Unresolved wage issues with worker’s unions now see HAL employees sitting on an indefinite strike, but the Government couldn’t care less.
- Since 14th October 2019, 20,000 HAL workers are on indefinite strike in all 8 HAL campuses.
- Wage Revision was not done in 2017 and is delayed till now, workers Union has not agreed to the offers by the HAL management.
- Because of economic slowdown, HAL planning to cut labour cost by recruiting temporary workers instead of permanent ones.
- In recent times, HAL has been losing Defense contracts to private players like Anil Ambani’s Reliance Defense Limited.
Hindustan Aeronautics Limited (HAL), India’s aerospace and defense PSU is witnessing an indefinite strike by 20,000 strong workforces since the 14th of October 2019. The strike is headed by the worker’s union and spans across all 8 HAL Campuses in Bengaluru, Hyderabad, Nashik, Lucknow, Koraput, Korwa, Kanpur, and Kasaragod.
HAL is crucial to India’s much-touted Defense structure, of which the country has always been proud. It delivers planes and also maintains them for IAF, tasked with carrying out routine services, overhaul, and repair. Furthermore, HAL is a profitable and healthy business, with credentials of manufacturing international standard aircraft.
HAL workers are up in arms, and the management has been unable to resolve the issues at hand.
The strike enters its 6th day and if it continues for long, HAL’s production and operational capabilities may also take a blow. The Government has ignored the issue till now, showing apathy towards the workers of a crucial public sector organization.
In fact, HAL is not the first PSU in news for unhappy workers. It’s a growing trend from BSNL and MTNL to Air India. It’s also a trend of apathy towards state-owned PSUs and welcome garlands for privatization.
The Wage Issue
On 14th October, the All India HAL Trade Unions Coordination Committee (AIHALTUCC) passed a resolution to opt for an indefinite strike. Their demand consists of unfulfilled wage revisions. Furthermore, the workers demand the elimination of disparity in the hike percentage between executive wages and worker wages.
As per the demand by AIHALTUCC, worker’s wages had to be revised twice in 10 years. The latest one was supposed to happen in 2017. However, it hasn’t happened with less than a quarter left of 2019. The union claims the last hikes were in 2012 was part of the 2007 revision.
Now here’s a twist, the Management says the 2007 hike was followed by one in 2012. On the contrary, S. Chandrasekhar, General Secretary of AIHALTUCC claims it was only part-time wage revision twice after 5 years each instead of the two full wage revisions, as management claims.
Flashpoint: The Executive-Worker Disparity
The difference in the percentage of hike in the basic salary and perks provided to workers and executive officers became the predominant flashpoint for the agitation. However, the HAL management claims, the offer of an average hike of 9-24% with an average wage increase of 15-16% it made to the Union was fair and substantial in today’s time.
However, the union rejected the offer that the revision was more of a wage deduction. They demand the same hike of 15% in basic pay and a 35% increase in perks as HAL gives its executives. HAL officials are blaming the delay in negotiation on multiple demands by the workers which they find unreasonable.
C.R. Ananthakrishnan (Director, Finance, HAL) said that management will convince the workers and negotiate the matter as soon as possible and that too, without the intervention of the Government. But something else that he said catches attention. The official added that ‘the wage negotiation being done for the coming 10 years’ is based on the performance and the contracts that HAL will receive in the coming future.
While performing well in the current scenario, HAL’s healthy financials are due to the previous contracts it is fulfilling right now. For the future, let us take a look at what HAL’s prospects have been in terms of defense contracts recently.
HAL’s Health and Future Prospects
Labour cost is a concern that every company has to deal with. So, HAL’s labour cost is around 24%, and the company’s average is approx. 15-16%. Ananthakrishnan said the company needs to be cautious about the fact that labour cost aligns with the company’s growth. He further said that HAL needs more orders to ensure the workers keep on working and are not kept idle.
In 2019, HAL has a turnover of Rs 19,400 crore. It earned a profit of Rs 2282 crore. However, the management is looking to bring down the current labour cost of 24% to 20% in the coming years. This is a clear hint of the impact of the current economic slowdown on HAL. This also means that the company might recruit temporary workers which is more sustainable as compared to permanent ones, making the burden more bearable for the company.
The management’s offers would result in a reduction of employees’ wages, especially for those working at HAL for 15-20 years.
Chandrasekhar opined that over and above the wage increase, there’s also the question of cost to the company. However, he also said that the management’s offers would result in a reduction of employees’ wages, especially for those working at HAL for 15-20 years.
From making 126 Rafale Aircrafts to Nil: HAL is not getting the defense contracts as it used to
The Rafale controversy rose questions on the Government’s role in dealings with Dassault Aviation of France. The contract which was initially for 126 Rafale Aircrafts was to be fulfilled by HAL indigenously. Instead, the debt-trapped Anil Ambani’s Reliance Defense Limited made a foray into Indian Defense Sector which in itself is on the way to privatization like in the US, and EU countries.
Furthermore, the trend is growing. In October 2016, Dassault Aviation and RDL joined hands and formed a 50-50’ JV called Dassault Reliance Aerospace Ltd. (DRAL). Although opposition cried foul, the Indian Government claimed to have played no role in the formation of DRAL.
However, this was different from the story that came from France. Former French President Francois Holland stated in an interview that while negotiating terms with Indian PM Narendra Modi, his government had ‘no choice’ but to select Anil Ambani’s Reliance. He also said that RDL’s name was proposed by the Indian Government.
The Recent Trend of Private Lobbying in India’s Defense Contracts
In 2015, even before cracking and securing the Rafale deal, Anil Ambani was in Moscow while Indian PM Modi was also visiting Russian President Vladamir Putin. Ambani was reportedly there to bag contracts including Kamov and building frigates for the Indian Navy.
However, the contracts at that time went to the trusted traditional Indian partner HAL for setting up a production line of $1 billion Kamov KA-226 light helicopters. Similarly, Russian United Shipbuilding Corporation’s frigate deal went to the state-owned Goa Shipyard Ltd. However, Reliance has had some success in Russia too.
In 2018, Russia sent a letter to the Indian government that it signed up with Reliance Defence in an INR 6,000 Crore deal to manufacture and act as the lead integrator for its 200 Kamov 226T Helicopters. Moreover, the letter had stated that Russia had kept the traditional partner HAL as a backup option subject to the Indian government’s approval.
HAL has also historically played a huge part in India’s defense partnerships with Russia and other countries. From the production of legendary aircraft like Sukhoi to indigenously innovations like IAF’s combat Tejas, HAL’s progress is crucial to India having a strong public-sector economy. Ignoring it and a future where it gets lesser contracts would mean a gradual downward trajectory for another legendary Indian PSU.
- HAL is financially healthy with a turnover of Rs 19,400 but is unwilling to heed to the wage demands of its workers.
- Indian Government has recently favoured privatization in defence with players like Reliance which is posing a direct threat to HAL fortunes in the future.
- HAL’s current profits and financial health is due to old contracts on which it is currently delivering.
- If the indefinite strike continues, it might hamper HAL’s production, leading to another loss-making PSU in India.