Bajaj Auto, India’s third biggest two-wheeler manufacturer, has proposed a 10 percent pay cut for factory employees if production does not resume on April 21. The proposed cut will be for little over half of April and until the lockdown is lifted on May 3.
“If production resumes from April 21, then there will be no cut. But if no production happens, then we have been told to expect a pay cut of 10 percent, which works to around Rs 2,000-2,500 for factory employees,” said a source at Bajaj Auto.
As per guidelines issued by the Ministry of Home Affairs (MHA) on April 15, the government is allowing industries to start operation in rural areas. In addition, manufacturing and other industrial establishment with access control in special economic zones (SEZ) and export oriented units, industrial estates and industrial townships can restart production from April 20.
The maker of Pulsar and KTM bikes, which has had several run-ins with the labour union on issues including wages in the past years, has received the backing of the union this time around. No retrenchment of employees has happened till now and nothing is on cards yet, the source said.
In a reply to a query from Moneycontrol, Rakesh Sharma, Executive Director, Bajaj Auto, said, "Given the extension of the lockdown till May 3 and continued uncertainty beyond that, particularly related to resumption of industrial and commercial activity, we are looking at all options for reducing costs. As part of this preparation, we are also deliberating a cut in salaries and wages for the lockdown period. Employees, unions and contract staff have been given a heads up. Quantum and timing are yet to be finalised."
CNBC TV18 reported that Managing Director Rajiv Bajaj will not take any pay during the period citing an internal email circulated by the company’s human resource department.
"Many companies, including organisations in our industry, have already announced and/or are contemplating various cost control measures including job reductions, salary/bonus reductions, freezing capex, cutting marketing budgets and other stringent measures to sustain. While our financial position allows us to avoid drastic measures, we do need to be prudent and take measured steps to control our fixed operating costs urgently," an email from the company's human resource department stated.
In March Apollo Tyres and JK Tyre announced a pay cut for the senior management as a way to tackle ‘the deteriorating market condition caused by COVID-19’.
Bajaj Auto saw its March domestic two-wheeler sales fall by 55 percent to 98,412 units hit by loss of production due to the lockdown announced by the government on March 23. Its total sales for March slumped by 38 percent to 242,575 units.
For FY20, Bajaj Auto’s total sales comprising two-wheelers, three wheelers, quadricycles in domestic and export market saw a decline of 8 percent to 4.61 million units compared to FY19.
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