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GURUGRAM/MANESAR: As the second week of August rolled in, 39-year-old Banarsi Shah began making plans to head back to his village near Begusarai in Bihar. An auto worker at the diesel engine unit of Maruti Suzuki’s Gurugram plant, Shah had hit the jackpot: a nearly three-week-long leave. “I don’t really know what is happening to car sales or the economy,” he said over the phone from his village. “I hope to come back on 1 September.”
When Shah became an auto worker in 2008, the automotive industry was going through a prolonged boom. Between 2000 and 2015, the share of jobs in automobile manufacturing doubled from about 3% to nearly 7%, providing employment to an estimated 800,000 people. But that ride now seems to have definitively hit the brakes.
Reports of job losses (some of it masked as long leaves) in the automotive sector in the face of an economic slowdown are now steadily streaming out, although growth in new auto jobs had begun to show signs of weakening as far back as 2012 (see Chart 1).
Jasraj Singh, who sits next to his idle truck in an open field in Gurugram, remembers the 2012 slowdown. “Even that wasn’t this bad,” he said. “I used to transport 2-3 loads (of cars) a month to a railhead in Guwahati. Now, I haven’t got work for over 10 days. Some others haven’t transported anything for a month.”
The 2012 slowdown and the violent strike at Maruti Suzuki’s Manesar plant that year resulted in 70% of the workforce morphing into a “temporary”, six-month-long contractual status; a subsequent fall in average wages (see Chart 2); and an acceleration in automation that was already underway (while the average robot density in Indian manufacturing is three per 10,000 workers, it is 79 per 10,000 in the automotive industry).
The current slowdown, which began to hit the workforce early this year, is perhaps the final piece in the jigsaw. The question now on the minds of many workers is: even if the slowdown ends, will auto jobs ever have the same allure?
“In the automobile industry, you don’t really need experience, especially on the assembly line. You are expendable,” says Paaritosh Nath, a researcher at Azim Premji University. “The employment outcomes we are seeing in the current conditions (of a downturn) have been a decade in the making.”
In Manesar, the brunt of the fallout has been borne by the temporary and casual workforce, which is in the majority.
Around Sector 4 in Manesar, normally teeming with casual workers looking for daily work, the streets are eerily empty. “Chhutti pe gaya” (gone on leave) is code in an industrial belt where firing is no longer necessary, since the permanent workforce is limited anyway.
Workers at big car and bike factories are still better off because of an impending 8-10% bump in production capacity ahead of Diwali and the annual festive season. However, those staffing the auto parts factories, which operate on narrow margins, have a more immediate perception of production swings. “Nobody gets overtime work these days,” said Subham Rana, 26, who works at Lumax Auto Industries Ltd in Manesar. “The streets are empty when I step out after 5.30pm.”
The long-term effects that this is going to leave on the labour market is “very worrying”, said Radhicka Kapoor, an economist at the Indian Council for Research on International Economic Relations. “That one of the fastest growing industries in the country over the past two decades is in such a slump is worrying.”
At Maruti’s Manesar plant, however, workers have been insulated somewhat due to a slight uptick in production to cater to the expected rise in sales around Diwali. “Pasina dekh (look at my sweat),” said Nitesh Pratap, stepping out of the factory after the 3pm work shift. “There is no slowdown on my assembly line. I am working as hard as I was.”
If sales don’t pick up around and after Diwali, men like Pratap may need a viable backup plan.