Tata to hike wages despite meltdown

Auto major, Tata Motors Limited, plans to give wage hikes to its staff for 2009-10 despite the market meltdown, though it won't be as much as last years's levels, a human resource department official of the company said in Kolkata on Monday.

Speaking on the sidelines of an HR conference organised by the Indian Chamber of Commerce, S Tambe, vice president, human resources & corporate administration, TML said, "There are companies that haven't given a raise this year but we are definitely looking at giving increments this year."

The company was yet to finalise its wage increment structure for the current year and an announcement would be made on July 1, he added.

During the last three years, the average wage increment was around 12-13 per cent. "The increment would definitely be in single digit this year however," Tambe pointed out. He also ruled out any possible downsizing this year.

Tambe pointed out that since last year, Tata Motors had decided to pursue a policy whereby increments were given on performance basis, while raising the basic salary component was restricted.

For every rupee increase in the basic salary, the final impact on wage is more than a rupee considering contributions to provident fund and gratuity thereby increasing company's longterm liabilities.

"We have introduced what is called "merit allowance" last year which is in a way linked to performance, he said.

Merit allowance does not impact provident fund, super annuation, because the total amount of hike is given in the allowance form and not in basic.

Tambe also pointed out that TML had also been able to reinstate a few hundred of the casual workers employed at Tata Motors' Jamshedpur plant who had been removed in the October-November period.

"We have already reverted some of the requirements there," Tambe said.

It is to be noted Tata Motors had laid off a few hundred of its casual worker in October-Novembercorresponding with block-closure of production at Jamshedpur plant following the demand slump.

Indian auto industry which contributes 3.5 per cent of the GDP is expected to witness a steep drop in growth this year.

The auto industry growth had been 14 per cent on the domestic front and 40 per cent on the export front last year, this year it was expected to be close to one per cent on the domestic front and 24 per cent on the export front.

According to industry estimates overall growth for the auto industry this year would be three per cent overall against the expectation of 16 per cent.