STRIKE AT MUTHOOT FINANCE CALLS FOR INTROSPECTION
Even as the State claims to have gone a notch higher in terms of ‘ease-of-doing-business’, conciliatory talks between striking workers of MFIN and the management failed to thaw the frostiness. Destination Kerala attempts to get to the bottom of the issue which could potentially stymie Kerala’s larger business ambitions
Kerala Chief Minister Pinarayi Vijayan, who is one among the tallest Communist figureheads in India at present, said: “Muthoot Finance Limited (MFIN), being a homegrown business, is one company which every Keralite can be proud of. However, it is equally important that the growth of the company should be based on protecting the genuine interests of its employees.”
Setting aside all theatrics and grandstanding, the stubborn management and the combative workers should listen to this and try to understand its larger meaning. At this point, this seems to be the only practical solution to the current imbroglio caused by the labour dispute in India’s largest gold loan company, in terms of loan portfolio. Or else, it can even be construed as the beginning of the end of the congenial industrial climate in Kerala.
On August 20, a section of its employees under the banner of Muthoot Finance Employees Union (MFEU), with the backing of CITU, launched an indefinite strike against the management alleging poor pay, unfair salary and incentive structure, and anti-labour practices. This happened just three months after Muthoot Finance Limited announcing a net profit of Rs. 1972 crore for FY19.
It may be ironical that the strike has erupted within six months of the State being declared ‘investor-friendly’ by Chief Minister Pinarayi Vijayan himself at ‘Ascend Kerala’, a high profile event hosted by the State’s Industries Department at the most expensive MICE property in Kochi. Various branches of MFIN across Kerala witnessed dramatic scenes as striking workers backed by the CITU turned militant and used muscle power to prevent the non-striking employees who volunteered to work in various branches. Even George Alexander Muthoot, Managing Director of MFIN, had to stage a sit-on on the footpath in front of the MFIN headquarters in Kochi as the agitated protesters blocked him from entering the office premises. Being a listed company, the news spread like wildfire and went viral across social media platforms. Several rounds of conciliatory talks between striking workers and the representatives of the management convened by T P Ramakrishnan, State Labour Minister, failed to break the deadlock. Ruffled by the alleged non-cooperation of the management, CITU has called for a joint agitation by various trade unions. A coordination committee of trade unions, including INTUC, AITUC, HMS and others, is now leading the strike against Muthoot Finance across the State.
Meanwhile, the Kerala High Court has appointed an observer to monitor the conciliatory talks being undertaken to settle the issue. The High Court lawyer, who has been appointed, can also act as a mediator in the proceedings. Earlier, the High Court also directed the State Government as well as the police to give protection to employees of Muthoot Finance who are willing to work. In a separate directive, the High Court also maintained that it would not interfere with the right of the striking workers to peacefully carry on with their protests against the management without causing any obstruction to the smooth functioning of the branches.
The strike was not a sudden outburst but rather a ‘last resort’ of workers who have allegedly been facing harassment from the management ever since they set up employees union in the company in 2016. “Why can’t a company which is reaping profits to the tune of Rs. 1972 crore consider a small wage hike to its workers, who are toiling hard for them for decades?” asks C C Ratheesh, State General Secretary, Non-banking Employees and Private Finance Association, who is now leading a publicity campaign across the State seeking support for the striking workers at Muthoot Finance, along with MFEU State Secretary Nisha K Jayan. While the managers and above draw high salaries, employees at lower levels are being paid meagre sum as salaries, even those who have put in service for decades, they allege.
The Muthoot Finance Management on the other hand continues to reiterate its stand that it would not accept labour unions in the company. Earlier, in September, George Alexander Muthoot informed the management’s decision to shut shop in Kerala citing statistics that the Kerala component was just four per cent of its overall business and that, too, is running at a loss. He said the company would be forced to permanently shut down 346 out of the 623 branches in the State. The company has also engaged chartered accountants P Z Chacko’s & Co. to find buyers for its gold loan portfolio in branches which it wanted to shut down initially.
“Firstly, let me tell you that there is ‘no union in Muthoot’, CITU is trying to create one for the past three years. Despite calling 12 strikes, totaling 52 working days over the last three years, they have been unable to successfully create this because they simply don’t have the strength or the backing of the vast majority of employees. After three years of these intermittent strikes for the most silliest and insignificant reasons, we have lost 66 per cent of our business in Kerala, which was 11 per cent of our total all-India business when the strikes began in 2016, and now it is 4 per cent of our total all-India business. However, Muthoot Finance as a company has registered an overall growth of 50 per cent during this time (between 2016 and 2019) from Rs. 24,000 crore to Rs. 35,000 crore. The profits after tax during this period increased from Rs. 1200 crore to Rs. 2100 crore. For three years we stood by our branch employees to try and help open these branches that have been forcibly closed by CITU goons, who have been preventing them from opening the branches, threatening them and their families. Unfortunately, they enjoyed the tacit support of the State Government machinery that was supposed to protect our organisation and the rights of our employees to work. But today we are in a position wherein we have to take a decision to get rid of this cancer. My sympathies for those businessmen/businesswomen who are financially dependent on Kerala and have been unfairly targeted by the CITU/trade unions,” said George Alexander Muthoot.
Toughening its stance further, M G George Muthoot, Chairman, Muthoot Finance, categorically said that the company would not recognise the existing union and is not willing to accept the proposal to conduct a referendum for the creation of a trade union in the company. “The CITU-backed employees’ union is not valid. To form a union of employees, one needs the support of 20 per cent of the work force. For that, they need the support of 7000 employees, which they don’t have. At present, the strength of our workforce is 35,000-plus,” he told mediapersons.
“We are not against formation of trade unions but instead of secret ballot, the employees will have to submit an affidavit in the court stating their interest to form one in the company,” he said.
Rubbishing allegations that the company is a poor paymaster, the Chairman said every employee in the company is getting paid as per the existing rules and regulations. “However, the company cannot afford the newly-proposed minimum wages, which, if implemented, would result in an increase in the salary of a peon from Rs. 15,000 to Rs. 45,000. Since such a revision is impossible, even for a company like ours, the association of NBFCs has challenged the same in the court and secured a stay. Having said that, I have given assurance to the State Labour Minister that if at all there was anyone in the company who was not paid even the existing minimum wages, he or she would be compensated. It has to be noted that a senior manager who has a monthly salary of Rs. 1.5 lakh is behind the agitation,” he said.
M G George Muthoot also listed out the demands raised by the striking workers that the company has accepted over the course of time, adding, ‘‘even though we did not have to do so.”
“Transfer of employees is the prerogative of the employer. Even Chief Minister Pinarayi Vijayan has transferred hundreds of police personnel after he assumed office. Yet, we brought back several employees who were transferred. This is similar in the case of incentives and bonus,” he said.
However, Elamaram Kareem, State General Secretary, CITU has demanded that the management must cooperate to conduct a referendum in the company for the purpose of forming an employees’ union. “Muthoot Finance management is insulting democracy as well as trade unions by indulging in anti-labour activities,” he said. Meanwhile, Anathalavattom Anandan, State President, CITU said the Muthoot management should show the basic courtesy to accept the fact that the company’s growth was also the result of tireless work of its employees
KERALA INDUSTRY SILENT
Even as Muthoot Finance is mulling exiting from its home State due to labour unrest, Kerala’s industry leaders largely remain silent on the issue. The silence maintained by various industry bodies is also very telling. Several attempts to take the view of TiE Kerala, State’s largest body of entrepreneurs, proved futile as the leadership is said to be too busy in organising this year’s edition of TiEcon hyped as the largest congregation of entrepreneurs.
However, a few entrepreneurs expressed their protest against the manhandling of employees of Muthoot Finance by CITU workers. “The proletariat has the right to strike. Similarly, the proletariat have the right not to strike. The CITU is reduced to a goonda organisation by this conduct. Not different from fascist methods which we all despise,” thus wrote Jose Dominic, veteran tourism entrepreneur against CITU’s attack against a women employee of Muthoot Finance. A surveillance camera footage from one of the branches of MFIN revealed a CITU worker using force and dragging a woman employee out of her office and forcefully shutting down the branch.
Meanwhile, Kerala Non-Banking Finance Companies’ Welfare Association has expressed deep concern at the disruption of business and normal functioning of branches of Muthoot Finance in Kerala. Thomas George Muthoot of Muthoot Pappachan Group (MPG), who is the Chairman of KNBFC Welfare Association, urged the State Government to explore all ways and find a permanent solution to the labour problems being faced by the industry. “As an association we have been at the forefront of promoting a greater sector-wise benchmarking wherein our employee benefits are on par with that of the best in the country. As a result, many of our members have come up with options like quarterly incentive plans for the employees, performance-linked pay-out plans and ESOP etc. Besides, the companies are being strictly regulated by various regulatory bodies like RBI, SEBI and IRDAI with regular audits of its business practices and the same being confirmed with the respective board of directors.”
Financial experts underline that being a listed company it is mandatory for Muthoot Finance to strictly adhere to the rules and regulations and hence, chances of wage-related issues or undesirable practices are highly unlikely. “In the private sector, performance of employees matters. Companies usually provide performance-linked incentives as competition is intense. However, if a company wants to hike the salaries of lower cadres, it is a decision that has to be taken based on a moral perspective and not considering business interests,” said Dr. V K Vijayakumar, veteran investment strategist.
The bitter experiences faced by companies in Kerala due to militant trade unionism in the past would be the reason for managements to nip any attempt to form employee unions in the bud itself, he added. “Often, trade union leaders fail to understand the broader picture of the economy in their attempt to protect their vested interests and start dictating terms, which the management cannot afford. The experience shared by Kochouseph Chittilappilly, in his book Practical Wisdom, is one good example. Once a hero of his employees, Chittilappilly became a villain after labour unions set foot in the company.”