Are industrial strikes bad for business? Data from Tamil Nadu says otherwise

In most industrialised States, strikes are fairly common, while the number of factories continues to remain high and keeps growing

When workers at Samsung India Electronics’ factory in Sriperumbudur, near Chennai, went on strike for more than a month recently, many people argued once again that strikes are harmful to business. This view gathered steam when Samsung India Electronics claimed in the Madras High Court on Tuesday that it had suffered a loss of around $100 million due to the strike by the workers, who were demanding recognition of their recently formed trade union. On October 15, the Tamil Nadu government announced that the strike had finally been called off.

The strike was widely seen as a disruption to the State’s industrial climate and a potential threat to future industrial investments. However, data suggests that in most industrialised States, worker strikes are fairly common, with the number of factories continuing to remain high and even growing.

In the 2008-2018 period, Tamil Nadu was the State with the highest number of industrial strikes, but it was also where the maximum number of factories were set up and factory workers employed. This contradicts the argument that strikes are harmful to business.

Reliable State-wise data for workplace disputes is available with the Union Labour Ministry between 2008 and 2018, so this is an analysis of that time period. In 2008-2018, Tamil Nadu recorded over 26% of all the strikes called, the highest among all States by a wide margin.

Chart 1 | State-wise industrial strikes in the 2008-18 period and its impact on wages, mandays and production. Each circle corresponds to a State. The farther to the right, the higher the State’s share in India’s strikes, mandays lost due to strikes, wages and production lost due to strikes

At the same time, the State also hosted 16% of India’s factories and a similar share of India’s factory workers during the period, again leading other States by a wide margin.

Chart 2 | The chart ranks the States on key indicators of industrialisation in the 2008-18 period. Each circle corresponds to a State. The farther to the right, the higher the State’s share in India’s factories, factory workers, of all factories’ GFCF and all factories’ overall profits 

Chart 1 also shows that 17% of workers in India who were involved in a strike in that period were working in Maharashtra — the second-highest among States. In the share of man days lost — total working days lost due to strikes — Tamil Nadu’s share was again the highest (15% of total mandays lost in India). In terms of value lost — production work hampered due to strikes — Gujarat was at the top of the list, forming 24% of such losses. Gujarat featured second-highest in the number of strikes called.

Notably, while these three States are at the top of the list on various measures related to strikes, as shown in Chart 1, they also lead the nation in key indicators of industrialisation, as shown in Chart 2. Tamil Nadu, Maharashtra, and Gujarat are the top three States, in that order, in measures such as the number of factories set up and workers hired.

They also lead in the Gross Fixed Capital Formation (GFCF) of factories — which measures the net investment in fixed assets such as machinery — which acts a proxy for a firm’s health and productivity. Their share in India’s industries’ overall profits also outsizes other States.

In fact, in the 2008-2018 period, the share of worker strikes grew in Tamil Nadu and so did the State’s share of the nation’s factories. In 2008, 28% of India’s worker strikes occurred in Tamil Nadu, and in 2018 the figure was 30%, with the State first on the list in both years in this measure. In the same period, the share of India’s factories in Tamil Nadu also grew from 14% to 16%. The State occupied the first place in this measure in both the years.

In fact with a trade union density rate — union members/total workers — of about 20%, India is not even among the top 50 economies in this measure. India’s figure is less than half of China’s 44.2%, a highly industrialised nation.

Chart 3 | Trade union density rates (in %) across BRICS countries (latest years for which data available)

Iceland, followed by advanced Scandinavian economies, lead the world in this measure with over half of their workers unionised.

Chart 4 | Top ten countries in terms of trade union density rates (in %)

sambavi.p@thehindu.co.in

vignesh.r@thehindu.co.in

Source: Labour Bureau’s Industrial Disputes reports, ILO’s Stat Explorer and Annual Survey of Industries

Published - October 24, 2024 07:00 am IST