Session 5 Labour Unions and collective bargaining

"Trade Union" means any combination, whether temporary or permanent,

formed primarily for the purpose of regulating the relations between workmen and employers or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business Trade unions are formed to protect and promote the interests of their members. Their primary function is to protect the interests of workers against discrimination and unfair labor practices Objectives
(a)

(b)
(c)

(d)

Representation Negotiation Voice in decisions affecting workers Member services Education and training Legal assistance Financial discounts Welfare benefits

Reasons for joining trade unions

Greater Bargaining Power
Minimize Discrimination

Sense of Security
Sense of Participation Sense of Belongingness

Platform for self expression

Betterment of relationships

Types of Trade unions

Altruistic Trade unions To take up welfare measures for improving the morale of workers To generate self confidence among workers To encourage sincerity and discipline among workers To provide opportunities for promotion and growth To protect women workers against discrimination
Selfish trade unions

(a) To achieve higher wages and better working conditions (b) To raise the status of workers as a part of industry (c) To protect labors against victimization and injustice

Theories of trade union Freeman and Medoff (1984)

The monopoly Increases the members wages over the market wages Restrict the labour supply Compels to substitute capital for labour Better quality of labour Misallocation of resources Greater inequality within the workforce Block technological change Inflexibility in the labour market

Theories of trade union (contd)

The Collective voice

A positive economic, political and social effects Development and retention of specific skills

protect the interests of lower income groups

Smaller the wage inequalities within the income groups Fairness in conflict

Neutral third party arbitration

Trade union in India-Background

Beginning of Industrialization
American civil war from 1861to 1865 Opening of Suez Canal in 1869

Main events in the industrialization process

First textile mill in Bombay in 1853 First jute mill in Calcutta in 1855 First railway track Mobility (rural to industrial cities) number of factories and workers
Number of registered factories 653 and workers 3,16715 (1892) By the end of the century, factories-1,207 and workers 548956

Working and living conditions

Housing problems Working conditions in the factories No holiday, and no fixed payment Closed and unventilated area Lay off without notice

Inhuman conditions Labour movement

Forms of Protest
Various forms of protest
Tendering mass resignation Holding public meetings Militant way of protest (Strikes)

Strikes
Ahmadabad in 1895 Jute mill in Calcutta, 1895

Birth of Labour movement

Two strikes every year in each factory The protest by railway employees against the delay in payment The Employees and Workmens Disputes Act, 1860 (one of the first labour laws in India) Indian Factory Act of 1881-provisions of the act were not up to the expectations of workers Stiff opposition from workers Bombay Government - Commission in 1884 NM Lokhandey the first labour leader in India Bombay Millhands Association, 1890; the first labour organisation Deenbandhu Weekly holiday on Sunday The founder of the labour movement in India

Some Major Strikes

Beginning of the 20th century
Acute shortage of skilled labour-widespread occurrence of the epidemic of plague Competition

Against electricity
Working hours 14 to 15 hours A number of strikes in the textile mills Bombay Millowners Assoication: 13 hours

Six-day strike of Bombay workers in July 1908 (Lokmanya Tilak)

22nd July 1908 -15 persons were killed

Ahmadabad strike

Year 1917 Anasuyaben Sarabhai Payment of plague allowance Went on strike from 4th December (Labour Day) Millowners a wage increase of 20 per cent as against workers demand of 50% Gandhijis intervention (wage rise 35 per cent) Famous Trade Union: Textile Labour Association

Sholapur strike
28th January 1920 (higher wages) 16th February meeting at the gate (a large number of workers were injured) 17th march workers started joining work

Historic strike of Buckingham and Carnatic mills (B.P Wadia)

1920s
All India Trade Union Congress (AITUC)

First session of ILO in 1919 16th July 1920 NM Joshi 30th October 1920 founding conference Resolutions adopted

Indian Trade Unions Act, 1926

NM Joshi, member of the Central legislative Assembly-legalise trade unions Trade Unions Act passed in 1926

Provisions of the Act

Any trade union with minimum seven members can apply for registration Unions went up to 75 with a membership of 1,81,077 Amendment of Act in 2001 (the figure raised to 100 from 7 members or 10

percent of the workforce in the plant)

General strike of Textile workers (1924)-over the issue of bonus

A A Alwe Girni Kamgar Mahamandal (union)

Entry of Communists in the labour movement

The year 1928 The biggest strike of textile workers in Bombay Held under the leadership of A A Alwe
The issue-rationalise work, cut down labour cost

Started 15th April, spread to other mills by 26th Major demands

No wage reduction Wage increase Standardization of work conditions Formation of service rules

The strike continued for five months A committee of enquiry The strike was withdrawn on 6th October A new union Bombay Girni Kamgar Union The strike was led by the activists of the communist party of India (S A Dange, Mirajkar, Nimbkar)

Major developments during 30s and 40s

Recession and its impact on working class
Curtailment of production Rationalization and wage cuts

Split in the movement The short congress rule

General election in 1937 Congress, except in Punjab and Bengal State initiatives Bombay Industrial Disputes Act of 1938

Outbreak of second world war

Boost to Indian Industries

Quit India Movement in 1942 (message to nation-do or die) Attitude of communists Postal strike: 10th July 1946 immediate revision of pay scales Strike by armed forces
Started in one royal navy ship 19th February 1946 A mutiny against the British Government

Phase 1 (1950-1960) A period of national capitalism

Import substitution
Increase in public sector employment Setting up of public enterprises

Rise of public sector unionism

Two trade unions (INTUC and AITUC) Unions are highly centralised

Average economy growth 2.3 per cent

Average employment growth rate (1951-56) 0.4 per cent The registered trade unions 4,623 (1951-52); 11,614 (1961-62)

Industrial disputes act (1947) single most piece of legislation between

workers and employers (no legal strike)

Phase 1 (1950-1960) A period of national capitalism

Started state-driven industrialization
Controlled labour movement State has a role in the determination of wages

State knew more about workers needs

Industry level unions in some regions like Mumbai By the end of the first phase, socialists broke away from congress

Hindu Mazdoor Sabha

India china conflict The radicals broke away from CPI, and formed CPI Marxists

New Trade unions CITU (Centre for Indian Trade Union)

Phase 2 (1960-79)
3rd, 4th and 5th five year plans
Inflation was at danger mar (10%) in1966-67 food inflation was at 20 %, it was worsened in 1973-74

Slowdown of public investment

Unequal terms of trade Income inequalities

Oil price shocks in 1973

Increase in the number of industrial disputes New forms of protests (Hartals and Bandhs)

Proliferation of trade unions

Inter-union rivalry increased (industrial disputes by union type)

Phase 2 (1960-79) Summary

Economic slowdown
Political turmoil Slowdown in employment

Declining real wages

Massive strikes and industrial conflicts Inter-union rivalries

Multiple unionism
New Trade Unions (HMS and CITU)

Phase 2 (1960-79)
Emergency regime of Mrs Gandhi (1975-77)
The right to strike was suspended Reduction of annual bonus (8.3 percent to 4 per cent)

A Qualitative change in the political climate (Janata govt (1977-80)

Attempt to forward an industrial relations bill banning strikes and

lockouts in essential industrial and services sectors Stiff opposition from trade unions The Bill was not passed The industrial disputes act amendment in 1965 In 1976 (firms employing more than 300 workers had to get government permission before lay-off State enacted their own labour laws Government role reduced over the industrial relation system

Phase 3 (1980-1991) The period of domestic economic liberalization

Average annual growth rate 5.7 per cent

Employment growth 1.8 per cent The best decade of economic growth, but worst for employment growth

Jobless growth
% of employment in manufacturing decreased from 24.5 percent to 17.4

per cent Open unemployment increased Worst drought in 1979 Industrial recession in 1980-81 Balance of payment crisis and IMF loan Gulf recession in 1990 Mrs Gandhi Returned to power

Phase 3 (1980-1991) The period of domestic economic liberalization

Public sector strike in Bangalore (1980-81)

Mumbai textile strikes regarding wage bonus issues Dr. Datta Samant

New party (Kamgar Aghadi Party)

Trade union (Hindu Mazdoor Kamgar) Government has slowly withdrawn from industrial relation system

Independent unions operating in the major industrial centres

Regional wise analysis
Steady decline of ideological trade unions

Under the dominant political parties

Plant and firm based unions in Bangalore and Mumbai This is due to dissatisfaction with traditional bargaining structure

Phase 3 (1980-1991) The period of domestic economic liberalization

High increase of wage in firms with plant specific unions
Traditional unions predominant in older industries

Due to increasing instability in the product market, traditional unions were

unable to form plant-specific trade unions High productivity brought about the increase in real earnings Industrial Disputes act amendment in 1982 a firm employing more than 100 workers (earlier it was 300) need permission from state government to lay off workers A bill was proposed to reduce the multiplicity of unions It was rejected because of the controversy over the definition of industry Summary

Independent trade unions Skilled versus unskilled Period of jobless growth Massive strikes

Fourth Phase (Since 1991) The period of economic reforms

Post reform decade
Stabilisation and structural adjustment programmes Rupee was devalued in 1991

1992-96 GDP growth was 5.3 per cent

Industrial recession (1996-97) Decline of public investment

Emergence of transnational companies

Foreign direct investment (5.3 billion in 1991 to 141.9 billion in 1994) Services sector growth
Structural transformation

Merger and acquisitions Regional inequality

Fourth Phase (Since 1991) The period of economic reforms

Restructuring of unprofitable public sector enterprises
Reduce the workforce through VRS

More employment flexibility

Decentralised bargaining structures Less government interventions in the bargaining process

Inter-state competition to attract foreign and local capital

Down the labour market institutions

Investment in capital-intensive technologies

More labour intensive sectors were uncertain (Textile and Jute) More capital intensive sectors have plant based independent unions (Banking,

transportation) Capital intensity led to jobless growth Wages were determined at the plant level Maximum growth in IT enables services

Fourth Phase (Since 1991) The Period of Economic Reforms

In the 1990s, about 15 per cent workforce reported job less (Shut down

many industrial units) Growth in labour productivity, and average workforce earnings Since 2000, economy has witnessed revival of employment Employment growth outstrips population growth But casual and regular employment decline Only self-employment increases More than 50 per cent are self-employed in india Decline in agriculture

Major changes summary

Collective bargaining in India has mostly been decentralized, but now in sectors

where it was not so, are also facing pressures to follow decentralization. Some industries are cutting employment to a significant extent to cope with the domestic and foreign competition e.g. pharmaceuticals. On the other hand, in other industries where the demand for employment is increasing are experiencing employment growths. In the expansionary economy there is a clear shortage of managers and skilled labor. The number of local and enterprise level unions has increased and there is a significant reduction in the influence of the unions. Under pressure some unions and federations are putting up a united front e.g. banking. Another trend is that the employers have started to push for internal unions i.e. no outside affiliation. HR policies and forms of work are emerging that include, especially in multinational companies, multi-skills, variable compensation, job rotation etc. These new policies are difficult to implement in place of old practices as the institutional set up still needs to be changed. HRM is seen as a key component of business strategy. Training and skill development is also receiving attention in a number of industries, especially banking and information technology

Causes of industrial disputes

The causes of industrial disputes can be broadly classified into two categories: economic causes The economic causes will include issues relating to compensation like wages, bonus, allowances, and conditions for work, working hours, leave and holidays without pay, unjust layoffs and retrenchments. non-economic causes The non economic factors will include victimization of workers, ill treatment by staff members, sympathetic strikes, political factors, indiscipline etc.

Causes of strikes A strike, which is a powerful weapon used by trade unions and other labor associations, involves quitting of work by a group of workers for the purpose of bringing the pressure on their employer so that their demands get accepted. When workers collectively cease to work in a particular industry, they are said to be on strike. Strikes can occur because of the following reasons: Dissatisfaction with company policy Salary and incentive problems Increment not up to the mark Wrongful discharge or dismissal of workmen Withdrawal of any concession or privilege Hours of work and rest intervals Leaves with wages and holidays Bonus, profit sharing, Provident fund and gratuity Retrenchment of workmen and closure of establishment Dispute connected with minimum wages

Lockouts and Picketing

A lockout is a work stoppage in which an employer prevents

employees from working. It is declared by employers to put pressure on their workers. This is different from a strike, in which employees refuse to work. Thus, a lockout is employers weapon while a strike is raised on part of employees When workers are dissuaded from work by stationing certain men at the factory gates, such a step is known as picketing. Pickets are workers who are on strike that stand at the entrance to their workplace. It is basically a method of drawing public attention towards the fact that there is a dispute between the management and employees.

Gherao
Gherao in Hindi means to surround It denotes a collective action initiated by a group of workers under

which members of the management are prohibited from leaving the industrial establishment premises by workers who block the exit gates by forming human barricades. The workers may gherao the members of the management by blocking their exits and forcing them to stay inside their cabins. The main object of gherao is to inflict physical and mental torture to the person being gheraoed and hence this weapon disturbs the industrial peace to a great extent.

Trade union in India stylised facts

Union density
Union members/workforce = 4 per cent Union members/wage and salary earners = 25 per cent

Union membership
Trade union BMS INTUC Affiliation BJP Congress 1989 3.11 m 2.7m 2002 6.22m 3.89m

CITU HMS
AITUC

CPI(M) Socialists
CPI

1.78m 1.47m
1.07m

2.67m 3.22m
3.34m

Major trade union in India

All India Trade Union Congress (AITUC) Bharatiya Mazdoor Sangh (BMS) Centre of Indian Trade Unions (CITU) Hind Mazdoor Kisan Panchayat (HMKP) Hind Mazdoor Sabha (HMS) Indian Federation of Free Trade Unions (IFFTU) Indian National Trade Union Congress (INTUC) National Front of Indian Trade Unions (NFITU) National Labor Organization (NLO) Trade Unions Co-ordination Centre (TUCC) United Trade Union Congress (UTUC) and United Trade Union Congress - Lenin Sarani (UTUC - LS)