Memoir of Nokia Sriperumbudur: Lessons deliberately not learnt

Amirtha[1] is an angry worker today, her cherished dreams were robbed from her. In a span of a few months, her life, which appeared economically stable lies in ruin. She knows not whom to blame, nor why such events have come to pass. Amirtha had joined the Nokia mobile manufacturing plant in Sriperumbudur in 2009, after high school, in her late teens, to support her family. She is today a young mother to an infant, wife to a casual construction labourer, and unemployed, with no means to fulfil her family’s needs. Amirtha is but one of the thousands of unfortunate workers of Nokia India all victims of the unfettered market economy.

It was over two years ago in March 2013, when Nokia’s unionized workforce had successfully negotiated a collective bargaining agreement with the management. Nokia India had not only recognized the union[2], but agreed to double the wages of workers over the next three years. From this high point, as Nokia wound down its most successful manufacturing plant in Sriperumbudur between May and November of 2014, Amirtha and her co-workers were mute spectators. Their dreams of economic liberation melted away before their very eyes. As Amirtha comes to terms with her new unemployment status, it seems that the world has conspired against the likes of her in bizarre and inexplicable ways.

The reason the plant in Sriperumbudur came to a grinding halt, laying off thousands of workers, was because Microsoft, which had acquired Nokia’s international handset business decided not to acquire this plant. For its part, Nokia has unequivocally blamed the non-acquisition of the Chennai plant by Microsoft on a tax dispute with the Indian authorities over import of software components in handsets.

Nokia’s narrative of blaming the Indian government for the plant shutdown has been uncritically accepted by sections of the main stream media. Recent award winning article, Ghost of Sriperumbudur, published in LiveMint by emphasizing the professionalism of Nokia and empowerment of Nokia workers, paddles this narrative (1). This argument is further consolidated by media’s projection of Nokia as a model employer, a poster child for the success of special economic zones (SEZ), and a generator of employment. Thus Nokia becomes a victim of the bureaucratic tax regime inherited from India’s post-colonial socialist state. Even Tamil Nadu State government and some Nokia workers influenced by this narrative, have blamed this catastrophe on the tax dispute. This finds resonance with those demanding greater deregulation of the corporate sector not merely lowering taxes and also dismantling labour regulations for ease of doing business and promoting investment friendly environment.

In this article we challenge this dominant narrative and endeavor to show that the only victims of Nokia India story are the workers and tax payers of India. By chronicling the history of Nokia Chennai plant, we argue that Nokia’s labour friendly policies were circumstantial and that it profited directly and indirectly from the poor labour regulations and special privileges it received by being in SEZ and through its MoU with the State government.

By reviewing the financials of its operation, it will become evident that Nokia made enormous profits out of its operations in India, but cried foul to pay even a meager 5 percent of this profit in tax. Given the low rate of taxation, this could not have been the central reason for its closure. We further argue that global policies of Microsoft had anyways sealed the fate of the Chennai plant, as has been seen in similar Nokia plants in Hungary and China. On the basis of this experience, we hope to show that the continuation and expansion of this policy by the central government would only lead to further exploitation of the working class.

Part I: Deconstruction of Nokia as model employer
Part II: Nokia’s Tax Disputes, Sale to Microsoft and Eventual Shutdown of the plant
Part III – Conclusion: Winners and Victims

Part I: Deconstruction of Nokia as model employer

 Nokia, State, MoU and labour expectations

Though Nokia had entered India in 1996, the memorandum of understanding (MoU) signed between Nokia and Tamil Nadu Government in 2005 is a good place to start, as this marks the start of the existence of Sriperumbudur plant and it explains Nokia’s understanding of labour situation in India. Nokia and TamilNadu Government signed a MoU on 6th April 2005, after Nokia’s announcement that it would set up a manufacturing plant in Sripermubudur.

This MoU contained terms of mutual agreement as regards to Nokia’s obligation to the State and of course the State’s obligations to Nokia. Via the MoU, Nokia and its suppliers Foxconn, Jabil, Salcomp, Wintek, Laird, LightsOnMobile were allotted a 200-plus acre SEZ in Sriperumbudur. Flextronics and BYD, also suppliers of Nokia, operated from nearby SEZs. Being factories in SEZs, Nokia and its suppliers were eligible to avail incentives under the then newly passed legislation, the Tamil Nadu Special Economic Zones (Special Provisions) Act 2005. Through the MoU, the State acknowledged that the (Nokia) facility would be in the interests of the state and its members creating tangible economic benefits including without limitation, the creation of employment opportunities and trade revenues (2).

By this agreement, the state had conceded that it would not by any conditions, have any ‘restrictions on any form of employment that Nokia utilized (2). The following are assurances on labour regulations provided in the MoU:

  • Facilitate speedy clarification, interpretation and resolution of issues, as and when they arise, related to labour laws and regulations in the state and the country.
  • Allow ‘initial’ seeding of manpower under Apprentices Act
  • Performance based manpower absorption post the training period
    Flexibility in employment conditions (including working hours for women, shorter/longer work hours in shifts)
  • Facilitate obtaining requisite permission for operating 24×7 shifts and exemptions from Factory Act(including allowing women to work in night shift)
  • Allow the SEZ to be declared ‘public utility’ to curb labour indiscipline
  • Flexibility to hire workers without any conditions and restrictions
  • Facilitative role of local enforcement offices (including single point reporting and auditing)
  • Delegations of all powers under industrial and labour regulations to Development commissioner.

Nokia’s presence as an economic benefit to the State is a general vague entitlement accompanied by absolutely no promises by the company. Nokia does not guarantee anything to either the State or its citizens – either in terms of employment or quality of employment or in terms of revenues and taxes that State would enjoy through these revenues. The State by signing this MoU is content with this general exposition of Nokia’s benevolence for Tamil Nadu. The absence of any guarantees of the companies to the public for the various subsidies they receive is carefully constructed within the articulation of the SEZ act.

On the other hand, Nokia did not want to be constrained by the existing legal protection that workers have under various acts and therefore through the MoU route they tried to circumvent the provisions of these acts by seeking to narrow the scope of these acts.  

Finally they tried to restrict the avenues for workers to register their grievances by demanding that the SEZ become a public utility which prohibits workers from striking. Through the MoU they also demanded that the State divest the labour commissioner from regulating labour practices in Nokia and vest it in the hands of the SEZ development commissioner. Whereas the primary function of a labour commissioner is to ensure that the rights of the workers in a factory are not violated, the development commissioner’s primary duty is to ensure smooth running of SEZ enterprises. This creates a conflict of interest negatively impacting the rights of the workers.

These assurances sought by Nokia from the State point to certain implicit assumptions about the existing labour market conditions in India:  unavailability of skilled labour, prevalence of labour antagonisms, delays and impediments in handling of labour-related matters by the State. 

Employment Standing Order, Skilling of Manpower and Quality of Employment

Nokia had sought flexible hiring using Apprentices Act to seed manpower and performance-based manpower absorption (2). While terms such as flexibility and seeding had been left quite vague in the MoU, leaving workers exposed to potential vulnerabilities in their jobs, the Employment Standing order[3] codifies the categories of workers, providing an insight into labour arrangement in Nokia. This complicated 7-fold classification, a pet tool of capitalists, have bearing on the legal rights accorded to the worker.  

Nokia classified workers on the shop floor as permanent, contractual, temporary, causal, trainee, apprentice and substitute (3). 

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In 2006, as Nokia was starting its production, more than 7 lakh students appeared for the 12th class Tamil Nadu State Board Examination (4). Out of these students, about 5 lakh passed the examination qualifying for higher education. Those who could not afford higher education, would enter the labour workforce in unskilled and semi-skilled work. This was the workforce Nokia and its suppliers targeted.  This young workforce of Nokia came from all over Tamil Nadu, actively recruited by government machinery to work as trainees (5). Their contracts stipulated a training period of 9 months and their wage was termed a stipend[4]. Given this recurrent profile of workers passing out of high school every year, Nokia’s reference to lack of skilled labour belies credulity.

In this regard we should note that the Apprentice Act, 1961 was enacted to increase employment of youth via on-the-job practical and theoretical training by industry experts. The act mandated that in factories with more than 500 workers, the training was to be imparted in separate training spaces. The objective of the act makes it clear that the appointment of apprentices for lower wages is an unfair labour practice. Nokia and its suppliers bypassed the main objectives of this act by declaring the apprentices productive, i e, fit for production work in less than 2 months, and employed them on the shop floor.

Nokias Employment Standing Orders also states that the company is not obliged to employ a trainee after the completion of training period. In Nokia, there were no records of whether trainees were retrenched at the end of the training period, but such retrenchment was observed in Nokia’s supplier companies[5]. The employment of trainee workers, who were legally only apprentices, cleverly circumvented labour laws. This allowed companies to pay workers less than they would to a regular employee.  They were not obligated to provide neither security of tenure nor any benefits.

In addition to the use of apprentices in production work, Nokia and its suppliers also employed contract work force in their factories. In 2011, the report Phony Equality recorded that 20%[6] of workers in Nokia and 60% in supplier factories were contract workers (6). These workers were contracted through various agencies and did not have same wages and benefits as permanent workers with similar work experience.

Nokia maintained that contract labour was not employed in core production activities at the Sriperumbudur plant. However, what is core activity and what is not is left to be defined by the business, increasing the possibilities of subversion. The above mentioned report highlights, “although the jobs listed above seem to be regular and perennial in nature, with the majority of the contract workers (2,800) used for assembly and warehouse operations, Nokia claimed that these jobs are incidental and not core jobs in mobile phone manufacturing. On the registration certificate referred to above, the nature of Nokias work in the SEZ establishment is listed as manufacturing of mobile phones but the main purpose of the SEZ unit is storage and assembly of components to be integrated into more than 20 models of phones.31 This implies that contract workers are being used for perennial work that is core to the establishment’s nature of business, which Section 10(2) of the Contract Labour Act prohibits.”

Contract labour was actively employed in core production activities by Nokia’s suppliers. In India where about 93% of the work force is employed on informal terms with limited or no legal rights, the Contract Labour (Abolishment) Act, 1970 was enacted so that factories do not exploit contract workers for core and perennial work. But these legislations are structurally dismantled in the name of flexible hire-and-fire employment policies.

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Figure 1: Employment data in Nokia and its suppliers[7]

While Nokia was not ready to pen down employment numbers in the MoU, Nokia and its suppliers’ workforce did not exceed 25000 workers at its peak. Precarious employment as trainees and contract workers in large numbers, in this case exceeding 50% of the workforce, leaves workers vulnerable to heightened exploitation, as they can hardly unionize for their rights for fear of swift no-questions-asked dismissal. The contract workforce at Nokia was the first to disappear during the process of Nokias plant shutdown, and these workers were not even entitled to any compensation. While Nokia gave a small compensation to trainees, their suppliers did not do so.

Labour Resistance at Nokia and suppliers

The Sriperumbudur plant expanded rapidly and by 2011, it produced 500 million mobile handsets, more than any other plant of Nokia or any other mobile phone manufacturing unit in the world (7). The first recruits, who started out as trainee workers, were by then being absorbed as permanent workers, and were bearing the brunt of increased production pressure at Nokia and consequently at its supplier factories.

Year

Worker
Category

Wage
in Rs per month

 2007

Trainees

3400

2008

Permanent

5400

April
2009 – 2010

Permanent

5500-8200

 

Trainees

4000

Apr
2010 – 2011

Permanent

6000-11300

 

Trainees

4820

 

Contract
Workers

4400

Apr
2011 – 2012

Permanent

6750-12900

 

Trainees

5800

Apr
2012 – 2013

Permanent

8000-14250

Apr
2013 – 2014

Permanent

11500-17750

 

Contract
Workers

6200

Apr 2014 –

Permanent

15000-21250

Table 1: Nokia Wage Table[8]

Despite higher output and of course higher profits, workers’ wages reflected little growth and were reported to be between Rs 3,400 and Rs 5,400 in 2009 (8). The lack of wage increases seems to have been the riding factor for swift demands for unionisation in Nokia. 2009 and 2010 saw heightened labour unrest in Nokia.

The workers went on flash strikes and protests to expose production pressures and unsafe conditions (9). In October 2010, negligent work place safety resulted in the death of a worker. She was dragged into a malfunctioning machine, her head was crushed (10). Such incidents, and labour protests led to national and international pressure by groups like Citizen’s Collective, Cividep, Good Electronics, and Finnwatch, which documented working conditions and violations in Nokia and its suppliers. The Nokia management initially dealt with the unionisation efforts of Nokia workers by entering into collective bargaining negotiations with unions propped up by the management and by suspension and dismissal of workers suspected of promoting independent unions (11).

The sustained struggles by workers led to Nokia to recognize and sign agreements with Nokia India Thozhilalar Sangam, the majority union in 2010 and 2013, both of which, however, were applicable only to permanent workers.  Nokia also implemented several worker friendly measures including bus transport to the house (especially for women workers in the night shift), crèche facilities, educational assistance and better amenities. However such worker-friendly policies did not trickle down to Nokia’s suppliers.

As mentioned earlier, Nokia’s suppliers were independent companies established nearby to supply components to Nokia. The workload and of course the workers’ fortunes were closely tied to Nokia. This was most evident when Nokia closed down. Foxconn, a major supplier, primarily produced outer cases (both metal and plastic) for Nokia’s phones. The profile of workers and their skill sets in Foxconn were not that different from workers in Nokia. Yet, Foxconn workers faced far worse working conditions than Nokia’s workers, both in terms of wages and benefits (12).

Workers in Foxconn were paid less than workers in Nokia. In 2010-11, a trainee and a grade D permanent worker at Foxconn were paid about Rs 2,995, and other permanent workers would be paid around Rs 4,000.This was nearly half of what Nokia was paying its workers at the time (see Table 1 for Nokias wages). Apart from paying dismal wages, Foxconn seemed to be negligent about safety at its plants and dealt with workers’ objections with little remorse (13).

Similar to Nokia, workers at Foxconn began trying to bargain with the management and unionise. Flash strikes started over wage increases and recognition of union throughout the year 2010. Permanent workers at Foxconn went on strike for 37 days in 2010 and management dismissed several workers for unionizing and signed collective bargaining with a pro-management, minority union[9].

Similarly, both permanent workers and contract workers in BYD, another Nokia supplier, struggled for better working conditions in 2010 (14). The BYD management termed the strike illegal citing the company’s ‘public utility’ status and ‘locked out’ workers for more than a week. Flextronics and Salcomp, also Nokia’s suppliers, have been criticized for their poor labour conditions including low wages, use of contract/trainee workers, and lack of amenities (6).

Nokia as a model employer

The labour unrest that arose in Nokia and its suppliers was the outcome of unfair working conditions in the factories including intense production pressure, low wages and lack of amenities. The works committees, constituted in Nokia, Foxconn and BYD electronics for worker-management relations, were not able to resolve the grievances of workers.  This in turn led to unionisation.

Nokia management’s initially antagonistic relationship with unions transformed due to continued workers’ struggles, international pressure and from increased media attention. This shift in approach to unions resulted in improving relationship with the workers, better working conditions and to the seminal negotiation of a wage agreement that guaranteed a healthy wage increase, if only to the permanent workers. It must be noted that Nokia itself benefitted by improving the relationship with workers both in terms of accrual of goodwill for its brand and improved workforce participation.

Nokia had since its inception implemented selective labour incentivising practices such as transport, subsidized canteen facilities etc. The wages, while low, was still better than what was on offer in similar factories in the region. Workers, especially women, did feel safe to work in this environment. Nokia therefore was popular among its workers and others workers coveted an entry into the company as the rest of the companies around had far inferior standards.

However within Nokia these incentives did not accrue equitably to all workers, as trainees and contract workers did not enjoy the same assurances and wage benefits as permanent workers. In fact as a close look at Nokia’s suppliers revealed, the conditions were worse for the workers in these supplier companies.  Nokia, having benefited from the labour employed in the supplier companies, did not exert any pressure to extend decent working conditions for all its direct and indirect workers.

Another oft claimed rationale for cheap labour is the decrease in profits. However, the following figures, from Nokia’s Income Tax Reports between 2007 and 2010, tell us yet another striking story, and put the labour cost in perspective.

Nokias Revenue between 2007 and 2010

Rs 73873 crores

Employees Cost including wages, salary(for management) and
welfare between 2007 and 2010

Rs842 crores

Nokia Indias profits (before tax) between 2007 and 2010

Rs 4115crores

Nokia’ s labour cost to the total revenue during 2007 to 2010 was mere 1.13%. When wages were increased for workers in 2009 due to unionisation, the increase in percentage of labour cost to revenue was 0.3%.

However while media flouts Nokia’s friendly labour policies, what is left out in the discourse is that Nokia implemented the entitlements mandated by Factory Act, 1948. The factory act specifically mandates these provisions including transport, canteen and creche facilities. Why were every other factory and even Nokia’s suppliers allowed to get away with these basic amenities not being implemented properly? Nor do the media acknowledge the role of the labour struggles in this process. If anything, the unrest is used to clamor for reforms of the same legal entitlements that led to Nokia being a model employer.

Part II: Nokia’s Tax Disputes, Sale to Microsoft and Eventual Shutdown of the plant

As we discussed before, in March 2013, Nokia India Thozhilalar Sangam, the largest union at Nokia negotiated a long-term wage agreement with Nokia management, which was hailed by workers, unions and management (15). The wage agreement, as already mentioned, provided an immediate increase of 30-50% in wages for permanent workers, and would have doubled their salary in the next three years. However, the confidence of the workforce in the economic security, guaranteed by the wage agreement, was short-lived as production was substantially reduced by end of the 2013 itself.[10]By April 2014, contract workers, trainees and majority of the permanent workers at Nokia were no longer employed.

In 2006, when Nokia began production at Sriperumbudur, it was the market leader with 36% of global market share in mobile handsets (16). By 2013, Nokia’s market share had dropped to less than 20%. Much has been written about reasons for the rapid slide of Nokia, foremost of which was the growth of smartphones replacing feature phones. While Nokia was the market leader with 50% market share in smartphones, its Symbian based smartphones could not compete with the rapid explosion of Apple’s iPhone, and Android-based mobiles of Samsung in particular (17). Nokia‘s partnership with Microsoft in 2011 to produce Windows-based smartphones[11] did not stop the slide in its market share of smartphones to 5% by 2013. In September 2013, Microsoft announced that it would acquire Nokia’s phone business.

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In early 2013, Income Tax Authorities in India audited and levied a tax of Rs 1,912 crore (which was later revised to Rs 7,000 crore and Rs 21,000 crore with interest) (18). The tax was levied on software royalty paid by Nokia India to Nokia Finland, which was taxable under royalty agreement. This is broadly called transfer-pricing, when two corporations that are related, are mandated to price and account for transfers of all goods services between them at market prices. Nokia challenged the Government’s terming of mobile software as royalty, and contended that this was import of raw materials and not taxable. While the dispute was pending, Nokia India transferred Rs 3,500 crores to Nokia Finland as dividend. (18). With no funds to cover the tax liability, the Income Tax Department froze the assets of the Sriperumbudur plant in September 2013.

Nokia sought legal intervention to unfreeze the assets so that the plant can be part of its sale to Microsoft. The Delhi High Court allowed unfreezing of assets with liability to Nokia Finland (to the extent of the dividend paid to it). However, Microsoft did not acquire the Sriperumbudur plant as part of their global acquisition of Nokia’s mobile business. Instead, it extended a one year contract to Nokia to continue producing handsets in the plant until 2015[12]. In November 2014, Microsoft abruptly terminated this contract with Nokia, and the Sriperumbudur plant was shut down permanently.

Even though the order by Delhi High Court allowed the sale of the manufacturing facility in India with liability for Nokia Finland in the tax dispute, Nokia chose not to do so. In 2008, Nokia had split its operation in India and registered the sales division as a separate company from the Sriperumbudur plant. This enabled Microsoft and Nokia Finland to ensure that Nokia’s liabilities were limited to the company that owned the Sriperumbudur factory. The assets of Nokia’s manufacturing plant (which has no takers so far) is estimated to be less than Rs 586 crore, hardly enough to meet Nokia’s tax liabilities, thereby evading tax with impunity[13].

The suppliers have not fared well either.  Except Salcomp and Flextronics, all other vendors have shut down production. While Wintek, LightsOnMobile and others closed earlier, BYD electronics and Foxconn shutdown in 2014.

Microsoft cancelled its one year contract to Nokia’s Sriperumbudur plant for production of feature phones dovetailing with its strategy of focusing on Windows-based smartphones (19). Since the acquisition, Microsoft has closed Nokia factories in Europe, reduced operations in China, and has consolidated production in Vietnam[14]. It is likely that the Sriperumbudur plant may have been closed irrespective of the tax dispute.

While Nokia and the media have argued that the tax dispute was reason the Sriperumbudur plant shutdown, our analysis exposes more contingent reasons like Nokia’s misreading of the demand for smart phones, its decision to not invest in innovative technologies, increased competition from the likes of Samsung and Apple, decisions taken by Nokia and Microsoft in the context of the global mobile business and their own interests in cutting loses, evading tax liabilities and moving to cheaper and less regulated countries such as Vietnam.  Thus it made good business for Microsoft to move its production and for Nokia to shut shop in India but the costs were unfairly borne by the workers and the families.

Extreme profitability for Nokia Finland

The Delhi High Court order documents the economics of Nokia’s presence in India (18):

Nokia Finland’s investment in Nokia India (1996)

Rs 35 crores

Nokia India’s investment in India (including production
work paid resources, parked assets)

Rs 1,858 crores

Nokia India’s turnover between 2005 and 2012

Rs 1,50,700 crores

Funds transferred from Nokia India to Nokia Finland via
purchases of raw materials

Rs 57,924 crores

Tax paid by Nokia Finland’s in India between 1997 to
2013

Rs 71 crores

Funds transferred from Nokia India to Nokia Finland as
dividend

Rs 3,500 crores

Capital Tax paid by Nokia India to Indian Government

Rs 2,181 crores

Nokia Finland had invested Rs 35 crores in 1996 in Nokia India Private Ltd. The profits generated by Nokia India between 1996 and 2005 allowed Nokia to invest in the Sriperumbudur plant. This enabled Nokia Finland to extract over Rs 57,900 crores from Nokia India in the form of raw materials (which included the software royalty) and Rs 3,500 crores as dividends. Clearly, as Justice Khanna and Sachdev put it,It is apparent that doing business in India has been extremely profitable and beneficial for Nokia Finland

Nokia India and Nokia Finland have paid a tax of Rs 2,250 crores to Indian government. There are no clear records available on tax subsidies to these entities. However some examples contextualize the kinds of subsidies enjoyed by Nokia. The Tamil Nadu government alleged that Nokia had falsely claimed Value Added Tax (VAT) exemptions of Rs 2,400 crores between 2009 and 2012, as these units were not exported but domestically sold (20). The exemption of VAT was only for exports.

The Comptroller and Audit General of India documented that Rs 650 crore of duties were exempted for Nokia to import raw materials for domestically sold units in 2005 and 2006 alone (8). The economic data evince that benefits to the state (via tax) and to the public (via employment) are negligible and short-lived, while Nokia accrued extreme profits.

 

Part III – Conclusion: Winners and Victims

Workers’ lives post Nokia shutdown

In April 2014, Nokia announced voluntary retirement scheme (VRS) for its 7000+ permanent workers, with a compensation package between Rs 4-7 lakh comprising 15 months of salary and earned leave (21). While Nokia workers protested demanding job security, the management pressured workers to accept the proposed VRS (22). Transport services were cut down ending the transport-to-the-house policy. Nokia’s Human Resources Department also insinuated that the VRS scheme will be withdrawn if workers did not opt for it[15]. By the end of May, over 5,600 workers had opted for VRS. The employment of the remaining 950+ workers also came to an end when Nokia shut down the production completely in November 2014.

Thus, the workforce which joined Nokia and its suppliers in their 18s and 20s, have found themselves ‘retired’ in their late 20s. Their search for employment has been largely unsuccessful. Employment opportunities for their acquired skillset is simply non-existent, with very few electronics companies continuing in the area.

While there are several industrial conclaves (especially in the automobile sector) and SEZs in the region, the workers find no employment in these sectors. Across sectors, managements prefer to start workers as trainees with low wages, disregarding years of experience. The companies prefer younger workers as trainees and most workers cite an unwritten age ceiling of
25 years for recruitment.

Some workers have found employment only by hiding their Nokia work experience from prospective companies. Gomathi[16], a diploma graduate, worked as a diagnostic technician in Nokia for 5 years. She opted for VRS in May 2015 and applied to Salcomp. As she had heard from her peers that Salcomp was refusing to take workers from Nokia, she hid her Nokia experience and joined Salcomp as a trainee, earning 40% less than her earlier wage. Some workers have used their compensation money for household emergencies including siblings’ weddings, medical expenses, loan repayments etc. Workers have reported that companies refuse to take workers from Nokia and Foxconn saying that they had been “pampered” by Nokia in terms of wages and amenities. As the wages and amenities provided by Nokia were indeed what is mandated under labour laws, using this to deny employment to workers is effectively silencing the workers from demanding their basic rights.

While the state and district administration which actively recruited workers for Nokia have conducted meetings for terminated workforce, they have not provided any substantial alternative opportunities for workers.

Was this experiment worth the cost?

The story of Nokia India, its rise and fall, is an important chapter in the recent economic history of this country. India was to become an economic giant, taking its place among the largest economies of the world. Growth in manufacturing — fuelled by policies of liberalization and deregulation — was to take us there. Towards this goal of rapid industrialization, our political leaders, egged on by the national and international business community, were prepared to gamble away many things including the rights of the working class that constitutes the majority of the people of this nation. The legislations on Special Economic Zone that came into effect in 2005, was an expression of this motive and mission – constructed around access to natural resources, subsidies, flexible hire and fire policies and unrestrained access to market. Even as criticism raged against free trade and special economic zones, our government touted Nokia India as a shining example of this policy. 

Nokia indeed has proven to be an example. From inception, Nokia India was clear as to what its demands were if it were to invest and manufacture in India. It wanted a submissive workforce at the lowest wage possible, flexibility to keep wages low, hire and fire workers and restructure its size at will. It also wanted quick and favorable resolution of disputes that were to arise between its management and the workers. The MoU between the State Government and Nokia India is clear as to this objective. It would have been a severe short-sightedness on the part of contractual parties to not see that such demands would result in confrontations and conflicts on the shop floor. The State Government not only short sighted, was also eager to sign away the hard earned rights of the working class towards living wage, working hours, legal protection and collective bargaining. Can the State gamble away the rights of the workers? Can a MoU overrule legislations like Industrial Disputes Act?

The working conditions in Nokia, though better than many other factories, remained at best average. Precarious employment using contract workers and subversion of workers classification constituted over 50% of the work force. Wages bordered on minimal wages for the workers in these factories and were hardly raised. Production pressures increased and safety norms were compromised, leading to death of a worker.

As anticipated by Nokia, workers dissatisfied with working conditions, rebelled and unionized, enabled by the protection of existing laws. All this came to fruition for the workers, when in 2013, (when discussions with Microsoft was already ongoing), Nokia entered into a generous wage agreement that promised to double the wages for workers. Nokia India should have known that its very existence was under question due to the ongoing negotiations, yet it neither disclosed this to the workers, nor take it up with Microsoft to protect jobs and wages in India. Nokia India also did little to address the issues of wages and working conditions in its supply chain. The suppliers that populated the SEZ in India, were known to have a very poor record on these counts and Nokia benefited from the low cost components they provided. Even though these companies were situated right within the SEZ, Nokia allowed for vastly differential and often very poor conditions of work to perpetuate among its suppliers, while extending the benefits of the MoU to the suppliers. The workers found it severely restrictive to bargain collectively, as the government had written off their legal rights.

Nokia was clearly a winner, as it made phenomenal profits. But what did people of India get for having hosted Nokia, laboured for its growth and subsidized its operations by granting liberal tax breaks? We have ended up with still young workforce, without jobs, without useful work experience, without opportunities and above all without hope. Was this experiment worth the cost?

Will our Government learn a lesson?

It does not seem so from the portrayal of Nokia’s downfall in the media and the state’s discourse. The careful construction of Nokia as a model employer, the blame of tax disputes on the shutdown of the plant are used to reinforce the agenda of liberalism and the prescribed model of development. While we watch the spectacle of ‘Make in India’ and ‘Global Investors Meet’ in television and print, we are bombarded with same promises of jobs and economic growth. Behind this mirage of paradise, successive governments are steadily dismantling every provision and legislation that protects our environment, land and workers’ rights.

From its ascent to power, NDA has systematically removed various provisions under the environmental protection act and has repeatedly stated that it will remove environmental hurdles to fast track projects. The recently legislated land acquisition act, which sought to protect the farmers to an extent against the onslaught of industrialization, is being watered down via ordinances and when that failed, State Government legislation. Through this, the government wants to do away with social impact of land acquisition, does not want our consent to take our land and does not care about our food security as fertile lands are gifted away to corporates. The final salvo is the attack on labour laws. In the name of rationalizing labour laws, the government is going ahead with dismantling minimum wage laws at a national level, dismantling overtime limits and wage requirements, legalizing contractualization of industrial workforce and is making it easy for companies to fire workers en masse. It has already severely restricted factory inspectors from inspecting factories at will and taking complaints from the workers. Now it also wants to curb unionizing and collective bargaining by criminalizing worker protests like ‘Go-Slow’ and Strike. On the other hand, violations of labour laws (if any) by companies will not be treated as crime but a matter of reconciliation. In effect, we are going create a national scale ‘Special Economic Zone’, sacrificing our rights, our resources and our revenue.

The workers of Nokia India are clearly the visible victims of corporate greed. But they are also victims of a conniving government, which rather than act as custodian of their rights, signed it away under the pretext of economic well-being. Amritha’s anger has a target; it is the government, yet it is not because it demanded of Nokia, taxes that they were legally bound to pay, but because the government failed to demand of Nokia, minimum guarantees of employment generation, work conditions and secure employment. There is a choice before Amritha and us. We can either remain angry and frustrated but silently submit to such flawed policies or stand up with other workers and fight the expansion of these flawed policies and legislation, so that our rights and wealth is preserved in the interests of Indian workers.

References

1. The Ghost of Sriperumbudur. Live Mint. [Online] October 29, 2014. http://www.livemint.com/Companies/nIRZOHMNcD5fgegpWDDqBP/The-ghost-of-Sriperumbudur.html.

2. Memorandum of Understanding in relation to establishment of Electronic Hardware Manufacturing Facility in the state of Tamil Nadu between Government of Tamil Nadu and Nokia India Pvt Ltd . 2005.

3. Ltd, Nokia India Pvt. Standing Order, Chennai Factory (Undated).

4. Ministry of Human Resources Development, Government of India. Results of High School and Higher Secondary Examination 2007. 2009.

5. Dutta, Madhumita. ARRANGEMENT OF LABOUR AND CONDITIONS OF WORK IN MOBILE PRODUCTION FACILITY: A BRIEF CASE STUDY OF THE NOKIA TELECOM SEZ IN SRIPERUMBADUR TALUK, KANCHEEPURAM DISTRICT, TAMIL NADU.

6. Cividep, Finnwatch& SOMO. Phony Equality: Labour Standards of Mobile Manufacturers in India. 2011.

7. Nokia India Manufactures 500 mn Handsets New Dual SIM Phone Soon. TelecomTalk Info. [Online] May 06, 2011. [Cited: Oct 14, 2015.] http://telecomtalk.info/nokia-india-manufactures-500-mn-handsets-new-dual-sim-phone-soon/65596/.

8. Collective, Citizen’s. The Public Price of Success: The costs of the Nokia Telecom SEZ in Chennaifor the government and workers. 2009.

9. R. Jai Krishna, Dhanya Ann Thoppil and Romit Guha. Strike Disrupts Work at Nokia’s Chennai Plant. Wall Street Journal. [Online] Jan 21, 2010. http://www.wsj.com/articles/SB10001424052748703699204575016442013819362.

10. Ambikas Death. Kafila. [Online] 2010. http://kafila.org/2011/01/21/ambikas-death-madhumita-dutta-venkatachandrika-radhakrishnan.

11. Nokia seek week’s time on suspension issue: Union. Economic times. [Online] Jan 30, 2010. [Cited: Oct 14, 2015.] http://articles.economictimes.indiatimes.com/2010-01-30/news/28406001_1_nokia-sriperumbudur-plant-suspension.

12. Pratap, Radhakrishnan, Dutta. Foxconn Workers Speak: We Are Treated Worse Than Machines. Asia Monitor Resource Centre. [Online] 2011. http://www.amrc.org.hk/content/foxconn-workers-speak-we-are-treated-worse-machines.

13. Madhumita Dutta, Venkatachandrika R, Millie Nihila, Kaliyaperumal Narayan. The mysterious case of fainting workers. 2010.

14. Radhakrishnan, Dutta and. The New Cellu-lar Jail. Kafila. [Online] 2011. http://kafila.org/2011/01/23/the-new-cellu-lar-jailmadhumita-dutta-venkatachandrika-radhakrishnan/.

15. Nokia gives steep salary hikes to staff in Chennai. Economic Times. [Online] March 08, 2013. http://articles.economictimes.indiatimes.com/2013-03-08/news/37561913_1_chennai-comeback-plans-nokia.

16. Nokia. Press Release: Nokia reports fourth quarter 2006. 2007.

17. Ali-Yrkkö, Jyrki, et al. Microsoft Acquires Nokia: Implications for the Two Companies and Finland. 2013.

18. High Court Delhi Judgment on WRIT PETITION (CIVIL) NO. 6150/2013, Decision on December 2013.

19. Microsoft shifts Nokia manufacturing to Vietnam. [Online] August 21, 2014. http://www.thanhniennews.com/business/microsoft-shifts-nokia-manufacturing-to-vietnam-30216.html.

20. Madras High Court Judgment on Writ Petition Nos. 9077, 9078, 9079, 9725, 9726 and 9727 of 2014, Dated 29-04-2014. 2014.

21. Nokia offers VRS scheme to Chennai plant employees. [Online] Apr 11, 2014. [Cited: Oct 14, 2015.] http://www.thehindubusinessline.com/companies/nokia-offers-vrs-scheme-to-chennai-plant-employees/article5900739.ece.

22. Dutta, Madhumita. Nokia: Disconnecting People. Thozhilalar Koodam. [Online] April 01, 2015. tnlabour.in/?p=2124.


[1] Name changed

[2] Trade Union Act, 1926 and Tamil Nadu Trade Union Rules do not mandate employers to recognize a union in the shop floor.

[3] A legally mandated document that explains the policies of human resources in the shop floor

[4] The contract further states that the training can be extended. Workers reveal that the period of training was usually 15 months.

[5] On discussion with worker on 21st Jan 2015, he stated that 25 youths were recruited by Foxconn and only 3 were confirmed after 3 years of training.

[6] With trainees, the percentage of precarious workers in Nokia and its supply chains is over 50%.

[7] Nokia or Government have not published the exact number of persons employed. These are compiled from various data sources including reports, court case statements, press statements, and news articles.

[8] From various sources including collective agreements, media news and reports

[9] The rival union Foxconn Tholilalar Sangam had to pursue legal options to be recognized in 2014.

[10]Conversation with workers, Jan 22,2015, Sriperumbudur

[11] The Chennai plant was not equipped to handle windows based smartphone technology. Nokia would setup a new plant in Vietnam for production of smartphones.

[12]Notice in front of Nokia SEZ refers to Microsoft’s orders being cancelled resulting in shutdown of the plant

[13] The most famous example being DOW’s acquisition of Union carbide where the liability of one of the biggest industrial tragedy was passed on to the Indian citizenry.

[15]        Industrial Disputes act specifies compensation at 3 months salary + salary for 15 days for every year of employment for the worker.

[16] Name changed

 

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One Response to Memoir of Nokia Sriperumbudur: Lessons deliberately not learnt

  1. Divya Kasturi Rangan says:

    This is a very informative article that puts things in perspective.
    Very well written.

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