Recently the auto industry was in the headlines for all the wrong reasons, like the recent strike at Maruti’s Manesar facility, along with a number of cases where employees had a standoff with the management. According to a report by the market research company, JD Power, the country’s aim of becoming a global hub for small cars is likely to be hampered with labour problems, deficiency of skilled employees, and slow expansion pace by manufacturers of auto components.
In the India Auto 2020 report, the market research company said that the ambition of the country to be a global hub for production of small cars faces obstacles from manpower issues like deficiency of skilled labour, high cost of labour, and low worker productivity and efficiency. The risk of problems caused by unions is not uncommon in India, since most of the labour unions have political affiliation. Because of this regional politics always interfere in business operations.
These unions utilize their influence for promoting manual labour over automated labour in the Indian facilities so as to create more employment that results in longer cycles of production, increased cost outgo and greater quality variability. India is ranked 92nd from the 139 countries in the Global Competitiveness Index of World Eco Forum, for the year 2010-11.
The report also stated that the increasing cost of labour has increased pressure on the cost of production and has also led to labour problems in a few cases. The report also highlighted cases of labour unrests faced by many companies like GM and Hyundai in India.
The Indian auto industry is estimated to have a deficiency of 3 lakh skilled employees. The report quoted chief economist of CRISIL, D.K. Joshi, saying that while the country has a large employable population, not many of them fit the job category. Because of this, wages will go up in areas of labour shortage.