By Munsif Vengattil and Praveen Paramasivam
CHENNAI (Reuters) – A labour strike in India that has disrupted production at a Samsung (KS:005930) plant has put the spotlight on a politically-backed worker group which quietly mobilized employees of the South Korean company and now plans to extend its efforts in the country’s electronics sector.
The Samsung protests over low wages, now in their fifth day, cast a shadow on Indian Prime Minister Narendra Modi’s plan of courting foreign investors to “Make in India” and tripling electronics production to $500 billion in six years.
From Foxconn to Micron (NASDAQ:MU), companies have been lured to more business friendly policies and cheap labour under Modi’s decade-long rule, especially as foreign manufacturing giants look to diversify their supply chains beyond the powerhouse of China.
On Friday, hundreds of protesting workers wearing blue-coloured Samsung shirts continued to sit inside makeshift tents near the home appliances plant in southern state of Tamil Nadu, sporting red caps with the acronym CITU.
The Centre of Indian Trade Unions (CITU) is backed by India’s most influential hard-left political party and has 6.6 million worker members. It demands worker-friendly measures, though it has historically focused more on auto sectors and companies like Hyundai (OTC:HYMTF).
While employees at companies like Samsung can unionize on their own, partnering with groups like CITU, which was started in 1970, is seen by some workers as a way to garner more national support and get their voice better heard by companies.
With the Samsung strike, CITU is now planning to make inroads into the electronics manufacturing sector which is growing at a rapid pace but where companies “are not doing wage revisions properly,” said S Kannan, its Tamil Nadu deputy general secretary.
“There is no opportunity for collective bargaining either,” he added.
A strike of this scale – which impacts production – is not common in India’s electronics industry. Previous notable ones include worker unrests at iPhone factories of suppliers Wistron and Foxconn during 2021, where unpaid wages and a food poisoning incident were triggers, respectively.
CITU has plans to push for more worker rights at Apple (NASDAQ:AAPL) supplier Flex (NASDAQ:FLEX) and electronics firm Sanmina where it has been in talks with the management for demands including union recognition and better wages, Kannan said.
Flex in a statement said it upholds highest global standards for labor practices and believe in a respectful and collaborative environment.
The prime minister’s office, the federal IT ministry, the Tamil Nadu labor ministry, and Sanmina did not respond to Reuters queries.
DIRE SITUATION
The Samsung strike is one of biggest industrial unrests to have caused production disruptions at a foreign multinational company. The plant alone accounts for around a third of its annual $12 billion India revenue.
While workers protest, Tamil Nadu Chief Minister M.K. Stalin has been on a U.S. tour since late August and held talks with companies such as Nike (NYSE:NKE) and Ford (NYSE:F).
In Samsung’s case, the CITU privately wrote a letter in July – seen by Reuters – asking the its management for higher wages for workers who it said were forced into a “dire situation”.
When the company didn’t agree, CITU supported workers to start a strike this week, which is also serving as a challenge to companies the group says pay low wages to poor workers.
Samsung workers are earning 25,000 rupees ($300) on average per month, CITU said, and they are demanding a raise of 36,000 rupees ($430) over three years. One worker outside the plant said he joined Samsung a decade ago and makes only 23,000 rupees a month, which made life difficult with soaring living costs.
“Instances of strikes could be reduced if government ensures a mechanism for multinationals to respect the labour laws including freedom of association and collective bargaining,” said K.R. Shyam Sundar, an economist who has written on labour reforms in India.
In a statement on Friday, Samsung said it has initiated discussions with its workers at the Chennai plant “to resolve all issues at the earliest.”
