With two recent incidents, the government is scampering to do damage control to Karnataka’s image as an industry-friendly state.
Within days of the violence at Wistron in Karnataka’s Kolar, reports of the Taiwan based company rethinking its expansion plan have emerged. Wistron, which currently has 1,200 permanent employees in their Kolar plant, reportedly intended on increasing their workforce to 25,000 by the end of 2021. This comes in the backdrop of the lockout at Toyota’s Bidadi plant where employees have been striking for almost 40 days. The factory that came to Bengaluru’s outskirts in 1999 has been facing allegations of unfair HR practices by the employees, just like Wistron.
While the two incidents may be dismissed as unconnected, the government is now scampering to do damage control to Karnataka’s image as an industry-friendly state. OLA opting to set up the first electric scooter factory worth Rs 2,400 crore in Tamil Nadu too has put extra pressure on the Yediyurappa government, sources in the CMO tell TNM.
The events at Wistron that have now received global news coverage have long term ramifications-political, on the manufacturing industry and on the future of labour rights.
Leaders from opposition parties have articulated their concerns regarding Brand Karnataka, urging the state government to implement stricter measures to ensure there is no repeat of the violence. Many within the ruling BJP too, have spoken out, pushing for a probe into the violence that led to the destruction of property in Kolar district’s Narasapura plant.
Sources in CMO tell TNM that Chief Minister BS Yediyurappa has been pressured from various quarters of the government and the party to seriously look at the long-term ramifications of the state government not ensuring timely intervention to avoid such incidents. Yediyurappa and Jagadish Shettar have been accused of not being dynamic enough in luring investment to Karnataka and if more companies walk away, it would also serve as a huge political blow.
The state’s government reaction has been assessed as ‘passive’ by the Centre. Sources add that the CM has been warned that such incidents will not be taken lightly by global companies and the state might not just lose their current investments to states like Tamil Nadu, Telangana and Andhra Pradesh but will stand to lose any future investment as well. A senior leader in Delhi reportedly told Yediyurappa that if the right message is not sent out, investors may not opt out of just Karnataka but out of India altogether.
Just a day before the violence at Wistron plant, a Taiwanese delegation met the Karnataka Chief Minister and discussed future investment opportunities in the state. The delegation led by Director-General of Taipei Economic and Cultural Centre (TECC) Ben Wang was reportedly assured of all possible cooperation by the state.
The possibility of large-scale investment in the state being hampered was a massive concern for the government, one that has made it reluctant to pull up Wistron for violations of Labour Laws.
This possibly also explains why three investigative teams which inspected the manufacturing unit – Departments Of Factories and Boilers Industries, Labour and Industries – all failed to contradict Wistron’s claim of Rs 437 crore losses.
Rights of workers violated
“15 of us quit our jobs at a local manufacturing factory with the hope that we will get better pay and working conditions at this foreign company. But we have faced many issues – late payments and reduced pay for overtime. When we used to take it up with the contractor, he would blame it on the HR. Finally after many months, we went directly to the HR but they blamed it back on the contractor,” says Ravi Kishore* an employee who says while nobody formally filed a complaint with the labour department, their angst was well known to the management, and they had approached the District Collector.
Last few days, several such tales have come to the fore about several Labour Law violations. But while the government was quick to issue statements in support of the company, the employees feel let down that their voice is unheard even now. They say they do not support the violence but that does not mean the other issues should get overshadowed.
The Industries department had issued a statement saying “Government of Karnataka is deeply disturbed over the events that happened at the Wistron factory premises recently at Narasapura Industrial Area, Kolar. We strongly condemn the violence that took place in the plant premises. Police investigations are going on and strictest action would be taken against the wrong doers”.
While the preliminary report by the Labour Department also admitted to several violations at Wistron, the government is yet to issue a strong statement acknowledging this publicly. The union members say some of them tried getting appointments with a few ministers to air their grouses but have not succeeded so far.
While the violence has been condoned by everyone, accounts of labour law violations both in the Toyota plant and Wistron unit should be a red flag highlighting the problems the workforce faces. From unreasonable pay cuts to being treated unfairly during health issues, the complaints make for a fit case of human rights violations too.
Another employee of Wistron, Jagadish* says that Wistron employed seven contractors so that if one contractor refused to abide by their demands, no matter how unreasonable, they could have leverage saying we have six others to provide us with a workforce. Jagadish says that many one of the employees of the firm that hired him would often say if the ‘Chinese sweatshop style of functioning’ would not work out, then these factories will wind up and thousands will lose their jobs.
With global brands contemplating either withdrawing from China or diversifying their manufacturing hubs, fear that India will lose out due to bad publicity from such incidents are being voiced.
Speaking to TNM, brand specialist Harish Bijoor said, “What happened in these two last incidents particularly the Toyota incident makes you want to revisit labour issues again. It creates a scar on the image of Karnataka as a positive industrial hub. It worries me that this could send a bad signal to those who are looking at investing in India possibly pulling out of China. Whenever one thinks of relocating businesses from one geography to another, due diligence is done. This is the time when due diligence is being done across India. If investors see these cases as a trend it will be a cause of worry. So we have to manage this very carefully because small has a habit of becoming big.”
Former president of Federation of Karnataka Chambers of Commerce and Industry (FKCCI), Dinesh MC, also put the onus on the Yediyurappa government and suspected foul play. “I think that there should be an investigation, it is not a matter of just one company, this is a matter of the image of Karnataka and its culture.”
While the industry and the BJP want the government to send a strong message to the workers by clamping down on them, labour unions and lawyers who have been working with these employees worry that the violence might be used as an excuse to let the companies get away with the violations. They say, the onus will be on the Chief Minister to strike a balance between assuring the MNCs of a congenial atmosphere to set business and ensuring that the workers are not exploited henceforth.