Gurgaon: It seemed like a trivial incident at the time—an overzealous shop-floor manager meting out punishment to a worker for a fault on the assembly line at Napino Auto and Electronics Ltd near Gurgaon. The worker was asked to get on a table, hold his ears, squat, and then stand up again—a form of discipline across northern India and known as the “murga" (rooster) employed mostly on errant schoolchildren by teachers and by policemen on small-time criminals.

Industrial strife: A file picture of employees union members protesting against the Rico management in Gurgaon amid heavy police presence. Praveen Kumar / HT

The 19 November incident, which came to be perceived as a public humiliation, ignited the discontent that had been simmering among the 900 or so workers at the company that makes electronic parts for auto makers such as Hero Honda Motors Ltd and Suzuki Motorcycle India Pvt. Ltd. The workers, surprised by their own show of solidarity since there was no union history at Napino, went on a snap strike demanding action on a list of demands, including the payment of long-pending dues.

They also pushed for full overtime pay, salaried leave and, most critically, equal wages for contract workers doing the same job as the regulars. They sought a wage hike and wanted those who had been on contract for a lengthy period to be made full-time employees and thus eligible for employee benefits. Of the workforce, 852 are contract workers, 48 are permanent. Napino has a partnership with Japanese company Shindengen Electric Mfg Co. Ltd.

The uprising at the Manesar plant, 16km from Gurgaon, stalled production for two days. As word spread to other Napino units in Gurgaon and Haridwar (in Uttarakhand), workers served similar notices on the management: The Gurgaon factory was shut for two days, while in Haridwar, output was hit for a week. Napino did not respond to phone calls and email messages sent by Mint.

The strike leader, however, didn’t see the episode in terms of a battle between labour and employer, preferring to think of it as a fight in the family.

“We were upset, just like a son would get with his father," said Anil Singh, a worker who led the strikes at Napino, surprisingly reinforcing the paternalistic stereotype.

Going by that analogy, dysfunctional families seem to be on the rise. Labour unrest has rocked India’s industrial zones in recent months, disrupting delivery schedules at home and elsewhere. A strike in September at Rico Auto Industries Ltd, an auto parts maker, forced clients such as General Motors Co. and Ford Motor Co. to halt work at some of their US factories for a week, The Wall Street Journal reported in November.

The troubles that threaten to deflate India’s manufacturing “surge" start with the legislation that governs industrial disputes, which stem, ironically enough, from the state’s desire to protect workers.

India’s labour laws make it easy to hire workers, but not to fire them. The retrenchment of more than 100 workers involves lengthy paperwork, and such requests are often blocked by political considerations. Companies, including state-owned and multinational firms, subvert the rules by hiring large numbers of contract workers, who get paid less and work longer than their “regular" colleagues.

At the other end of the chain, companies need to keep a sharp check on costs—the Indian buyer is well known for having a keen eye for the value-for-money proposition, while foreign clients can always go to China (or any of the other emerging economies) for cheaper workmanship.

Caught in between is the Indian contract worker, taken on when there’s work and laid off when there’s none, usually without a social security net or benefits provided by the company to regulars.

Debashish Bhattacherjee, who teaches at the Indian Institute of Management, Calcutta, and is preparing a report on the auto industry, says much of the current problem is due to the lack of supervision.

“Large companies are better monitored by government agencies," Bhattacherjee said. “While they’d like to source parts from companies with reputation, they’re more bothered about quality than labour issues."

The Indian worker feels a new sense of entitlement to a share of the pie as economic growth shows signs of hastening after the slowdown caused by the credit crunch in 2008.

Employer and employee are thus poised to embark on a series of conflicts across India’s industrial landscape. The trade union movement has always been linked with the use of violence and intimidation by all sides, and so too in Gurgaon (and the rest of India).

Also See Workers’ Agitation (Graphics)

A “bad work culture" made worse by the influence of trade unions has sometimes been blamed for the latest rising tide of labour militancy—including the death of the chief executive of an Italian company’s local unit, Graziano Trasmissioni India Pvt. Ltd, in 2008—apart from the injuries and instances of intimidation that are too numerous to list.

One of the reasons for this is the evolving profile of the workforce, partly as a result of decades of social upliftment programmes and other grassroot reforms.

“Today, my boys are educated. They know how to use computers. They are not going to (sit by) and watch exploitation," said Jaspal Rana, a Hind Mazdoor Sabha leader who formed the first trade union in Gurgaon, at Lumax Industries Ltd, a manufacturer of car lamps, in 1988. Many of these “boys" include employees of Hero Honda, who are spearheading the movement to organize workers in the area.

India is no stranger to labour strife, most notably the Mumbai textile strike of 1982-83 spearheaded by Datta Samant, which was so successful that it killed off the industry and turned the mills into a real-estate bonanza for some of the owners.

Also See Factory Trouble (Graphics)

So what’s different about this wave of trade union activity? Timing. It comes as the world is emerging from a financial crisis that marks an inflection point in its industrial development. As the world’s fastest-growing economy after China—and one that sailed through the economic crisis relatively unscathed—India is poised to become one of the powerhouses that pulls everybody else out of the trough.

Take India’s automobile sector—it’s helping to define the future of the global car industry by churning out the low-priced models that are propelling growth as markets elsewhere lose steam. It’s also one of the key fronts on which workers are fighting companies, which explains why the stakes are so high.

Conflict zone: (top) A file photo of workers leaving the Rico plant in Gurgaon. Ramesh Pathania / Mint; (above) police personnel and “guards at the factory. Rico chief executive and managing director Arvind Kapur denied that the company had hired “bouncers, saying Rico has “80 guards for round-the-clock patrols of the complex. Bhagwat Dayal Sharma / Punjab Kesri

According to the 2008-09 Economic Survey, the labour-intensive automobile industry registered a turnover of Rs2.19 trillion. Of this, the vehicle sector registered Rs1.43 trillion while the components sector is worth about Rs76,320 crore (or more than half), with exports making up one-fifth of that.

The Union government doesn’t seem to be fully abreast of the trouble brewing on this front, going by the figures. According to its records, four industrial strikes had taken place till September in Haryana, but an investigation by Mint found at least 15 labour upheavals in the Gurgaon-Manesar industrial belt alone, each stopping work for a few hours to 52 days (see graphic).

Government statistics say there have just been 69 industrial strikes until September this year compared with 432 in all of 2008. Labour department officials admit there could be under-reporting. In 2008, 20 states reported strikes to the Union labour ministry. This year, only 13 states—less than half—have called in with numbers till now. Officials say that strikes by workers who don’t alert the labour department in advance are declared “illegal", and agitations that last less than a day are sometimes not included in official records.

Rico, the company where a death occurred during the strike in October, employs 1,275 regulars and nearly 1,675 contract workers, not counting casual employees. On a recent afternoon outside the company’s factory gates, workers voiced the problems they face, such as withdrawing money from the provident fund they’ve contributed to. The company, they allege, keeps changing employee code numbers, making it difficult for them to retrieve their savings.

Rico did not respond to messages seeking comment. However, Arvind Kapur, the company’s vice-chairman, chief executive officer and managing director, said over the telephone that his company complies with all rules. Apart from which, “we make sure contractors comply with all rules".

At least 60 contract workers at Rico Auto that Mint spoke to do not have health cover, but between Rs70 and Rs120 is cut from their salary every month. As for the regular workers, according to a list of employee codes available with Mint, around 82 don’t have medical insurance, mandatory for power-using companies that employ more than 10 workers.

Under the Factories Act, total working hours cannot exceed 48 hours a week, or eight hours a day in a six-day week. At Rico Auto, workers say they are not being paid double as per government rules for the extra hours that they are required to put in.

Rico Auto is not alone in treating employees at variance with prevailing laws. Neighbouring Sunbeam Auto Ltd, where the factory remained closed for 52 days through October, and Automax Ltd, where workers stopped work for a day earlier this month, operate in a similar fashion. Some offer double wages to regulars for overtime, but contract workers don’t get this.

This is in breach of the law that says contract workers, if employed in regular jobs, should be awarded equal benefits.

Common cause: Hero Honda workers’ union members outside the company’s plant. On the extreme right is Harish Sharma, secretary of 4S, a federation of 35 employees’ unions which was formed in June. Ramesh Pathania / Mint

“Here (in India), the typical argument is that workers are not qualified," he said. “In India, we do not pay premium, but discounted wages, for quality."

Workers say lopsided numbers at many companies—a small regular workforce dwarfed by a larger group of contract hires that’s being constantly retrenched and replenished—render it impossible to register demands and make management responsive.

As complaints and agitations rise, the government is trying to put together a report to curb contract law violations with the help of employers, workers and government representatives. Companies distance themselves from the issue, saying that the process is the sole responsibility of labour contractors, a position that has led to a steep rise in lawsuits.

At least 50 judgements on contract law have been passed by the Supreme Court and an equal number in the state courts, according to a study by Sanjay Upadhyaya, fellow at the VV Giri National Labour Institute, who specializes in contract law. He says the issue remains controversial as the trends in judicial pronouncements have not been consistent.

Some lawyers say the current situation is a problem that the workers have brought on themselves by using their trade unions’ backing to cover up for inefficiency.

Contract workers are better workers than regulars, according to P.P. Rao, a prominent Supreme Court lawyer, but he adds that it’s the laws that are at fault.

“I wouldn’t say that India’s labour laws are overprotective about workers’ rights," he said. “They, however, do not promote a disciplined work culture."

The restiveness at factories is giving trade unions a foothold in some of the newly industrialized areas, such as Gurgaon and Pantnagar in Uttarakhand, where there was a strike at a unit of Nestle India Ltd earlier this year.

This opportunity to organize workers and gain political traction comes as the Left parties, to which some of the unions owe their allegiance, have suffered setbacks in recent elections.

Workers of at least 35 companies in Gurgaon are now members of the Communist Party of India-affliated All India Trade Union Congress, while the Hind Mazdoor Sabha has members in at least 38 companies.

While unions compete with each other for membership, they also realize the value of presenting a united front. About 35 of them came together in June this year to form a federation under the banner 4S, or Sanyukt Shramik Sangharsh Sangh (Joint Labour Struggle Union).

It’s not clear what 4S’ exact long-term strategy is, but its immediate goal, says secretary Harish Sharma, a Hero Honda union leader, is to build a platform for joint decisions on issues relating to suspension, termination and union registration. At least two contractors have been removed from companies for “misbehaving" with workers as a result of efforts by 4S, he said. The federation’s representatives also sit in on conciliation meetings to settle disputes.

Several company and labour officials blame poor management, lack of transparency and a breakdown in communication between managers and workers as the root cause of the current disturbances.

One of the largest employers in Gurgaon—Maruti Suzuki India Ltd, the country’s biggest car maker—says good industrial relations aren’t difficult to achieve.

“You have to understand their (workers’) basic needs, and if you’re proactive," labour issues are less likely to arise, C.S. Raju, general manager, said on the sidelines of a recent conference on industrial relations in New Delhi. Workers at Maruti, he said, operate on a single shift and both workers and executives eat at the same canteen, a Japanese practice that promotes equality and a sense of unity, rather than a management versus workers hierarchy.

Maruti, which has an independent union, has seen strikes in 1986, 1988, 1996 and 1999, ranging from one to 85 days.

“Usually, companies do not have industrial disputes when they have strong unions and an effective system of social dialogue," says Anupam Malik, joint labour commissioner in the Haryana government.

Elsewhere, workers say recent attempts to organize trade unions have met with resistance, accusing companies of intimidation and strong-arm tactics. Companies, they say, are also hiring muscle from rural wrestling clubs, or “akharas", sometimes even former employees with criminal backgrounds, to threaten workers involved in union activity.

Three weeks after filing for trade union registration, Ram Niwas Yadav, a worker at Hema Engineering Industries Ltd, was waylaid by half-a-dozen men on the morning of 29 September. Yadav said he was beaten up by the men, who threatened to kill him if he did not resign from the company. As Yadav lay in hospital recovering from his injuries, the workers went on a one-day strike in protest.

In August, Hanif Mohammed, employed at Bajaj Motor Co. Ltd, was slapped several times by senior supervisors inside the factory before being forced to resign, prompting a production halt for a few hours. The incident took place a week after workers filed for union registration.

In the same month, workers at QH Talbros Ltd, which makes car steering systems, registered to form a trade union. The company’s first reaction was to transfer Mahesh Singh, a union leader, to Pune. After the factory was shut for two days owing to industrial action, it promised to reinstate him if he withdrew the papers for forming a trade union. The management eventually retracted the transfer order.

“The regular workers have got a raise this year after three years. Contract workers are still waiting for a hike," Singh said. “Workers toil for 12 hours a day but do not get double wages as the government regulation says. There is no way we are going to withdraw our papers."

QH Talbros, Hema Engineering and Bajaj Motor Co. did not respond to phone calls and emails sent by Mint.

Sometimes, it’s not always clear who is inciting the trouble and for what reason as with the dispute at Rico.

“Most of what’s going on (labour unrest) in Gurgaon is viewed as evil," says Rajender Pathak, an advocate at the district court who is fighting the case on behalf of Rico workers. “But it’s not always the workers’ fault."

The five-week protest at Rico, backed by the left-wing All India Trade Union Congress and the Centre of Indian Trade Unions, left one striking worker dead, while five others sustained bullet injuries. According to Pathak, the company announced a lockout on the morning of 21 September.

Workers who arrived for the morning shift found the gates locked and around three dozen policemen and between 200 and 250 private security guards—some equipped with firearms, others with sticks—were inside the facility. According to a labour official, around 150 security guards were inside, mostly hired locally.

At 3pm, the company verbally communicated that 16 workers had been suspended for instigating workers to go slow, while the rest could rejoin work the next day. In the conciliation meetings that went on through the night, workers argued that they had met weekly production targets, so the suspensions could not be made on that ground. No show-cause notice was served on the suspended workers which, Pathak said, was illegal.

The company was prepared for the confrontation. Four days before declaring a lockout, it filed for an injunction in court not to allow workers to strike within 200m of the factory, which the court limited to 50m. “This is the general practice of all managements in Haryana when they want to have a showdown with workers," said Pathak.

Kapur denied that the company had hired “bouncers", which he said was language “twisted" by the media. He said his company has “80 guards" for round-the-clock patrols of the complex.

During the stir, the company filed 10 complaints with the police against the strikers for disrupting work, beating other workers and preventing new hires—who arrived in buses to keep the unit running—from going inside. Workers complained to the police that the security men were flinging iron pellets and metal scrap from inside at the striking workers outside. The workers, who too were moving around armed with sticks, filed 22 complaints for beatings and one over a “missing" worker.

It’s not clear what exactly killed Ajit Yadav, the 28-year-old six footer who died on the way to hospital after a melee at the factory gates.

Workers said the security guards, who were originally hired from Haryana, were changed just before Diwali—the new ones had firearms and were allegedly hired from Agra through a former employee. This allegation could not be independently ascertained.

The post-mortem report said the victim suffered from a “lacerated wound" on the head and had a “depressed fracture" causing “contusion of brain matter". The report prepared by the Union labour ministry after consulting state officials implies that no one was directly to blame for Yadav’s death.

“The victim succumbed to injuries after falling on the ground," a ministry official said.

After the violence, the Rico management chose to file the first information report through one of their security guards; two workers were arrested for the murder while the private security guards disappeared. While all of Rico’s complaints to police have been registered as first information reports, those filed by the strikers have not been accepted by the police.

The Rico stir had a ripple effect as about two dozen companies employing 50,000- 60,000 workers shut the following day in protest.

Kapur said the trouble at the factory was “politically motivated by outside influences", without elaborating. He accused the unions of trying to create an atmosphere in which industry wouldn’t be able to survive, saying that this had already happened in the two states where the communists are holding power.

“Kolkata and Kerala don’t have industries, and now it’s starting in Gurgaon," Kapur said.

Graphics by Ahmed Raza Khan / Mint