Chapter 2: Prerequisites of Collective Bargaining

The second session on the prerequisites of collective bargaining will

include a thorough discussion on the bargaining bodies at the national,
industrial, and enterprise/unit levels, on the recognition and registration
of trade unions, and the criteria for recognition of trade unions for the
collective bargaining process, barriers and enabling conditions for
collective bargaining.


PRERREQUISITES FOR THE COLLLECTIVE BARGAINING:

For a successful collective bargaining process there are certain
prerequisites to be followed. In other words there are certain conditions
to be fulfilled which are briefly discussed below:

1) RIGHT TO ORGANISE AND RIGH TO COLLECTIVE BARGAIN: The
extent to which, the workers enjoy the right to organize and bargain is
the key success factors to which collective bargaining works in any
country. There are two prerequisites for the successful implementation of
this condition, first is the effective enjoyment of the freedom of
association in accordance with the principles set out in the Freedom of
association and the protection of right to organize convention, and the
second is the workers and the employers organization should be free
and sufficiently strong but also relatively equal in strength with the
management.

2) STRONG AND STABLE TRADE UNIONS: The impact of unionization
has a strong influence on the growth and development of collective
bargaining in a country. The rate of unionization varies from country to
country. The strong and stable trade unions lead to the success of
collective bargaining. Whereas the fragmentation of the unions, inter
union and intra union rivalries hinders the progress of the collective
bargaining process. This also leads to the host of other problems both for
the employer as well as the state, in addition to the above said. Example:
A union in the plant level may have conflict with the central union,
ultimately affecting the collective bargaining process.

3) RECOGNITION OF TRADE UNIONS: The collective bargaining can
take place only if the employers recognize trade unions or the workers
association for that purpose. The refusal of employer to recognize the
trade union or the complications that might arise in achieving
recognition greatly complicates the process of collective bargaining.
Recognition of union is achieved in two ways: it can be made
compulsory under the law or some systems must be developed by which
the unions can be recognized. For example: There are some countries
where there is no legal provision regarding the recognition of trade
unions and hence such unions have to struggle for getting the same.

4) ATITUDE OF EMPLOYERS AND TRADE UNIONS: The attitude of the
parties involved is also a crucial factor in the success of the bargaining. If
the parties are rigid, non-compromising and close minded it will be
impossible for collective bargaining to function. In that case the common
consensus is hard to be reached upon. On the contrary, if, the parties
have a compromising and flexible attitude, then only the possibilities of
an agreement can take place.

5) A SUITABLE FRAMEWORK: A set of established procedures and a
governing body is required for the smooth and effective functioning of the
collective bargaining procedures. In case of developing countries the lack
of a suitable frame work is so acute that, the collective bargaining
procedure may come to a standstill. These statutory bodies are
established in many of the developing countries where they may vary in
regards of composition, terms of reference and level of operations. The
machineries for the effective work out of the process of collective
bargaining have been laid down either by the legislation of the country or
by mutual agreement. Therefore setting up of the well organized
negotiating bodies for the purpose of collective bargaining is of immense
importance.

Forms of Collective Bargaining:

The forms of collective bargaining across South-East Asia are as diverse
as the cultures across its nations. Collective bargaining in each of the
South East Asian countries has been a result of an arduous struggle by
the people of the nation to protect & preserve their rights, and hence
each form of collective bargaining has a different flavor of its own. The
forms of collective bargaining are categorized on the basis of its basic
philosophy & the basic objective of bargaining, some work with the basic
philosophy of creating a win-win situation on one hand, to the win-loose
situation on the other. Basic objective of bargaining varies from self
interest to giving back to the management. Based on this, broadly, we
can categorize five forms of collective bargaining:

Conjunctive / Distributive Bargaining: Distributive bargaining
is the most common type of bargaining & involves zero-sum
negotiations, in other words, one side wins and the other loses.
Both parties try to maximize their respective gains. They try to
settle economic issues such as wages, benefits, bonus, etc. For
Example, Unions negotiate for maximum wages & the
management wants to yield as little as possible while getting
things done through workers. Union workers may try to convince
the management that they will go on strike if they dont get the
wages or working conditions they desire. Management, in turn,
may be willing to try to ride the strike out; especially if they have
cross trained other workers or have external replacements to fill in
for those on strike. In distributive bargaining, unions and
management have initial offers or demands, target points (e.g.:
desired wage level), resistance points (e.g.: unacceptable wage
levels) & settlement ranges (e.g.: acceptable wage level). Another
name for this type of bargaining is conjunctive bargaining.

Cooperative /Integrative Bargaining: Integrative bargaining is
similar to problem solving sessions in which both sides are trying
to reach a mutually beneficial alternative, i.e. a win-win situation.
Both the employer & the union try to resolve the conflict to the
benefit of both parties. Both sides share information about their
interests and concerns and they create a list of possible solutions
to best meet everyones needs. For Example, when companies are
hit by recession, they cannot offer the kind of wages and benefits
demanded by workers. At the same time they cannot survive
without the latters support. Both parties realize the importance of
surviving in such difficult times and are willing to negotiate the
terms of employment in a flexible way. Labor may accept a cut in
wages in return for job security and higher wages when things
improve. Management, on the other hand, agrees to modernize
and bring in new technology and invest in marketing efforts in a
phased manner. In India, companies like TELCO resorted to
integrative bargaining during the recession in the automobile
sector. Another name for this type of bargaining is interest-based-
bargaining and some people term it as cooperative bargaining.
The objective for both parties is to find the common ground
between them, to build relationship and to eliminate the
adversarial elements of traditional bargaining.

Productivity Bargaining: The concept of productivity bargain
involves a good understanding of the following concepts. Based on
these concepts both the parties must develop a productivity linked
scheme.

Difference between productivity & work intensity
How to conduct work study
ILO guidelines for work study Personal needs
allowance, Fatigue allowance, hazardous allowance,
etc.
Other Methods like MOST (Maynard Operational
Sequence Techniques)
Systems improvement and method improvement
Required Skills and Knowledge for productivity
settlement

Composite Bargaining: Workers believed that productivity
bargaining agreements increased their workloads. Rationalization,
introduction of new technology, tight productivity norms have
added to this burden and made the life of a worker somewhat
uneasy. As an answer to such problems, labor has come in favor
of composite bargaining. In this method, labor bargains for wages
as usual, but goes a step further demanding equity in matters
relating to work norms, employment levels, manning standards,
environmental hazards, sub-contracting clauses etc. This works in
the favor of the workers, for e.g., when unions negotiate manning
standards they ensure the workload of workers dont exceed.
Workers are no longer interested in monetary aspects to the
exclusion of work related matters. However, there is no doubt that
wages, bonus and other monetary benefits continue to occupy
center stage in the bargaining sessions, but there is a definite shift
towards composite bargaining. Without such a proactive stand
workers may not be able to withstand the forces of liberalization,
automation and outsourcing. Through composite bargaining,
unions are able to prevent the dilution of their powers and ensure
justice to workers by putting certain limits to the freedom of
employers. And for employers, this is lesser evil than strikes and
lockouts. This situation may not continue for long though, with
the compulsions of the free market, reduction in labor or wages.

Concessionary Bargaining: Quite opposite to the other forms of
bargaining, where the unions demanded from the employers, in
concessionary bargaining, the objective is to giving back to
management some of what it has gained in previous bargaining.
Why should labor be willing to give back what it has worked so
hard to obtain? Usually such a move is prompted by labor leaders
who recognize the need to assist employers in reducing operating
cost in order to prevent layoffs and plant closings. Thus, it is often
economic adversity that motivates concessionary bargaining. A
good example is the agreement between General Motors & the
International Union of Electric Workers that granted GM around-
the-clock operations, wages and benefits concessions for the new
hires, and a two-week mass vacation. The concessions were made
to save over 3,000 jobs at a plant in Ohio. In some cases, despite a
financial crisis, the union may not be willing to concede. This may
be because the union doesnt view managements arguments as
credible. Thus, the degree of trust and credibility between the
management and the union may influence the extent to which
concessionary bargaining occurs.

Systems of Collective Bargaining:
There are varied systems for collective bargaining across South-East
Asia; it varies from informal oral agreements to a very formal & detailed
agreement. Broadly, there are three different systems of collective
bargaining;

Single Plant Bargaining (Unit Level): Bargaining between
management and a single trade union at its specific plant or
business unit is single plant bargaining. The out come of the
bargaining would not be applicable to other plants of the same
company. This type of collective bargaining prevails in the United
States of America & India.

Multiple Plants Bargaining (Plant Level): Bargaining within a
single company/establishment, having several plants, and the
workers employed in all of these plants. Here the result of the
negotiation would affect all the plants even if they are at
geographical distances.
A collective agreement at plant level or unit level is reached only for the
plant or unit for which it has been drafted, and its scope and extent are
limited only to that particular unit or undertaking. The agreement
generally provides for certain common norms of conduct with a view to
regulate labor management relations and eliminating hatred and
misunderstanding, It contains provisions for a quick and easy solutions
to those issues which require immediate and direct negotiation between
the two parties and lay down a framework for their future conduct if and
when controversial issues arise.

Multiple Employers Bargaining (Industry Level): Bargaining
between all the trade unions of workers in the same industry
through their federal organizations, and the employers federation.
This is possible both at the local and regional levels and is
generally resorted to in the textile industry. Germany follows this
systems where National Trade Unions negotiation, with the
employers association, on behalf of all the workers in a particular
industry. The best example of industry level bargaining is the
textile industry in Bombay and Ahmedabad in India. This
agreement extends to all the textiles in the regions and all are
obligated to uphold it.
National Level Bargaining: This kind of bargaining is done
irrespective of any plant, industry. Because they all have a
common concern.