India’s largest carmaker Maruti Suzuki, a subsidiary of Japan’s Suzuki Motor, is in the midst of its biggest ever labor unrest. The company’s plant in Manesar in the North Indian state of Haryana was recently the site of one of India’s worst labor altercations: A senior executive was killed brutally and nearly 100 managers and supervisors were injured by a mob of more than 3,000 workers. The mob also set fire to the office wing and the main gate. Investigations are ongoing and the company has declared a lock-out at the facility. The apparent issue: reinstatement of a worker who was suspended for misbehaving with a supervisor.
A company statement noted: “By any account, this is not an ‘industrial relations’ problem in the nature of management-worker differences over issues of wages or working conditions.” After meeting with the state chief minister, Maruti Suzuki chairman R.C. Bhargava told the media: “We have requested the government to speed up the investigation and treat the matter as a criminal case and not as one of industrial dispute.”
But Maruti is no stranger to labor trouble. In June 2011, there was a 13-day strike at the same plant over the formation of a second trade union with external affiliations. A month later, there was a 33-day standoff between management and workers at the plant. Last October, workers once again went on strike, demanding the reinstatement of employees who were suspended during previous agitations. They also raised the issue of establishing an independent workers’ union. While the management managed to end the strike, its modus operandi raised questions of corporate governance: There were allegations of a payout.
The violence at Manesar needs to be condemned unequivocally, observers say, adding that India needs more sensible labor laws and effective implementation of those policies. One area of major concern is the condition of contract workers: They are often not paid fair wages or treated equitably. The Maruti incident is also being seen as a reflection of growing social unrest due to an increasing mismatch between India’s economic aspirations and reality.
At the same time, Manesar has once again put the spotlight on how multinationals engage with their teams in India. Maruti, for instance, has been in India for almost 30 years, but in the past few years the top management seems to be getting increasingly disconnected with the ground realities. Industry observers point out that ever since expat Shinzo Nakanishi, the current managing director at Maruti Suzuki, took over from Jagdish Khattar in 2007 — Khattar was at the top job since 1999 — it is the Japanese voice that counts more in crucial decisions. Cultural differences by way of sense of discipline and employee engagements have also played a role in increasing the gap.
In another development, Korean firm LG Electronics has seen an exodus of 15 senior executives at its India operations over the past six months. The provocation for this was reportedly the restructuring of the organization and entry of Korean expats in key positions, thereby reducing the role of the Indian executives. Earlier this year, the firm abolished the post of the chief operating officer and created four director-level posts. Three of these new positions are being held by Koreans.
In an earlier interview with India Knowledge@Wharton, Manish Sabharwal, chairman of Bangalore-based staffing services firm TeamLease Services, observed that, unlike in most American and European companies, “in most Korean and Japanese companies, the power tends to reside heavily in the head office. I heard a quip about Toyota that they don’t globalize but colonize. Obviously, these structures have important implications for how labor engagement and negotiations are handled.”