Maruti ups wages 50% at Gurgaon unit

Eager to avoid a repeat of the labour unrest that has gripped its Manesar facility, Maruti Suzuki on Tuesday announced a wage hike of 50% for workers at its Gurgaon unit with effect from April this year, besides a host of other incentives.

Beginning October, permanent workers at Gurgaon — 2,032 in all — will get an increment of Rs18,000 in their monthly salary, spread over a period of three years.

“Negotiations have been going on since April and the wages will be effective from October in retrospect from April,” said Kuldeep Jhangu, general secretary, Maruti Udyog Kamgar Union.
The Gurgaon facility currently produces Maruti 800, Omni, Gypsy, Ritz, Estilo, WagonR, Ertiga, Eeco vehicles.

Experts feel the wage hike is aimed at avoiding a repeat of the labour unrest that has gripped the company’s Manesar facility over the past year or so.

“The company had little option after it suffered huge losses due to strikes and lockouts in the past one year. It had to come up with a solution to retain the permanent workers. It is a compromise formula,” said Yogesh Saigal, an independent HR consultant.
Currently, salaries at the Gurgaon plant range from Rs35,000 to Rs39,500 a month. Of the Rs18,000 increase, workers can avail up to 80% of the increase, or around Rs14,400, in the very first year.

The previous wage settlement at the Gurgaon plant was in 2009, when the union had managed to get a 6% hike for its members. The average hike then was around Rs7,000, spread over three years, with workers allowed to avail only 50% of the hike, or Rs3,500, in the first year.

Among other incentives, the workers will also now be entitled to variable dearness allowance, which would be Rs700 to start with and be revised in sync with inflation.

They would also get medical benefits. While a worker and his immediate family is covered completely by Maruti Suzuki for his medical expenses, for his parents, the company will pay 90% of the expenses till Rs1 lakh and 80% from Rs2 lakh onwards. The rest has to be borne by the worker. The company has not set an upper limit for both the categories.

Travel allowance, too, has been hiked, while the training period has been reduced from three years to two years.

Going forward, Maruti also plans to provide housing facilities to its workers at both the facilities as dwelling costs are higher in Delhi NCR areas.

The company would also like to roll out the benefits to the Manesar workers, but is yet to work out a formula. Workers at that plant had demanded a wage hike of Rs15,000-16,000 a month, while the  management had offered a Rs10,500 increase and negotiations were underway when violence erupted on July 18, leading to a shutdown of the unit till August 21.

A top official said the increase in wage bill was too small to affect the company’s bottomline.

Analysts also feel that a 50% hike for 2,032 permanent workers will not have a major impact on company’s finances.

“The company’s margins are under a lot of pressure anyway due to foreign currency fluctuations, rising import costs and increased discounts. This will further increase the wage cost of the company but will not have a major impact overall, considering it is not an overall wage hike,” said an analyst from a domestic brokerage who did not wish to be quoted.

Besides, the company will pass on this increase, said experts.