Neoliberalism and the Dignity of Labor

in the Indian Automobile Industry – A

Case Study of the Bajaj Auto Strike, Pune
By Simran Jain

Introduction
The genesis of resistance across the world with respect to industrial mechanization
dates back to 1779. This movement, known as the Luddite movement, involved,
among others, English workers in the weaving and textile industry. They objected
to the introduction of the mechanized loom, as they perceived the new machinery
to be a threat to their livelihood.1
In the 19th century, Karl Marx propounded the Conflict theory. He emphasized
that in a capitalistic setup, the reason for conflicts is the power differential among
societal classes. According to the Trusteeship philosophy of Mahatma Gandhi,
employers are supposed to look after the welfare of employees. The Pluralistic
theory of industrial relations emphasizes that industrial relations theories and
policies seek ways of achieving a workable and equitable balance between the
goals of workers, employers, and the larger society.2 Excessive corporate power
SIMRAN JAIN is a third-year student creates substandard wages and working conditions, which can burden society
at the National Law University Delhi with welfare-reducing social costs.
(NLUD). She is the student fellow at Cen- Globalization is now deeply rooted in the world economy. It has created a
ter for Innovation, Intellectual Property huge potential for business development across world and has resulted in the
and Competition (CIIPC). She has been birth of a new global economic map. It is a major driver of economic growth
the legal researcher for the National via international trade in goods, services and capital flows through foreign direct
Commission for Women, Government investments (FDIs) and portfolio investments.
of India. She is also a researcher for Safe The introduction of technology across the world has spread far and wide, which
in India, an organization that aims to is quite often not in tandem with domestic technology. In the last few years,
highlight the violation of safety norms global capitalism has led to significant restructuring. One major aspect of this is
across automobile industries in India. the transnationalization of production, i.e., the separation and segmentation of
She is associated with the Clinic for As- production processes across different regions or factories all over the globe. This
sistance in Labor Laws (CALL), NLUD. She phenomenon is often described as the ascendancy of global production networks
has been published in various national (henceforth GPN).3
and international blogs. Her research As a consequence, global and local markets are more competitive than ever
interests include competition, IP law, before. Competition has increased between multinational companies to tap into
international law and gender justice. new markets, use cheap labor to exploit economies of scale, and reduce the cost

FALL 2016 ©2019 BY SIMRAN JAIN 193

 NEOLIBERALISM AND THE DIGNITY OF LABOR IN THE INDIAN AUTOMOBILE INDUSTRY

of production.4 Governments of developing nations keep employees, regarding working conditions in the industry
their labor laws flexible in order to attract foreign capital, and recognition of the trade union.
which places an increasingly downward pressure on wages This paper seeks to examine and analyze these follow-
and union bargaining power.5 This also has an impact on ing issues, as well as the violation of labor rights in the
domestic companies as competition increases for them as context of the Bajaj Auto Strike in Pune. It argues that the
well, and they have to keep up with the changing industrial agency of labor has been devalued post globalization. As a
landscape. This process adversely affects the interests of result, employers have begun to violate the basic right of
labor. Thus, the rights of workers end up being a matter workers such as wage revision and ensuring safe working
of consideration and importance.6 conditions in the establishment.

Conditions in the Automobile Industry Bajaj Auto Strike Pune: History,

Globalization has played a vital role in the growth of the
Indian automobile industry. A nation’s industry becomes Issues and Recent Developments
global when foreign firms begin to enter in the domestic
markets.7 Such a development has taken place in the Bajaj Auto Limited is an Indian company that produces
Indian automobile industry. Till the ‘80s there were only motorized vehicles. The said company is a unit of Bajaj
two domestic companies that manufactured a limited group, which was founded in the 1930s by Jamnalal Bajaj
number of products. However, after globalization, global in Rajasthan. The company is presently based in Mum-
auto doyen companies from US, Japan and Europe have bai, Pantnagar (Uttarakhand) and its biggest plant is in
had significant presence in India. This did not happen Chakan, Pune (Mahrashtra, India).
on its own. There has been 100% FDI in the automobile The Chakan plant lies in the Special Economic Zone
industry in India since 2002.8 Other reforms and measures (SEZ) which is promoted by Maharashtra Industrial De-
have also been implemented in India, which has resulted velopment Corporation. The said plant was set up in 1999.
in a booming automobile sector. However, in a bid to keep The Pantnagar plant workers had started an agita-
their interests in place, the companies have consistently tion in May 2012 after getting a poor increment. The
ignored the needs of the workers. Pantnagar workers approached Vishwa Kalyan Kamgar
Another issue of importance is that a significant strand Sanghatana (VKSS) to support their agitation. Since the
of the literature tends to treat capital as autonomous, if workers of Pantnagar were skeptical that the union could
not all powerful, in its ability to shape the entire process, be registered in Uttarakhand, they requested VKKS for
rendering the agency of labor almost negligible. In other membership. Considering their situation and request,
words, the agency of labor has been inadequately accom- VKKS gave them membership to the majority of work-
modated. Thus, the phenomenon of globalization has ers from Pantnagar.9
proved to be beneficial only for the companies and con- The management of Bajaj Auto argued that the registra-
sumers and has affected the workers disproportionately. tion of VKKS was only for Maharashtra, and they did not
One such example that demonstrates the deplorable have the right to take up any membership from outside
conditions of the workers and a blind eye to their de- Maharashtra. The union claimed that the management
mands is the Bajaj Auto Strike in Pune. The dispute arose refused to recognize the union and indulge in collective
in 2013 with respect to the issue of wage revision in the bargaining. The VKKS referred this matter to the Uttara-
industry. Collective bargaining between the union and khand High Court.
the management of Bajaj Auto for settling the issue of The judgment of the High Court directed the labor de-
wage revision failed and the workers’ union called for partment of Uttarakhand to start the conciliation process
a strike. Another contention was the pending issue of with VKKS.
eight workmen who were dismissed from services for The Pantnagar workers had to join VKK due to ha-
various acts of misconduct in 2013-14. The workers rassment by the local management and low increments.
have demanded reinstatement of those dismissed work- Eventually, a new union came up at Pantnagar, and a fresh
ers who, according to the company, “did not report at agreement was signed between them and the Bajaj Auto
the place of transfer/deputation in spite of court orders” management.
and a wage review process. However, the decision of VKKS to extend membership
The four major issues in this case are related to in- to the workers at the Pantnagar plant changed the relation-
crease in wages, granting of shares of the company to the ship between Bajaj Auto management and the workers at

194 LABOR LAW JOURNAL FALL 2019

the Chakan plant. It caused the general atmosphere in the Court, in the case of Bharat Bank Ltd. Vs. The Employees
industry to vitiate. of Bharat Bank Ltd.15
The workers at Chakan were given impossible tar- The International Labor Organization conceptualized
gets. Consequently, due to failure in complying with the concept of minimum wages for the first time in 1928.
the unreasonable demands of the management, the This was done in order to protect from exploitation those
employees started getting warning letters, show cause workers, who were working in industries where wage levels
notices and suspension threats. There were cases of sus- were substantially low. This left the workers very vulnerable
pension, pending enquiry and dismissal. Their demand and since they were not well organized, they were also left
for a scientific time study based on ILO norms was not with minimal bargaining power.16
accepted by the company. Further, there was failure to A draft bill considered by the Indian Labor Conference
review the increment in wages as per the settlement in 1945, was introduced in the Indian Parliament in 1946.
reached between the parties in 2010. The workers then This led to the adoption of Minimum Wages Act in 1948,
terminated the long-term settlement and stopped work which was enacted to secure the well-being of workers
from July 25, 2013. working in a competitive market with menial wages.17
From September 2012 and June 4, 2013, nine meetings The act defines wages as inclusive of all remuneration
were held between the company and union at Chakan, that is capable of being expressed in monetary terms. It
with no resolution to any of the conflicts.10 would be payable by the employer to the employee after
the latter fulfills the terms of contract of employment.18
Major Issues and Their Legal Analysis It represents the level below which the wages cannot be
permitted to drop.19

1. Increase in Wages and Share of Profits Issues in Minimum Wages Calculation in India
On June 25, 2013 about 950 workers at the Chakan plant The Minimum Wages Act only lays down the procedure
of Bajaj Auto demanded improved wages and working to fix and revise minimum wages. It does not provide
conditions. This demand was responsible for the major for fixed amount of wages, but the basis on which it
controversy in the issue. should be calculated. Generally, for the said calculation,
The company is the world’s most profitable two-wheeler the fixing authorities consider principles laid down in
manufacturer.11 The VKKS has alleged that the compen- resolution of the 15th Indian Labor Conference, which
sation paid to the workers was not in tandem with the is also not strictly adhered to. As a consequence, there
rising profits of the company. Its claim was that for each is evident variation in the minimum wage rates, even
Pulsar motorcycle that is produced, the workers get only in the same occupation. Often, it does not even reflect
Rs 300, while shareholders and managerial staff get Rs the necessary cost of living.20 Another issue is related
16,700 and the dealers, and government get Rs 10,000 to gender disparity in minimum wage. However, there
each. Further, inflation in Pune as per the consumer are a few indicators based on international experience,
price index for industrial workers grew by 11.7% in which can be used while calculating minimum wages.
2010 over 2009.12 They are estimates of cost of living for workers and
their families, number of people directly affected by
Judicial Intervention in Cases of Wage Demand minimum wages, etc.21
In Indian labor law jurisprudence before 1947, a case Since the calculation of minimum wages is itself conten-
was dismissed outright if a trade union demanded higher tious, workers in the industries must not be compelled to
wages. This was on the grounds that a court does not have subsist on wages, which are often erroneously calculated.
the power to alter the contractual obligations between the Thus, they must be able to raise demands for an increase
parties.13 Then in 1949, the Federal Court held in the in wages.
case of Western India Automobile Association vs. Industrial The judicial principles of wage fixation are derived partly
Tribunal14 that in the interest of social justice, and with a from both the management and economic theory. They are
view to secure peace and harmony between the employer further blended with the tenets of equity and fairness. For
and employees, industrial adjudication can impose new this, it is imperative to look at the Indian jurisprudence
obligations and abolish redundant ones. Subsequently, this with respect to the demand of increase in wages by the
opinion of the Federal Court was adopted by the Supreme workers working in an establishment.

FALL 2019 195

 NEOLIBERALISM AND THE DIGNITY OF LABOR IN THE INDIAN AUTOMOBILE INDUSTRY

No. Name of Case Year Bench Strength Ratio

1. Express Newspaper (P) Ltd. v 1959 5 judge bench Demand for increase of wages should not be forced upon the employer unless it is
Union of India1 ascertained that the employer has the capacity to pay. Thus, both financial ability and
stability are the necessary conditions to be seen. The establishment has to be secured
financially for the future as well and, thus, stability becomes an essential criterion.
2. Indian Oxygen Ltd. v Workmen2 1963 5 judge bench In this case, wage revision was decided on the basis of facts. Since there was mate-
rial change in circumstances since the time wages were fixed in 1949, the Court
held that it called for a revision in the year 1962.
3. Airlines Hotel (P) Ltd v Workmen 1963 3 judge bench The financial position of the company was taken into consideration while deciding
whether to increase the wages. It was held that considering the profit that the
company had acquired over the last few years, increase in wage would result in
wiping out entire profit. Hence, wage revision was not done.
4. Workmen v British India Corpora- 1965 3 judge bench The Apex Court held that while considering the issue of wage revision, sections of
tion Ltd.3 workers in different departments of industry have to be seen differently and their
wages have to be decided accordingly
5. Workmen v Orient Paper Mills Ltd4 1969 3 judge bench While considering the minimum wages, including basic wages, dearness allowance
and product bonus should be considered and the increase is justified, only then the
total wages can increase.
6. Press Trust of India and another v 1974 2 judge bench Fixation of the wage scale depends upon the paying capacity of the employer. The
Union of India5 financial capacity of the employer has to be taken sufficiently into consideration.
Further, there is a requirement of proper material evidence to assess the paying
capacity of the employer while considering the question of increase in wages.
7. Tata Consulting Engineers v 1980 3 judge bench It was held that it is the fundamental jurisdiction of the Industrial Tribunal to revise
Workmen6 the wage scale. Tribunals have full liberty to propose an ad hoc increase of wages as
a part of the revision
8. Mahatma Phule Agricultural 2001 2 judge bench The increase in wage is not a one-time exercise. It is a permanent increase that will
University v Nasik Zila Sheth vary as the basic starting wage and dearness allowance will vary. The Court in this
Kamgar Union7 case held that universities not following this practice are indulging in unfair labor
practices.
1 2 3 4 5 6 7
[1959] S.C.R. 12 1963 Supp (2) SCR 736. (1965) 2 LLJ 433 (1969) 1 SCR 666 (1974) 4 SCC 638. (1980) Supp SCC 627. (2007) 7 SCC 346.

Thus, it is clear from the case laws mentioned that in a few other fields, this was the first instance of such
during adjudication, the Court has sought to balance the demand in India made by workers from the assembly and
claims of social justice with the situation of the national production floor.
economy and of capital for reasonable profits. The Court This demand for ESOP was dismissed immediately. The
is of the opinion that the matters related to wage fixation MD of Bajaj Auto, Rajiv Bajaj stated that if the workers
are not static and are subjected to change. The paying began to demand like wayward children, the company,
capability of the employer has to be taken into account like a parent, had to be “fair but firm.”29
while assessing the issue. In the present situation, VKKS He also declared unambiguously that the company
had contended that there was substantial profit incurred did not believe that loyalty of people could be bought by
by the company, thus their wages should be increased. throwing shares at them. The management further said
Once the matter is taken to the Court, it should look that ESOPs are a legitimate demand only in the IT in-
into the facts and if increase of wages is within the paying dustry or where capital is an issue. Even those automobile
capability of the employer and will still keep the company companies that issue shares, issue it to only those in the top
financially stable in the future, then the wages of the em- managerial positions in their research and development
ployees should be raised. (R&D) wing and not to workers.30
An almost indignant response from Bajaj’s side shows
2. Owning Company Shares the chasm between how managements view workers’ role
The union asked for equity shares, also known as employee and how the latter sees it.
stock ownership plan (ESOP). It was asked to be given The president of the union explained the reason behind
to the workers at Re 1 a share. While this practice is still the demand for cheap equity shares. He said that since they
prevalent in information technology (IT) companies and were the ones producing wealth, they must have a share

196 LABOR LAW JOURNAL FALL 2019

in its profit. They also contended that since management is done as a part of a strategy to retain talent by giving
was not paying fair wages and was refusing to review the the workers shares in the company. Infosys is one such
wage agreement, they thought demanding that shares company that has been able to carry out this process with
via the share dividends of the company would result in success.34 In 2014, Flipkart, Housing.com and Snapdeal
fair exchange. The union was demanding individual, not offered ESOPs to its employees.35
group shares. This would have given the workers a stake In 2018, Eastman Auto and power, an automobile
in management and selling off shares would not be as easy company in Gurgaon decided to grant ESOPs to hun-
as would be in the case of individual shares.31 dreds of its employees, in order to reward them for their
The workers’ demand for shares in the company was contribution.36
mainly to ensure proper compensation for work, which The Managing Director was of the opinion that this
had been inadequate in the wage agreements that were measure would go a long way in inculcating a sense of
negotiated from time to time. The last wage agreement ownership among employees and make them partners
was for a period of nine years (ending in 2019), with a in achieving professional excellence. The company’s em-
revision every three years. The workers nullified this agree- ployees have also welcomed the initiative. They believe
ment and asked for shares in the company. that ESOP is a noble initiative which has made them feel
ESOPs are most commonly used to provide a market for valued and an integral part of the company. They believed
the shares to motivate and reward employees. In almost that it will motivate them to perform better.
every case, ESOPs are a contribution to the employee, Thus, it is evident that granting of ESOPs in India is
not an employee purchase. As early as the early 1990s, the not limited to the IT industry anymore, contrary to the
Bharat Electronics Limited Union in Bangalore sought argument of management. Granting ESOPs to the workers
shares for workers. In this context, Bhowmik32 raised some will ensure their share in the profits of the company. The
pertinent points with respect to worker-shareholders and workers will not have to wait for management to revise the
how it has the potential to alter the relationship between wages and in failure to do so, take recourse of litigation.
workers and management and between workers and the Since this issue will no longer be required to be taken up
union themselves. It was the fear of a changed worker- by the union, it could exercise collective bargaining with
union relationship that has made some unions apprehen- respect to other matters in the establishment.
sive of such schemes.
Upon considering the comparative analysis, the ESOPs 3. Working Conditions Within
have been successful in the US with respect to the number the Establishment
of companies that have implemented such plans of making
workers shareholders of the companies they work in. In The union pointed out that the speed of assembly lines had
India, however, this idea is contested most with respect gone up from 42 seconds per motorbike to 28 seconds in
to the public sector companies, as it is seen as a move to the last six years. This had resulted in production of about
privatize the public sector by the said distribution of shares. 1,028 two-wheelers daily. Many young workers started suf-
The ESOPs have been successful in USA mainly because fering from kidney stones because of the unrelenting pace
of the laws that are in place. Companies are given tax of the assembly line and a fall in the number of relievers.
benefits if they enroll in the ESOPs scheme. The work- From about five to seven relievers, which were required
ers are also allowed to borrow capital and form trusts in for the workmen to drink water or to go to the toilet; the
order to purchase shares collectively. These two provisions number was reduced to three.
make ESOPs possible for the workers and lucrative for N. Vasudevan of NTUI drew a parallel of this situ-
the companies. 33 ation with that of Maruti Suzuki workers’ struggle. In
On the other hand, Canada has had a different experi- both places, young workers, most below 35 years, have
ence. The workers have established cooperatives with the health issues because they have to work at tremendous
help and support of the government and unions. These speed that treats them more as machines than humans.
cooperatives continue to enjoy the support of the union. The response of the Bajaj Auto management after being
The whole process has exposed workers to the techniques of asked the reason for reducing the relievers, was that they
management and built up their awareness. Both of these are followed the Kaizen technique of constant improvement.
important if workers are to eventually organize production. There used to be seven relievers, which were now reduced
ESOPs in India have been generally offered in the IT to three or four.37
sectors. It is typically offered to middle and higher man- The VKKS said that management was upset with
agement employees at bonus or at discounted prices. This it as it espoused the issue of workers at the Pantnagar

FALL 2019 197

 NEOLIBERALISM AND THE DIGNITY OF LABOR IN THE INDIAN AUTOMOBILE INDUSTRY

(Uttarakhand) unit. When the union attempted to orga- “Adjudication does not, in our opinion, mean
nize the workers for the movement, it led the management adjudication according to the strict law of master
to believe that VKKS was provoking them. The genesis of and servant. The award of the Tribunal may con-
this agitation dates back to the time when workers of the tain provisions for settlement of a dispute which
Pantnagar plant approached the VKKS to take up their no Court could order if it was bound by ordinary
demands. In 2012, they went on strike to assert their right law, but the Tribunal is not fettered in any way by
of formation of union. This agitation was supported by these limitations. In Volume 1 of Labor Disputes
VKKS. It was alleged that soon after this their relations and Collective Bargaining by Ludwig Teller, it is
with the management began to get worse. said at page 536 that industrial arbitration may in-
VKKS also stated that the management of Baja Auto volve the extension of an existing agreement or the
had suspended 22 workers in Chakan plant after the strike making of a new one or, in general, the creation
in June 2012. It also denied to revise the wage agreement. of a new obligation or modification of old ones,
According to the agreement in 2010, in case employees while commercial arbitration generally concerns
of Bajaj Auto were given a higher increment than that itself with the interpretation of existing obligations
mentioned in the wage agreement, this higher increment and disputes relating to existing agreements. In our
would be applicable to those covered by the agreement opinion, it is a true statement about the functions
as well. According to the union, this clause was violated of an Industrial Tribunal in labor disputes.”
by the management.
The VKKS was recognized in 2007 after a long period This has been the settled position since this case and has
of struggle. Initially, management had responded to the been later affirmed by various HC judgements, Ahmed-
demands of formation of VKKS by closing down the abad Sarangpur Mills Company Ltd. v Industrial Court
Akurdi plant. The production was shifted to units at Au- Ahmedabad and Anr.41
rangabad and Uttarakhand in September 2007. Finally, India’s automobile industry is the one of the largest in
after an order of the court, the Bharatiya Kamgar Sena, the world.42 There are four belts in this industry, with
which was backed by Shiv Sena, was derecognized, and Delhi-Manesar being the largest one. Over the years there
the VKKS was deemed as the majority union.38 have been reports of workers’ meeting with serious ac-
The Supreme Court of India, during the 1950s, decided cidents in the industry, which often results in permanent
the industrial disputes by interpreting both the contractual disabilities or considerable deterioration in the working
obligations and the legislation literally. efficiency of the employees.43
In 1957, Justice Bhagavati, in the case of Nirmala Textile Laws regarding workplace safety are in place in legisla-
Finishing Mills Ltd., v Second Industrial Tribunal, Pun- tions such as The Factories Act.44 Chapter IV of the Act
jab39, asserted the notion of social justice. He remarked is devoted to ensure safety of the workers, and Part III to
that the ultimate objective of industrial adjudication is ensure a healthy working condition for the workers. The
to bolster the growth of the national economy and to latter includes provisions of cleanliness, ventilation, drink-
promote industrial peace. ing water, latrines, urinals, ensuring fencing of machinery,
In the case of Rastriya Mill Mazdoor Sangh v Apollo prohibition of employment of young persons near danger-
Mills Ltd.40, Justice Hidayatullah observed that tenets of ous machines, etc. Section 845 of the Act provides for ap-
social justice are not dependent on contractual relations pointing a Chief Inspector by the State Government. The
and are not to be enforced according to the principles of Chief Inspector, subject to the control of the State Govern-
contract of service. It is something beyond those principles ment, has the power to issue orders to the owner of the
and is invoked to render justice even when there is no premises in respect of the carrying out of the provisions.46
contractual backing. Since the Chief Inspector is subjected to the control of
The dispute arose due to the closure of a mill for certain the government, the government itself may have policies
days due to the shortage of water. The workers demanded which may favor the owners of the factories. Hence, there
compensation for loss of wages and dearness allowance. is a possibility that the workers’ interest may get under-
The Court upheld the decision of the Industrial Court of mined here due to the lack of initiatives and apathy by
granting wages to the workers. It also upheld the Industrial the government. The Act provides no mechanism for the
Court’s decision of not applying the Standing Orders Act workers to approach an adjudicatory body directly in case
according to which, inasmuch as the partial closure of the of violation regarding their safety conditions. The Chief
Mills was due to force majeure, they were not liable The Inspector mandatorily acts as an intermediary. In case the
Court upheld that: inspector issues certain directives, the contravention of the

198 LABOR LAW JOURNAL FALL 2019

same results in penal consequences under section 92 of the etc. It is not possible for employers to bargain with every
Act. However, there is no stringent punishment or penalty union. There is no statute in India that lays down pro-
prescribed under the Act. The maximum period of impris- cedure for recognition of trade unions, through which a
onment of the employer is two years. There is absence of sole bargaining agent could be chosen for the purpose of
robust institutional mechanism that could support their getting into negotiation with the employer. The attempt
implementation. This has resulted in hazardous working for statutory recognition came in 1978-88. In 1988, it was
conditions, as the employers have no fear of sanction suggested that there should be a bargaining council, and
and, thus, do not invest in alleviating the safety condi- the sole bargaining agent should be from an elected bar-
tions in the establishments. There are grossly inadequate gaining council. Trade union recognition and the Unfair
provisions for post-accident treatment, compensation and Labor Practices Act 1971 stated how this council was to be
rehabilitation in the Act. The injured workers are mostly elected. However, this Act was never notified. Today, about
left with long-term psychological and physical damage, six states in India have a trade union recognition act. West
with obvious financial adversity.47 Bengal and Kerala follow a secret ballot method. Others,
It is imperative for the legislature to realize that the including Maharashtra, chose the verification method.
Factories Act was formulated in 1948, and since then In the case of Rail Coach Factory Men’s Union vs. Union
there have been considerable changes in the industrial of India,49it was held that only a recognized union had the
landscape; both with respect to technology and structure power to get into negotiation with the employer, and that
of the economy. Many of these changes were unfathom- the prominent method for recognition is to be adopted.
able back then. Hence, there is a pressing need to amend Indian Labor Commission’s Code of Conduct came in
the Factories Act according to the current times. It is sug- 1962, and it was enforced on all TU’s part of the ILC.
gested that there should be clear a demarcation between Once the procedure is initiated, everyone has to consent
different sectors of industries, such as automobile, cement to the recognition process. Labor jurisprudence gives more
factories, pharmaceutical etc. Guidelines related to safety importance to consensus than to law.
requirements should be concisely provided in the Act, In Automobile Products of India Employees Union vs. As-
depending on the suitability and requirements of the sociation of Engineering Workers,50 the court held that once
particular industrial establishment. there is agreement between management and a recognized
In absence of a robust legislative mechanism enabling union, generally, the Industrial Court does not interfere
the workers to assert for better working conditions, there in the agreement entered by the trade unions even if the
is a need for courts to step in. Based on the decisions of statute mandates otherwise.
Rashtriya Mill Mazdoor Sangh and Nirmala Textile Fur- In Balmer Lawrie Workers’ Union vs. Balmer Lawrie and
nishing, the courts can decide in the favor of the workers Co. Ltd.,51 the court held that there is need for recogni-
in Chakan plants, and should increase their breaks during tion of trade unions in order to avoid conflict in industry.
the work hours. Even though a recognized trade union has the exclusive
right to get into bargaining, the minority union under the
4. Recognition of the Trade Union Industrial Disputes Act can also raise dispute in the form
Another reason that leads to frequent strife in the au- of individual demand. The Court felt workmen had to
tomobile companies in India is the unwillingness of make some compromises to get better living conditions.
managements to recognize unions.48 Thus to oppose the According to the law in Maharashtra, the majority union
capitalists, assert their rights, and oppose the increasingly has exclusive rights to get into settlement.
declining share of labor in the value-added economy, in- In MRF united workers’ union v government of TN52, the
dulging in collective bargaining becomes a major challenge division bench of the Madras High Court said recognition
for the workers working in these establishments. With the is an important concept for implementation of statutory
dismantling of the welfare state in India post-liberalization rights. Also, the right to be associated with a trade union
in 1991, the deregulation process accelerated the weaken- is a fundamental right. The argument of discretion of
ing of labor power in India. This also resulted in decline management with respect to recognizing the majority
of wage share. union, or it cannot be accepted.
Collective bargaining, however, is a powerful tool in Thus, based on the cases mentioned above, as per the
the hands of the workers to assert their rights and get into MRF United case, the management of Bajaj Automobile
negotiation with the employer. ought to have recognized VKKS. Management’s unwilling-
In India, there are multiple trade unions in the work- ness to recognize the union and subsequent use of coercive
place. They are formed on the basis of region, caste, gender methods amount to unfair labor practices. Had there been

FALL 2019 199

 NEOLIBERALISM AND THE DIGNITY OF LABOR IN THE INDIAN AUTOMOBILE INDUSTRY

recognition of the union since the beginning, the matter During the strikes in 2014, management threatened
would not have escalated as it did, and the subsequent the workers, stating that they would shift the production
agitation was completely avoidable. facilities to other plants. Bajaj Auto has the flexibility
to be able to move production out of Chakan to other
Conclusion plants located in Pantnagar and Aurangabad in a short
time. Management also stated that, once the production
For the labor class in India and their leaders, the major shifted to the other plants, the striking workers would be
challenge is to keep up with their morale at a time when not needed and may have to content themselves with the
inflation is at a high and even the prices of essential items benefits under the Voluntary Retirement Scheme.56 With
is soaring. Job opportunities have become scarce. There no indication of management yielding, and not enough
is general apathy from management whenever workers support from the rank and file of the employees, pressure
raise their demands. Instead of getting into negotiation, from suspended employees and wage losses ultimately
workers are met with coercive actions. This is also what resulted in the strike being called off by the workers after
the management of Baja Automobile did; it threatened 50 days. This is one of the many instances of management
to shift the plant from Chakan to elsewhere, when the victimizing the workers.
workers unionized and demanded their rights. Despite the Today the wage share of the Indian working class is
judicial mandate for management to give recognition to substantially lower than even in other so called emerging
the majority trade union that had been elected, manage- economies in the global South.57 As noted earlier, this
ment flouted it. This worsened the situation. Incidentally, phenomenon has accelerated after the economic restruc-
when workers went on strike, it was during the time when turing post 1990. In the absence of a legislative mandate,
the automobile industry in that region was looking at there is blatant ignorance by management to even endure
actively cutting production costs and, thereby, resulting safe working conditions for the workers. On the other
in loss of jobs. This made the situation even more difficult hand, management refuses to get in negotiation with the
for VKKS.53 employees and instead threatens them.
In 2014, the Company revised the wages of the workers The majority of the existing labor laws in India were
and the permanent employees got a hike of Rs. 10,000 a framed when India was under British rule. Therefore, the
month.54 With respect to the demand of the trade union major objective of these laws was not to give protection
for increase of wage, if the employer has the financial ca- to labor but to protect the interests of the colonial ruler.58
pacity to pay them out of the profits, the precedents direct There is a pressing need for these laws to keep pace with
us towards an increase in wage share of the employees. The changing needs of the time. A few flexibilities in the laws
employees can approach the Court for revision of wages, have been introduced, but they are applicable only in limited
if unsatisfied with the rise in wages by the employer. The areas, such as export processing zones (EPZs) and special
employer would have to materially prove its inability to economic zones (SEZs), etc. Further, the existence of large
pay for the Court to pronounce the decision in their favor. number of laws along with multiple legal bodies has also
Further, the demand of ESOPs in the industry should added complications to proper functioning of such laws.59
be fulfilled by the employer. It shall ensure the share in Thus, it can be concluded that the agency of labor has
profit by the workers. Further, management cannot refuse been devalued post-liberalization. The primary focus of
to acknowledge the majority union, the VKKS, and as a employers is to garner profit for themselves and exclude
result, refuse to enter into negotiation with them. the workers from the profit sharing system. The legal sys-
The issue of dismissal of six workers from the Pune tem also has not facilitated the rights of discourse of the
plant is pending in the Labor Court. The struggle of workers by providing safeguards and remedy. Therefore,
VKKS in Chakan has led to certain revelations about the landscape is such that the workers have to unionize
the reaction of the community in general. Even dur- themselves and constantly struggle in the apathetic envi-
ing the 50 days of a hunger strike of VKKS in 2013 at ronment created by employers and the dearth of initiative
the Chakan plant, there was no support from the civil by the government. The three social partners namely the
societies or an industry wide action. Even the media political authority, labor unions and employers should
coverage was very limited. The state government was a pursue harmony in the industrial establishment as their
mute spectator. The labor minister just called one meet- primary goal. They should undertake exercises in order to
ing and that, too, was unsuccessful.55 restore social and industrial peace.60

200 LABOR LAW JOURNAL FALL 2019

ENDNOTES

22 12
[1959] S.C.R. 12 Labor Bureau (2012): Consumer Price Index talks-aim-at-job-security-forsuspended-work-
23
1963 Supp (2) SCR 736. Numbers For Industrial Workers Annual Report ers/article5011023.ece
24 38
(1965) 2 LLJ 433 2011 (Shimla: Labor Bureau). Menon, Sudha (2007): “Biggest Bajaj Auto work-
25 13
(1969) 1 SCR 666 Judicial Response to Industrial Disputes, ers’ union gets court recognition”, LiveMint, 17
26
(1974) 4 SCC 638. h t t p : / / s h o d h g a n g a . i n f l i b n e t . a c . i n / b i t- October, viewed on 16 August 2013, http://www.
27
(1980) Supp SCC 627. stream/10603/8113/14/14_chapter%205.pdf livemint.com/Companies/wHNEgoPH4oOFH-
28
(2007) 7 SCC 346. accessed on B8IHByoUK/Biggest-Bajaj-A...
1 14 39
Jessica Brain, ‘The Luddites’, The historic UK < AIR, 1949 FC 111. 1957 SCR, 335
15 40
https://www.historic-uk.com/HistoryUK/His- 1950 LLJ SC AIR, 1960, SC, 819.
toryofBritain/The-Luddites/> accessed on 16th 16
International Labor Organisation, India Wage 41
MANU/GJ/00331964.
42
April 2019. Report- Wage policies for decent work and http://www.ibef.org/industry/india-automobiles.
2
John W. Budd, Rafael Gomez and Noah M. inclusive growth< https://cse.azimpremjiuni- aspx
43
Meltz, ‘Why a balance is the best: the Plural- versity.edu.in/wp-content/uploads/2018/09/ AGRASAR, what can safeguard workers? Acci-
ist industrial relations paradigm of balancing IndiaWageReport.pdf> accessed on 3 rd Aril dents in the Automobile Industry: Case Studies
competing interests.’ Theoretical Perspectives 2019. and Stakeholder Response. (Safe in India Report)
17 44
on Work and the Employment Relationship Preamble of the Minimum Wages Act, 1948 The Factories Act 1948.
18 45
Industrial Relations Research Association, 2004 The Minimum Wages Act, 1948. Section 8, The Factories Act 1948
19 46
Research Volume AIR 1966 SC 306 Section 93(4), The Factories Act, 1948.
3 20 47
ha, P., & Chakraborty, A. (2016). Global Produc- International Labor Organisation, India Wage Re- Ibid.
48
tion Networks and Labour Process. In D. Nathan, port- Wage policies for decent work and inclusive Chanchal Pal Chauhan , ‘the Strife within’ Busi-
M. Tewari, & S. Sarkar (Eds.), Labour in Global growth <https://cse.azimpremjiuniversity.edu. ness Today, accessed from https://www.busi-
Value Chains in Asia (Development Trajectories in in/wp-content/uploads/2018/09/IndiaWageRe- nesstoday.in/magazine/features/labour-trouble-
Global Value Chains, pp. 398-420). Cambridge: port.pdf> continues-to-torment-automobile-companies/
21
Cambridge University Press. Ibid. story234237.html> accessed on 3rd May 2019.
4 29 49
Gereffi, Gary, John Humphrey, Raphael Kapil- Gupta, S D and H Joshi (2013): “How Downturn 2010 SCC OnLine Del 956
50
insky, and Tim Sturgeon. 2001. ‘Globalization, Helped Bajaj Quell Chakan Strike”, Business 1990 AIR 1159
51
Value Chains and Development.’ Institute of Standard, viewed on 17 February 2019 1985 AIR 311
30 52
Development Studies Bulletin 32.3. Ibid. 2009 IV LLJ 685 Mad
5 31 53
Krishnan, R. (1996). December 1995: The first Gupta, S D and Swaraj Baggonkar (2013): “This Gupta, S D and H Joshi (2013): “How Downturn
revolt against globalization, Monthly Review, Is Not a Kirana Shop that I Can Handle Shares Helped Bajaj Quell Chakan Strike”, Business
48(1), 1-23. Like that: Rajiv Bajaj”, Business Standard, 28 June, Standard, 15 August, viewed on 17 August
6
Chattopadhyay, Utpal & , Bhawsar. (2014). viewed on 12th May 2019, http://www.business- 2018, http://www.business-standard.com/
The Impact of Globalisation on Labor: Evidence standard.com/article/comanies/this- is-not-a- article/companies/how-downturn-helped-b...
54
from Suzuki’s Motor India Venture.’ Interna- kirana-shop-that-i-can-handle-shares-like-that- Business Insider Bajaj Auto Hikes Wages of
tional Journal of Economics, Commerce and rajiv-bajaj-113062700840_1.html Chakan Plant Workers by Up to Rs 10,000 A
32
Management. II. Bhowmik, K Sharit (1994): “Workers as Share- Month, <https://www.businessinsider.in/bajaj-
7
Mitchell, W., Shaver, J.M. and Yeung, B. (1993). holders: Case for Closer Examination”, Economic auto-hikes-wages-of-chakan-plant-workers-by-
Performance following changes in international & Political Weekly, 29(40). up-to-rs-10000month/articleshow/40365846.
33
presence in domestic and transition industries. Mackin, Christopher (2011): “Employee Owner- cms?utm_source=contentofinterest&utm_
Journal of International Business Studies, 24 (4), ship: The Road to Shared Prosperity”, The Nation, medium=text&utm_campaign=cppst>
55
647-670 8 June, viewed on 16 August 2018, http://www. Ibid.
8 56
Das, K.S.L. (2011).Foreign management and In- thenation.com/article/161255/employee-own- Kamal K. Jain, “Decoding the strike at Bajaj Auto’s
dian workers’ struggle. Retrieved April, 27, 2019 ership-road-shared-prosperity#axzz2bjVkUL00 Chakan plant: a negotiator’s framework”, Emer-
34
from http://www.labourfile.org/Print Document. Kumar, Nagesh (2001): “Indian Software Industry ald Emerging Markets Case Studies, (2014).
57
aspx?ID=712> Development: International and National Perspec- ILO, Global Wage Report (2012-13) as quoted in
9
Abhishek Shaw, Lina Mathias ‘Bajaj Auto Workers’ tive”, Economic & Political Weekly, 36(45): 4278-90. CBGA (2014), Major Dimensions of Inequality in
35
Agitation- Withdrawal and Triumph’ EPW, Vol. Ahead of IPO, Eastman Auto and Power of- India: Wage, Centre for Budget and Governance
48, Issue No. 38, 21 Sep, 201 fers ESOPs to staff, < https://www.livemint. Accountability, New Delhi
10 58
Ibid. com/Companies/X3r3hcRqoB5YYpNulYi0SO/ Ibid.
11 59
Philip, Lijee (2012): “Hero Powers on Minus Ahead-of-IPO-Eastman-Auto-and-Power-offers- Ibid.
60
Honda, Beats TVS; Bajaj Auto Takes the Race to ESOPs-to-staff.html> Chattopadhyay, Utpal, ‘The impact of globaliza-
36
Global Tracks”, The Economic Times, 25 March, Ibid. tion on labour: evidence from Suzuki motor’s
37
viewed on 17 March 2019,< http://articles. Byatnal, Amruta (2013): “Bajaj Protests: Talks India Venture.’ International Journal of Economics,
economictimes.indiatimes.com/2012-03-25/ Aim at Job Security for Suspended Workers”, The Commerce and Management United Kingdom
news/31234304_1_ pawan-munjal-splendor- Hindu, viewed on 16 August 2018, http://www. Vol. II, Issue 4, 2014 Licensed under Creative Com-
hero-and-honda> thehindu.com/business/Industry/bajaj-protests- mon Page 1 http://ijecm.co.uk/ ISSN 2348 0386.

FALL 2019 201

Reproduced with permission of copyright owner. Further reproduction prohibited
without permission.