The corporate responsibility watchdog Finnwatch has commended power systems company Wärtsilä for gains made in improving its operations in India since a previous report in 2015.
However in its latest review of the firm’s India business, the NGO said that Wärtsilä still has work to do – specifically with respect to ensuring workers are adequately paid and monitoring its subcontractor network.
Finnwatch based its latest set of recommendations on Wärtsilä’s Khopoli factory, where it said the most significant improvement had been the establishment of an independent trade union. The NGO had reviewed operations at the plant last summer as well as two years ago.
Back in 2015, workers had told Finnwatch that a union at the plant had been formed in a bid to shut out other labour unions from the facility. According to Finnwatch, Wärtsilä management had invited the union to the factory.
In its new follow-up report, Finnwatch said that Wärtsilä had been able to improve in the intervening two years and that an independent union now operated at the plant.
"The new union at Wärtsilä's Indian factory has intervened, among other things, in problems with overtime payment in previous years," said Finnwatch researcher Anu Kultalahti.
The previous Finnwatch report claimed that overtime compensation had been incorrectly paid for years. It noted that unpaid claims were being retroactively paid from the beginning of this year.
Finnwatch applauded the company for its openness during the investigation. Wärtsilä allowed researchers free access to the factory to speak with workers last summer. The plant is situated in the state of Maharashtra near to Mumbai. The factory manufactures modules and tube modules for engines and power plants.
Insufficient supervision of working conditions
In spite of offering some praise, the NGO criticised Wärtsilä for continuing to pay low wages. Workers with short-term contracts in particular may not be earning enough to live on. When researchers visited the plant in 2016, half of the workers – some 108 -- had permanent jobs and the other half were on fixed-term contracts.
Finnwatch also slammed the power systems company for failing to tighten up oversight of its supply chain. Two years ago the organisation identified major problems with the operations of one contractor, Echjay Forgings.
Kultalahti said that Wärtsilä had attempted to address the problems with the subcontractor, but Echjay Forgings was not prepared to change its ways, following which Wärtsilä terminated the relationship.
In the report on its last field visit, Finnwatch focused on the Wärtsilä plant exclusively and did not visit subcontractor facilities.
Wärtsilä has indicated that it will strengthen its supply base especially in Asia, but the company's assessment of human rights risks and monitoring of working conditions are still not transparent and credible, the NGO said.
"In many Asian countries, operations involve human rights risks," Kultalahti added.
In India, there is a risk that wages are insufficient for workers to live on and do not have the freedom to organise in unions.
"Companies require a minimum wage from contractors. According to human rights principles, workers should be able to demand an adequate living wage," Kultalahti noted.