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Monday, August 26, 2013

Bajaj Auto strike analysis- Don't Compromise on Business Vaues and Being tough pays sometime

Dear Friends,
The fifty day long workers strike at Chakan plant (Pune) of Bajaj Auto ended on 13 August 2013 with the workers union unconditionally calling it off and deciding to go to work from 14 August 2013. Around 80% workers reported for work next day. Workers union called for strike on 25 June 2013.
It can be termed as a case where to resolve the industrial relations stalemate created by workers union on certain unrealistic issues far from economic reality, if you take a tough stand; it is bound to bring results due to conviction to the cause.
In management-labour stand off, resolving the issues may be easy, but selling the solution to workers is by and large difficult. This has happened in Bajaj Auto case where union leaders pushed themselves to a wall from where there was no exit, but to surrender by withdrawing the 50 day long strike unconditionally.
Strike has never brought win-win situation in labour management relations. This should be properly understood by workers and their union leaders. Union leaders in this case made mistakes one after another and the consequences are catastrophic for workers, because they did not get anything and have lost 50 days wages. 22 workers are subjected to disciplinary proceedings. It is not loss of salary but also a loss of self respect and pride for workers. Union leaders have made the workers laughing stock. On the other hand management also lost sale of around 20,000 units in June alone.
This is the first strike at the Chakan plant of Bajaj Auto in its 16 years of operations.
Management and workers union executed an agreement in March 2010 for 9 years which lasts till 2019 with a clause that provides wage revision in three years. This wage revision was due in March-13. But union arbitrarily terminated the agreement and raised demands on the management. According to labour department workers demanded an annual hike of Rs. 10,000/- with an additional correction of Rs. 5,000/- apart from benefits of variable dearness allowance. The union had then submitted separate list of 37 demands which also seek clarity on the company’s promotion policy, eligibility for a housing loan of Rs. 5 lakh, education loan of Rs. 2 lakh and marriage loan of Rs. 50,000/-. Union also separately demanded a work study at the site to measure how much production is possible in 480 minutes.
Over and above union made audacious demand of allotting 500 shares of the company to each worker at Rs. 1/- only. The point here is to analyze what inspired workers union to raise such a absurd demand. Probably due to leading perception amongst workers that automation and improvement in productivity has resulted in a significant growth in profitability of the company and the benefits are not being shared equitably by the management, union without giving a serious thought raised the demand and gave workers a false hope.
Management moved to Industrial Labour Court against the workers union by filing unfair labour practice complaint and declaring the strike illegal. Union had no moral courage to face the court and avoided to take the notice. In the mean time management shifted the production to Aurangabad and Waluj plant and also kept Chakan plant running through trainees to some extent. From the very beginning management strategy was to be tough on the issue of discipline and share demand and make workers hiring. Further Bajaj Auto M.D. statement that the company will not agree to the demand to allot shares to employees even if the strike goes to for 500 days as even the top management has not been allotted shares, built further pressure on workers and union leaders.
Actually employees’ stock options have never been offered to blue collar employees’ in Indian manufacturing industry. This practice has only been with few IT Organisations. Tata Motors and Mahindra & Mahindra allotted shares only to top management in the R&D division and not to workers. In manufacturing culture loyalty of the employees cannot be bought by giving shares to them. Moreover, the ESOP has never been a part of union negotiations in Indian industry. It can be said that Mr. Bajaj has done a good job by rejecting this demand firmly from the day one. His stand has insulated the entire manufacturing sector of the country from such absurd demand of unions. In future workers unions will think twice before raising such demand.
Side by side management also suspended 22 workers who were found involved in various issues of indiscipline and go-slow.
At the end, workers union could not get even a face saving medium. Suspended workers have not been taken back and management only assured that suspension cases would be considered “objectively and sympathetically”. The cause as well as timing of the strike was wrong. They had to call off strike without any of their demands-including substituting new wage agreement-met.
The lesson from Bajaj Auto case is clear-management should never compromise with their basic business values and principles. In labour management conflicts, opting for short term peace will surely breed long term problems that develop in to more complex relationship and lastly workers unions should demonstrate enough maturity while raising demands. Being tough in IR is not bad always.
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