Hindustan Times

December 23, 2020

Wistron violence: Lessons for Indian manufacturing

On December 18, a report quoted government officials as saying that the violence was not planned and “it was a sudden outburst” driven by the fact that the five-six staffing firms were exploiting “the workers by not paying or defaulting on salary payments”.

On December 12, workers turned violent at Wistron Corporation’s Apple iPhone plant in Karnataka’s Kolar district. Initial reports suggested planned violence by the workers and estimated losses to be as high as Rs 430 crore. As more details came in, the picture changed. Not only have the estimated losses been significantly lowered (to a range of Rs 20-50 crore), it has emerged that the workers had a genuine reason to be unhappy.

On December 18, a report quoted government officials as saying that the violence was not planned and “it was a sudden outburst” driven by the fact that the five-six staffing firms were exploiting “the workers by not paying or defaulting on salary payments”. “While workers should not have indulged in vandalism, the manpower suppliers will face action for violating rules and holding back wage dues,” the official said, without naming the companies, according to the report .

The company has since fired one of its top executives in India. Events at the Taiwanese company’s factory should not be seen in isolation. They offer a peak into the precarious state of labour relations even in jobs that are extremely technologically sophisticated and high-value in nature. As India seeks to attract more high-value manufacturing and cement its place in the global value chain of sophisticated electronic goods such as mobile phones, these incidents only underline the need for a proactive policy to prevent growing conflicts between labour and capital. This policy will have to keep in mind both the international realities of GVCs and India’s own experience in manufacturing.

1. Factory workers’ wages are a miniscule part of iPhone’s price

Apple’s iPhones are among the most expensive in the world. However, the workers who make these phones get only a small fraction of its price. According to a 2012 blog post on the Washingtonbased non-profit Economic Policy Institute, manufacturing costs were just 2% of iPhone’s total price, whereas profits accounted for 51%. Wages are an even smaller fraction of manufacturing costs. These numbers capture the stark reality of global value chains, where the workers engaged in manufacturing might be earning disproportionately lower than suggested by the final price of product. 

A ground report based on conversations with the factory’s workers by The News Minute, a news website, supports this view. The report says basic salaries of workers are as low as between .10,000 and .20,000 and workers forgo basic comforts such as two daily breaks on the job for as little as .300. To be sure, sophisticated electronic products take a lot of costly research and development efforts, which might not reflect in the manufacturing cost. However, the point remains that workers making these products might be living a hand-to-mouth existence.

Link: https://www.hindustantimes.com/business-news/wistron-violence-lessons-for-indian-manufacturing/story-yF8mwDUPgmq7K2j0ZTr96J.html

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