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Finnwatch: Minister Berner's company's Indian subcontractor tramples workers' rights

Employees report illegally low wages and forced overtime work.

Vallila Interior chair Anne Berner at the firm's Helsinki headquarters. Image: Trond H. Trosdahl / Lehtikuva

An Indian subcontractor of a firm owned by outgoing Finnish Minister of Transport and Communications Anne Berner's family is guilty of violating workers' rights, says the corporate responsibility NGO Finnwatch.

The firm, RK Exports, is a supplier to the Helsinki-based Vallila Interior, which sells printed fabrics, rugs and home accessories. It was established in 1935 by Swiss businessman Otto Berner, grandfather of Anne Berner. A dual Swiss-Finnish citizen, she is now the firm's chair while her brother Mathias Berner is CEO.

Employees of the subcontractor, based in the southern Indian town of Karur, say the firm pays wages below the legal minimum and compels them to work overtime beyond the legal limit during production peaks. The factory has refused to comply with minimum wage legislation for the textile sector imposed by the state of Tamil Nadu in 2014.

"The employers have tried to delay adoption of the new minimum wage laws by suing the state of Tamil Nadu in court. This is worrying, as even the new minimum wage is not enough to live on," says Finnwatch researcher Anu Kultalahti.

RK Exports has an SA8000 certification, developed by Social Accountability International (SAI). Finnwatch, however, is critical of the SAI and the German certification firm TÜV Nord, alleging that those who carried out the audit used the wrong minimum wage data.

According to the SAI, SA8000 is "the leading social certification standard for factories and organizations across the globe," which "helps certified organizations demonstrate their dedication to the fair treatment of workers".

It measures social performance in eight areas including child labour, forced labour, health and safety, freedom of association and the right to collective bargaining, discrimination, disciplinary practices, working hours and pay.

Vallila 'surprised'

Vallila says it is surprised by the Finnwatch report since RK Exports had provided Vallila with its valid SA8000 certificate and signed Vallila's operational principles agreement.

"We are surprised that there are reported shortcomings in processes that have been inspected. We will go over these findings with the auditing bodies," Vallila said in a statement on Thursday.

Vallila says that RK Exports only accounted for 1.3 percent of Vallila Collection's overall purchasing last year, down from 2.4 percent in 2017.

Anne Berner owns about 30 percent of Vallila Collection. When she became a cabinet minister in 2015, she owned more than 60 percent of the firm, but subsequently handed over about half to her sons.

Balmuir leather goods also under the magnifying glass

Finnwatch also looked into the operations of another Indian subcontractor that supplies leather goods to Balmuir, another Finnish interior design brand, which is owned by the Wheslyn Group.

The NGO alleges that Balmuir products are manufactured by workers in the Faridabad area of northern India who are not paid minimum wages or pension benefits.

"The employees report receiving very low wages, even below three euros a day. An employee cannot get by on a wage like that, even in India," says Kultalahti.

Wheslyn Group CEO Heidi Jaara says the firm takes the reported problems "extremely seriously" and has taken immediate steps to correct them.

The Finnwatch study is part of a development cooperation project partly funded by the Finnish Ministry of Foreign Affairs as well as a consortium of development, environmental and labour groups.