Trade unions in India: changing role & perspective.

AuthorSodhi, J.S.


Unions in India have been preoccupied with protecting the interests of the workers. The government worked in tandem with the unions in setting up labor standards. In the process unions became strong and began asserting themselves not by contributing to the economic performance but by organizing a large number of strikes at the national and the enterprise levels. The globalization process, since 1991, has adversely affected labor. There has been jobless growth for many years. Most of the additional employment has been of an informal nature, even in the formal sector. At the enterprise level, management's quest for a lean and mean organization has led to a reduction in workforce, replacement of permanent workers with causal or contract workers. The employer is also merrily into union bashing or resisting the formation of unions and taking a tough posture in collective bargaining. Unions are, therefore, up in arms against the inaction of the government and unfair practices of the management. However, they are operating from a weaker platform and the management in tandem (de-facto) with the government is asserting itself.

For a long time after 1947, neither the government nor the management thought of the unions as a group who may contribute to the economic performance of the economy or the enterprise. Unions too did not think of themselves in this role. This is now changing gradually. The unions and the management are entering into agreements with bearing on productivity and growth of the enterprise.

Trade Unions in India

Trade union membership data available are somewhat outdated and ambiguous. Membership has remained very low although it increased marginally from 2.0 per cent in 1980 to 6.3 per cent in 2002. Most of the membership is in the formal sector although it is the informal sector employees who need to be unionized. While the membership is low, the number of Trade Unions is very high since the Trade Union Act, 1926, allows any seven persons to form a union. The claims by unions of their membership are also flawed. This is evident from the fact that the verified membership of the unions was 24.48 million in 2002 although the central trade union organizations claimed a membership of 41.18 million (Pong Sul Ahn, 2008). The ambiguity in membership is further compounded by the fact that registration of unions is not compulsory. As a result, there have been three types of unions in India; those that do not register and are statistically invisible; those that register but do not submit returns to the Registrar of Trade Unions; and, those that register and submit returns on membership figures (Venkataratnam, 1996). Recognition of trade unions is voluntary except in states like Gujarat, Maharashtra, Rajasthan and Madhya Pradesh. In other states, it is governed by voluntary Code of Discipline and Inter Union Code of Conduct. In practice, however, this voluntary recognition process leaves about half of the workmen without representation.

Less than 2% of the workforce is covered under collective bargaining although refusal to bargain by the employer as well as the trade unions in good faith is considered to be an unfair labor practice in the Industrial Disputes Act, 1947 as amended in 1982.

In the first thirty years after independence, there was greater emphasis on centralized bargaining in view of the large role of the State in labor market institutions. Centralized collective bargaining had positive outcomes on wages (D'Souza, 1998). It is also argued that centralized bargaining took political overtones as wages and working conditions were being determined solely on such considerations (Myers, 1958; Fonseca, 1964; Jackson, 1972). Collective bargaining in the private sector now usually takes place with the enterprise level unions. In the public sector, it is with centralized trade union federations and politically affiliated trade unions at the national/or regional level (Jose, 2000). Most of the collective bargaining takes place in the formal sector as over 94 per cent of the workforce is in the unorganized sector in which the employer-employee relations are quite opaque in view of the near absence of the principal employer. Venkataratnam's (1999) study shows that the institution and practices of collective bargaining have been on the decline over the years in view of: the shrinking size of the organized sector; capital intensiveness of industry; government granting permission to close enterprises and reduce employment through retrenchment and voluntary retirement schemes; promotion of export processing zones where labor rights exist only on paper; acute need of the employers to meet fast paced developments of the competitive scenario; and, government's passive role in cases of labor law violations and other anti labor practices.

Employees' voice in industrial companies is further hushed up by the absence of workers' participation in management despite the provision of Works Committees in the Industrial Disputes Act, 1947 in enterprises employing 100 or more workers. These committees exist largely on paper only (Sodhi et al, 1996).

Trade Unions today are besieged with problems due to the globalized environment as well as their internal functioning. The former has resulted in substitution of labor with capital by the management; changing forms of employment including the employment of contract labor (almost 30% of the workforce in industrial enterprises is contract labor with insignificant protection); management's hostile attitude and their quest for downsizing; strong resistance to union formation by the management at the enterprise level; and, an indifferent attitude of the government towards the workers. The government has created Export Promotion Zones where labor laws are applicable but seldom enforced, largely due to the resistance from the employers. The government, though well aware of this fact, has not taken any action. Internally, the unions are confronted with an indifferent attitude of workers; lack of internal democracy; multiplicity of trade unions; weak organization structure and financial position; emergence of independent unions; shift of power from the federations to the enterprise level unions and their inability to organize informal sector worker (NCL, 1969; Industrial Relations Bill 1978 and 82; Standing Labor Conference in 1986; Trade Union and Industrial Disputes Amendment Bill, 1988; Ramanujam Committee, 1992: NCL, 2002).

Collective bargaining has been on the decline. Pong Sul Ahn (2010) highlights some of the factors contributing to this are: absence of legal provisions for recognizing trade unions as a bargaining agent; multiplicity of trade unions in a single establishment and the resultant lack of consensus of all the recognized trade unions; developments in the field of management of human resources in a large number of enterprises which has taken over some of the functions of the trade unions; and, employment of flexible labor like the contract, casual, part time and contingent work labor.

Historical Perspective

The deplorable conditions of workers in the 19th century drew the attention of a large number of social activists to the plight of workers in the then industries like cotton, textile and jute. The first strike occurred in 1877 followed by agitations and demonstrations in Bombay (now Mumbai). The Bombay Mill Hands Association was formed in 1890 and the Printer's Union of Calcutta and the Postal Union of Bombay were formed in 1905 and 1907 respectively. The first trade union was established in 1918. Trade Union Act was enacted in 1926. The conditions of workers, however, remained very poor. Whitley Commission (1929-31) highlighted that the only effective safeguard against exploitation was their power to combine. The first Indian Labor Conference, a tripartite body, was held in 1940 to discuss issues related to wages, working conditions, etc. A tripartite body called the Indian Labor Conference (ILC) was formed in 1940.

After Independence the trade unions split on political lines and today there are 11 Central Trade Union Federations, besides a multitude of others, at the State and the Industry levels. The government of India adopted the socialistic economic framework and accordingly, the Constitution of India (Article 19) guarantees freedom to form unions and this is a fundamental right. The government enacted the Industrial Disputes Act 1947, 1948 Minimum Wages Act, Factories Act 1948, Industrial Employment (Standing Orders) Act, 1948 and the Employees State Insurance Act 1948 during the early years after Independence. The First Five Year Plan (1951-56) highlighted that the worker is the principal instrument in the fulfillment of the targets of the plan and in the achievement of economic progress generally. The Second Five Year Plan (1956-61) reiterated that a strong trade union movement is necessary both for safeguarding the interests of the workers and realizing the targets of production. Public sector was given pre-eminence in the economic policy framework.

The government policy framework helped the workers in getting better working conditions and participation in management. The government encouraged formation of...

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