A week ago, news reports trickled in about Wistron shutting down its iPhone assembly production in India and shifting its other manufacturing operations to countries like Vietnam and Mexico. There may have been profitability pressures at stake — and an inability to compete with the larger Apple suppliers Foxconn and Pegatron. The Tata group is now stepping into the void by buying out the entire Wistron plant on the outskirts of Bengaluru.
It remains to be seen whether the Tata group is able to run the unit profitably and sustainably. Beyond the usual business imperatives, there is also the issue of a record of poor industrial relations — something that doesn’t get sufficient attention these days.
Less than three years ago, violence erupted at Wistron’s factory when, according to the police complaint, “5,000 contract labourers and 2,000 unknown culprits vandalised the factory”. Now, violence of this kind isn’t uncommon. The violence at Maruti’s Manesar factory in 2012, resulting in the death of a senior HR executive and leaving nearly 90 officials injured, remains a blot on India Inc’s industrial relations track record.
These encounters point to a culture of oppressive work conditions and practices — and also a gradual deterioration in the industrial relations climate in the manufacturing sector in the country. That’s why how the Tatas, with its reputation of fostering strong industrial relations, manages the unit will need to be watched closely.
This is significant given that the Indian government is still pressing ahead with its Make in India programme. Apple, on its part, has already indicated that it wants to shift at least 25% of its iPhone manufacturing to the country.
However, critics have repeatedly pointed out that Taiwanese firms like Foxconn have a reputation for creating exploitative conditions for workers at their mega factories in China. Contract labourers are made to work long hours, given repetitive work, paid minimum wages, often without any social security or overtime, served poor quality food at canteens, not allowed sufficient toilet breaks and publicly humiliated by supervisors if they complain about the work. Over the years, there are several documented cases of suicides across Foxconn’s factories in China.
This model of feudal management isn’t uncommon across Indian industry either. Supervisors at a leading automaker in Pune would punish workers if they asked for a respite from their repetitive work and were made to stand in the sun in a space designated as the ‘red square’ outside the factory floor. In a leading FMCG firm, a senior HR manager found that no safety equipment and proper uniforms had been given to contract workers, who worked alongside permanent workers. Supervisors made the contract workers do the more difficult tasks. And as a common industry practice, before they could claim permanency after completing 240 days of work, they would be laid off. This imbalance and unfair treatment has often led to protests, strikes and violence. Not to mention, high attrition levels and employee disenchantment.
There is, no doubt, a crying need for jobs for our youth. However, in a globalised world, manufacturing will continue to use automation to reduce or entirely eliminate any dependence on humans. It remains an eternal dilemma. In its drive to chivvy up manufacturing and GDP growth, the Indian government has assiduously wooed large industrial houses and multinationals to invest in the country. Ease of doing business is now a key item on the agenda. And the sudden decision to suspend labour laws in UP, Gujarat and other states in 2020 is part of the formula to make it attractive for MNCs with operations in China to evaluate India as their new investment destination.
Yet this should not mean that the government looks the other way when workers are exploited and subjected to inhuman conditions. Or else, a large vulnerable section of our population could find themselves being trapped in low-end jobs with very little scope for growth, and with the added risk of being laid off as soon as business faces a downturn.
That risk is real. Earlier this month, I attended a book launch in Mumbai. Written in Marathi by Vivek Patwardhan, the former global head of HR at Asian Paints, the book deals with the unique world of workers, based on his experience and on-going research on themes like trade unionism, industrial relations and pragmatic industrialists. The former head of HR at the Tata group Satish Pradhan and noted labour economist Dr Suchita Krishnaprasad also spoke eloquently and thoughtfully. I subsequently followed up with them to understand the ground realities better, then and now.
Here are a few threads that emerged. The old world of industrial relations is now no longer an area of focus for industry. Much of it has already shifted to HR and talent management. IR jobs aren’t seen as valuable. The best and the brightest at the higher ed vanguards, like TISS, are now no longer interested in IR. Factory stints aren’t coveted and as a result, these new gen professionals often lack the empathy and consciousness that previous generations of post graduates had for ensuring better workplaces in the factories, and not just inside air-conditioned offices.
There was a time when labour commissioners and inspectors were seen as powerful — and also corrupt. Successive governments have whittled down the inspector raj, and significantly reduced the state’s involvement. Labour commissioners seldom follow up on complaints of mistreatment. The settled system of dispute resolution isn’t adhered to. At the same time, the trade union movement, which was meant to uphold worker rights, has lost its teeth, partly because some of them have sold out to management or realised that funding worker welfare is an insurmountable challenge.
Unscrupulous contractors with political linkages supply cheap labour to industry. They now have a new garb: they’ve set up institutions that offer diploma programmes in engineering for ITI students and NEEM trainees. The students continue to work through the four years. The industry pays them a small stipend. But here’s the reality: the long 12-hour work day makes it difficult for many of them to attend theory classes and earn the elusive diploma.
There are employers who see the merit in a more values-based management approach. The Tata group, the Godrej group and Thermax have been known to pursue pragmatic policies that take into consideration worker welfare. Patwardhan also pointed me to Hemant Mondkar, chairman of Hytec Engineers. He has evolved a sensible way to share wealth with his workers. (See his short 5 min video with Mondkar or read Patwardhan’s blog post here.)
However, when trust is broken and management is dehumanised, there are no winners in the end. There is also a price to pay for such short-termism.
So, if we are serious about achieving harmonious, inclusive growth, we need to deal with this looming crisis urgently and systematically. But is anyone really listening?
The used and discarded workers in India by Arun Maira (Founding Fuel)
Suspending labour laws means a road to nowhere by K Ramkumar (Founding Fuel)
The Anatomy of Wistron Workers by Vivek Patwardhan (Vivek’s World)
(A shorter version of this Strategic Intent column was published in Business Standard)