The Lede
Thousands of those terminated in the auto sector are from the NEEM scheme
Thousands of those terminated in the auto sector are from the NEEM scheme|Photo credit: Reuters

Skilling Scheme Goes Awry, Underprivileged Terminated In Auto Slowdown 

The Centre’s NEEM scheme was meant to skill the underprivileged but they are now out on the streets 

Sandhya Ravishankar

Sandhya Ravishankar

It was a boon for auto companies in Tamil Nadu, especially, in 2017 when the AICTE (All India Council for Technical Education) amended the provisions of the 2013 National Employability Enhancement Mission (NEEM) Regulation.

Why was it a boon? They took on board thousands of young, underprivileged trainees in the garb of skill enhancement at a basic stipend and put them to work as contract employees.

Now that the economic downturn has hit the auto sector, the first casualties are these NEEM trainees who began from nothing and are now back on the streets.

What Is NEEM?

The NEEM scheme was first introduced in 2013 by the UPA (United Progressive Alliance) government led by the Congress. It was envisaged as an apprenticeship scheme which would help underprivileged youth from rural and backward areas of the country to improve their skill sets and get jobs in the organised sector.

The scheme did not take off as expected and five years passed by until the BJP-led NDA (National Democratic Alliance) government came to power. The Regulation was dusted off, consultations held and amendments were made to NEEM.

The scheme encourages corporates to provide on-the-job training for underprivileged youth who have discontinued studies after Class 10, are studing in diploma courses or even PhDs.

A monthly stipend of between Rs 10,000 to Rs 15,000 has to be paid to the trainee by the company.

Trainees are not entitled to any further benefits that normally accrue to workers. They do not get ESI (Employees’ State Insurance) or EPF (Employees' Provident Fund) or gratuity or any other benefits.

The term of training would be from a minimum of 3 months to a maximum of 3 years.

“The NEEM contract shall not be either an offer of employment or a guarantee of employment,” reads the amended regulation.

Training and placement organisations accredited by the AICTE would act as the go-between. These NEEM Facilitators would find underprivileged youth, give them basic induction and training in communication and English skills and place them with companies for their apprenticeship.

Out of a total of 43 NEEM Facilitators in India, eight are from Tamil Nadu.

NEEM & The TN Automobile Sector

Tamil Nadu is well known as India’s ‘Detroit’ thanks to the large presence of automobile manufacturing units here.

There are no numbers available as to how many trainees have been placed in which sectors by these eight facilitators under NEEM since 2017 when the amendments came into force.

The Lede attempted to reach all the NEEM facilitators listed out in the AICTE website. Out of eight, we were able to reach three. The others were either not reachable or refused to provide information about the number of NEEM trainees they had sent out into the workforce.

One of the largest facilitators is TVS Educational Society. “We have managed close to 30,000 trainees so far,” said VR Shankar, VP-Operations at TVS Educational Society. “90% of these are placed in the auto and auto ancillary sector,” he said.

Another facilitator, Madurai based Aparajitha Foundation said that they too placed most of the trainees in the automobile sector.

“So far we have trained and placed around 5000 people,” said S Mathivanan, Coordinator of Aparajitha Foundation. “60% of these are in the automobile sector in and around Chennai,” he said.

A smaller facilitator, Chennai based TalentPro India Foundation too said the same. “The purpose of NEEM is to provide employment to underprivileged persons, by providing skill upgradation,” said G Sainathan, Head-Compliance, TalentPro India Foundation. “Basic induction is done by our team. We have placed around 1000 persons so far and almost all of them are in the automobile and auto ancillary sector.”

A number of Bengaluru-based facilitators too had sent trainees to Tamil Nadu’s auto and auto ancillary sectors as part of the NEEM scheme. It is unclear as to what the numbers are.

The scheme had taken off. And with it, the problems.

For one, the auto and ancillary firms treated these NEEM trainees as contract employees, a violation of the law.

Worse, they began to push NEEM trainees into core production jobs which are meant to be done only by permanent employees.

Unions at these companies protested.

A 2018 protest at Ashok Leyland’s Ennore factory demanding that NEEM trainees must not be allowed into core production
A 2018 protest at Ashok Leyland’s Ennore factory demanding that NEEM trainees must not be allowed into core production
Photo credit:

“Since 2017 auto sector companies have preferred NEEM workers,” said S Kannan, Kanchipuram district president of the CITU. “A monopoly of large contractors has been created thanks to NEEM by breaking the petty contractors. The auto companies have to pay contract workers EPF benefits. But with NEEM they do not have to pay any benefits whatsoever. NEEM has worked out well for the auto companies while denying these people their due rights,” he said.

Kannan, who heads one of the largest unions in Tamil Nadu’s auto and ancillary sector, alleges that malpractice was rife thanks to the NEEM boom.

“NEEM workers were inducted into production, which they are not allowed to do. Only skilled labourers can be allowed to do production work in OEM (Original Equipment Manufacturer) and in component manufacturing as per the Directorate of Industrial Safety and Health. Core production jobs cannot be given to contract workers under the Contract Labour (Regulation and Abolition) Act,” he said.

“We protested many times,” said Kannan. “Nothing really changed. The auto firms have done injustice to permanent employees as well as to the NEEM workers.”

“NEEM has stripped many of their due rights,” said R Sampath of the Working People Trade Union Council. “If there are 100 permanent employees in a factory, there will be 1000 NEEM trainees who were used as contract employees. That is how bad things got.”

R Sampath of the Working People Trade Union Council
R Sampath of the Working People Trade Union Council
Photo credit: Sandhya Ravishankar

Despite the warnings of the unions, all was hunky dory for managements as well as NEEM trainees. But the fall was not too far away.

And Then, The Crash

Come early 2019 and the automobile sector began to witness a slowdown in demand, directly impacting sales growth hard.

Maruti Suzuki was the first casualty as it failed to renew the contracts of around 3000 contractual workers. Close to 1000 temporary workers were asked to go on leave.

Production has been halted intermittently in the company’s Manesar and Gurugram plants in Haryana.

Tata Motors and Ashok Leyland closed their Pantnagar plants for two and 12 working days in July, respectively.

“Non-production” days – where workers are asked to stay home, but with full pay – have been announced by almost all automobile manufacturers.

In Tamil Nadu, unions say that production has been slashed by 30% across the auto sector.

They told The Lede that Ashok Leyland has called for two days a week as “non-working” days each month. In August, Ford had issued ten continuous days of leave.

In the past two months, Royal Enfield had issued six days a month of “non-working” days apart from the regular weekly off days for employees.

Sundaram Clayton and Lucas TVS, both part of the large TVS Motor group, had also announced non-production days.

Many other car and motorbike manufacturers have terminated temporary workers in India.

But the real calamity has been for the auto ancillary sector which is dependent on the auto manufacturers for business.

“Auto ancillary units, especially the smaller ones, have taken a huge hit,” said R Sampath of the WPTUC. “The competition between component makers is very stiff so they work on very low profit margins. They cannot survive without orders and they have sent their labour away,” he said.

While news reports have quoted unconfirmed figures of 5000 to 6000 contract workers terminated across auto and auto ancillary companies, S Kannan of the CITU says that the figure is likely to be much larger.

“From what we are hearing across companies, around 15,000 to 20,000 are out of jobs,” said Kannan. “Most of these were working in the auto component manufacturing units near Sriperumbudur. Of course, we do not have exact or official figures,” he added.

The Lede approached Ashok Leyland and Royal Enfield for responses. The former declined to comment while the latter did not respond.

Only Hyundai and BMW appear to have escaped relatively unscathed for the present.

“The ongoing slowdown in the auto industry has had impact on Hyundai, albeit at a lesser degree,” a company spokesperson responded to The Lede in an email questionnaire. “In the month of August, we declared Non-Production days in select shopfloors. This was as per our operational plan to rationalize production.”

“Our sales have fallen in the last few months, but the impact has been neutralized to a large extent by the rise in export volumes on strong demand from overseas markets. Further, the demand in certain segments, especially the SUV segment has been high which is keeping our plants busy.”

BMW, on the other hand, functions on a ‘production follows the market’ model – only once an order is received will the car be assembled - which means that an inventory pile-up is not a concern for them as is the case with most other brands.

“There have been no retrenchments in the company,” said Vinod Kumar Shankaran who heads the BMW Staff and Employees Union. “Our inventory is limited and when an order comes in we work very fast. Our throughput time is very efficient so there is no surplus of inventory,” he said.

Hyundai too stated that there were no retrenchments in their firm. “Our contract employees are engaged in support services like canteen, housekeeping and logistics. We have not retrenched any of them or any other employees for that matter,” wrote the company spokesperson.

Neither Hyundai nor BMW have taken in trainees under the NEEM program.

The slowdown is attributed to a variety of reasons, depending on who one speaks to. From GST which ramped up car prices, to consumers awaiting the introduction of the BS VI norms as well as the overall slowing of the economy, a multitude of factors appear to have come together to affect the auto industry.

According to Hyundai - “The current market slowdown in India is due to many factors like banking & finance policies, liquidity crunch, transition of BS IV to BS VI and uncertainty of business environment.”

Unionists like Kannan say the Centre’s announcement of incentives for electric vehicles too has dampened the consumer’s sentiment toward petrol and diesel vehicles.

“The auto sector has been demanding a cut in GST for long,” said union leader R Sampath. “We hope demand will pick up in April once the BS VI norms are implemented. Customers seem to be holding back, waiting for the new technology to come in before buying a car,” he said.

From Backward Backgrounds To The Streets

In the midst of the mayhem are the NEEM trainees, who were treated as contract workers by the auto and auto ancillary firms.

So much so, that according to industry insiders, the Provident Fund Commission has written to NEEM facilitators demanding to know why NEEM trainees were not being paid their due EPF.

It is reliably learnt by The Lede that talks are on between the PF Commission and the AICTE which is at pains to explain that NEEM is purely an apprenticeship scheme and not a job.

“NEEM was never meant to be contract employment,” AICTE chairman Anil Sahasrabudhe told The Lede in an exclusive interview.

AICTE chairman Anil Sahasrabudhe
AICTE chairman Anil Sahasrabudhe
Photo credit: Sandhya Ravishankar

“NEEM is essentially enhancement of employability of people from backward backgrounds. It is not a job. What trainees are given is a stipend, not wages. Some companies are misusing it and the problem has erupted in the past one year,” he said.

Sahasrabudhe added that if NEEM trainees were being put to work in lieu of contract workers, it was a violation and anybody can complain. “The law should take its course if companies are violating it. Anyone can complain and we will take action,” he said.

NEEM is being worked upon currently by the Union government, to fix the loopholes allowing companies to use these trainees in lieu of contract workers.

But the damage has already been done. Thousands of NEEM trainees are out on the streets already, the first to be sent out by auto companies.

“Most of those who have been terminated are NEEM workers, because in the past year and a half, all companies have been taking in only NEEM trainees,” said S Kannan of the CITU.

“Their situation is terrible. They are not unionised, they do not want to be unionised because they are afraid for their future. The companies have told them that they will be taken back in a few months once demand picks up. They want to believe this.

So most of them have gone back to their villages and are sitting idle, waiting for a call from the companies they worked for. They have been thoroughly exploited,” he said.

When questioned about how many NEEM trainees have been retrenched from the batches they had placed, TVS Educational Society said they were not aware. “No one has come back to us so far to tell us about retrenchments,” said VR Shankar, VP-Operations of the firm.

Everyone profited from the NEEM scheme during the sunny days. But come rain, it is the underprivileged who are forced back on the streets.

NEEM facilitators have made crores from the scheme. Facilitators charge anything between Rs 500 to Rs 1000 per head for providing NEEM trainees to companies.

Companies that take in NEEM trainees get cheap labour without additional costs to company, a blessing from the government itself to hire and fire and also get to claim the stipend paid to NEEM trainees as part of their CSR (Corporate Social Responsibility) activity.

It is no skin off the noses of either the facilitators or the companies that take in NEEM trainees when the going gets rough, as it has now.

But the trainees, originally from backward and rural areas, denied the safety net offered by the law to regular workers, have nowhere to turn.