Tamil Nadu has been attracting a lot of investment in automobile and auto ancillaries manufacturing, and repeated labour unrest is threatening to be a deterrent for future investments in the state.
Labour unrest is back to haunt the country's second largest car maker. Hyundai employees have threatened to go on a sit-in strike yet again after the company refused to take back 35 dismissed employees.
And this even after an agreement between the two sides three months ago. The agreed deadline to reinstate those workers expired on Monday.
The workers had been dismissed for alleged misconduct. The automaker for its part has been engaged in talks with the dismissed workers for a possible settlement. Hyundai says it is willing to pay their dues and ex-gratia as per settlement.
If the strike does go ahead, it will be the third strike at Hyundai over the past year. On April 20, 2009, employees struck work for 18 days after the management laid off 65 workers.
Then again on July 23, 2009—this time the issue was a wage agreement that was signed by what the employees called a minority union.
And it’s not only Hyundai. In May 2009, workers at MRF struck work for months demanding recognition of their union. In September 2009, a senior official at Pricol was killed in workers’ unrest in the auto-ancillary hub of Coimbatore. Production was shut down for more than a month at Pricol.
Abdul Majeed, auto sector leader at PWC, said, "This sends really wrong signals. Our labour laws need an amendment. No one wins when it comes to dealing with labour. There has to be a give and take to some level amongst everyone. But our labour laws are the biggest of problems."
The existing labour laws require large companies to receive prior permission from state governments before laying off workers or hiring workers on contract. These laws have been blamed for encouraging workers to strike. With India positioning itself as the hub for small car production, such labour unrest may not send the right message to international investors.