Manesar Incident – India’s 94% Vs 2%

The incident at Manesar has become an irritant for everyone – the government, the villages around Manesar, the company, the cops, the workers. Everyone wants to quickly get the production line running somehow and get the inconvenience out of the way. Justice should  definitely be given to those hurt by it directly, and there should be no mercy shown towards murderers, but to limit the whole incident to just this would be tragic. This incident has the potential to become an inflexion point for Labour laws in India, which could herald an industrial revolution for India.

While the incident probably happened as result of poor work culture and poor relationships between workers and Maruti’s managers, the larger context of this is the Rigid Labour laws under which companies are forced to operate in India. If a company cant fire an employee without approval from the government, which it will never get, then all executives will try and avoid recruiting workforce directly. All sorts of middlemen and sub-contractors will spring up to cater to this demand of workforce, and none of these middlemen will have any moral qualms in treating the workers shoddily. As result of these labour rigidities, 94% of Indians work in unorganised sector. Merely 2% of the total workers in India are covered by any forms of unions. These 2% will resist any changes that may reduce their privilages, even if the same laws also prevents the spread of benefits of working in the  organised sector to the 94%.

India reports an unemployment figure of about 9%, but this number is actually much higher since there is massive under-employment in India. Agriculture contributes to less than 15% of India’s GDP now, but it employs almost 50-60% Indians. A lot of this population would willingly jump out of the low productivity sectors like agriculture with its stagnant income, into manufacturing sector if they had an opportunity.

If ever someone was looking for an an opportunity to challenge India’s regressive labour laws, worlds most regressive labour laws by some studies, then it dosent get better than this. But it  would need well-meaning politicians and brave corporate executives to pull this off, both of which are oxymorons. Political will is low as the government is fighting for its survival and cant take on the unions at this stage. Maruti’s shareholders wont have much patience to let Maruti single-handedly try and cure India’s misdirected socialistic attitude; besides there are no medals for bravery in corporate world, only for achieving targets. So path of least resistance will be found by all. Some token face-saver will be given to Maruti, and things will be back to normal, which is a shame.

I am all for unions, and for them to be able to do collective bargaining for the welfare of workers, and I also think that wages need a correction in India. But these same unions will resist all modifications to the current labor laws, and the 94% of Indians will continue to suffer. With the slowdown now affecting India, such deep structural flaws in India will continue to become flash points, till everyone one day is forced to face reality. The only question is what are the limits of our Masochism…

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  1. Maruti’s Manesar incident is the story of India’s 2% Vs 94%. My blog post on it-

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