Tuesday
Business & EconomyLabour strike – Nokia’s salary revision irks employees
While the liberalised economy of India has been great for investors, large corporations and highly skilled professionals, it has not been so great for the average shop floor worker. Corporations throughout India try to find some way around the labour laws to pay their workers less than they should. It is an open secret that every large corporation in India employs a large number of contract and temporary workers to avoid paying them the benefits that a permanent worker is entitled to. Also, in the last few months, there have been reports of labour strikes in industries across the country.
The latest strike is happening in Nokia, the Finnish mobile phone giant, that has its plant located in Sriperumbudur. In its state-of-the-art facility, Nokia runs three shifts, churning out mobile phones that cost between 1,000 INR (20 USD / 15 EUR) and 20,000 INR (415 USD / 290 EUR) which are sold in India and other markets. The company has over 8,000 employees on its rolls, including 5,500 women. Nokia started operations in 2006 and recruited a large number of workers who had completed high school as well as technical diploma holders and trained them. A newly recruited worker gets around 3,500 INR (75 USD / 50 EUR) a month with promises of a gradual increase in pay. The company also provides pick-up and drop facility for all its employees.
Workers have been demanding a raise in pay since August 11. The management met with workers’ representatives and offered an increase of 800 INR (17 USD / 12 EUR) for those who had worked one year for the company, 950 INR (20 USD / 14 EUR) for those who had completed two years and 1200 INR (25 USD / 18 EUR) for those who had been with Nokia for three years. Workers on the other hand, have been demanding a uniform increase of 1,500 INR (31 USD / 21 EUR) for everyone. The management did not accept this. As a result, the workers had decided to go on a flash strike within the facility from August 13. The strike was started by those who had completed the second shift and they were joined by others who had come for the third shift.
While we hope the matter would be eventually sorted out amicably and the employees get their due, the increasing number of strikes across the country presents a distressing scenario. Large corporations must realise that employees are a very important part of any company and should give them their fair share of the pie. Unhappy and disgruntled employees reduce productivity and can negatively affect the quality and quantity of goods produced. On the other hand, there can be no greater asset for a company than a loyal, dedicated and happy workforce. To get these qualities out of a typical employee, there is only one way – treat him/her well and pay him/her adequately.
After the closed, highly regressive days of the licence raj, the Indian economy began to be liberalised slowly from the nineties. This has unleashed the potential of India both as a large market and a good location for corporations, both domestic and multi-national, to set up shop here to tap the growing market as well as the relatively low cost of manufacturing products here due to the availability of skilled labour at low wages. Different states began competing with each other to attract as many investors as possible and the better run states were able to convince many a corporate to start a facility to cater to the domestic market as well as for exports. This was good for those who were entering the job market as several opportunities were available for those who had the right skills.
The southernmost state of Tamil Nadu (TN) is one of the few states to have taken maximum advantage of a liberalised economy. As India’s most urbanised state (43.86% of the population lives in urban areas) and the state with the second highest per-capita income among large states, Tamil Nadu is one of the handful of states with a literacy rate of above 75%. TN also ranks first in terms of the number of registered enterprises in the entire country and the industries are well spread out throughout the state instead of being clustered around one or two cities. Blessed with an even distribution of wealth, a technically well trained and equipped workforce with a large percentage of them fluent in English (TN has the largest number of engineering institutions in the country), a relatively long coastline and state policies designed to attract a variety of industries, it’s no wonder that Tamil Nadu is a highly industrialised state when compared to the others. Wisely, successive state governments have made it a policy to build a highly diversified economy with equal emphasis on the services, manufacturing and agriculture sectors.
With an economy that is not overly dependent on any particular sector, TN is a great place to find the best talent from a variety of fields. Though the city of Chennai is known as “the Detroit of South Asia” for the large number of automobile and allied industries located here, it is also a leading Information Technology centre. In recent years, the government has promoted the growth of electronic industries in and around the town of Sriperumbudur, located close to Chennai. Chennai has emerged as the Electronics Manufacturing Services Hub of India.
Many thanks to Ronin for his contribution to this post!
Written by An alien Earthling
Post Tags: business, chennai, corporations, India, labour, mobile phones, Nokia, pay, South Asia, Sriperumbudur, strike, Tamil Nadu, wages
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Aug 19, 2009
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Workers are currently paid $75/month in India. In US/Finland the semi-skilled labour(2-3 years experience) would be paid around $3500-4000/month.
The Nokia Indian salary is 53 times cheaper than in developed countries. But the cost of the mobile phone is the same in India or many times expensive than in US(high end phones)..So is the price of a toyota/ford car..The price of house is lot more in India than in US…Only food may be cheaper..Education is free in developed countries like US and finland..
It is understandable if they pay 5 times cheaper salary or even 10 times. But 50 times cheaper salary is not fair to the American worker or the Indian worker..This makes the outsourcing sweat shop complaints true! Eventually no employee is happy other than the owners of the co..
Would Nokia management and other multi-nationals take notice? and be more responsible
Aug 19, 2009
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what Ronin said is right… Govt should insist the minimum wage of Central Govt 7000 INR as minimum for any worker.. otherwise this kind of super exploitation goes on ever to fatten MNCs
Aug 19, 2009
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Most governments in emerging markets think that keeping the market attractive for investors and MNC’s is more important than enforcing corporations to pay well. China entered the outsourced manufacturing space long time back. Yet the pay scales are not comparable to the west even today. Unless these nations start focusing on home grown R&D, things may not improve in the pace we would like it to.
Innovation and Product Development can only bring the kind of equality with the Developed nations that Ronin or Pattabi are envisioning. Most US and Western innovations spawn from their Defense R&D spendings. The R&D spending of western nations are several times higher than that of Asian nations.
Aug 19, 2009
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“Innovation and Product Development can only bring the kind of equality with the Developed nations that Ronin or Pattabi are envisioning.Most US and Western innovations spawn from their Defense R&D spendings ”
Regarding this I share some informations.
In India R&D is in the hands of persons graduated form best institutions and who claim to be highly meritorious academically. These people shall reinvent what was invented decades before in western countries and copy paste research papers. THEY HAVE NO CREATIVITY.
Last week I read two news items , one in Reporter another in JUVI
One person from TN who was a district director of school education claims to have invented a machine which can produce electric power required for a house in the house itself by giving input in a small battery operated motor. The photograph of the machine looks like a mechanical device having wheels. ( From my school days I too was thinking about a discovering perpetual machine and have conducted many thought experiments without going for a lab.) If the claim is true many problems will be solved.
This week another person has claimed to have invented a simple technology device to track all the satellite communications. This is not yet recognised by our Defence department and the person has accused our government for dragging the recognition and has filed a case in the court.
A month back Arcot Veerasamy was saying that he was examining a device to generate electricity from well water.
More inventions shall flow from Tamil Nadu if a proper institution is established by the state government to initiate encourage promote test and register for intellectual property rights of inventions. Better pass this suggestion to persons like Kanimozhi.
The central government in India is a big influential organisation which cannot take effective action on innovations from simple men and women.
malar
Aug 19, 2009
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I agree we need to have a minimum payscale for jobs,so that this companies don’t exploit labor markets..The quality of human life should not be pushed beyond certain limits for economic benefits..
Aug 20, 2009
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Malar,
Our premier institution entrance system are built so well to weed out any creativity in the offing..they only pick students who can rote things well and think/perform well within a box..Some of the most creative friends of mine did not get into any engg or med schools..most of my one-dimensional classmates went into engg and med schools..
Some schools like IIT build creativity due to the experience and pride..A student in US is interviewed and his holistic achievements are evaluated to get into a top school..we dont look for anything than a no..
But then we are here to change things, are n’t we?
Aug 20, 2009
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I do hope the minimum stipulated salary of government is exercised.
But there are few questions to the government:
1. Is the minimum stipulated salary changed according to the location (city/ town/ village) as we do for government jobs ?
2. What is the benefit the country gets for giving the manufacturing units lands at lower rates – of course employment is one, and business around these units, but what is that these corporations give back “by themselves” to the country – it could be in terms of infrastructure, schools etc
Few understanding on Nokia’s Chennai unit:
1. Various web sites (including Nokia’s) states that Chennai (Sriperumbudur) site is manufacturing over 100 million units per year.
2. Chennai site has been declared the best in terms of quality of all manufacturing units of Nokia
3. After a period of 3-4 years of operation, the management costs should go down, hope it is happening in Nokia too.
Taking into account – infrastructure depreciation costs, security, transportation, marketing, management, maintenance, travel, materials- Nokia is bound to make atleast 25% profits towards its turnover. Even 2% of it could be a bigger effect on the labourers salaries. It can even be checked in relation to the contribution of this unit against that of the entire organisation. This way they also encourage competition among their own units.
The general mistake in offshoring is, the unit is seen only as a “production house” and generally never calculated in terms of their contribution towards the entire organisation’s cost & profits. May be Nokia would like to do that ?
Being such a wonderful brand, I think Nokia should build a name for itself as a “responsible” company.
Aug 20, 2009
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24th August there should be an announcement about the decision made among union, Nokia & labour department of the government.
Aug 20, 2009
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Alien,
You broke no of hits record for this month! Congrats!
Regards,
Aug 21, 2009
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While minimum wages seem to be the only way out, it soesn’t always have to be like that. Corporations can take the lead and pay their workers much more than the minimum wages if they want to. This not only has a spin-off effect in terms of productivity but also enhances the reputation of the brand.
A genius like Henry Ford realised that his workers were an integral and important part of his company and therefore paid them very well. His logic was, The average worker should be able to afford the cars that he makes. Of course, before Ford revolutionised the concept of car manufacturing by inventing the modern assembly line used to build the world’s first “people’s car” – the Ford Model T, cars were prohibitively expensive and only wealthy Americans could afford them. Ford’s brilliance changed all that and average blue-collared workers were able to buy the cars they made with their own hands.
Nokia is a great company that makes wonderful products. They’re from the world’s most developed region (Scandinavia) where workers are paid very well. Let’s hope they’re able to satisfy their workers’ demands which seem perfectly reasonable to us.
Aug 21, 2009
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Thanks, Ronin! Full credit goes to you for suggesting the topic and providing reference material.
Aug 27, 2009
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I am not able to get any news on the decision made among the workers, management & government.
Aug 28, 2009
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Nothing at all? Any idea about the continuation of the strike
Aug 29, 2009
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Nothing till now.
Sep 2, 2009
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Cost of luxury cars in India is double the price in USA. Cost of cell phone is not rated for Indian purchasability. Car accessories are also being over charged. Companies like Pioneer, Sony have a low-end market in USA and have cassette players to serve this market in USA. One can see a sharp difference between Pioneer USA and Pioneer India websites regarding the product choice. In India, all products are high end with cheaper low end but good products being removed. They are forcing everyone to buy only CD players in India. They are giving false claims that “Cassette player dont sell in India”, in reality poorer customers who want low end products are denied and forced to buy high-end products. Several states in India, very small percentage own a car, they want a cheap functional audio system (Cassette player) and these MNCs are using the name of “latest technology” (CD/MP3 player) to hike prices. Payment of salary and leave is also undercut to workers in India because India has stupid labour laws.
Jan 27, 2010
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There was a strike again sometime last week. Nokia I guess has gone to lenghts to keep this issue hush hush.
Feb 3, 2010
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Labour/Workers are/were always the exploited class in india. There is strong need of the stronng Trade Unions. The leaders of these Trade unions must be “TRUE LEADERS” not the Political Leaders which is normally found. Management and Mulinational Corporation are always to exploit and they will till the workers become vigileant. Don’t expect much support from government because now a days democracy revolve around Power and Vote. God help those who help themselves.