June 10, 2023

Wistron Is Guilty Of Ignoring Signals

By A Special Correspondent
First publised on 2020-12-21 06:03:51

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It is unfortunate that Wistron allowed the delays in payment of wages to escalate into a full scale labour dispute, knowing full well that the one thing that workers cannot tolerate, world-wide, is repeated delays in clearing their wages. Wistron should have known that it was a test case of a foreign manufacturer in the production-linked incentive scheme of the government of India. It should also have kept in mind that since it was producing for brands such as Apple, Lenovo and Microsoft, all of which are very sensitive to how their vendors take care of their workers, it should have put extra emphasis on addressing the delay in payment of wages. But it allowed the problem to linger and snowball into an ugly confrontation. The action it has now taken, removing the vice-president in-charge of the business in India, is good but it must realize that more than persons, it might have been the disruption in cash flows that caused the problem.

For Wistron, this has meant that Apple has stopped further orders till it takes corrective action. Wistron, being a foreign company that has been working with major brands across the world, must know that all these brands are now very concerned about how their vendors comply with ESG (environment, social and governance) practices in the countries they operate. Both investors and consumers do not touch brands that do not factor in ESG. That is why the company will have to immediately reorient its labour policies to ensure that such an incident is not repeated.

For India, this incident might have two serious consequences. One, as India liberalizes its labour laws and allows fixed-time contract employment by companies, labour unions will show Wistron as what can go wrong in such a scenario. Secondly, as India pushes for Make in India and seeks foreign investment, violence such as the one at the Wistron factory in Bangalore will turn away investors. Hence, both the government and the company must move in fast to control the damage. 

Pic courtesy: Deccan Herald