ASHUTOSH SHARMA

SECTION- B
PGDM(GENERAL)

BUSINESS CASE STUDY

LABOUR UNREST AT MARUTI SUZUKI PLANT

This article throws light on India’s worst labour unrests happened at Maruti Suzuki’s Manesar Unit. It was
the one of the darkest days for Indian industry. Though the company had witnessed many incidents of
protest from employees, but never like this intensity and violence.
On 18th July 2012, Wednesday, Maruti’s Plant at Manesar plant was hit by the violent workers at one of its
Auto factories. They attacked on supervisors and started the fire that killed a company official and injured
100 Managers including some Japanese Expats. There were Nine policemen who were injured as well. The
company lost its HR General Manager who was brutally beaten by the attackers. He was not able to leave
the building, he was burned to death. Such was the brutality shown by the attackers.
The loss incurred due this violence was 500 crore damage to Manesar Plant, which was quite heavy.
Problems associated with the Case-
It is known that one of the causes for this horrible incident was that the company had hired several workers
on contract basis and there was huge disparity compensation and benefits. The major issue seems to be the
norms across the industries to hire a percentage of workers on contract basis and thereby to overcome the
provisions of labour laws. The other problems were-

 There was lack of Indian connect. As per insiders, the Japanese tends to dominate majority of
decisions. Indians and Japanese are quite different in terms of discipline, employee connect. So, there
must be several points that didn’t relate with Indians.
 The challenges of running Manufacturing units were increased. Though, in manufacturing industries
cost and sales have grown up but sales are poor. Due to which running a profitable business is very
difficult, same was the case with Maruti. So the company tries to find the ways in bringing down the
cost to increase the productivity. Maruti Manesar’s Plant had hired 40% contractual labours with
salary half of the permanent skilled workers. Despite such competitive intensity, Maruti had never
been as severe. Bringing short term players was only option to increase productivity.
 The workers in Gurugram are young and restless. They are intolerant and aggressive in their
expectations unlike the older generation trade unions who used to look for solutions through
confrontations.
 There was lack of communication between Management and workers. They were clueless regarding
a section of workers who were so furious.
 Workers, both skilled and contractual felt that they were not getting their due share of huge profit
Maruti Udyog was earning in car industry. They had been raising this issue for several years and
there had been rise in salary even, but never in the proportion which the workers demanded.

Solutions-
  There should be no physical violence and criminal act anywhere. Assurance to exemplary
punishments has to be resolved by the management of the workers.
 The government should modify the laws with change in time. Labour union in manufacturing sector
has been politically motivated , political leaders and parties tries to dominate trade union since it is
not against the law for workers to get recognition from political parties.
 There should not be any gap between Management and the workers. Here comes the role of HR,
they need to be pro-active in their approach, they need to reach the labour class, they can hold
meetings time to time for a fruitful relationship which will be beneficial for the industry.
Changes that took place by the Management-

 They started hiring temporary workers through their internal HR instead of contractor.
 New hiring of permanent workers.
 Termination of 500 workers engaged in the incident.

2012 2014
900(P) No. of workers 1100(P)
1800(C) 600(T)
No Paid Leave Leave 4 days in 3 months
Rs 17,000(P) + Rs 50,000(PA) Pay Rs 25,000(P)
8.5 hrs Working hours Unchanged
P- Permanent C- Casual T- Temporary