Samsung Strike in India: A Major Challenge to Modi's 'Make in India' Initiative and the Rise of Worker Unions in Electronics Manufacturing
By Munsif Vengattil and Praveen Paramasivam
CHENNAI (Multibagger) - A significant labor strike at a Samsung facility in India has brought attention to a politically-backed worker organization that has successfully mobilized employees of the South Korean conglomerate. This group now aims to expand its influence within the rapidly growing electronics manufacturing sector in India.
The ongoing Samsung protests, which have entered their fifth day, have raised questions about Indian Prime Minister Narendra Modi's ambitious "Make in India" campaign. Modi's initiative seeks to attract foreign investment and boost electronics production to $500 billion over the next six years.
Foreign manufacturing giants, from Foxconn to Micron, have been drawn to India due to its business-friendly policies and affordable labor costs under Modi's decade-long leadership. This is particularly appealing as these companies aim to diversify their supply chains beyond China.
On Friday, hundreds of Samsung workers, donning blue company shirts, continued their sit-in protest inside makeshift tents near the home appliances plant in Tamil Nadu. They wore red caps bearing the acronym CITU, representing the Centre of Indian Trade Unions.
CITU, backed by India's most influential hard-left political party, boasts a membership of 6.6 million workers. Historically focused on the automotive sector and companies like Hyundai, CITU is now targeting the electronics manufacturing sector, criticizing companies for inadequate wage revisions and lack of collective bargaining opportunities.
S Kannan, CITU's Tamil Nadu deputy general secretary, stated, "There is no opportunity for collective bargaining either."
Strikes causing production disruptions are rare in India's electronics industry. Notable past incidents include worker unrest at iPhone suppliers Wistron and Foxconn in 2021, triggered by unpaid wages and a food poisoning incident, respectively.
CITU plans to advocate for more worker rights at Apple supplier Flex and electronics firm Sanmina, where it has already initiated talks for union recognition and better wages.
Flex issued a statement affirming its commitment to upholding the highest global labor standards and fostering 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 Multibagger' queries.
A Dire Situation
The Samsung strike is one of the largest industrial disruptions affecting a foreign multinational in India. The Tamil Nadu plant alone contributes to about a third of Samsung's annual $12 billion revenue in the country.
While workers protest, Tamil Nadu Chief Minister M.K. Stalin has been on a U.S. tour since late August, engaging with companies like Nike and Ford.
In July, CITU privately communicated with Samsung's management, requesting higher wages for workers, whom they described as being in a "dire situation." When the company did not agree, CITU supported the workers in initiating a strike this week, challenging companies accused of paying low wages.
Samsung workers currently earn an average of 25,000 rupees ($300) per month and are demanding a raise to 36,000 rupees ($430) over three years. One worker, who has been with Samsung for a decade, stated that his monthly earnings of 23,000 rupees make it difficult to cope with rising living costs.
"Instances of strikes could be reduced if the government ensures a mechanism for multinationals to respect labor laws, including freedom of association and collective bargaining," said K.R. Shyam Sundar, an economist specializing in labor reforms in India.
In a statement on Friday, Samsung announced that it has initiated discussions with its workers at the Chennai plant "to resolve all issues at the earliest."
Analysis: What This Means for You and Your Finances
Understanding the Content:
- What Happened: Workers at a Samsung plant in India are striking over low wages, disrupting production.
- Why It Matters: This strike challenges Prime Minister Modi's "Make in India" initiative and highlights the growing influence of worker unions in the electronics manufacturing sector.
- Who Is Involved: The Centre of Indian Trade Unions (CITU), Samsung, and the Indian government.
How It Can Affect You:
- Investment Impact: Disruptions in production can affect Samsung’s stock prices and potentially the broader electronics market.
- Economic Implications: Strikes and labor unrest can deter foreign investment, impacting India’s economic growth and job creation.
- Consumer Prices: Prolonged strikes may lead to production delays, potentially increasing the prices of Samsung products.
By understanding these dynamics, you can make more informed decisions regarding your investments and stay aware of potential changes in the market that could affect your finances.