The breakout of mass rioting by workers against senior executives in a Maruti Suzuki car manufacturing plant on July 18 in Gurgaon, Haryana, is a black mark on contemporary India’s industrial relations. It is emblematic of a crisis in emerging economies where contradicting goals of high economic growth and welfare of the present generation of workers are clashing with no easy resolution in sight.

In the industrial slums around Sao Paulo in Brazil, Johannesburg in South Africa, and Shenzhen in China to Gurgaon in India, the growth pangs of emerging economies are manifesting themselves violently. Maruti Suzuki’s Japanese managing director, Shinzo Nakanishi, may be wary of a “new militant workforce” in Indian factories, but the gaps between managerial incomes and lifestyles and the hardscrabble situation of workers are rising and cannot be swept aside as an unavoidable byproduct of economic growth.
They stand out starkly in a milieu like Gurgaon, which has been designed to be a Westernised capitalist utopia with glittering careers for highly skilled workers. The low-skilled labour force from conservative rural areas forms a huge underclass and represents the other side of India which is barely subsisting on low wages, poor housing and negligible sanitation.
While Suzuki has never experienced such wrath from workers in its other plant in Haryana or elsewhere in the world, there was a large contingent of temporary contract workers in the Manesar factory. Their resentments about low wages and lack of employment security seem to have played into a more volatile mix of politicised trade unions, typical Japanese managerial demands for higher labour productivity, and northern India’s caste-based social cauldron.
Ideally, labour forces in emerging economies must move up the skill ladder and enter the formal economy, which, at least on paper, is more humane than the informal economy. But the widespread resort to temporary workers in late industrialising countries bent on catching up through fast growth rates has meant that the formal economy has two tiers, viz. workers with job security and better pay, and a much larger set of labourers who are second-class industrial citizens.
Maruti Suzuki’s hint that it believes there might be “shadows that are sabotaging our operations in India” also implicates corporate rivalries — the usual suspects whenever such industrial disturbances erupt in India. Sceptics could counter that companies which fail to keep a balance in labour-management ties or in relations with wider society use the alibi of conspiracies to cover up their own inadequacies in treating workers or local communities with dignity. But the fact that Maruti Suzuki is the market leader in the lucrative and ever-growing small car sector, where other automobile manufacturers are trying to make inroads, does leave a bad feeling about whether the Manesar mayhem is an orchestrated event belonging to the category of below-the-belt corporate boxing. Ratcheting up ugly industrial disputes through rogue trade union leaders with a view to embarrassing ruling political parties or factions within them is also standard practice in the harum-scarum that is Indian democracy.
Sociologically, the shocking violence in the Manesar plant is a reflection on the modernisation process underway in emerging economies and the resultant class churning. Maruti was conceived by Sanjay Gandhi as an indigenous “people’s car” that would be affordable to the middle classes of the 1980s. It was the only reliable option for the intermediate section of Indian society until the liberalisation of the economy brought in a flush of foreign subcompact cars to choose from. The dream of entering the middle class and consolidating one’s status within that band was symbolically tied to the ownership of a Maruti. Today, as the Indian middle class surges to a humungous size of 300 million, the demand for cars in that category has expanded extraordinarily.
In the race to deliver to this burgeoning market, the management of Maruti Suzuki has been steadily increasing its annual production targets and pushing workers harder on quality and efficiency standards Contract labourers being paid barely Rs 7,000 a month would have definitely felt the squeeze of exacting Japanese perfectionism coupled with meagre compensation. It was as if the dreams of the Indian middle class were being built by piling on the backs of the poor.
The so-called “Good Conduct Bond”, which the Manesar plant’s managers wanted workers to sign last year in the menacing presence of policemen, had caused major tensions on the factory floor owing to fears that it was a ruse to scrap unionisation. Such developments must be seen in the larger context of rising consumption of Indians who are benefiting from the privatisation of the economy juxtaposed against the growing expectations of the working class which is flocking to manufacturing centres like Gurgaon. The allure of consumerism that is so visible and flaunted openly by the hip-and-happening elites of Gurgaon is tantalisingly unattainable for poor workers who are denigrated as yokels.
The management of industrial and social relations is at a delicate juncture across emerging economies. On one hand, the manufacturing sector’s growth is being encouraged by states in order to generate employment for the poor, but on the other hand, foreign investors find themselves caught in complex crisis of cultural, social and political nature that exacerbate underlying economic clashes of interests. The ball is in the court of governments to intervene and renegotiate the basic compact between white and blue collar workers that can ensure fairness as well as profits.
By definition, emerging economies are characterised by rapid growth, which has a dark side in the form of persistently high inflation. Tempering prices only during electoral cycles has become an escapist strategy for many governments who take GDP growth as the be-all and end-all of their existence. If they continue shirking their responsibilities towards the poor with the alibi that labour needs to be “disciplined” for the sake of growth, explosive industrial relations are in the offing.
There is also a need for more inclusive social spaces and institutions to mitigate the gaps in entitlements and the psychological barriers between natives and outsiders which build up class animosities in all emerging economies. If multinational corporations do not engage and win the trust of the netherworld in places like Gurgaon, i.e. the “other India”, more Manesars are in the making.

The author is a professor and dean at the Jindal School of International Affairs