Changing labor laws alone will not attract Apple and Co to India

These changes were made at the insistence of Apple and other large global manufacturers. But strong opposition from trade unions and political parties forced the Tamil Nadu government to stall the amendments. Then on May 1, Chief Minister MK Stalin announced his return.

The next day the Congress launched its manifesto for the upcoming assembly elections in Karnataka, attacking the “anti-labour policies” of the BJP government in Karnataka. It said it would repeal amendments that seek to increase working hours within a year of being made. Government.

Whatever the outcome of the election, the amendments passed in Karnataka are now in question. It is entirely possible that the state may take a U-turn, as has happened in Tamil Nadu.

Events in both states reinforce India’s reputation for policy volatility, uncertainty and unpredictability. They also serve as a reminder about the vast difference in working conditions of organized labor and its unorganized counterparts, who make up the bulk of the workforce.

The evacuation will result in only a handful of organized sector workers being hired as per the rules. Working conditions in most jobs in India do not meet prescribed standards anyway, as Indian manufacturers have found ways to circumvent legal protections and safeguards by hiring workers through vendors, as Radhika This has been documented by economists like Kapoor.

But global companies do not bend the laws like this. Southern states, in fact, have introduced legal changes to attract investments from large global manufacturers – notably Apple, which has been manufacturing in India since 2017 – which have long complained about the country’s “outdated” labor laws. Have complained.

According to a Financial Times report, Apple and its manufacturing partner Foxconn are among the companies that are pressing for relaxation of labor regulations on the lines of China. Foxconn has a plant in Sriperumbudur, Tamil Nadu, Pegatron has a manufacturing unit in Chennai and Wistron has one near Bengaluru.

Global manufacturers are considering diversifying some of their supply chains away from China. States want to roll out the red carpet. However, they should first reconsider their strategy. Despite manufacturers’ demands, a change in working hours is unlikely to be a major consideration when choosing a new factory location.

The Chinese supply chain is highly complex, as several reports in the Financial Times earlier this year showed. They show how deep Apple’s supply chain is in China and why it would be difficult to replicate elsewhere. Apple relies on China to produce more than 90% of key products and earns about a fifth of its revenue there — $74 billion last year.

Guangdong, where Apple’s component makers are largely located, offers world-beating efficiency in customs clearance and turnaround times at ports. Provincial governments in China offer preferential policies, such as tax-exemptions, apartment complexes for migrant workers, warehouses, highways and airports, to Apple’s component-makers.

Back in 2010, Apple faced international criticism after a series of reports about “iSlavery”, the FT report mentioned above, followed the suicide deaths of more than a dozen workers at component-making factories in China. Done, in which there are gruesome programs. But weak labor protections are now only a small part of China’s greed. The use of robots is on the rise, and automation is only going to increase.

So weak labor protection may not be the way to attract investment. Instead, states should strive for better enforcement of labor-protection rules to prevent exploitation of workers. The eight-hour working day was adopted by the International Labor Organization in 1919 and is still followed by most of the civilized world.

Similarly, labor inspectors should be reined in to prevent corruption and reduce red tape. Uninterrupted power supply, better infrastructure and logistics are non-negotiable and will go a long way in attracting investments.