In today's Finshots we talk about the vandalism incident at Wistron's manufacturing unit in Kolar.


The Story

On 12th December, violence erupted at Apple’s contract manufacturer — Wistron Corp’s Narasapura facility near Bengaluru, over alleged non-payment of wages and poor working conditions. On that fateful night, Wistron employees ransacked the office and laid siege to the building. And while 150+ people have been arrested since then, it does beg the question — How did this happen?

Wistron is a Taiwanese company and a key manufacturing partner for Apple in India. Back in 2017, the company invested close to ₹3,000 crores in setting up a production unit in Kolar to make iPhone 7 and iPhone SE devices. The government, in turn, had offered the company 40+ acres of land and multiple incentives to invest in creating 10,000 jobs for the local community. And while they did create those jobs, there was definitely some questionable ethics involved.

According to a report in the Times of India, Wistron apparently promised engineering graduates a monthly paycheck of 21,000 but then reneged on the promise, not once but twice. The story goes that they cut the salary from ₹21,000 to ₹16,000 and then cut it again to ₹12,000. Non-Engineering graduates had it even worse. They saw their salary drop to a measly ₹8,000. And despite the wage cuts, they were forced to work overtime after being mandated to put in 12-hour shifts as opposed to the regular 8-hour shifts. Now bear in mind close to 90% of the 10,000+ workers employed at Wistron’s Narasapura facility were contract workers i.e. temporary labour hired through staffing agencies. And that probably means employee grievance redressal was never really a priority. So, when repeated calls for change fell on deaf ears, young men and women took to the streets and ransacked the facility. One trade union leader even claimed the violence was a direct result of the “brutal exploitation” of employees who were forced to work in conditions that resemble sweatshops. And when you consider that most of these are 20-year-olds from poor households desperately looking to make ends meet, you can understand their frustration.

However, vandalism isn’t really an optimal solution. It only begets more problems. Granted, everybody is now paying attention to the incident but over 150 employees languish in jails. The state meanwhile is justifiably worried that this will affect investor's sentiment. After all, it seems the reputation of the government’s “Make in India” program could be on the line. But perhaps it’s also prudent for the government to take a moment and relook at worker’s conditions to make sure they cut a fair deal for both parties involved  — investors and employees.  In fact, if anything, the incident has once again cast the limelight on India’s flimsy labour laws. This year an internal document revealed how Karnataka’s state government was planning to dilute certain laws on labour and pollution. And while there is every reason for the state to work on improving the ease of doing business in India, it might not end well, if the improvements come at the cost of labour rights.

And the Narasapura incident only exemplifies this point. Preliminary findings now suggest that both Wistron and the hiring firms violated several local labour laws. And while Wistron has apologized for the incident, they blamed a software glitch for the non-payment of dues. The hiring firms meanwhile have remained defiant even in the face of mounting criticism. And guess what? The only company that seems to have dealt with the situation proactively has been Apple.

While this might come as a surprise to some of you, do note that Apple has been in hot waters several times in the past for working with suppliers who mistreat employees. And they’ve had to learn their lesson the hard way. In fact, recently when Apple found out that Pegatron — the company’s second-largest contract manufacturer had violated Apple’s student-worker program and forced students to work night shifts and even overtime in some instances, Apple went ahead and suspended its business with Pegatron altogether. Hell, they even have an elaborate supplier code of conduct to keep belligerent contract manufacturers in line. As per the code’s Wages and Benefits section — Apple suppliers have to “meet all legal requirements relating to wages and benefits (as per local law)”, and they are required to “pay accurate wages in a timely manner, and wage deductions are not allowed as a disciplinary measure”. Furthermore, it states — “All use of temporary and outsourced labor shall be within the limits of the local law.” And since Wistron flagrantly violated these provisions, Apple has placed the company on probation — Meaning no new business until Wistron mends its ways.

So yeah, the Narasapura incident was entirely avoidable and yet, corporate greed and government apathy paved the way for one of the worst acts of vandalism Karnataka has seen in the recent past.

Until next time…

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