In June 2015, Stora Enso announced the closure of its Stora Enso Inpac factory located in Chennai, India. Finnwatch and Indian non-profit organisation Cividep examined how responsibly the enterprise, which is majority-owned by the government of Finland, managed the layoff of 350 workers.

Finnwatch examined working conditions at Stora Enso Inpac in 2013. At the time, many problems were observed some of which Stora Enso had inherited from the factory's previous owner and which the state-owned enterprise had been unable to correct with sufficient speed. The wages paid to dalit workers, who lived in very primitive conditions, were below a living wage, and workers reported problems with occupational safety. The news of the Stora Enso Inpac closure gave rise to concerns on what would happen to already struggling workers and their families.

Finnwatch asked its Indian partner Cividep to interview the dismissed workers and representatives of the factory's trade union. In contrast to other Finnish companies that operate in India, Stora Enso's Indian factory had an independent trade union that was able to pursue the interests of workers also in negotiations over the closure of the factory.

Lay-offs and dismissals arouse a lot of strong feelings; especially corporations that pay large dividends have been blamed for irresponsibly increasing unemployment using the short-sighted excuse of financial performance. At the same time, it should be acknowledged that it is sometimes justified and also necessary for an enterprise that operates in the market economy to adjust its operations to changes in the business environment e.g. by shutting down non-profitable operations.

In large part, local legislation and possible separate agreements with a factory's trade union are the factors that influence the closure of factories and dismissal of workers. There is relatively little mention of termination of operations in the international guidelines for corporate responsibility.

The information provided by Stora Enso on the lack of profitability in the Indian packaging industry seems well justified: the unit that produced packages lost a major international buyer when Nokia's factory in India closed down. Stora Enso shared information on the economic difficulties at its India-based factory consistently, and, before making the decision to close the factory, the company seemed to make a concerted effort to maintain operations by implementing changes to the factory’s production process and looking into selling the factory to another company. The factory's economic downhill has also been acknowledged as the reason for the closure in the termination agreement between Stora Enso Inpac and the factory's trade union.

However, problems were observed in the way Stora Enso shared information with its workers. Workers were only told about the closure the same day as the media was informed. Negotiations with the trade union on procedures related to the closure were only initiated two days after the notification of closure was given. Workers said that they had already been concerned about their jobs, when the factory's other unit was shut down at the turn of 2014-2015. However, at that time, supervisors had assured that no one needed to be worried about their jobs.

The OECD Guidelines for Multinational Enterprises stipulate that when an enterprise considers the implementation of changes in its operations which will have major employment effects, in particular where the closure of an entity involves collective lay-offs or dismissals, the enterprise must provide reasonable notice of such changes to representatives of the workers in its employment and their organisations, and, where appropriate, to the relevant authorities. Stora Enso made the decision to shut down the factory unilaterally, and workers were not given the opportunity to present other options for improving the profitability of operations. The closure of the Stora Enso Inpac factory was also not discussed in Stora Enso's European Works Council (EWC). In its previous dialogue with Stora Enso, Finnwatch criticised the company for the fact that a representative from the Indian factory was not been represented in the EWC.

The OECD's guidelines stipulate that an enterprise must co-operate with worker representatives and appropriate government authorities so as to mitigate adverse effects to the maximum extent. Stora Enso deserves recognition for actively negotiating with the factory's trade union on severance pay for workers. An agreement was reached between the factory and the trade union in August 2015.

All the workers, who signed the termination agreement, were paid a severance payment made up of different benefits totalling at least 250,000 rupees (approximately 3,260 euros). This sum is more than a two-year salary for production workers. Depending on the number of years a worker had served the company, the sum rose considerably; in some cases totalling to 750,000 rupees (approximately 9 780 euros). There were over 40 blue collar employees who received more than 600 000 rupees.

Additionally, workers who had been injured while working at the factory, some of whom Finnwatch interviewed for its report published in 2013, received extra compensation totalling approximately 40,000–60,000 rupees (approx. 540–810 euros). Severance pay was made available to all the factory's workers.

The majority of workers and trade union representatives interviewed for this article were satisfied with the agreement. Only individual workers, who had suffered a permanent injury as the result of an occupational accident, were displeased with the total sum of compensation they received. According to the workers, this was because their supervisor had previously promised them an extra occupational accident compensation payment of 100,000 rupees.

In addition to the severance pay, Stora Enso organised training for the dismissed workers, giving them information on how to advance in the labour market and how to responsibly use severance pay, and also gave its workers the opportunity to take part in vocational training to further their skills. Local organisation Hand in Hand was selected to provide the training. It remains unclear why none of the workers participated in the vocational training.

Stora Enso had planned the closure conscientiously and consulted the Business for Social Responsibility (BSR), which is specialised in corporate responsibility, throughout the process. In the reference material it drew up for Stora Enso, the BSR listed the best practices, as well as the expectations of NGOs and other stakeholders.

Use of the BSR as a consultant demonstrates that Stora Enso has tried to comply with its duty of care and made an effort to arrange the closure of its factory in a more socially responsible manner than Indian legislation requires. However, in addition to consulting the BSR, it would have been important for Stora Enso to utilise its EWC in the factory's closure. This would have helped in avoiding problems related to sharing of information with its workers and given the factory’s workers the opportunity to find alternatives for the closure.

Tämä teos, jonka tekijä on Finnwatch, on lisensoitu Creative Commons Nimeä-EiKaupallinen-EiMuutoksia 4.0 Kansainvälinen -lisenssillä.