The industrial strife in Manesar is not just about how anarchic Young India can be. It is also about the need to revamp labour laws.

A striking thing about last week’s violence at Maruti Suzuki’s Manesar factory in Haryana, which claimed the life of a senior executive and injured scores of other management personnel, is the age profile of the labour force involved. The bulk of the workers at the company’s Manesar plant are in their early-20s and a good chunk outside the company’s rolls. This is in contrast to Maruti’s older Gurgaon plant, where the average age of workers — a larger number of whom are permanent — is close to 40, and they are mostly married with children. The fact that Maruti’s labour troubles, going back to strikes last June and September, have been concentrated at Manesar, and not the relatively more peaceful nearby Gurgaon unit, provides valuable lessons both from a demographic as well as industrial relations perspective.

The first aspect concerns the perception about India hitting a demographic ‘sweet spot’ that could potentially confer a competitive advantage, similar to what China enjoyed from the 1980s through the last decade. The average Indian was aged 25.1 years in 2010, which is projected to rise only gradually to 31.2 years in 2030. The corresponding median for China’s population had already touched 34.5 years in 2010 and is seen to cross 40 years by 2025, eroding the edge derived from a predominantly young and more productive population. A growing pool of young workers can, no doubt, be a great source of economic dynamism, since they are in a position to both earn and spend. But as Manesar shows, young workers can also be impatient, aggressive and irreverent towards authority, which sometimes extends to being provoked to commit extreme acts of violence. The fact that as contract employees, they would be doing jobs largely identical to those carried out by permanent workmen earning far more, doesn’t help the situation either. All this, if anything, points to the flip side of having 10 million new entrants to the country’s work force every year: In the absence of sufficiently remunerative and fair job opportunities, these youngsters can be a source of anarchy rather than harbingers of any ‘demographic dividend’.

But Manesar also highlights the urgency for reform of labour laws, that currently confine themselves to merely stipulating against employment on a contract basis. The stricter enforcement against casual employment must be balanced with provisions that make lay-offs of permanent employees more possible during periods of downturn. The absence of this now is really at the heart of a corporate preference for keeping the size of its permanent workforce to a bare minimum. The rest are hired on contract and adjusted, depending on the ebbs and flows of the business cycle. A shift away from such a regime is what may be best for Young India as well.

(This article was published on July 23, 2012)
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