Why violence happened at Wistron-Apple Facility?

Wistron Violence and issue of contract workers

Synopsis: The recent case of violence at Wistron’s iPhone manufacturing plant also highlights the challenges faced by contract workers in India.

Why Wistron Violence happened?

  • Recently, Wistron’s iPhone manufacturing plant was attacked by thousands of contract workers over alleged non-payment of wages, resulting in theft and loss of goods worth hundreds of crores.
  • Whereas, Wistron stated that it had deposited the money in the account of the contractor (staffing firms) and the action will be taken against that firm.
  • In response, Apple has put Wistron Corp. on probation by not giving new orders after an audit of the serious lapses in labour practices.

As per the initial findings, some serious lapses have been found out in labour practices.

  • Wistron became fully operational in August 2020, with around 5,000 employees and rapidly scaled up its contractual employee strength from around 3,000 to nearly 8,500, due to rising demand.
  • It was followed by increase in shift timing from eight-hour to 12-hour shifts. On the other hand, contractors were not paying the workers their full wages as per their contract. Wages were being paid very late and in some cases slashed from Rs 22,000 to Rs 8,000 in some cases.
  • There was no employee grievance redressal system in place. Final argument which triggered violence was broke out over the attendance system not capturing the exact work hours of workers.  

Who are contract workers?

  • Contract workers are hired by the contractors’ company and paid by them only, they are not on the payrolls of the company on whose shop floors they work.
  • Company transfers payments to contractor companies as per the agreements and contractor companies make payment to the contract workers. Principal employers/companies are responsible for the welfare facilities of the workers.
  • As per the data of the Annual Survey of Industries (2017-18), 36.4 percent of total production workers in the registered factory sector, are contract workers.

What are the issues faced by the contract workers?

  • Firstly, Contract workers are often tasked with the same jobs as regularly employed workers but have limited social security benefits, receive lower wages, and operate under poor working conditions.
  • Secondly, Sub-contracting itself has become multi-layered. In many cases, Subcontractors themselves are Hiring labor from multiple subcontractors/third party work supply firms. Setting accountability in this case becomes very difficult.  
  • Third, Despite providing the provision of Fixed-term employees in the Code on Industrial Relations, firms continue to rely on contract workers, because
    • The cost of hiring contract workers continues to remain lower compared to cost of hiring fixed-term employees, who are required to be paid pro-rata wages and social security including gratuity. 
    • In the case of contract workers monitoring, legal compliance and litigation costs are shifted onto the contractors.
Code on Industrial Relations (2020)

  • Under the code, government introduced the option of fixed-term employment, in a bid to discourage the use of contract workers.
  • Such employees can be employed without mediation of contractors. These employees are though assured of benefits same as permanent workers in the establishment, but are not entitled to any advance termination notice or any payment in lieu of termination.
  • Fourth, Code on Industrial Relations is itself vague regarding major aspects of contract workers
      • The basic issue is that the provisions of fixed-term employment in India are open-ended i.e. does not specify a minimum or maximum tenure for hiring fixed-term employees or the number of times the contract can be renewed.
      • Workers may find themselves moving from one fixed-term contract to another, without any assurance of being absorbed as permanent workers by their employer.
  • Fifth, Labour Code on Occupational Safety and Health provides exceptions by allowing the use of contract workers in core activities under certain conditions such as a sudden increase of volume of work in the core activity which needs to be accomplished in a specified time.

What should be done?

  • Firstly, the use of contract labour in core activities excluding services such as security, catering and sanitation, should be completely prohibited by government.
  • Second, Conflict between the Code on Occupational Safety and Health and Code on Industrial Relations regarding contractual labours should be resolved immediately. Former allows contract labor in some exceptions.
  • Third, it is notable that Wistron increased the no. of contractual workers after the launch of Production Linked Incentive (PLI) Scheme, which is limited for 5 years and on the incremental sales. Such employment generating schemes should have a provision that the jobs generated should be on the firms’ payroll and not the contractors’.
  • Fourth, As Atmanirbhar Bharat Rozgar Yojana, is offering provident fund subsidies to employers for hiring new formal workers. This together with PLI scheme should be leveraged to generate formal employment.
  • Fifth, as an immediate step, a compulsory grievance redressal mechanism for contractual workers should be established.

 

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