India’s car-producing state Haryana on Friday ordered a 35% hike in its minimum wage after factory workers boycotted work and protested this week over rising costs of living in the wake of the US and Israel’s war against Iran.
The Haryana government has announced that it will increase the minimum wage for unskilled workers from about $120 per month to $165 per month from April 1. While this is a step that will help workers, it will increase cost pressure for India’s auto industry amid rising input prices and supply chain disruptions.
The decision came a day after clashes between police and workers in Manesar, 30 miles (48.28 km) south of New Delhi and home to companies such as Maruti Suzuki and hundreds of attached units that finance them.
“We urge the workers… to continue their work peacefully,” state official Ajay Kumar said in a video address Friday.
Gas supply disruptions in recent weeks have caused restaurant prices to soar, hitting factory workers hard and forcing some to return to their villages.
India, the world’s second-largest importer of liquefied petroleum gas (LPG), is battling the worst gas crisis in decades as the government cuts supplies to industry to protect households from cooking gas shortages.
The government’s move will increase costs for India’s auto industry, which is already grappling with soaring raw material prices resulting from the Iran war. While companies like Tata Motors and Mahindra have increased vehicle prices, Maruti has also warned of a similar move.
heavy dependence on gas
India’s heavy reliance on gas across its economy, including businesses of all sizes, households, agriculture and public transport, makes the country’s factories and low-income populations the most vulnerable in Asia.
Akash Kumar, 25, who works for Munjal Showa, a supplier to bike manufacturer Hero MotoCorp, said street vendors were charging him twice the price for a meal of bread, curry and yoghurt.
He said Friday’s decision should bring some relief. “Whatever we get, we have to be happy,” he said, adding that employees had resumed work after being informed of the wage increase.
Labor unrest in Manesar affected various auto suppliers this week, according to Reuters interviews with more than 30 workers. Workers say they are demanding higher wages to maintain their livelihoods as food becomes more expensive and gas supplies become more unstable.
The federal government insists there is no shortage of cooking gas for households and is increasing the supply of small gas cylinders for day laborers and migrants.
Munjal Showa told Reuters that production was partially affected this week.
At Loop Polymers, a supplier to Maruti and Honda, there was a sign on the wall at the factory gate warning of disciplinary action against absent workers, and a company official said the protests had caused “significant disruption to work at the factory.”
Loop, Maruti, Honda and Hero did not respond to requests for comment.
While talks between Iran and the United States raise hopes of de-escalation, auto industry executives said it could take weeks for supply chains to normalize as more migrant workers return home.
In India, around 400 million local migrant workers head to places like Manesar to earn the minimum wage for an average of 48 hours a week.
“Most employers are trying hard to retain their dwindling workforce by providing two meals a day or paying small bonuses,” said Vinod Kumar, president of the Indian Small and Medium Enterprises Forum, which represents thousands of small businesses.
The group is seeking government support to take “urgent” measures and set up cluster-based shared kitchens, as Kumar said, “Once workers leave, it is very difficult to get them back.”
(Reporting by Aditi Shah and Arpan Chaturvedi in Manesar; Additional reporting by Dhwani Pandya in Mumbai, Saurabh Sharma in New Delhi and Sumit Khanna in Ahmedabad; Editing by Aditya Kalra, Myoung Kim and Elaine Hardcastle)
