Lesson from Maruti’s wage hike: Companies need to be proactive about workers

 Maruti Suzuki has given its workers a front-loaded three-year wage increase of up to 75%. It has also decided to dump its practice of hiring contract workers through contractors. Instead, it would hire workers through its own HR department. While up to 15% of the workers would still be temporary hands, they would be paid on par with the permanent staff, to eliminate complaints about wage discrimination. While Maruti’s own cost per contract worker might not have been all that different from its cost per permanent worker, what the contractor paid his workers was significantly lower, going by worker accounts after the recent violent incident at Manesar. This was a major factor in the buildup of worker resentment that finally culminated in violence. We welcome the change of tack at the Maruti management and the new direction of engaging with labour  At the same time, it is very important that workers and unions do not draw the conclusion that violence is the only language that managements understand. If such a message gets around, the result would be disastrous. 
Industry needs a new compact with labor  The old-school mentality of seeing labour only as a necessary evil, a cost to be kept as low as possible, regardless of what it means for their living standards and morale, is a short term view on par with shipping a consignment of shoddy goods to make some extra money on one export order. Labour is, at the level of the individual plant, a source of productivity and creativity, and, at the level of the economy, a source of demand for industry’s produce. Lowly paid labour with low morale does little good for individual enterprises or for aggregate demand economy-wide. The point is to put in place managerial practices and incentives to align workers’ interests with those of the enterprise as a whole. For this, managements have to be proactive and imaginative. It is futile to rely upon ability to put down, using force if required, any show of resistance by workers. It makes far more sense to tap people’s innate creativity at the workplace, both to make them happy and add to productivity.

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