‘Auto Sector Businesses Actively Avoid Reporting Even Serious Accidents, Injuries’

This is significant as the automobile industry, which contributes to 7.1% of India’s gross domestic product, employs 37 million people directly or indirectly.

“The primary reason for the injuries is a lack of responsibility among all stakeholders including factory owners/managers, OEMs [original equipment manufacturers], and the government towards worker safety,” said Sandeep Sachdeva, co-founder & CEO of SII. This lack of responsibility extends to the auto sector brands, the ultimate beneficiaries of this supply chain, who have the commercial power and, indeed, corporate responsibility, to improve this situation, he added.

SII is a civil society organisation started in 2016 to improve worker safety in India's auto sector supply chain, and social security through the Indian government's Employees' State Insurance Corporation (ESIC) scheme. This year’s report additionally brings perspectives on the problems faced by women workers in the sector who have been impacted by serious injuries.

“...women appear to face differential treatment post injury by employers and even the government system,” said Sachdeva. There are cases where women workers have been threatened with dismissal if they advocate new methods to prevent accidents or demand social security entitlements, he said.

Between 2017 and 2020, three people died and 11 were injured each day, on average, due to accidents in India's registered factories, IndiaSpend reported in January 2023 based on government data.

In an interview, Sachdeva talks about the report and its findings, and challenges around occupational safety and health (OSH) in India, and how OEMs and their supply chains, and the government must intervene to improve workers’ safety.

Edited excerpts:

SII started working on factory accidents and injuries about seven years ago, in 2016. Have there been improvements since then? Is occupational safety in factories a priority for governments, manufacturers and their supply chains? Why do we see so many injuries?

The primary reason for the injuries is a lack of responsibility among all stakeholders including factory owners/managers, OEMs, and the government towards worker safety. In the auto sector supply chain, workers often work on dangerous machines like power presses and in unsafe working conditions with inadequate safety provisions.

For example, as reported in ‘Crushed 2023’, 54% of injured workers in Haryana and Maharashtra were aware--before the accident--that the machine was faulty, and 70% of them had informed their supervisor about the faulty machine. Clearly, many owners/managers of these auto component factories do not listen to their workers or, worse, do not care about them.

This lack of responsibility extends to the auto sector brands, the ultimate beneficiaries of this supply chain, who have the commercial power and, indeed, corporate responsibility, to improve this situation. Just as an example, more than half of injured workers in Haryana and Maharashtra reported that an audit did not take place in their presence.

There has been some positive movement since our first report--Crushed 2019 and later the first SafetyNiti 2021. A few auto sector brands have started improving their work safety policies for their own contract workers and for those in their suppliers. Seven of the top 10 OEMs are now declaring their OSH policies in the public domain. A few have started increasing audits of their Tier-2 suppliers [Tier-1 suppliers supply parts to the OEMs. Tier-2 suppliers supply to the Tier-1 organisations]. There are early indications of some reduction in accidents in Gurugram, but it’s not a significant trend yet. There is a very long way to go. For example, we have been advocating for safety sensors to be installed in power press machines which account for most of the crush injuries, but the number of injuries happening on power press machines without safety sensors is around 90%.

The Ministry of Corporate Affairs (MCA) has started promoting the need for adoption of National Guidelines for Responsible Business Conduct (NGRBC) by large businesses and the MSME sector; the National Human Rights Commission issued a notice based on the Director-General Factory Advisory Labour Institute (DGFASLI) data on accidents in registered factories. However, a lot of opportunities to strengthen the Occupational Safety and Health (OSH) infrastructure continue to be missed, including the non-release of India’s National Action Plan on Business and Human Rights, the lack of OSH focus in the latest policies from multiple ministries, and the delay in setting up of an online portal for real-time OSH data, all of which are outlined in ‘Crushed 2023’.

The auto sector brands and the government need to come together and take this issue head on if we want to achieve Sabka Saath Sabka Vikas.

According to your report, in six years, more than 6,000 injured workers have been found and assisted by SII. You say that the DGFASLI has “seriously understated” injuries in factories. SII met more than 500 injured workers in Haryana in 2020, while official data reported by DGFASLI show only 68 in the year. Why does the DGFASLI data understate injuries and fatalities? What are the problems, and what have been the consequences?

This is an old problem in our country and has been going on for decades. The system is incentivised to underreport rather than expose the truth. Even in 2021, the total number of non-fatal accidents reported for Haryana is 24, which is less than 2.5% of the 1,000+ injured workers supported by SII alone in two locations, Manesar in Gurugram and Faridabad.

The DGFASLI data is collected through correspondence with the Chief Inspector of Factories of states and Union territories (UTs), and there appears to be no apparatus for systemic data collection at the states and UTs. [Auto sector] Businesses actively avoid reporting even serious accidents and injuries as they are required to and workers find it difficult to get their FIRs lodged even if they want to.

SII has been recommending the creation of a reliable accident/injury reporting and governance system and to use it for constant continuing improvements, including strengthening OSH in the states to improve factory inspections and effective penalties for repeat offenders. There appears to be no action taken based on this recommendation.

Bad data, obviously, leads to bad policies, which do not help the country. For example, DGFASLI’s Standard Note mentions a consistent decline in fatal and non-fatal injuries, but with this data quality, we cannot be sure. The fallout of the underreporting is that occupational safety ends is not prioritised as a policy objective. For Sabka Saath Sabka Vikaas and to compete in the global manufacturing supply chain, which is taking Environmental, social, and governance (ESG) and similar initiatives seriously, we need to increase our focus on the issue of OSH, and good data would be the appropriate starting point.

We must remember that India’s labour productivity is 131st in the world and unless we improve working conditions, we cannot achieve the growth we plan for and compete professionally, at scale, with China and others.

The medical support for workers, many of whom are migrant and non permanent, is lax. The ESIC enables health entitlements and compensation to workers and is mandatory. But you find that in many cases, it is not given on the day of joining jobs. How widespread is this problem? Are manufacturers directly responsible for ensuring ESIC is provided? And is non-compliance punished?

‘Crushed 2023’ reports that a majority of injured workers in Haryana and Maharashtra, 68% and 85%, respectively, received their ESIC e-Pehchan card after accidents, whereas they should have received it on day one of joining. Since the injured workers are a representative subset of the total workers, we can be sure that lakhs of workers are in the same boat and many may not even be registered for ESIC services. From our experience, this includes cases where the employer deducts the employee contribution but does not register the worker under ESI.

The direct responsibility for registering the worker under ESIC and ensuring that they receive their e-Pehchan card on the day of joining is on the principal employer--that is the factory owner or manager. But as the ultimate beneficiaries of the risk borne by the workers in their supply chain, OEMs should own the responsibility for the failure of their suppliers to abide by the law.

Additionally, global (e.g., ILO) and national (e.g., NGRBC) laws and regulations consider the OEMs responsible for their actions or the lack thereof in their supply chains.

The penalty for non-compliance with ESIC rules is insignificant. ESIC managers do not have the capacity to audit non-compliant businesses. SII has been recommending digital solutions to ESIC by using their data to take proactive actions and is hoping that these are implemented soon.

Your report says that, “Factories with poorer ESIC compliance also have worse working conditions.” Do you find that there are more factories who do not comply? Could you elaborate based on your findings?

It is intuitive to assume that a factory which complies better with one law, that is, the ESIC Act, which pertains to social security for the worker, also complies better with another law, like the Factories Act, which pertains to occupational safety and health. It should be a sign of a business’ professionalism in all matters.

This has been statistically proven in our analysis. This has also been our experience from the fieldwork covering four auto sector hubs across two states; that is, the factories which do not comply with ESIC rules have worse working conditions.

In terms of numbers, we have multiple indicators that indicate non-compliance with ESIC rules as well as safety norms. In addition to the post-accident ESIC registrations mentioned earlier, the fact that a majority of injured workers were first taken to private hospitals and only later to ESIC hospitals in all the three states we have data for--Haryana, Maharashtra and Uttarakhand–also indicates the extent of non-compliance with ESIC laws.

With respect to working conditions, ‘Crushed 2023’ data demonstrates that most factories, whose workers we assisted, flout them by not conducting inspections, overworking workers without overtime payment beyond the legal limit of 48 hours per week, employing unskilled workers in roles that require skilling, not providing any safety equipment beyond gloves and manipulating accident reports. This must stop.

In Haryana and Maharashtra, more than 80% workers worked for more than the legal limit of 48 hours a week and most of the injured had worked six days a week. There seems to be inadequate inspection and monitoring. How much can the new labour laws, which have not been notified yet, make a difference?

The new Occupational Safety, Health and Working Conditions Code (OS andWC) Code and the draft OSH rules have a few provisions which may not be helpful for worker safety, but which some state governments appear to be in a hurry to implement. On the other hand, there are several simple worker-friendly rules in the new OS&WC Code which do not appear to be implemented. Our report analysis some of these sections in detail.

The OSH Code has an eight-hour cap on daily hours but no weekly cap, while the draft rules have a 48-hour weekly cap but no cap on daily hours. Even though the labour laws have not been notified, many state governments were quick to amend the Factory Act or pass notifications extending the working hours beyond 48 hours.

This may create convenient confusion for businesses, resulting in even more strenuous working conditions, especially in poorly run factories, which will likely cause more accidents.

In the report, we have also identified three other rules that could aggravate the issue of inadequate inspection and monitoring, which multiple state governments appeared to be in a hurry to adopt and have already adopted through amendments to the Factory Act. This includes doubling the minimum number of workers needed to be defined as a factory, full exemption from the Factory Act for new factories for up to 1,000 days and weakening regulation of factories by introducing the option for compounding offences and thereby decriminalising offences.

On the other hand, no state government seems to be in a hurry to adopt the provisions which will support workers like annual free health check-ups, consent for overtime, calculating overtime with rounding up to the next half hour, maintaining a database for inter-state migrant workers, restricting the engagement of contract labour/third-party employees in certain core activities and social security for workers in the unorganised sectors.

In the spirit of Sabka Saath Sabka Vikas and Make In India Responsibly, we recommend that provisions of the new labour laws that can aggravate worker accidents should be reevaluated afresh.

The report has explored the condition and stress faced by women workers, and found that though the reason for accidents appear to be the same for men and women, women are, anecdotally, pressured more than men to operate power presses. Why is that, and what are the problems faced by women workers that are leading to injuries or fatalities?

Recently, SII has found many injured women in the auto sector supply chain, which forced us to additionally focus on these injured women workers in the latest edition.

Women in India earn 28% less than men. This gender gap extends to the operation of power press machines too, with women getting paid less than men for operating the same ‘dangerous machines’. Due to their financial circumstances, many women workers choose to work on power presses--despite knowing the risks--for the additional meagre sums offered to them; between Rs 1,000-1,500 per month more than a packing/helper role they were usually hired for. This has led employers to employ women at wages lower than men, and in certain factories, more women run power presses than men, especially in Faridabad, while earning much less than men for the same job. We have anecdotal evidence that many women are forced against their will to run the machines by their supervisors when there are fewer operators available, and the production pressure is high.

Additionally, women appear to face differential treatment post injury by employers and even the government system. We have found cases where women workers have been threatened with dismissal if they advocate new methods to prevent accidents or ask for documentation to get ESIC pensions and other funds due to them. At ESIC, women have the additional issue of [an informal expectation of] needing a male companion to try and get the services that they need after the injury.

There have been instances where workers who meet with accidents being untrained or undertrained, yet being forced to operate heavy machinery or those that need skilled handling. Almost half of the injured workers were aware that the machine was ‘malfunctioning’ and could not do anything about it, you say in the report. Why does this happen? How can these lapses be identified and prosecuted?

The average injured worker is young, lowly educated, an inter-state migrant and works as a non-permanent worker with no union membership. With a majority of injured workers we have identified or supported--63% in Haryana, 80% in Maharashtra and 100% in Uttarakhand--being non-permanent employees, often hired through contractors, and with not much documentation, it is no surprise that workers are unable to “do anything about it”. The unclear employer-employee relationships often make legal protection inaccessible to many of them, and access to social and legal safety nets difficult to impossible.

The only stakeholders who can “do anything about it” in the prevailing circumstances are the OEMs, the government and the final consumers.

Among these, we believe that OEMs with the best know-how, access to, and leverage over their own supply chains and as the direct and ultimate beneficiaries of these supply chains need to and should take the lead in improving working conditions and ESIC compliance in their deeper supply chain.

The OEMs should prioritise the implementation of the minimum required actions to prevent these injuries, like mapping their deeper supply chains at least to Tier 3 suppliers--that is three levels of suppliers--quality audits to Tier 1, Tier 2, and Tier 3 suppliers, and establishing grievance redressal mechanisms that extend to these tiers.

With respect to the government, the report shows that the number of Industrial Safety and Health departments’ factory inspections has reduced across geographies. These are critical to improving the safe working environment in factories and should be increased. Additionally, we have been suggesting the use of ESIC data to identify hotspots of poor working conditions in the country and prioritise factories with worst conditions for inspection.

How should the government intervene to improve occupational health and safety and make OEMs accountable? What role must OEMs play in ensuring their supply chain is compliant to workers’ safety standards? Are there practices from other countries which can be adopted?

We can always adopt good practices from other countries and even within our own country, best practices from different states. For example, most industrialised countries have prohibitive punishments for failure to comply with OSH laws which act as a strong deterrence for factory owners or managers.

The policy recommendations include the need for OEM boards to take responsibility for worker safety in their deeper supply chain, the creation of a joint industry-level task force with Society of Indian Automobile Manufacturers/Automotive Component Manufacturers Association, advocacy to the government to make Business Responsibility and Sustainability Reporting mandatory for all auto sector brands irrespective of ownership structure, reporting annually on indicator 8.8 of Sustainable Development Goals (Fatal and non-fatal occupational injuries per 100,000 workers, by sex and migrant status), and setting up mechanisms to ensure that workers' voices and feedback in the entire deeper supply chain are heard.

The operational recommendations include mapping the deeper supply chain, creating, publishing, and implementing a Supplier Code of Conduct that ensures compliance with NGRBC, ESIC and other rules and regulations, including all non-permanent workers in their own factories, in the OSH Policy statement, at par with their own permanent workers. Further, improving transparency and accountability of accident reporting in the supply chain, weeding out habitual offenders and commercially rewarding the safest factories, and initiating effective ground-level actions, like honest surprise worker safety audits and worker training in regional languages.

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