Maruti Suzuki Chairman needs lessons on CSR

Employees are our greatest asset is an oft repeated phrase in CSR Reports of almost all responsible companies. A highly integrated CSR workplace which has robust employee engagement and high levels of employee satisfaction, as a result of a CSR strategy and values framework, would reduce employee interests in unionization. Maruti needs to relook its policy towards its workers, both permanent and contract.

By Suresh Kr Pramar

The Chairman, Maruti Suzuki India Limited, R C Bhargava, urgently needs lessons in Corporate Social Responsibility. In a recent article published in the Economic Times he reveals his ignorance about responsible and inclusive business. “I had been unable to understand what exactly companies are supposed to do as their CSR. Is it philanthropy and charity? Is it social and humanitarian work or protecting the environment? Is it undertaking public service tasks which normally government should be doing?” he has said

According to Bhargava making profits on a sustained basis is a necessary condition for any company to survive for long. He says “it is in the interests of workers, and other direct stake holders, that the company should have long term sustained growth. Yet, in a large number of companies this does not appear to be recognised. Workers do not think that they should help the company become more competitive.”

The Chairman seems to believe that employees/workers are duty bound to make sacrifices to ensure the profitability of the company. This even if they have to work for discriminated wages and zero level perks under inhuman conditions. He ignores the fact that working conditions in Maruti, as described by the workers, go against various national and international labour laws.

Bhargava seems ignorant of the fact that companies can no longer ignore their stakeholders, particularly the workers. He harps on the fact that Maruti has borrowed from the Japanese experience ignoring the fundamental fact that the work culture in the two countries is very different.

He ignores the fact  that even in Japan companies would not be allowed to ride rough shoed over the rights of workers and allow the type of discriminatory practices followed by Maruti Suzuki with a large section of its workers. A recent revised law on contract labour in Japan outlaws “unreasonable” differences in the working conditions of contract and permanent employees”

He would like workers to make sacrifices because “if the company does well in terms of rising productivity and profits, they too would be enabled to improve their quality of life.” The workers, he says, should not see that management is not ‘exploiting’ them. He claims “workers shared in the gains of productivity, a large number of them became owners of houses and were respected and treated as human beings similar to management.”

The article reveals the confused thinking of the Chairman. His main theme suggests that the business of business is to make money. (A present day Milton Friedman“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”). Bhargava needs to understand that Maruti’s  problems stem from the fact that the company is not living up to its declared CSR Policy.

Like most Indian companies Maruti has adopted a CSR Policy According to the company’s web site “Maruti Suzuki has adopted a CSR policy, which serves as a guiding tool for the management and the employees in steering Maruti Suzuki towards long term sustained growth in harmony along with the interests of the stakeholder (stakeholder include employees).”

The Maruti Suzuki’s CSR Policy among other things says “the company will be deeply committed towards the welfare of its employees, their families and communities around its operations to improve quality of life as a whole.” The role of the CSR department is to professionalize CSR activities in Maruti Suzuki and strengthen the mechanisms involving the activities.”

Viewed against the touch stone of its CSR Policy Maruti has failed both its employees and the community impacted by its presence. CSR based human capital initiatives include the right to fair labour practices, competitive wages and benefits and a safe, discrimination-free, family-friendly work environment. These motivate workers to perform better, take on new roles and responsibilities and stimulate them to acquire new skills and competencies in support of the organization.

Corporate Social Responsibility (CSR) is an organization’s obligation to consider the interests of their customers, employees, shareholders, communities, and the ecology and to consider the social and environmental consequences of their business activities. By integrating CSR into core business processes and stakeholder management, organizations can achieve the ultimate goal of creating both social value and corporate value.

In her book ‘CSR for HR: A necessary partnership for advancing responsible business practices, Elaine Cohen, an international HR and CSR expert points out that “CSR begins with creating a responsible work place, where business takes the responsibility for its impacts on employees and their families” Employees have the most influence on the business and are most affected on a daily basis. They are the one who keep the business running.

“How can you expect your employee to understand and support CSR practices if they themselves are not treated in a responsible way? Without engaged, committed, motivated, capable and competent employees, working together towards a common goal, none of the other stakeholders would benefit because business will not succeed at an optimum level.”

Maruti’s treatment of its workers even goes against national and international CSR Codes. UN Global Compact Principle on Labour lays down “Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining” It calls for the elimination of discrimination in respect of employment and occupation. The labour principles of the Global Compact have been taken from the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work.

The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business released by the Ministry of Corporate Affairs, says”Business should promote the well being ‘of all employees’ According to the Guidelines an employee includes “a person employed, directly or by or through any agency (including a contractor)”.It lays down that organizations “should respect the rights of freedom of association, participation, collective bargaining…” This principle is applicable to all categories of employees engaged in the business “within and outside of its boundaries and covers work performed by individuals, including sub contracted and home based work.”

A bone of contention between the Management and the workers relates to the workers demand to be allowed to form an independent Trade Union. Management insists they join the union affiliated to the Gurgaon plant. The Workers say that the Trade Union patronized by the management is pro-management and therefore cannot fight for the rights of the workers. “That is a pocket union of the company which the workers don’t want to be part of,” says All India Trade Union Congress’ D L Sachdeva.

Workers at the plant claim that the management is anti labour and discrimatory in the matter of salary and allowances. Maruti has alienated a large section of its workers by denying them a fair salary and the right to form an association to fight for their rights. The company has been particularly discriminatory against the contract labour it employs.  Over 40 percent of the 3,000 workers at the plant are reportedly on contract.

Contract workers are discriminated against in the matter of salary, perks and overtime payments even though there is little difference in the nature of the job they perform. While permanent workers get a minimum Rs 23,000 per month, those working on contract are paid only Rs 9,500. They are not entitled to any perks including medical benefits or the bus service available to permanent worker.

Workers say they have to do an eight-hour shift which is often extended by an hour. The company provides a 30-minute lunch break, ten minutes of which goes in travelling to the canteen. A seven-minute break is given for tea and using the bathroom. Going on leave becomes almost impossible as Rs 1,500 is deducted for every day on casual leave from their salary. To have a high performing team, it is essential that people receive fair and proper compensation and recognition for their work.

According to Ramesh C Jain Chairman, Industrial relations task force, CII and Former group vice chairman of Eicher companies should not “treat the contract labour unfairly in terms of compensation, working conditions or what have you in terms of facilities for a permanent worker.”  Wages, work conditions and the temporary workers are a recurrent theme in the Maruti story. Last year’s strike at the company was fueled by demands for higher salaries, better work conditions, and reclassifying temporary workers as permanent ones, a change that would have made them eligible for several benefits such as leave with pay and medical allowances.

Most Multi National car manufacturers in India are pushing up their profits using contract workers. These workers do pretty much the same work as their “permanent” peers, but are paid a much lower salary. Former labour secretary Chaturvedi has said “Companies hire contract workers for exploitation rather than bringing any flexibility to their production just because they come cheap. “By not giving them social security and proper working conditions, how do you expect them to be loyal to you?”

“Contract workers end up sharing the same work space with and doing the same jobs as the regular ones as in the case of Maruti. Owing to the disparity in the pay structure and socio-economic status, there is a discontent among the contractual wokforce that may eventually culminate in a labour crisis,” said XLRI’s Sarkar.

Maruti’s problems are deeper, he said, and added, “There are some internal policy-related hurdles such as import cost and royalty payments, which have gone up due to yen appreciation (in the case of Maruti specifically) and has affected their profitability.” According to Anoop Kumar Satpathy, a fellow at the V.V. Giri National Labour Indian law entitles contract workers to be paid as much as permanent workers should their jobs be similar.

Employees are our greatest asset is an oft repeated phrase in CSR Reports of almost all responsible companies. A highly integrated CSR workplace which has robust employee engagement and high levels of employee satisfaction, as a result of a CSR strategy and values framework, would reduce employee interests in unionization. Maruti needs to relook its policy towards its workers, both permanent and contract.

Disclaimer:  The views expressed by the author in this article are his own and do not necessarily reflect the views of INDIACSR.

(Suresh Kr Pramar, Trainer, Writer,  CSR Consultant and the Executive Director, Centre for Training & Research in Responsible Business is a veteran journalist presently actively involved in promoting CSR through his publication CRBiz and by conducting workshop on Corporate Social Responsibility. He can be reached at, Mobile No: 09213133042/9899305950)

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