How technology impacts trade unions

AUG. 13, AKURDI, PUNE. It’s the 50th day of the worker’s strike at Bajaj Auto, India’s second-largest motorcycle company. In a community hall opposite the main gates of Bajaj’s corporate headquarters in Akurdi, more than 500 workers belonging to the union—Vishwa Kalyan Kamgar Sanghatana—are gathered. I walk in as the union leader, Dilip Pawar, 56, steps up to the microphone, and the hall erupts: “Vishwa Kalyan Kamgar Sanghatana, vijay aso!” (Victory to Vishwa Kalyan Kamgar Sangathana) and “Hamari union, hamari taakat!” (Our union, our strength). Pawar announces the end of the strike, and for the next 55 minutes, delivers a speech laced with words such as unity, equality, and rights. So far, so predictable. The auto industry has seen more than 10 strikes in the past five years or so, and union meetings such as this are depressingly common. What’s caught the attention of the world’s media, however, is the union’sdemand, the refusal of which led to the strike. Apart from a wage hike and better working conditions, the union had demanded stock options for workers; reports say it had asked for 500 shares at Re 1 per share for each worker. (The Bajaj Auto stock closed at Rs 1,800 on the Bombay Stock Exchange on June 25, the day the strike began.) Traditionally, union demands have been around better working conditions or better pay.

A report in business daily Mint says the Bajaj management was open to the idea of discussing a wage revision, but would not give in to the demand for shares. In an e-mail to Fortune India, Rajiv Bajaj, managing director of Bajaj Auto, wrote that his reaction to the stock option demand was relief: “I knew instantly that they had chosen a losing battle by hinging their strike on an issue that was irrelevant to our business model.” (At a press conference in July, Bajaj said that in 50 years, the company had not given free shares to anyone, including the chairman, “and we are not about to start now”. The company also does not have an employee stock ownership plan at any level.)

The strike was called off with the management making no concessions. A failure of the union? Sure. But what’s compelling about this strike is the demand itself, which shows a degree of knowledge not seen before. And that signals the rise of a new worker for whom the colour of a collar is immaterial. Workplace hierarchy seems to be finally dying—at least from the worker’s point of view.

The new worker, and this is not just at the Bajaj factory, is more educated than his predecessor, has a degree or diploma, and, in many cases, a working knowledge of English. He (and increasingly, she) may not have graduated from a college, but has most likely attended a course at a polytechnic or an ITI (industrial training institute, which gives diplomas in vocational courses). In some ways, more evolved demands seem to be the result of natural progression; as a population gets more access to education, it gets more aware. Equally, this change has been hastened by the boom in access to the Internet and all that it holds. And these workers are all connected.

WITH SOCIAL MEDIA, the divide between the attire, lifestyle, and language of the managers and the workers is becoming irrelevant,” says Bino Paul, chairperson, Centre for Human Resources Management and Labour Relations at the Tata Institute of Social Sciences (TISS) in Mumbai. I see the force of this when I meet Pawar and a bunch of workers after the big meeting calling off the strike.

What’s behind the demand for shares, I ask Pawar, sitting in his office down the road from the Bajaj HQ, interrupted by telephone calls and endless cups of tea, and occasional queries from an assistant who is updating the union’s Facebook page (which is almost entirely in Marathi and Hindi). Union members wander in and out of the room, and during one of Pawar’s phone calls, I ask some of them what they know of stock options. A twentysomething tells me helpfully: “Madam, just put ESOP on Google. You’ll get everything.” A straw poll shows that all the workers in the room have smartphones and most of them are on Facebook. Another young worker adds: “A lot of us invest in stocks and we know how these things work.”

Pawar explains that for the past two years, the union has been conducting training sessions for line workers—the technicians who man the assembly lines and earn an average of Rs 16,000 a month. A group of workers spends a weekend at a nearby hill station (Lonavala or Khandala), where HR and financial trainers teach them the basics of communication and finance, including understanding a company balance sheet—all paid for by the union. “We’ve been following the quarterly results regularly and if the company can give a 450% dividend, why can’t it reward its workers with stocks? It’s always the investor who benefits from our hard work, so we decided that we also want to be investors,” says Pawar.

That sense of wanting ownership is something espoused by one of the early prominent supporters of the labour movement in India—M.K. Gandhi. In fact, the first public fast that Gandhi undertook was on behalf of textile workers in Ahmedabad, who had gone on strike seeking a 50% wage hike to meet the rising cost of living. Gandhi persuaded the workers and the mill owners to agree on a 35% hike. He also helped draft the constitution of the Ahmedabad Textile Labour Association, a group of seven unions. The Gandhian ideal, as expressed in some of his writing, was for workers to see themselves as partners in the business. “When you know that the mill is as much yours as of the mill-owners, you will never damage your property,” he wrote in his newspaper, Harijan, in 1935.

Pawar, meanwhile, says the demand for shares was also an attempt to settle the wage revision problem in one shot. He explains that giving shares will mean that the worker gets to benefit from rising share prices and will ensure they do their best to keep the company profitable. Judging by Bajaj’s response, the management evidently has not seen the force of this argument.

The increasing disconnect between the workers and the management is one of the reasons for incidences of violence during worker agitations. Violence was a part of the textile workers’ movement in Mumbai in the late ’70s and ’80s, when union leader Datta Samant was seen as a figurehead of militant trade unionism. In the auto industry, a manager was killed by workers in the Coimbatore factory of auto components maker, Pricol, in 2009. Earlier, in September 2008, a mob of workers at the Indian unit of Graziano Trasmissioni, an Italian transmission company, beat the company’s managing director to death.

One of the big reasons for the rise of militancy is the frustration that some workers feel at being paid less money and given less respect than managers who are less able to run machinery and keep the factory going. Pawar says that as a new generation of workers comes up, the dissatisfaction with status quo is likely to lead to even more violence in the next few years.

A senior worker in the Bajaj union says he communicates on Facebook with workers in Europe and Japan. “When we can use Japanese technology and production techniques, why can’t we get the same facilities that the Japanese workers get in their factories?” he demands. And then: “The Japanese worker is appreciated for doing just his job, it motivates him. Why can’t we have that?” This awareness is, in part, due to the union’s offsite programmes, where, Pawar says, “Along with understanding labour laws in India, we also discuss policies that exist in other countries.”

Sunil Ranjhan, senior vice president, HR, Honda Cars, says, “Two decades ago, a line worker’s retirement goal was to become a supervisor. Today, he wants to become a manager before he retires.” That’s an 80% jump in pay, if nothing else.

The good news is that some managements have recognised these changing aspirations and are taking steps to keep workers happy. About a year ago, Honda Cars India introduced an age-based policy for medical allowance. “When we started 15 years ago, there were 10 levels of hierarchy, and medical allowance was tied to that. Some years ago, we crunched the medical allowance to four levels. Now we believe it should be related to the person’s age, not designation,” says Ranjhan.

Pranabesh Ray, dean of academics at XLRI, Jamshedpur, says, “If the aspirations and lifestyle of the shopfloor worker are similar to that of his manager, why should the compensation and benefits be vastly different?” The HR head at a tool manufacturing plant in Pune says she gets requests from workers for a better-structured salary slip. “They ask if the indirect benefits to them can be included in the salary slip, so it looks attractive and helps them get higher loans,” she says. From what she’s told, they want to buy 60-inch televisions, expensive phones, or holidays abroad.

At another factory, senior workers ask for retirement benefits and life insurance. “Many of them have children working abroad and some concepts such as social security are influencing expectations here,” says the vice-president of the plant. Prabir Jha, senior vice-president and chief HR officer, Tata Motors, adds: “The charter of demands the newer generation puts to management won’t be the old-world charter.”

On a recent trip to one of the plants, Jha realised that the kind of questions asked by the line operators were similar to those asked by the diploma holders and graduate engineers. “Given that everyone has a similar job profile on the shopfloor, a diploma engineer wants to know why a B.E. guy gets paid more than him,” says Jha. (The difference between the three is that the B.E. is generally a four-year intensive course; the diploma is generally awarded after three years and teaches the basics of engineering; and an ITI diploma is awarded to students, including school dropouts, who complete a short-term vocational course.)

This sense of identity and image (the belief that a degree is not necessarily better than a diploma) is something that more and more HR managers are seeing. The union leader at an automobile plant in the National Capital Region belt asked the company’s HR manager if he could get business cards for himself. “Even though the work profile of the line operator is not glamorous, for his family he’s an engineer. He’s seen his manager fish out a card, he believes it makes him look important, so he wants it,” says the HR manager. This rising conflict raises a question that Ray loves asking his students at XLRI: “How do you define a shopfloor today? The person disbursing cash at a bank is also working on a shopfloor in a services industry, as is a call centre employee. The workers in a factory are no different,” he says.

ALL THIS HAS dramatically changed supervisor-worker dynamics, which often leads to disputes because the young workers demand explanations for doing any work that’s outside the norm, and supervisors, often old school, are compelled to show their authority. Sometimes, however, the conflicts are because the worker and supervisor are of similar age. “Earlier, your boss was much older and you had a sense of reverence because it was the reflection of a patriarchal society. That reverence disappears if you’re the same age as your boss. The boss has to demonstrate in action that he knows more. From an approach of reverence, it is now an approach that says ‘you prove to me why I should listen to you’,” says Jha.

Workers are willing and ready to confront managers with daily demands instead of routing these demands through the union. The HR head of an auto component manufacturing plant in Pune says the workers don’t just come up to the HR managers with their issues, they insist on going to the very top to get answers. In fact, factory workers approached the associate vice-president asking for access to the pantry, which was reserved for managers.

It looks like the end of the classic labour union, since the ability of workers to articulate problems and directly approach the management goes against the concept of collective bargaining. Sharit Bhowmik, chairperson of labour studies at the School of Management and Labour Studies at TISS, says, “One of the core issues of the strike at Maruti’s Manesar plant was of recognition of the new union there. They [the workers] felt they needed an independent body to represent their demands.” Paul says independent unions (like the Manesar one), however, mean that “collective labour power is definitely on the decline”. Pawar says workers even question union leaders. “Twenty years ago, if the leader said do this, it got done, no questions asked. It’s not the same today, they expect a logical explanation.”

Managers are finding that the only way to keep workers motivated and confident is to be open and transparent. Santrupt Misra, group director, human resources, Aditya Birla Group, says, “I cannot emphasise enough the importance of having your ear to the ground in this day and age where employees have countless ways to access information and form half-baked opinions, which are detrimental to them as well as the company.”

He tells of a time he heard of workers grumbling in a factory overseas. He spoke with the workers to get to the root of the problem, and found that they believed that their salaries were lower than what the law mandated. Misra engaged an auditor to educate the workers. He then released the published financial data to the workers who worked it out to realise that the company was well within the law. “They have easy access to information, but their ability to interpret isn’t always adequate. In the absence of authoritative communication from the company, the workforce is likely to listen to whatever comes their way,” says Misra.

IT’S NOT JUST about disseminating information. Jha says companies have to make serious efforts to listen to their employees. “We need to be better role models and listen to what he’s saying and not saying. I don’t think MDs and board members are spending that kind of time, unless it is an IT company, where the workforce is 70% of the cost.” Rajiv Dubey, president and member of the group executive board, Tata Motors, agrees. “There are almost no conversations about labour in the boardrooms these days,” he says.

If they listen, managers will realise that a factory floor worker wants to be treated the same as an executive. At Tata Motors’ Jaguar-Land Rover assembly unit in Pune, workers on the shopfloor wear T-shirts and jeans. The associate vice-president of human resources at an industrial tool manufacturing unit in the Chakan belt in Maharashtra says workers want to know why they can’t wear jeans on Fridays. “They know that the dress code for the staff is business casuals on Fridays, they want the same.”

The caste system in the manufacturing sector is also evident in the alienation of plant HR from corporate HR. “Ideally, the plant side HR should have gained importance. But there is a huge lack of integration between the two and companies should seriously look into that disconnect,” says Paul of TISS.

Recent studies by the institute’s students show a decline in the involvement of plant-level managers in the company’s strategy. One reason for that is that corporate HR is more visible to top management, and its people tend to grow faster in the organisation than those from plant HR.

Another reason for this disconnect is that the HR curriculum at most business schools gives little importance to conciliation, arbitration, and conflict management, says Paul. This March, he changed the curriculum of the flagship course at TISS, the Master of Arts in Human Resource Management and Labour Relations, to focus more on industrial relations and labour laws.

The real change will come when there is a concerted effort by the management to relook at HR policies for blue-collared workers and bring them on par with those applicable to the staff. Rajiv Bajaj agrees. Asked how HR should deal with factory-floor workers, he says: “In principle, exactly what they do for their engineers and managers.”