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Unions caution against VRS trend in Auto Sector

New Delhi: Workers’ union leaders caution against the recent wave of schemes that allow the workers to voluntarily opt for retirement, as being a harbinger of “more exploitative work conditions” in the country’s manufacturing sector – something that is further alleged by them to be in line with what is envisioned by the reform-oriented labour codes, acceding to a report published in News click by Ronak Chhabra.

The development, most visible among the automotive bigwigs, is however, billed as “crucial” to achieve operational efficiency within the companies, according to industry leaders – driven by an ambition to “beat” China.

On January 5, the Japanese two-wheeler maker Honda Motorcycle and Scooter India (HMSI) announced a voluntary retirement scheme (VRS) for its permanent workmen at its Manesar facility in Haryana, citing “prolonged demand slowdown” and “economic fallout from the coronavirus crisis” as reasons behind the move.

“In these uncertain times, we are aligning our production strategy for improved overall operational efficiency with the objective of long term business sustainability,” the company letter stated, while initiating the process to prune its workforce.

The move came months after the car manufacturing division of the same company initiated a similar scheme for its employees at a Greater Noida facility; which was eventually followed by the closure of the plant.

Recently, other manufacturers like Tata MotorsAshok Leyland among others have also offered their employees an option of retiring voluntarily, due to what they are referring as the market conditions being “poor”.

Trade union leaders, however, seem to have a different take on the issue, who view the manpower restructuring not merely as a result of the pandemic-triggered economic disruptions. “The companies that are trimming their manpower today citing lockdown, and COVID-19 as reasons are actually making space to employ cheap labourers – in the form of contract workers, and fixed term employees,” said Satbir Singh of the Centre of Indian Trade Unions (CITU).

While contract workers are already on the rise in the industrial townships such as Manesar, one of the labour codes – the Code on Industrial Relations – among the total four also has introduced the fixed term employment framework for the industries. It also reportedly does away with the provision that would deter employers from converting permanent jobs into fixed-term contracts.

To be sure, fixed term contract workers are entitled to receive all statutory dues like gratuity, provident fund, among others that a permanent worker receives. However, seen as a major change in the relations between employers and employees, the introduction of term contracts has received flak for turning the latter to be at the “mercy” of the former.

Singh argued that the companies are “alluring” their permanent workmen to opt for voluntary retirement. “Even if they are being paid an handsome amount in exchange, it will be easily recovered in the future by employing cheap labour, who will be subjected to more exploitative work conditions,” he said.

Jasbir Singh of the Employees’ Union at Bellsonica, an automotive part manufacturer in Manesar, agreed. “The VRS schemes that will see the ousting of permanent employees will also ensure that the dismantling of the unions in the long run,” he said.

He argued that it is more difficult to unionise the temporary workforce given that there terms are not fixed and that they can be easily retrenched. “Not just VRS, many companies in Manesar are also laying off their permanent workforce or are transferring them. This has been happening since years but has only accentuated in light of the passage of the labour codes.”

Passed in September last year, the four labour codes are set to be implemented across the country by April.

Manmohan Gaind, general secretary, Manesar Industries Welfare Associations, didn’t “support such allegations.” “This [VRS] is mainly being by the companies to achieve operational efficiency and there is nothing wrong in it,” he said.

“The market conditions are becoming highly competitive. If the indigenous manufacturing sector is not strengthened then we will never be able to beat the China in low-cost production,” he told NewsClick, adding that, to achieve it, “restructuring the manpower is crucial.”

Gaind contented that such a “growth” would be “disruptive” for the labour segment. “But we must not hold a myopic view. These changes are being brought with a long-term understanding,” he said.

NewsClick also approached Naveen Sharma, Division Head of general affairs at HMSI’s Manesar facility to check whether the company has any plans of employing workers on fixed contracts. “The company as of yet has no such plans,” he said on Saturday, January 9.

Asked about the VRS, Sharma said that the response from the permanent workers has been “good” till now, adding that, “We have a target of 400 workers; we hope to achieve that easily.”

The Manesar facility of Honda has 1,900 permanent workers. The scheme window is open till January 23, which can be extended as per the management’s discretion.

The announcement of HMSI’s VRS has also put other workers in other establishments to worry. “I know of at least two major automotive parts companies in the area, whose management is currently designing a VRS scheme for their employees,” Satish Rana of the employees union at Shivam Auto Tech Limited, another automotive part manufacturer, said.

“There is no dearth of workers who are ready to work for much lower wages than a permanent worker. A ‘permanent worker’ will soon become a thing of past,” Rana rued.