Answer Happy

Multinationals often make judgmental errors regarding cross-cultural issues and the business environment prevailing in foreign countries. Honda Motorcycles and Scooters India Ltd. (HMSI), a wholly-owned subsidiary of Honda Motor Company Limited, Japan, established its plant in India in 1999 and made such mistakes in handling people - management issues. Recent clash between the Labor and Management of Honda Motors and Scooters India in Gurgaon has once again brought back the bogey of strikes of socialist era. Everyone including MNCs, government, economists and employers are skeptical of resurgence of labor movement. If labor movement gets a new life, it can give a severe jolt to Indian economy. Therefore, it is necessary to analyze the reason behind these events and curb the nip in the bud. The riot that followed the labor-management dispute in Gurgaon over the Honda Motorcycle and Scooter India spat could be the first major sign of things to come. After a decade-and-a-half of market friendly policy changes, the union seems to be sticking their neck out again to ensure they are being heard. Some says the left parties in power are the force behind this resurgence, the central unions disagree. They see the UPA government in the Centre providing a major conducive environment for their woes to be heard. For now, the battleground has been cleared and the soldiers are back home. A peace pipe is being passed around and the warring factions appear momentarily happy to take a drag as they put behind them the images of mayhem that hit the industrially flourishing Gurgaon Manesar region in Haryana. But behind the wall of silence, tremors can still be felt. The question on everyone's mind is how to ensure that what happened in Gurgaon does not happen again. Globalization and liberalization have forced government to give a serious thought to our anarchic labor law, which makes our companies uncompetitive globally and discourages foreign companies from investing in India. Indian labor laws are among the most rigid in the world. In this scenario, Government recognized the need for increased flexibility in Labor
market, but they cannot bring the policy of hire and fire approach, more so, since the institutions of social security, particularly unemployment insurance, are not well developed in our country. Therefore, structural reforms in labor laws must ensure the welfare of workers. Reforming labor laws will boost industry and create more jobs. Besides government, it is the responsibility of the employer to develop some well specified procedures that must not create undue unrest among workers and whenever they need more manpower, they should give a preference to the workers it is retrenching at present. They should also introduce some Unemployment Insurance Schemes made by the contribution of employees and employer. The fact that the less rigid nations also have more efficient economies, and higher wages and a smaller share of laborer who are long-term unemployed is not a matter of coincidence. Given that the reform of labor laws is, contrary to popular perception, in the interests of the workers, what government needs to do is let this topic debated and explained so that workers, instead of opposing such reform, become its advocate. Research has revealed that labor strikes globally hit once in eight to 10 years. That period is now nearing. "The Honda incident should be taken as early warnings of a big wave of labor militancy in the future." The All-India Trade Union Congress (AITUC), which has just claimed a conquest by bringing Honda Motorcycle & Scooter India's workers union into its fold, has now trained its guns on Maruti Udyog Ltd. the leading producer of passenger cars in the country pertaining to the dismissal of 92 employees during a labor trouble at Maruti in 2000-2001 and several hundred opting for a voluntary retirement scheme, which, it is alleged, is not exactly voluntary. Labor Unrest A labor unrest is a social phenomenon of enormous complexity and it is very difficult to give any complete explanation of this phenomenon. It is a matter of controversy whether the predominant factors underlying labor unrest are economic or non-economic. It has been concluded that so long as income remained the all-important means for satisfying human wants and needs, wage would continue to be major consideration in labor unrest. Considering the nearing period of labor unrest with the recent cases of Honda and Maruti, it is the time to do root cause analysis and find out what are the possible reasons which lead to labor unrest so as to address these issues.
Questions: 1. Mention and explain atleast 5 issues that leads to labor unrest. (5 Marks) [Note: You can relate with the case that was discussed in class for answering this question]. 2. How is the working style of Japanese firms different from that of Indian counterparts? (5 Marks) 3. Why are the Japanese companies like Toyota, Suzuki, Honda constantly facing difficulty while doing business in Indian setup? How can such labor unrest can be reduced? Mention few recommendations. (10 Marks)