While the demand for a union is sub-judice, the Samsung workers have called off their strike.
| Photo Credit: MAHESH KUMAR A.

When workers at Samsung India Electronics’ factory in Sriperumbudur, near Chennai, went on strike for more than a month recently, many people argued once again that strikes are harmful to business. This view gathered steam when Samsung India Electronics claimed in the Madras High Court on Tuesday that it had suffered a loss of around $100 million due to the strike by the workers, who were demanding recognition of their recently formed trade union. On October 15, the Tamil Nadu government announced that the strike had finally been called off.

The strike was widely seen as a disruption to the State’s industrial climate and a potential threat to future industrial investments. However, data suggests that in most industrialised States, worker strikes are fairly common, with the number of factories continuing to remain high and even growing.

In the 2008-2018 period, Tamil Nadu was the State with the highest number of industrial strikes, but it was also where the maximum number of factories were set up and factory workers employed. This contradicts the argument that strikes are harmful to business.

Reliable State-wise data for workplace disputes is available with the Union Labour Ministry between 2008 and 2018, so this is an analysis of that time period. In 2008-2018, Tamil Nadu recorded over 26% of all the strikes called, the highest among all States by a wide margin.

Chart 1 | State-wise industrial strikes in the 2008-18 period and its impact on wages, mandays and production. Each circle corresponds to a State. The farther to the right, the higher the State’s share in India’s strikes, mandays lost due to strikes, wages and production lost due to strikes

At the same time, the State also hosted 16% of India’s factories and a similar share of India’s factory workers during the period, again leading other States by a wide margin.

Chart 2 | The chart ranks the States on key indicators of industrialisation in the 2008-18 period. Each circle corresponds to a State. The farther to the right, the higher the State’s share in India’s factories, factory workers, of all factories’ GFCF and all factories’ overall profits 

Chart 1 also shows that 17% of workers in India who were involved in a strike in that period were working in Maharashtra — the second-highest among States. In the share of man days lost — total working days lost due to strikes — Tamil Nadu’s share was again the highest (15% of total mandays lost in India). In terms of value lost — production work hampered due to strikes — Gujarat was at the top of the list, forming 24% of such losses. Gujarat featured second-highest in the number of strikes called.

Notably, while these three States are at the top of the list on various measures related to strikes, as shown in Chart 1, they also lead the nation in key indicators of industrialisation, as shown in Chart 2. Tamil Nadu, Maharashtra, and Gujarat are the top three States, in that order, in measures such as the number of factories set up and workers hired.

They also lead in the Gross Fixed Capital Formation (GFCF) of factories — which measures the net investment in fixed assets such as machinery — which acts a proxy for a firm’s health and productivity. Their share in India’s industries’ overall profits also outsizes other States.

In fact, in the 2008-2018 period, the share of worker strikes grew in Tamil Nadu and so did the State’s share of the nation’s factories. In 2008, 28% of India’s worker strikes occurred in Tamil Nadu, and in 2018 the figure was 30%, with the State first on the list in both years in this measure. In the same period, the share of India’s factories in Tamil Nadu also grew from 14% to 16%. The State occupied the first place in this measure in both the years.

In fact with a trade union density rate — union members/total workers — of about 20%, India is not even among the top 50 economies in this measure. India’s figure is less than half of China’s 44.2%, a highly industrialised nation.

Chart 3 | Trade union density rates (in %) across BRICS countries (latest years for which data available)

Iceland, followed by advanced Scandinavian economies, lead the world in this measure with over half of their workers unionised.

Chart 4 | Top ten countries in terms of trade union density rates (in %)

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Source: Labour Bureau’s Industrial Disputes reports, ILO’s Stat Explorer and Annual Survey of Industries

Chennai:

The strike by Samsung Electronics workers in Tamil Nadu’s Sriperumbudur is likely to end today as significant progress has been made in negotiations between the striking workers and the company, according to sources from both sides.

The Centre of Indian Trade Unions (CITU), which represents the workers, will discuss the terms of the agreement in its general body meeting today and announce the withdrawal of the strike if ratified.

Tamil Nadu Chief Minister MK Stalin thanked the CITU, Samsung workers, and the state ministers of small industries, labour, and industries for their efforts in resolving the issue.

The Tamil Nadu Industries Ministry sources have outlined these terms of the agreement:

• All striking workers will return to work immediately.
• No retaliatory actions by management against workers involved in the strike.
• Workers must cooperate fully with the management and avoid any actions prejudicial to the company’s interests.

Both parties have accepted these terms, and the workers have indicated their willingness to end the strike and return to work. However, CITU President Soundararajan, speaking to NDTV, has clarified that the final decision on the strike’s withdrawal will only be confirmed after the general body meeting.

Samsung India has welcomed the decision and thanked the Tamil Nadu government for its support. The company has also assured that it will not take action against workers who merely participated in the strike.

The strike, which began more than a month ago, was driven by demands for union recognition, a pay revision, pay parity, and an eight-hour workday. While Samsung conceded to several of these demands, including a Rs. 5,000 wage increase, the issue of union recognition had been a matter of reluctance.

The Tamil Nadu government played a key role in mediating the dispute, with ministers, including Industries Minister TRB Rajaa, stepping in to facilitate discussions. The strike, which initially impacted production ahead of the Diwali season, saw Samsung mitigating the effects by employing contract workers and reorganising its logistics team.

CPI(M) leader Soundararajan meets Samsung employees protesting over various demands, in Chennai.
| Photo Credit: ANI

The ongoing workers’ strike at the manufacturing facility of Samsung, the South Korean electronics giant, in Sriperumbudur near Chennai, appears to have put the Chief Minister M.K. Stalin-led Dravida Munnetra Kazhagam (DMK) government in a spot.

The workers have been on strike since September 9, demanding higher wages and union recognition. The demand for recognition of the Centre of Indian Trade Unions (CITU)-affiliated Samsung India Workers’ Union (SIWU) has been the key friction point between the striking workers and the company’s management. CITU is affiliated to the Communist Party of India (Marxist), a DMK ally.

Last month, Union Labour Minister Mansukh Mandaviya wrote to Mr. Stalin, urging him to bring a “swift resolution” to the strike at Samsung. Mr. Stalin assigned Industries Minister T.R.B. Rajaa, Micro Small and Medium Enterprises Minister T.M. Anbarasan, and Labour Minister C.V. Ganesan to address the issue. In the presence of the ministers, several long meetings were held between the management and workers, and a “settlement” was reached between the company and the workmen committee on October 7.

However, CITU rejected the settlement proposal and said that the strike would continue until SIWU is recognised. The police arrested some of the protesting workers and dispersed the others. This move evoked strong criticism from the Opposition parties, such as the All India Anna Dravida Munnetra Kazhagam, Amma Makkal Munnettra Kazagam, Pattali Makkal Katchi, and Naam Tamilar Katchi. Even the DMK’s allies — the Tamil Nadu Congress Committee, the Marumalarchi Dravida Munnetra Kazhagam, Viduthalai Chiruthaigal Katchi, the CPI(M), and Tamizhaga Vazhvurimai Katchi — have backed the workers. Interestingly, some leaders of the Bharatiya Janata Party in Tamil Nadu have spoken against the CITU protest.

Industry bodies such as the Confederation of Indian Industry Tamil Nadu have said it is vital to reach a swift resolution to maintain the State’s industrial momentum and attract investors. The DMK-affiliated Labour Progressive Federation has asked CITU not to blow the issue out of proportion.

Mr. Rajaa and Finance Minister Thangam Thennarasu spoke to the media and argued that the issue of union recognition is sub judice and that the State government would take a decision based on the verdict of the Madras High Court. Mr. Rajaa said the management was also ready to fulfil the other demands of the workers, including high-quality food, standard locks, and air-conditioning of all the 108 buses. But they were unsuccessful in convincing the protesters to return to work.

Deputy Chief Minister Udhayanidhi Stalin told reporters that Samsung is a multinational company and has refused to recognise a politically backed union. All other demands of the workers have been fulfilled, he pointed out.

The protest has come at a time when the DMK government is projecting Tamil Nadu as a preferred investment destination. The government is said to have attracted investments amounting to ₹10 lakh crore and generating 31 lakh jobs in three years. The protest, in fact, began when Mr. Stalin was in midst of a visit to the U.S. visit to woo investment. He signed investment pacts to the tune of ₹7,600 crore with various companies during his visit. Ford agreed to resume production, nearly three years after it ceased vehicle production in India, in Tamil Nadu, which was seen as a major win for the DMK government. Tamil Nadu is India’s largest exporter of electronic goods.

States are competing for investments. India is trying to take advantage of ‘China Plus One’, a strategy where businesses are avoiding investing only in China and are seeking to diversify investments and supply chains to other countries. As Indian States are also facing the challenge of youth unemployment, they are trying to attract investments to generate jobs.

While attracting investments with the pitch that Tamil Nadu offers a peaceful industrial environment, the State government cannot afford to neglect the interests of workers. The government of the most industrialised State in the country, as per the Reserve Bank of India, faces a real challenge in balancing the demand of the workers to form a union and the need for industrial development.