India's largest automaker Maruti Suzuki India has laid off 3,000 contract workers as automobile sector faces the worst slowdown of two decades. Maruti Suzuki India Chairman R.C. Bhargava said on Tuesday the company had not renewed the contracts of 3,000 temporary employees, as the automaker battled rising inventory, reported Reuters.
Safety norms and higher taxes have “added substantially” to the cost of cars, affecting their affordability, Bhargava told shareholders at the company’s annual general meeting.
An earlier report had said that Maruti Suzuki had downsized the number of its temporary workers. It had employed 18,845 temporary workers on average in the six months ended June 30, down 6 per cent or 1,181 from the same period last year. The company also said job cuts had accelerated since April when the automobile sales plunged in the country.
Bhargava had then said that the workforce was being reduced to reflect the slowdown in business, adding that this was one reason carmakers liked to have some temporary workers. “One of the consequences of a slowdown is that the marginal players and weaker players find it difficult to survive. When do consolidations happen in business? Only when times are difficult,” he added.
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The Society of Indian Automobile Manufacturers (SIAM), in its July sales report, said that more than three lakh casual and temporary workers have already lost their jobs due to this drop, while many auto dealerships have shut shops across the country. An estimated 10 lakh jobs are on the line if demand does not pick up or the government comes to the rescue with some bailout measures, SIAM had added.
India’s auto sales declined for the ninth straight month in July, threatening more jobs cuts and temporary halting of production to keep costs in check. Automakers such as Suzuki, Tata motors, Ashok Leyland, Mahindra and Toyota have announced a pause in production following muted demand for growth.
