Chennai: As the clock edges towards 1pm, the young, trendy factory workers are easily identifiable as they walk briskly to the busy Chengalpet junction bus stop, an hour’s ride from Chennai. Within minutes, two large white buses and two smaller ones bearing the trademark blue Nokia sign arrive in quick succession and the young assembly line workers hop on for the second shift at the world’s largest cellphone maker’s Sriperumbudur factory.
The workers at this pickup point, who assemble handsets exported to over 50 countries, were feeling upbeat thanks to a Rs1,000-Rs3,000 jump in monthly wages following a strike in August that persuaded Nokia Oyj’s Indian unit to accept a politically-backed union and concede its demands.
The Nokia episode was a departure from the “no unions” policy of most multinational corporations that have set up shop in Sriperumbudur, also known as the Detroit of India after the former US automotive capital, and is fast acquiring another title: the country’s Shenzhen, after China’s electronics hub.
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Apart from Nokia and electronics companies such as Singapore-based Flextronics International Ltd, the town is also home to automotive makers such as the Indian units of Hyundai Motor Co. and Ford Motor Co., besides a multitude of auto parts vendors who service them.
Fight for rights: The car assembly line at the Hyundai Motor India plant in Chennai. The company has refused to recognize the union despite three strikes this year. Labour lawyers say non-recognition of a union is a violation of a fundamental right of workers. Babu Ponnapan/Mint
Nokia’s move to recognize a union is also under the microscope following the September killing of a manager at Coimbatore-based auto components company Pricol Ltd by protesting workers and the third strike this year at the Sriperumbudur factory of Hyundai Motor India Ltd (HMIL).
HMIL still refuses to recognize the Hyundai Motor India employees union that is supported by the Communist Party of India (Marxist)-backed Centre of Indian Trade Unions.
“What you really find today are caste-based, political party-based or issue-based unions,” said B. Santhanam, managing director of French glass maker Saint-Gobain Glass India Ltd, which also has a factory in Sriperumbudur, but doesn’t have a unionized work force. “Therefore, companies are still figuring out whether a new one actually represents the workers.”
While the strikes and the death have raised questions in some quarters about whether Tamil Nadu’s industrial landscape has become less welcoming, there doesn’t seem to be much doubt in the minds of investors. Tamil Nadu is ranked fifth among states attracting foreign direct investment (FDI) — behind Maharashtra, Gujarat, Karnataka and Delhi.
Despite reporting 71 strikes—the highest number in the country in 2008, according to the Union labour ministry—industry lobby group Associated Chambers of Commerce and Industry of India data show the southern state logged a 248% jump in FDI in 2009, beating all other states in growth and increasing its chances of climbing up the ranks.
The latest entrant is French tyre maker Michelin SA, which in November said it will invest Rs4,000 crore in Tamil Nadu on its first Indian production facility.
Salaries at most factories that largely employ contract, or non-permanent labour, start at about Rs3,000 a month. While Nokia refused to disclose the number of its contract workers, at Hyundai, 75% are on contract or are trainees. At least half the workforce at circuit board maker Foxconn India Developers Pvt. Ltd, a component supplier to Nokia, are non-permanent employees. Only permanent employees have a right to collective bargaining or to unionize.
Companies should change the way they regard unions, said a professor at India’s top management school.
“Over time, the attitude in business schools has been to look at labour as a disposable commodity and trade unions as evil,” said Biju Varkkey, a professor in personnel and industrial relations at the Indian Institute of Management, Ahmedabad, and a friend of the deceased Pricol human-resources manager Roy George. “Violence is never the solution for anything. Still, undeniably, labour is being marginalized through outsourcing and casual employment and at the end of it, shareholder value creation will get affected,” Varkkey said.
Most multinationals such as Hyundai and Saint-Gobain support a workers’ committee elected by the employees that discusses wage and other issues with the management. Nokia, too, had a workers’ committee, but earlier this year when salary increment discussions with the management failed, the employees approached the ruling Dravida Munnetra Kazhagam’s trade union arm, the Labour Progressive Front (LPF).
“We need to have some power in our hands too, right? If we went into a strike independently without associating with the LPF, then I would probably be sitting at home unemployed right now,” said a 21-year-old Nokia union member, who found his first employer in the cellphone maker and didn’t want to be named for fear of victimization.
The Nokia worker, who has studied up to the 12th grade, said his wages nearly doubled to Rs6,200 a month following intense bargaining after the August strike that led to intervention by the state’s labour department.
Still, labour rights advocates claim to be hitting roadblocks in the burgeoning Sriperumbudur industrial zone. Just this month, the efforts of Bangalore-based Cividep India—“a worker rights and corporate responsibility watchdog”—to hold an informational event for workers were stymied.
Managers at the Sriperumbudur hotel, where the event was going to be held, cancelled the group’s booking the evening before the Sunday event.
At the new venue, invited workers didn’t show up. Cividep claims that factory managers in the area who got a whiff of the meeting may have warned workers to stay away.
Nokia’s India chief says the unions should jettison old-style confrontationist attitudes and seek to work with the companies.
“If companies feel that the union is bad, then I would say that the union has failed, not the management,” said D. Shivakumar, managing director of Nokia India. “If unions talk in terms of productivity, in terms of costs, then you may get a different reaction.”
According to a Tamil Nadu labour department official who didn’t want to be named, non-recognition of a union is the top reason for industrial disputes today, an act that labour lawyers say is a violation of a fundamental labour right and could work against worker productivity.
“If freedom of association and collective bargaining rights are respected, then there will be less strife,” said Ramapriya Gopalakrishnan, a labour lawyer at the Madras high court, who has worked with the Switzerland-based International Labour Organization, an arm of the United Nations that promotes social justice. “But in India, companies are happier to deal with unions who can be paid off because that would be a question of money and not rights,” Gopalakrishnan said.
It is 5pm and in another part of Sriperumbudur, just off the gleaming Chennai-Bangalore national highway, a bus cruises towards a peach-coloured dormitory building housing workers in Taiwanese mobile phone component maker Foxconn.
Nearly 30 workers in their early 20s, having completed the second shift, jump off the bus.
They are all trainees who perform similar tasks as the permanent workers and get about Rs3,000 in hand every month after accounting for overtime.
One 21-year-old worker, who hails from from Tamil-Nadu’s Thanjavur district, voices the group’s concern over wages. “I was happier in my village where, with average daily wages of about Rs200, I could have earned and saved enough money amidst cheaper living costs,” said the son of a marginal farmer who sends home a big chunk of his salary every month, keeping just Rs500-600 for himself, speaking in Tamil.
The tall and slightly-built youth admits to decent working conditions and sometimes just a six-hour workday but with the boredom of a low-paying, repetitive assembly task already setting in, he plans to start looking for a another job.
Saint Gobain’s Santhanam says this is an indication that industrialization leads to prosperity trickling down the pyramid.
“That workers are scouting for jobs elsewhere is an absolutely fantastic thing because it means that someone who is uneducated and unskilled, often a migrant labourer, is being provided a ladder to climb into a better job,” said Santhanam, who is also chairman of the industry lobby group Confederation of Indian Industry’s skills, human resources and industrial relations committee. “We are looking at a micro-level problem and forgetting industries are providing upward mobility to those who don’t have the education or skills.”