Inequitable labour-capital relations could hit India’s investment destination credo

On Saturday, global personal technology major Apple placed all fresh production orders on hold for its Taiwanese supplier Wistron. This embargo may affect all Wistron units, but the trigger was one of the biggest expressions of industrial unrest in India in recent years at a new facility set up by the firm in Kolar, Karnataka, to manufacture iPhones, among other things. Violence broke out at the unit on December 12 after several workers raised slogans protesting against non-payment of their dues, a protest that escalated. In Kolar, Wistron claimed 437 crore of damages from the incident even as the Centre and the State government reacted with alacrity, given the importance of the project for India to establish its credentials as an alternative manufacturing base to China. The State said it was disturbed and around 160 people were arrested. The Centre asked the B.S. Yediyurappa administration for an expeditious inquiry to identify the culprits and ensure that investor sentiment is not affected due to the one-off incident.
The Prime Minister has been reported to be very worried about the development, and all necessary support has been promised so that the firm may restart operations. That may take a while now given that Apples own probe has found glaring lapses in Wistrons treatment of its staffers. From playing victim initially, Wistron has been compelled to change tack it now claims the damages from the violence were about 50 crore and has fired a top official handling its India operations for failing to ensure employees got their entire dues in a timely manner. Perhaps, if designated officials for hearing labour grievances had reacted adequately when Wistrons 1,300-odd regular staffers or its 8,000 odd contract workers at Kolar raised a red flag about wages, this may not have come to pass. If anything, enforcement of labour laws for employees benefit will make India an even more attractive and contrasting alternative to China where labour exploitation is rife. With global firms under pressure to exhibit higher standards in environmental, social and corporate governance, India also needs to up its game on enforcing compliance with the laws of the land and treating labour-employer disputes in an even-handed manner. When a showcase project becomes an exemplary basket case within months, for whatever reasons, the repercussions are deeper and wider. With the country on the cusp of a new labour law regime being marketed as a business-friendly regimen, misgivings about their provisions or unresponsive systems for employees grievances can only foment more such unrest. It may be a good time for the government to rekindle a tripartite dialogue mechanism with trade unions and employers like the erstwhile Indian Labour Conference, not held since 2015.