GM India Moves to Break Strike in Gujarat

Amid reports that a strike at its Halol facility in Gujarat are tarnishing the state's business-friendly image, General Motors India officials today met Gujarat Chief Minister Narendra Modi to discuss further investments and issued an ultimatum to about 250 striking workers threatening termination of services unless they returned to duty by tomorrow, according to India's Business Standard.

The move follows nine days of strikes at the car maker's Halol facility, resulting in a production loss of over 700 cars so far.

On March 16, workers resorted to strike at the Halol facility, which has an installed capacity of 85,000 units a year, protesting transfer of some employees to dealership outlets and opposing a long-term wage settlement agreement signed in December last year, the paper said.

The plant has one registered workers body — GM Employees' Union. The company claims that a new union, formed under the aegis of Congress-backed Indian National Trade Union Congress (INTUC), has been spearheading the agitation.

This might sound crazy to those who know Gujarat, but the Economic Survey for 2010-11 had said Gujarat witnessed the highest number of strikes and other forms of labour unrest in recent times on account of various financial and disciplinary issues, the paper writes. But I have a theory…. It could be precisely because Gujarat is so friendly to big business.

Here's why:

For those unfamiliar with India, it's a fairly weird country when it comes to union action. On the one hand, unions can be very powerful in the so-called "organized sector" of large, well-regulated businesses (though organized doesn't mean unionized in this context). And in the public sector units — i.e. state-owned industries — they comprise a strong enough lobby to block foreign investments, stall new airport contracts, and so forth.  But unions account for only a tiny portion of India workers.

Tough labor laws make it difficult for large companies to hire and fire workers, so the lion's share of work is pushed out to small, unregulated businesses in the "unorganized sector" where safety regs are flouted, minimum wage laws are ignored, and workers can be summarily dismissed any time.  And, again, weirdly enough, it's India's communists that are preventing labor reforms that would, yes, make it easier for big companies to downsize when necessary — but also encourage the demise of the unorganized sector that defies regulation of any kind….