auto industry jobs

The Life of Labour: 24 Dead in Punjab Cracker Factory Blast, Zomato Lays Off 540 Employees

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Zomato lays off 540 employees, says jobs will be automated

Popular restaurant discovery and food delivery platform Zomato has laid off 540 employees from its customer support team, saying jobs will be automated and those let go will receive two to four months of severance pay, Economic Times has reported. This is the biggest round of layoffs at the company, and has resulted in the reduction of 10% of its total employee strength.

“Over the last few months, we have seen our technology products and platforms evolve and improve significantly. We have dramatically improved the speed of service resolution, such that now only 7.5% of our orders need support (down from 15% in March),” the company said in a statement on Saturday. However, it insisted that it was not cutting costs, and cited figures of fresh hiring across functions this year.

“Zomato had earlier laid off close to 300 employees in early 2015, or 10% of its staff, due to cost-cutting,” reported LiveMint.

Sounding an alarm on future job losses due to advances in automation, Analytics India Magazine has argued for ‘upskilling’ of workers as a probable solution. A recent survey by IBM found, “More than 120 million workers globally will need retraining in the next three years due to artificial intelligence’s impact on jobs.”

The Zomato app page. Photo: Twitter/@Zomato

A recently-released report by the global commission on the future of work put together by the International Labour Organisation also argued for reskilling and upskilling of workers to keep humans at the centre of the world of work in the age of artificial intelligence. “Today’s skills will not match the jobs of tomorrow and newly acquired skills may quickly become obsolete,” it said.

Auto sales slump leaves workers struggling

While Union finance minister Nirmala Sitharaman blamed millennials preferring cab aggregator services like Ola and Uber for the slump in auto sales, she offered little explanation for automobile giants cutting production in even the heavy motor vehicles segment. According to a report in The Hindu, “Commercial vehicle sales – which are usually seen as an indicator of the economic activity in the country, tumbled nearly 39%.” Recently, Ashok Leyland also announced a pan-India cut down on working days, citing weak demand.

With automobile sales witnessing the worst crash in two decades, there have been production cuts and layoffs across the sector. Contractual and temporary workers have been the first to be hit and the auto ancillary industry that thrives on an ecosystem around production plants of big manufacturers has also been severely affected.

Manesar and Gurugram in Haryana are two such hubs of auto ancillaries that produce auto components for original equipment manufacturers. With a slowdown in production, contractual and temporary workers have been sent on leave. A team from The Wire that visited the area witnessed palpable fear among even permanent employees that they might lose their jobs. A joint council of trade unions of Gurugram has submitted a memorandum seeking government intervention to protect workers who they say are being fired in the guise of a production slowdown.

A ground report from Scroll.in documents stories of many such auto workers who have been laid off and are struggling to find new job opportunities.

24 dead in explosion at Punjab cracker factory

At least 24 people have been confirmed dead in a massive explosions at an illegal firecracker factory at Batala in the Gurdaspur district of Punjab. “The incident occurred as the workers inside were grinding potassium to fill in the crackers ahead of Diwali,” Inspector General (Border Range) S.P.S. Parmar told HuffPost India.

This is the most recent among many such incidents of workplace accidents, highlighting a lack of robust inspections and preparedness concerning occupational safety and hazard. On August 28, “at least 13 people were killed and 72 others injured in an explosion at a chemical factory in Maharashtra’s Dhule district,” Indian Express reported.

Also read: The Life of Labour: Migrant Workers in Kashmir Leave, 5 Die in Ghaziabad Sewer

Even though they seldom make national news, the number of workers dying in such avoidable accidents are quite alarming. “Every day, 47 factory workers are injured and three die in accidents. Data from the Labour and Employment Ministry reveal that in three years (2014-2016), as many as 3,562 workers have lost their lives while 51,124 were injured in accidents that occurred in factories across the country,” says a report in Hindu Businessline.

Government snubs experts

An expert committee headed by labour economist Anoop Satpathy, had recently suggested a needs-based national minimum wage of Rs 375 per day or Rs 9,750 per month as of July 2018, irrespective of sectors. However, Telegraph has reported that the government has overruled the panel and is now considering setting up a new committee of bureaucrats to determine a lower floor wage.

Representative image of MNREGA workers. Photo: IISG/Flickr (CC BY-SA 2.0)

Minimum wages in India are the lowest in the world when compared to other large economies.

“They said the main reason behind the Centre’s decision to let a new committee supersede the previous panel was that the experts did not concur with the feedback the government had received internally in their recommendation,” the report said.

There have been heated debates around what an ideal minimum wage should be and if they need to be uniform throughout the country. While trade unions argue that they should be decided in accordance with the Supreme Court’s judgment in the Raptakos Brett case, the recently passed Code on Wages, 2019 has left the determination and revisions at the mercy of committees which the unions claim will always have a pro-employer bias.

Even the Economic Survey for 2018-2019, which had a dedicated section on minimum wages, cited a study showing the presence of a “lighthouse effect” – the minimum wage acts as a benchmark that pulls up wages in the low-paid and informal sector by enhancing the bargaining power of vulnerable workers. This has reportedly led to a rise in actual wages.

Also read: The Life of Labour: MTNL Workers Unpaid for 2 Months, 2 Lakh Auto Sector Jobs Cut

International news

GM Korea workers stage first full strike in more than 20 years

Unionised workers at the South Korean unit of General Motors or GM have gone on a strike demanding higher wages and against the carmaker’s restructuring plan in the country, says a report in Financial Times. The strike is significant as the union has 8,000 members who are on an all-out strike for the first time in two decades.

Workers are reportedly awaiting a wind up of operations. Photo: Reuters

“The union is demanding a 5.7% increase in basic monthly salary, one and a half months of wages in incentives, and a cash bonus of Won 6.5m ($5,400) per worker.”

Cut down in production and fears of the motor giant winding up its operations in Korea has led to fears of a mass layoff.

California passes landmark gig economy workers’ rights bill

“Lawmakers in California have passed a landmark bill that would make it much more difficult for companies such as Uber and Lyft to classify workers as independent contractors rather than employees,” says a report in Guardian.

The bill would go into effect from January 1 and is set to make it difficult for companies like Uber to deny that their workers are employees. “…workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business,” it said.

The bill also allows for entitlements like holiday and sick pay to workers in the gig economy. US Democratic presidential candidates like Elizabeth Warren, Bernie Sanders and Kamala Harris have supported the move. The response from trade groups and platforms in the gig economy has been predictably critical.

“We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers’ and riders’ wants and needs,” the ride-hailing company Lyft said in a statement.

Extra reading

Jostled by robots and new job-seekers, auto workers have to accept their insecure fate

Strangled by a safety net: When severance agreements demand workers’ silence

73.2% of rural women workers are farmers, but own 12.8% land holdings

As they build India’s first camp for illegals, some workers fear detention there

The Jobs imperative: Improving employment outcomes for India’s youth

BSNL revival plan lacks vision: Staff union

Auto Slowdown Likely to Continue for Two More Quarters: TVS Motor CMD

In the past ten months, the automobile industry has seen a slowdown due to various reasons, including poor sentiment, a liquidity crisis, price increases and emission norms, and a hike in insurance premium.

Chennai: The automobile industry might come out from the slowdown and probably start seeing growth between January and April next year, said Venu Srinivasan, chairman and managing director of TVS Motor Company. He also said that a series of policies and regulations, including BS-VI, has resulted in a 40% cost increase in three years.

In the past ten months, the automobile industry has seen a slowdown due to various reasons, including poor sentiment, a liquidity crisis, price increases owing to the implementation of several safety and emission norms and a hike in insurance premium, etc.

“I think the slowdown will be there for a couple of quarters more. I expect everything will be digested by the time and hopefully, by next year, we should start seeing growth – between January and April,” he told Business Standard.

Commenting on the increase in the price of two-wheelers, he said that there has been a significant cost increase from BS-III to BS-VI. The Supreme Court order mandating insurance to be provided for five years has increased the prices by another 8-10%. The implementation of ABS for higher-end two-wheelers has also contributed. While the registration cost might go up marginally, BS-VI is also coming up, and this would further increase prices.

Also read | Auto Slowdown: Maruti Suzuki and Bosch Cut Production

“If you look at increase in cost, it should be around 40%, including switching over to BS-VI, over three years. It is not registration and road tax that are significant, but it is a series of increases that has raised prices very substantially for two-wheelers,” he added. Most of the vehicles will become BS-VI between September 2019 and January 2020.

The recent clarification by Prime Minister Narendra Modi that internal combustion engine (ICE) and electric vehicles will both be encouraged and grow is a strong step to encourage investment and employment in the automotive sector in India. This will increase confidence, create employment and bring in significant improvements to Make in India. India is also a major exporter and has global scale and competitiveness, and the approach would help the county to grow its exports, said Srinivasan.

The prime minister’s remarks will provide reassurance to millions of people across the supply chain, ranging from component manufacturers to original equipment manufacturers, dealers, mechanics and associated people across the country, he said.

A technology-agnostic approach that encourages all options is very important for a developing country like India, which is dependent on fossil-based sources for much of its power.

The industry doyen had earlier raised concerns over NITI Aayog’s demand that three-wheelers should be fully electric by 2023 and two-wheelers by 2025. He said that the BS-VI vehicles are cleaner than coal-based thermal electricity production since the electricity is produced from very poor quality coal with very high pollution. He added that the transmission losses were also high in the country.

Also read | How a Shadow Banking Crisis Sent India’s Autos Sector Into a Tailspin

Besides, the electric motor parts and batteries are coming from China and depending on lithium from China is more critical than buying oil from open sources. “If you put all that together, we are not yet ready,” he recently told shareholders in the annual general meeting. In countries where 60% power is produced from nuclear or renewable, like France and Germany, an electric vehicle could reduce pollution. Even those countries are aiming at 25% of vehicles to be electric by 2030,” he added.

Earlier, in a communication to shareholders, the company had said that it expects the two-wheeler industry to grow by around 6-8% in financial year 2020. In 2018-19, the domestic two-wheeler industry grew by around 5% to 21.2 million units, as against 20.2 million units a year ago.

By arrangement with Business Standard.

Mahindra Warns of Job Losses in Auto Sector, Seeks Government Help

A slump in sales has triggered massive job cuts in the sector that employs 35 million people directly or indirectly. Initial estimates suggest that about 3,50,000 workers have been laid off since April.

Mumbai/Bengaluru: Indian automaker Mahindra and Mahindra Ltd (M&M) said on Wednesday it saw a “huge danger” of job losses in the ailing domestic auto sector, as it sought government intervention, including tax reductions to revive demand.

A lending crisis among the country’s shadow banks, which fund nearly 55-60% of commercial vehicles and 30% of passenger cars, has led to automakers, including M&M and its rivals Maruti Suzuki India Ltd and Tata Motors Ltd, to either cut production or temporarily close plants.

M&M said in a statement it was only able to maintain margins due to falling commodity prices and the government must reduce the Goods and Services tax (GST) rate to spur demand.

A slump in sales is also triggering massive job cuts in the sector that employs 35 million people directly and indirectly. Reuters reported on Tuesday that initial estimates suggest automakers, parts manufacturers and dealers have laid off about 350,000 workers since April.

Also read: Two Lakh Jobs Cut in Last 3 Months Across Automobile Dealerships: FADA

“Now job losses are happening in four areas OEMs (original equipment makers), suppliers, dealers and unorganised sector,” Managing Director Pawan Goenka told reporters in Mumbai in a post-earnings press meet.

M&M’s heavy goods segment, which makes trucks and tippers, saw its worst growth in nearly six years, the company added, as it reported a June-quarter consolidated profit that nearly halved from a year ago to Rs 9.14 billion ($129.10 million).

“Given the current challenging global and domestic growth environment, a concerted policy effort will be required to prop sentiment, put a floor under consumption and revive growth,” M&M said.

M&M shares were 4.9% down in afternoon trading.

Two Lakh Jobs Cut in Last 3 Months Across Automobile Dealerships: FADA

With no immediate signs of recovery, the body feared that the cuts may continue and sought immediate government intervention.

New Delhi: Around two lakh jobs have been cut across automobile dealerships in India in the last three months as vehicle retailers take the last resort of cutting manpower to tide over the impact of the unprecedented sales slump, according to industry body FADA.

With no immediate signs of recovery, the Federation of Automobile Dealers Associations (FADA) feared that the job cuts may continue with more showrooms being shut in the near future and sought immediate government intervention such as reduction of GST to provide relief to the auto industry.

“The majority of job cuts have happened in the last three months. It started around May and continued through June and July,” FADA president Ashish Harsharaj Kale told PTI.

He further said, “Right now most of the cuts which have happened are in front-end sales jobs but if this (slowdown) continues, then even the technical jobs will be affected because if we are selling less then we will also service less, so it is a cycle.”

When asked how many jobs have been cut across the dealerships in India, he said, “Close to about two lakh.”

“It is a guesstimate that our members have already cut 7-8% of the jobs in most of the dealerships as the degrowth has been very high,” he added.

Around 2.5 million people were employed directly through around 26,000 automobile showrooms operated by 15,000 dealers. Another 2.5 million are indirectly employed in the dealership ecosystem, he added.

Also Read: How a Shadow Banking Crisis Sent India’s Autos Sector Into a Tailspin

The two lakh jobs cuts in the last three months are over and above the 32,000 people who lost employment when 286 showrooms were closed across 271 cities in the 18-month period ended April this year, he added.

Stating that more dealerships have closed in the past three months, Kale said, “We are collating the figures again. In a few cases some (dealers) have gone for closure of outlets, not the main outlets but those which were put up anticipating some geographic reach.”

Elaborating on reasons for taking the drastic step of cutting jobs, he said the ‘margin of error’ in the business in the past few years has really gone down with cost almost doubling in the last three to four years.

“The margin that we earn overall as a business has not gone up. Therefore, if we go into a degrowth situation we get into cash loss. So to avoid that, dealers have been cutting down on costs other than manpower. Till March this year none of the dealers went for any manpower correction because we thought this was a temporary slowdown and it will soon recover,” he said.

However, he said, “The way the first quarter has panned out despite good election results and the Budget, the degrowth continued. It is clear now that a proper slowdown has hit us. Now dealers have resorted to cutting manpower.”

Terming manpower as ‘the most precious resource of dealers’, Kale said, “That is the last thing we try to cut down. When the slowdown started we first decided that we should go for stock reduction. Most of OEMs have supported us. While cutting other variable expenses that we can, we did not touch manpower till March and almost mid-April.”

Ruing the loss of jobs, he said, “It is the last resort because it is difficult to get those manpower. We invest a lot on training them because it is a peculiar industry, whether it is a technical or a field job.”

As per Society of Indian Automobile Manufacturers (SIAM) figures, vehicle wholesale across all categories declined by 12.35% to 60,85,406 units in April-June against 69,42,742 units in same period of last year.

On the other hand, as per data based on registrations collated by FADA, automobile retail sales in the April-June period declined by 6% to 51,16,718 units in the first quarter of this fiscal as against 54,42,317 units in the year-ago period.

Passenger vehicles (PV) segment has been the worst hit with sales continuing to decline for almost a year now. In July, market leader Maruti Suzuki reported a 36.3% drop in its domestic PV wholesales, while Hyundai saw a dip of 10%.

M&M sales were down 16%, Tata Motors’ PV sales fell 31% while that of Honda Cars India Ltd (HCIL) also came down 48.67% during the month.

Seeking immediate government intervention, Kale said, “We are hoping, from whatever we are hear that the government has taken note of the serious situation that is going on in the overall economy, specifically with the auto sector. We are hoping for some support for the auto sector in the next few days or week or two.” He said the auto industry has already put out a request for GST cut.

“It is not a permanent demand. We know GST is such a huge developmental agenda for the government, but at the same time (it is needed for) reviving the auto industry. We (auto industry) are almost 8% of the GDP and 49% of manufacturing GDP,” Kale said.

He said while the revival of monsoon holds out hope, resolution of liquidity crisis, specially with the NBFCs, will go along way in helping the auto industry recover from one of the worst sales slumps in its history.