important means for satisfying human wants and needs, wage would continue to be major consideration in labor unrest. Now we do a root cause analysis to find out the possible reasons which led to the labor unrest at HMSI.The potential problems can be researched to find the root cause and correct it. The five heads are as follows :

Monetary Political Legal Job Specific Others

All the causes mentioned above have some impact on the labour dissatisfaction which may eventually lead in Labour Unrest depending on the intensity of the problem. But major reasons for the strike and lockouts are as follows:

Wages Retrenchment of labour which calls for sorting out the differences between employers and employees regarding Industrial Disputes Act, 1947. Management's decisions to go for contract labours without giving them permanent job security and denying fair wages. This issue can be addressed by bringing consensus between trade unions, employers, government and political parties in Contract Labour Act, 1947 based on their interests.

Workers perceived unfair treatment and this feeling got accentuated with other acts of arbitrariness and nepotism practiced by Indian managers in HMSI. They also felt aggrieved at the idiosyncratic attitude of a Japanese Vice-President (Production) who one day kicked a worker (though it was partly a friendly kick) who was slightly late in joining work after the tea interval. The discipline enforced on workers was very strict; they were often given sermons on their work behaviour, which they did not like. While Japanese top management had cross-cultural misunderstanding about Indian workers' psyche, Indian managers were practicing favouritism and hierarchical authoritarianism against them. The workers also noted a high wage difference in HMSI and the Hero- Honda for the same work. So they started a campaign for registering the union, and made demands by submitting to the management a demand charter. In the present era of globalization there is a trend to treat labor as a dispensable commodity. Large-scale use of contract and casual labor has been taking place at quite an extensive scale. These categories of workers had lent a supportive hand to the workers' struggle, without which the core workers would have found it difficult to win their battle against management's repression. When workers gave a call for strike, there was almost complete shutdown. Thus, the help lent by contract and casual workers also proved crucial for shaping of the conflict generation in this case.

2. Who, according to you, was responsible for the unsavory incident at HMSI? The workers? The trade Union? The management? Give reasons for your answer.

Ans. The interesting thing about the HMSI case is that the company wanted to pursue a non-union model without implementing its projected HRM strategy. It thought that its policy of paying slightly higher wages than the average in the automobile industry in Gurgaon region, providing same uniforms for all employees, and offering attractive welfare benefits to its employees would be good enough to secure their commitment to the company. The Japanese top management left HR issues to be handled by senior Indian managers who were basically production specialists, and were not experts in handling IR issues. Also, the hierarchy-ridden Indian managers were insensitive to issues that concerned the common workers. The management was caught unawares when it found that the accumulated grievances led workers to become very hostile and form a union with the help of the AITUC, which is the trade union wing of a political party that is a partner in the ruling coalition at the

central level i.e. United Progressive Alliance (UPA). Managements in India often succeed in breaking workers' unity in most union-organization situations with the help of state government agencies and using the legal system to their advantage. But in the present case that could not happen.
But keeping in view the totality of the HR practices that the company was following, there was a wide gulf between its projected HR policies and actual practices. The managers conducted themselves like autocrats, abused their authority, imposed unreasonable restrictions on employee movement, refused leave even in genuine cases of leave, threatened the workers of termination from service, etc. The employees were not treated with dignity or even as people. The HMSI case clearly shows the presence of Tayloristic working conditions in the company before the trade union came into existence, which became balanced after the July 25 scenario. The union's absence aided the pursuit of discriminatory personnel policies, especially by the Indian managers, which sowed the seeds of discontent among workers. This shows that even in MNCs the relevance of trade unionism should not be considered as a thing of the past. From employers' point of view, a union is almost always considered as undesirable as it is seen as weakening managerial prerogatives and bringing in inflexibility in organisational working. It is viewed as carrying the danger of destroying the established relationships and old loyalties. Union demands are mostly perceived as excessive and frivolous. Thus, the union symbolizes resistance to managerial unilateralism. Confrontation, suspicion and hostility at the time of the entry of a union in a non-unionised organisation, as was so in the HMSI case, are therefore naturally expected. These dynamics actuate the management to adopt tactics for weakening the union strength or prevent it from coming into existence. HMSI apart, the general trend in the new era is that while in smaller organisations employers are becoming far more authoritarian with employees in case of larger organisations, efforts are being made to promote a kind of new unitarism at the workplace, which involves use of HRM strategy to promote a seeming commonality of interests--involving a mix of hard and soft HR interventions-which aims, among others, to dilute the influence of the trade union. The case narration clearly shows the management's keen concern for union avoidance. In the process, it committed many unfair labour practices, which were well within the knowledge of state agencies involved in this dispute. Somewhat similar instances in other states reveal that labour and general administration has been showing hardened stances in its anxiety to woo investors. No government-not even a government led by the left coalition--is willing to give a pro-worker impression in addressing labour--management strife. The undue delay in union registration and the frivolous reasons given for state inaction in this regard explain such concerns of the state governments. The police brutality created enormous sympathy from the public and the media for the agitating workers. Due to the pressure put on it by the CPI the government had to show consideration to the interest of workers and take some action against the administrative officials. On the state's part, this was necessary to show to the media that the government cared for the working class. Thus HMSI workers and their union scored a moral victory and earned public sympathy. The covert state support to management in general has helped the latter to manage IR issues the way it likes. In the HMSI case, management allowed the workers' grievances to pile up; when they wanted to have them processed through a union that they formed, the management colluded with the state

agencies to deny them registration of their union on illegal and frivolous grounds, thinking that in the process it would be able to break the spine of the workers' unity. It committed many other illegal acts in this regard. For example, the management offered the workers a compensation package on the condition that they would not form a union, and the suspension/termination of services of workers who took active part in getting the union organised, were not lawful acts on the part of the management. These are gross violations of the provisions of the Trade Unions Act 1926 and schedule V of the Industrial Disputes Act, 1947. The State (political executive, administration, police) came to the aid of HMSI management in its efforts to discipline workers and resist union formation. All this however strengthened the linkage between the union and the AITUC. Today, state's priorities are more focused on efficiency, higher growth in GDP, and foreign direct investment rather than social justice. The present state of apparent cooperation in IR is symptomatic partly of a covert pressure on workers of the state's indifference to their cause. The Indian data on industrial conflict shows that man-days lost due to lockouts is much higher than those due to strikes. Thus, in a way the state assists capital in violation of trade union rights of the working class and dilution of labour standards. 3. What lessons can be learnt by other companies from the incident at HMSI ? How can HMSI and other companies avoid such situations in the future? Ans. The most important source of labour power in any country is a facilitative IR law and its effective working. This branch of law enables labour to organise itself, struggle to secure social and industrial justice and prevent commission of any unfair labour practices on the part of the management and workers in the course of processing their differences. Therefore, the Trade Union Act, 1926 and the Industrial Disputes act 1947 are legal instruments that confer important legal rights on labour. It is important to ask how did these laws work in the HMSI case from the view point of workers, and what can one learn from it. Firstly, it is important to note that we need to distinguish between the role of trade unions in public sector and private sector. Often, most of the criticisms of trade unions that are applicable to public sector may not apply to private sector unionism. Globalisation has substantially influenced the nature of industrial relations (IR) policies being followed by employers, and reduced the power of trade unions. Some social scientists caution that severe social tensions will result from acute economic inequality that will result from these policies in the next few decades. In the era of globalisation employers are trying to shift from the first three models of IR to the last three, thus adopting policies of some kind of "no-union model" or "weak union model." This is done through the practice of HRM strategy, which is known to be becoming popular across the world especially in multinational companies. Interestingly, however, the right of labour to organise and bargain collectively remains intact in most parts of the world. But employers are coming heavily on labour's efforts towards unionisation as they believe that trade unions adversely obstruct managerial autonomy. Emergence of larger number of service organisations including information technology (IT) and information-technology-enabled service (ITES) organisations where it is comparatively difficult to organise the workforce; emergence of gold-collared and knowledge workers who are less interested in unionisation; employers' greater tendency to employ contract and casual labour rather than core workforce leading to decline in organised sector employment; and increasing tendency of employers to employ labour law consultants to commit unfair labour practices by giving them a gloss of legality -the above-mentioned factors have also led to the adoption of new HRM strategy by most organisations in their efforts to gain competitive advantage through people.

Solutions: Though there are significant conflicts in the interests of the trade unions and employers, the contact workers are quite freely changed by employers owing to high vulnerability of those workers. The high job insecurity and unemployment in the country virtually forces the contract workers to insure compliance to employers. It enhances the control of the employers at the workplace. Hence, the trade unions are keen to develop strict norms of employing least number of contract labour and higher number of regular employees. In such scenario, it is a challenge to both the employers and trade unions to reach to a common ground to get solution to the present situation. A change in the mindset of the HR managers is required. The change in mindset has to come in terms of extending the trust radius to include employees in the main stream activities of the organization. There is an urgent need to revisit our labour policies and other labour related issues, if India as a country has to remain competitive and in fact has to assume its legitimate share in global economy, give the country's size and resources. India has two main social security schemes for workers in operation since 1950s in the organized sector. These are Employees Provident Fund Scheme and Employees State Insurance Scheme. The former provides social security like provident funds, pension on superannuation etc. to about four crore employees while the later caters to the medical care needs of specific group of workers particularly in the unorganized sector. Despite being among the largest social security schemes in the world, the two main schemes mentioned above cater to not more than 8 to 9 per cent of the country's total work force. Secondly, these schemes don't have built-in mechanisms to neutralize/compensate for the adverse fall out of globalization like closures, retrenchments etc. The closure of industrial Units and bankruptcies are normal feature in the developed economies all over the world. The workers of such unit do not feel adverse impact as they are covered by wellestablished social security system. 4. What could be the possible ramifications of labor unrest in a company? Discuss in the light of the incident at HMSI. Ans. Conflicts are becoming increasingly prevalent in most of the organizations and HR managers act as a vital buffer between the parties who need help to handle disputes. A positive and rational approach based on pragmatism and compromise would be helpful. So, my preferred method is negotiation. An effective negotiator should have a vision of what is to be accomplished and it should be in line with the future organizational goals. Focus should be on the underlying causes of the problem rather, than the often-expressed disagreement. As an HR manager our role is not only to cure the present troubles, but to ensure that they are permanently eliminated, with beneficial results for both employers and employees. So, it is the responsibility of the HR manager to empower employers and employees to do and to accept what is in the collective interest of the organization even if it might contravene their personal interests. From the point of view of the employer, an industrial dispute resulting in stoppage of work means a stoppage of production. This results in increase in the average cost of production since fixed expenses continue to be incurred. It also leads to a fall in sales and the rate of turnover, leading to a fall in profits. The employer may also be liable to compensate his customers with whom he may have contracted for regular supply. Apart from the immediate economic effects, loss of prestige and credit, alienation of the labor force, and other non-economic, psychological and social consequences may also arise. Loss due to destruction of property, personal injury and physical intimidation or

inconvenience also arises. For the employee, an industrial dispute entails loss of income. The regular income by way of wages and allowance ceases, and great hardship may be caused to the worker and his family. Employees also suffer from personal injury if they indulge into strikes n picketing; and the psychological and physical consequences of forced idleness. The threat of loss of employment in case of failure to settle the dispute advantageously, or the threat of reprisal action by employers also exists. Prolonged stoppages of work have also an adverse effect on the national productivity, national income. They cause wastage of national resources. Hatred may be generated resulting in political unrest and disrupting amicable social/industrial relations or community attitudes.