The two-week-long labour strike at Samsung’s plant at Sriperumbudur in Chennai is showing signs of escalation, with both sides refusing to budge from their hard stand. The impasse has come at the most inopportune time, when the government is doing its best to get global firms to set up their manufacturing base in India. This requires the firms concerned to relocate their base from countries like China, Taiwan, and Vietnam. Naturally, the companies would weigh the advantages of such relocation. Lack of adequate infrastructure and high tariff walls act as big disadvantages of coming to India. However, abundant labour supply at low cost, and a large domestic market, are big draws. Recognition of this fact and balancing the two are required, by company managements, workers, as well as the government. If the three stakeholders are not in unison on the goal, there will be problems. This seems to be the case at Samsung’s plant.
The workers want recognition of their union and wage increase from Rs 25,000 to Rs 36,000, both of which have been rejected by the management. While the workers certainly have the right to form a union, the demand for higher wages seems inappropriate. True, wages would on an average be 50-100% lower in India than in South Korea, Taiwan, China, or Vietnam, but that’s not the right comparison. In India, the average wage being offered by the contract manufacturers of Apple, and other similar industries, is also in the range of Rs 20,000-25,000 per month. Further, the minimum wage prescribed by the government in the Chennai region is Rs 16,000 a month. The workers here surely need to be more practical and engage in constructive negotiations for better training and growth prospects, rather than just seeking higher wages.
However, there’s much that the company management needs to do and answer for. It’s clear that it has failed in its basic duty of demonstrating to the workers that they are also stakeholders in the company’s growth and recognise the union. If the company can demonstrate that it’s fair and treats them as partners in growth, surely the union will see reason. This has been demonstrated in the case of Maruti in the past. In fact, there’s another lesson to be drawn from the Maruti experience. The company faced violent labour trouble at its Manesar plant in 2010-11, however there was no such issue at its older plant at Gurugram. The management realised that the workers of its Manesar plant were not sent for training to Japan, unlike their Gurugram counterparts. Corrective measures were taken and no labour tension has taken place after that.
Samsung is no stranger to strikes. In July and August, the 36,500 members of Samsung Electronics’ biggest worker union in South Korea demanded higher wages and benefits, striking for several days, but there was no impact on production there. But that may not be the case in India. The Chennai plant contributes 20-30% of Samsung’s revenue in India, a key growth market for the company. It’s the job of the management to teach workers how prosperity of the company helps workers improve their lives. The government also has a constructive role to play. The Centre and state need to be more proactive in resolving such a mess. At a time when large-scale electronics manufacturing is striking roots in the country, such industrial unrest sends a very bad signal to global firms.