You are on page 1of 16

Indian Industrial Disputes

1. Introduction

All around the world, since the very first periods of capitalism, labor and capital are in significantly conflict. This conflict has been lasting for centuries. At the beginning, the capitalists have taken advantages of law and conservatism to protect their interests and to suppress the workers. Meanwhile the labor ceaselessly fights for their rights form decade to decade. The capital and labor become stronger day by day and each remains firm in the determination of dominating over the other. While the capitalists want to maximize profit from his investment, the labor demand, on the other hand, is reasonable wage for their working. This is where they get locked in a continuing struggle for the mastery. And as the matter of fact, the result of those conflicts is disputes, in another word strikes or lockouts

Obviously there is a noticeable loss of production due to the conflict between capital and labor like in the case of Maruti, Dunlop and GM. This loss of production is a social and deadweight loss. It is important to arrive at a solution to this problem quickly otherwise labor-capital conflicts will create a tide against growth in the country.

1.1. Form of industrial disputes Strike is a denial of working in response to employee grievances. According to the Dessler G. (2008), "Strike is a withdrawal of labor". (p.619). "A strike is defined as a temporary stoppage of work by a group of workers (not necessarily union members) to express a grievance or enforce a bargaining demand". Foster A. (2004). Lockouts is a refusal by the employer to provide opportunities to work. It sometimes locks out employees and prohibits them from doing their jobs (and getting paid)" (Dessler G. 2008, p 621). It mostly initiated by the management of a company to enforce terms of employment, to resist employee's demands and force them to accept changed conditions. Employees are are blocked from entering the workplace until they agree to terms

1.2. Difference between strike and lockout Strikes and lockouts are the principle weapons used by labor and management.

Strike is weapon of workmen used for getting some particular benefits such as better working conditions or higher wage to help them and their families obtain a healthy living, better home and good education. In an attempt of diminish the profits of the exploiting classes, strike was described as one of the contributing factor for social order. Employer can answer to the strikes by lockouts, in another word, temporarily a weapon of shutting down the factory to make the other accept their demand. In a strike, the employers want to get the work done and the workmen do not want to do it while it is the other way around in a lockout In a strike the effort of workmen is that no workman should go to work or do any work while in a lockout all workmen make an effort to come to work There is more likelihood of a lockout after a strike has been declared. The likelihood of a strike after a lockout is much less.

1.3. Impacts Strikes and lockouts are the traditional means used by the employers and employees to convince the other parties accept their demands. However this type of action has a significant impact:

It causes a direct impact on the emotion and economic benefits of the parties

involved as well as their families which may lead to a negative impact on society and community.

It takes a long time to heal the broken relationship between the two parties

Indian industrial disputes

2.1. Overview

India, known as the biggest democracy in the planet has been suffering from various types of industrial disputes for a long time.

The number and seriousness of strikes and lockouts have varied from year to year. In 1990, 1,825 strikes and lockouts were recorded. As a result, 24.1 million workdays were lost, from which 10.6 million were lost to strikes and 13.5 million to lockouts. More than 1.3 million workers were involved in these industrial disputes.

According to a labor ministry survey there has been a decline in the number of strikes as well as lockouts since 1997. This continuous decline in strikes and lockouts indicates that the industrial relations in India are improving. However, the number of workers' affected and the mandays (an industrial unit of production equal to the work one person can produce in a day) lost by strikes, has been going up. This is considered a substantial impact of industrial disputes on Indian workers. The number of strikes declined from 1,305 in 1997 to less than 300 in 2004. Lockouts too show a declining trend from over 500 in 1997 to less than 300 in 2004.

Table: Number of disputes, workers involved and mandays lost in India

.. Source: Labor Bureau Shilma, Ministry of Labor and Employment of India

The workers affected due to strikes and lockouts increased from 1.42 million in 2000 to 2.91 million in 2005. There were 227 strikes in 2005, resulting in the loss of 10.81 million mandays, while the number of lockouts stood at 229 with a loss of 18.86 million man-days. In January-September 2006, there were only 154 strikes and 192 lockouts across the country, as compared to the statistics of 2005, which resulted in the time loss of 3.16 million man-days and 10.60 million man-days respectively. West Bengal, Tamil Nadu, Gujarat and Kerala were the most affected states in term of strikes and lockouts and number of workers affected. The

tendency of increasing mandays lost is also due to the growth of economic activities as well as the its expansion involving larger number of employees.

Table: Number of strikes, lockouts and total mandays lost in India (2000-2006)

Source: Labor Bureau Shilma, Ministry of Labor and Employment of India

Figure: Number of strikes and lockouts of India (2000-2006)

Source: Labor Bureau Shilma, Ministry of Labor and Employment of India

Figure: Number of mandays lost due to strikes/lockouts

Source: Labor Bureau Shilma, Ministry of Labor and Employment of India

Up to now the disputes have actually been on the decline in the country with less number of workers getting affected.

According to data available with the ministry of labor, so far 2010 has been a comparatively quieter year with 41 strikes and just 15 lockouts. In comparison, 2008 saw 109 strikes and 148 lockouts. In 2009, the number went down to 62 strikes while the number of lockouts stood at 172. The number of workers affected due to strikes and lockouts came down to a mere 90 000 in 2010 so far. This can be seen as a positive sign of increasing employee satisfaction.

Source: Labor Bureau Shilma, Ministry of Labor and Employment of India The number of disputes (strikes and lockouts); workers involved and mandays lost in Public Sector constitutes 17.48; 34.79 and 1.22 per cent respectively of the all-India total number of Disputes, Workers involved and Mandays lost whereas the Private Sector constituted the highest number of disputes and mandays lost i.e. 82.52; 98.78 per cent and involving only 65.21 per cent workers due to un-rest respectively as compared to the public sector during the year 2007.

Average Time Loss per Dispute, Workers involved per dispute and Average Number of Mandays Lost per Worker due to Industrial Disputes during the Year 2007

Source: Labor Bureau Shilma, Ministry of Labor and Employment of India

Table reveals average time-loss and average number of workers involved per dispute and average time-loss per worker in important Economic activities due to Industrial disputes during the year 2007. Average time-loss and average number of workers involved per dispute was highest in Manufacturing Industries and average time-loss and average number of workers involved per dispute was lowest in the Mining & Quarrying and Crops and Horticulture respectively. The time-loss per worker involved was recorded highest in Crops and Horticulture and lowest in Mining and Quarrying.


Recent disputes



May, 2009 On 19th May, the Mahindra and Mahindras (M&M) strike was called off by the workers union at the Nashik plant (the producing place of vehicle model Xylo, Bolero and Scorpio) after a private conversation between Chief Security Officer and a union leader. After 2 weeks of strike, as a result, two CV item (Xylo and Scorpio) was completely stopped producing though the sales record of these two were on their peak. Another strike also happened at Hyundai Motors India Ltd. (HMIL) plant near Chennai and caused a serious influence on their best selling items such as i20. The management had to shift their production to Europe

to meet the demand and not to break the export contracts.

October, 2009 A strike took place at Honda Motorcycles and Scooters Ltd (HMSL), whose factory is located near Gurgaon, Haryana. The employees were still working but they tried to slow down the production process by nearly 50%. This kind of action made the customer of HMSL bikes and scooters have to wait very long, especially in the season of high demand.

November, 2009 This time Hyundai Motors India Ltd. (HMIL), once again suffered from a strike. They have just overcome from their April strike which has affected their best selling i20 and six months later they encountered with another and become one of the one who is mostly affected by strikes.



April, 2010 Honda faced the same problem with slow down production strike which dramatically decreased 50% month on month in sales the sale in model Honda City and Honda Civic. It is said that the main reason of the strike is the workmen being less motivated.

May, 2010 This time strike and work slowdown took place at Exides Haryana plant. It made a serious impact on the output of Hero Honda (HH which force them to sell bikes without batteries.

June, 2010 Once again the strike hits HMIL in Sriperimbudur, Tamil Nadu which had 10,000 workers due to the reinstatement of 67 workers who were red listed by the company mainly for discipline matters. The management was acting too tough which made another strike happened and caused serious problem for the performance of the factory. As per the MoU signed between HMIL and the unrecognized union representing workers who were on strike, HMIL has agreed to review the 35 cases of dismissed employees. HMIL has also considered

confirming the 20 dismissed employees, who were reinstated, 3,800 cars was the estimated production loss on a day. HMIL official spokesperson Rajiv Mitra maintained that the average production on a day is 2,200 cars, which translates to a Rs 65 crore loss.

November, 2010 Nearly 800 workers at the Halol unit of General Motors India went on a strike to obtain higher wage which stop the factory from producing. The strike was called off after the management adds one more working shift in the existing two working shifts without increasing the salary as they promised in the last one year. The workers salary was still less than half of what other automobile companies are paying to their employees. That was why the workers took part in a strike to ask for their right of reasonable salary.



March, 2011 4600 Ford employees at the Marmalai Nagar plant had given a 15 day strike (from 7/3/2011 to 22/03/2011). Their demands were recognition of the union, discontinuing the system of leave period treatment of workers and no extra working time to compensate for the 10 minute tea break. The strike happened right at the time Ford successfully achieved 60000 unit sales by a single model Ford Figo in Indian automobile market. And this model Ford Figo was produced at the above factory..

March-April, 2011 GM plant, Halol, Gujarat with 1600 workers faced another strike after four month of the previous strike. The employees had established a new union under Indian National Trade Union Congress (INTUC) and claimed that they were forced to work overload which negatively affected their physical health and that the company had violated Provident Fund (PF) Act, gratuity norms and rules of Industrial Safety and Health Act. The strike was made illegal by the company. The strike hits GM India while they have decided to enterin commercial vehicle market with their Chinese partner Shanghai Automotive Industry Corporation (SAIC).


June - October 2011 Nearly 2000 workers at India's top car maker Maruti Suzuki called off a 13-day strike that had seriously affected production. Maruti Suzuki has two factories in India and plans to spend more than $1bn (620m) over the next three years to boost capacity in a market where vehicle sales grew by a record 30% last year. The workers went on a 13-day strike demanding the recognition of a new union Maruti Suzuki Employees Union. The strike had affected production at the company's main factory in Manesar in Haryana, which makes more than 1,000 cars a day. The strike attacks the plant while the company has decided to run fuelefficient diesel models in order to boost their selling which has long term effect also on the whole marketing process of upcoming special models.

The car maker has been hit again by another strike in Oct 2011. "The management and workers have signed the agreement in a spirit of cooperation and mutual respect, and look forward to work closely together for the benefit of all stakeholders of the company," Maruti said in a statement. It remains unclear whether the management and the workers have reached agreement on the formation of a new union. The company already has one recognized workers union. The companys workers went on strike again on Jul 2012. The companys property has been set on fire and 40 managers and executives got injured. The workers also damaged office furniture and broke glass panels. Workers union has been prevented management from taking disciplinary action. As a result of this strike in the car assembly plant of Maruti Suzuki in Manesar (the second biggest in the group in India, opened in

2007), the workers achieved a semi-victory, that is to say the partial officialisation of their independent base union, the MSEU (Maruti Suzuki Employees Union), by the company bosses, and the satisfaction of some demands. May July 2012


About 500 Air India pilots who fly international routes have been demanding that colleagues from the former Indian Airlines not be trained to fly Dreamliners because they worried it could hurt their career prospects. On May 8, 2012 about 100 pilots of Air India went on medical leave to protest the move to provide Boeing-787 Dreamliner training to pilots. Later the same day it sacked ten pilots and derecognized their union after 160 pilots failed to join

duty by the given deadline. This strike caused a loss of US$ 90.5 million in 45 days and forced Air India to cut back on its international schedule and combine flights. Air India pilots ended strike after 58 days.


Reason behind the strikes

According to recent studies, the number of strikes is growing especially among MNCs. The main causes of the strike are demanding for wage hikes, reinstatement of dismissed workers and demanding for recognition of labor unions. In some cases, the new union tries to take control the old union. In some companies such as Hyundai motors, each political party has its own union and when unions represent workers, politicians use it as a mean to obtain their own interest. Many recent strikes was about the recognition of a new union (Maruti Suzuki India Ltd) which raised an idea the workers are still not motivated enough or the management was not able to balance their shadow equally to all of their facilities.

The next point about the classification of workers, there are two groups of workers which are permanent basis and contract basis. Contract workers are generally self-employed individuals who are given a specific job to do during a set amount of time. There are no guarantees for continued work once the time limit has expired. However, the contract employee is not entitled to any increase in payments beyond what is established in the agreement. There is a small core of permanent workers, but a large number of workers are now contractual hires which make the permanent employees feel that. Their job security is under threat as well as makes it hard to form unions and motivate the workers. Since the explosion of strikes have always start from the job security, safety or salary related issues, the top managers of each company has to be ready to fix the situation, especially during the vulnerable times. If a strike attacks the producing when the company is at the peak time of selling or launching new product, it will cause an immense loss to the company.

The causes of industrial disputes in India can be broadly classified into two categories: economic and non-economic causes. The economic causes will include issues relating to compensation like wages, bonus, allowances, working hours, leave and holidays without pay, unjust layoffs and retrenchments. The non economic factors will include victimization of

workers, ill treatment by staff members, indiscipline



From those above reasons, it is evident than the communication gap between employers and employees plays a significantly important role behind any kind of industrial disputes. The mutual understanding between those two parties is a crucial factor in motivating workers and brings the company through any tough situation as well as achieves long term success.

Obviously there is some efficiency ways that top management would find useful and at the same time will help the company to motivate and make the workers feel privileged. Firstly the top management has to find out which rewards the workers/employees want or which rewards present highest value to them. Secondly, the managers must make sure the rewards are delivered to the employees once the given tasks or goals are completed. Finally, managers must ensure that the employees have the perfect condition and necessary capabilities to accomplish the given task, which will help the workers to grow self confidence among them about reaching the goal and thus get rewarded


However it is not easy to obtain the mutual understanding between employers and workers. It remains a big challenge to many top managers of each company. If employees understand the real situation of the company or what their employer has been through, they would less likely to make trouble or to suspect their employers. However it would be hard to give any excuse for benefit cutting if the business is still getting the substantial profits. If the conflict happens, the manager can use the help of professional negotiators to pursue their mutual interests and possibly find a good solution or ask for the help of a third party which normally is lawyer or a union leader to promote mediation. If mediation is unsuccessful, workers may have to take the conflict to the government. The only methods for getting the government interested in the conflict are through lobbying and a publicity campaign. From the above cases, its obvious there is always a worker union playing a leading role in most of the strikes. If there is already a worker union exists, the workers will demand to establish another one on behalf of a specific department. If the management leaders denied the request, the employees take it as a stimulus to call off a strike. Most trade unions in India are aligned to parliamentary parties and of these; leftist parties have traditionally been at the forefront of voicing workers' demands. But instead of lending strength to workers they have also followed government policies. The management should learn to deal with the situation as well as get along with the worker union.

Prior to 1991, national unions helped put in place tough labor laws. One such law forces firms with 100 or more employees to seek government approval before they can fire workers or close down. Labor laws also prevent companies from reassigning workers to different tasks, so the companies should learn to adjust to changes in the market.



Though strikes and lockouts are common global phenomena and Indian companies are often the target of random strikes, it's the MNCs (Hyundai, Honda, Nokia, Bosch, Pricol, etc.) which get attention because of their profile. Most of them represent the best across industries.


However, the strikes and lockouts should not be supported or made legal because it removes the source of profits and injures company. It makes serious harm to property of the company, the law breaking, and if there is an employee's win in the strike, labor cost makes a serious item in the budget of employer. It is clear, that during this conflicts both sided are suffered and lose more than either side expect to gain.