LECTURE - 14

TRADE UNIONS IN INDIA : ITS

PROBLEMS & SOLUTIONS

Dr. V C Pandey
 CONTENTS

. Size and finance of Indian Trade

unions-size, frequency distribution,
factors responsible for the small
size Finance-sources of income,
ways of improving finance.
Size of Indian trade Unions
 From their very inception, the average size of
Indian trade unions has been very small and
has continued to decline during the course of
years. The average membership of trade
unions in the country varied between 3,500
and 1,000 during 1927–48, but since then it
has always been below 1,000 mark in almost
all subsequent years, the lowest of 460
recorded in 1993.
Size of Trade Union : India Vs UK
 In sharp contrast to the position in the United
Kingdom, where over 70 per cent of union
membership is concentrated in unions having
2.5 lakh and above, in India bulk of union
membership has been concentrated in unions
having membership of less than 10,000.
The main factors responsible for the
small size of Indian trade unions

(i) factory or establishment being the unit of

union formation in an overwhelmingly large
number of cases,
(ii) ease of registration under the Trade Unions
Act, 1926,
The main factors responsible for the
small size of Indian trade unions

(iii) preponderance of small-sized

factories and establishments,
(iv) widespread union rivalry and
multiplicity of unions and
(v) availability of union leaders in
abundance
CASE STUDY: 1
What are the factors responsible for the small size of
Indian trade unions?

 In the city of Bhagalpur, a silk centre, there

are 100 silk mills employing 50 and more
workers each and an altogether 200
registered trade unions have been operating
in these mills.
CASE STUDY: 1
What are the factors responsible for the small size of
Indian trade unions?

 The central federations of trade unions and

local leaders have been vying with each other
to have their control over as many trade
unions as possible. Having been dissatisfied
with the outside leadership, workers of quite
a number of mills preferred to form unions
exclusively of workers and got these
registered under the Trade Unions Act, 1926.
CASE STUDY: 1
What are the factors responsible for the small size of
Indian trade unions?

 It was very difficult for many employers to

manage their business on account of the
regular pressures from different sets of
unions and many of them had to incur losses
and a few were forced to close their
businesses.
QUESTIONS ON CASE STUDY-1
 How is it possible to establish 200 trade
unions in the city when the number of silk
mills is only 100?
 Is it possible for outside leaders to form five

trade unions in a single mill and get them

registered under the Trade Unions Act, 1926?
 What factors are responsible for the small

size of trade unions in the city?

 What are the effects of multiplicity of small-

sized unions in the city?

Financial health of ITU
 Along with the small average size of unions, their
income has also been low. The average annual
income per union in the country was below 3,000
between 1951 and 1963, and it stood at between
3,000 and 10,000 between 1964 and 1980. After
1981, there has been some improvements, when it
generally stood between 10,000 and 40,000 up to
1999. Only from 1999 onwards, the income crossed
50,000 mark. However, in view of a continuous
increase in prices, the increase in income has been
nullified by rise in prices to an appreciable extent.
Case Study 2: Why are the finances of Indian
trade unions poor?

 In a cement factory in Madhya Pradesh, there

are 4,000 workers of whom 3,000 are union
members distributed amongst six registered
trade unions A.1–A.6 and two unregistered
trade unions B.1–B.2 operating in the factory.
Case Study 2: Why are the finances of Indian trade
unions poor?

 The Trade Unions Act, 1926, has prescribed a

minimum of INR 12 per annum for registered
trade unions. Union A.5 has kept INR 16 and
union B.2 INR 5 per annum as the minimum
subscription fee. The membership of the
unions fluctuates from year-to-year, but it
never exceeded 6,000 in any year
Case Study 2: Why are the finances of Indian trade
unions poor?

 The members of every union are reluctant to

pay subscription fee as no union is able to
provide services to the satisfaction of its
members. Majority of workers desired to have
only one union in the factory which alone
could protect their interests in a more
effective manner?
Questions on Case Study 2
 Why are the unions in the factory not able to
provide satisfactory services to their
members?
 Is it lawful for Union A.5 to prescribe INR16

per annum as the minimum subscription fee?

 Can Union B.2 fix INR 5 as the minimum

annual subscription fee?

 For which union will you recommend the

adoption of the ‘check-off’ system?

SOURCES OF FINANCES OF ITU
 Contributions from members have been the
major source of income of trade unions in the
country followed by miscellaneous sources
and donations. The membership fee itself has
been traditionally very low. Although
amendments to the Trade Unions Act during
more recent years prescribing the minimum
membership fees intended to raise unions’
income, in practice, these amendments did not
have much impact on enhancing their income.
EXPENDITURE OF ITU
 A major portion of the income of trade unions in
the country is spent on establishments, payment
of salaries and allowances to office-bearers and
miscellaneous items. Expenses on the conduct
of disputes, compensation to members during
contingencies, legal expenses, welfare benefits
and publications taken together constitute only a
small fraction of total expenditure. The pattern
of expenditure of Indian trade unions reveals
their inability to do much for providing benefits
and services to their members.
Ways of improving finance of ITU
 The main ways by which the finances of
Indian trade unions can be improved are:
 (i) large enrolment of members, strict and

regular collection of membership fee,

 (ii) increase in membership fee and
 (iii) introduction of the ‘check-off’ system.
Ways of improving finance of ITU
 Large enrolment of members and regular
collection of membership fee are severely
handicapped by the existence of widespread
union rivalry and plurality of unions in a single
plant or establishment, inability of a large
number of primary unions to satisfy their
members, the general apathy of the members
towards the activities of their unions and
absence of elements of compulsion regarding
payment of membership fees.
INTRODUCTION OF ‘CHECK-OFF’
SYSTEM IN TISCO JAMSHEDPUR

 INTRODUCTION OF ‘CHECK-OFF’ SYSTEM IN

TISCO The historic agreement of 1956
between TISCO and Tata Workers’ Union
provided for the introduction of the ‘check-
off’ system.
INTRODUCTION OF ‘CHECK-OFF’
SYSTEM IN TISCO JAMSHEDPUR

 The agreement inter alia stated that the

company would continue to recognize the
Tata Workers’ Union as the sole bargaining
agent of employees at Jamshedpur in the
union sphere. The company agreed in
principle to a union security system and to
the collection of union subscriptions through
the payroll in respect of employees other
than supervisory staff.
INTRODUCTION OF ‘CHECK-OFF’
SYSTEM IN TISCO JAMSHEDPUR
 The company would be prepared to join the
union in approaching the central or the state
government for any alteration that might be
required in law in order to permit the
bringing into effect the maintenance of
membership and ‘check-off’ provisions
referred to above.
Check-off’ system.
 In India, the introduction of the ‘check-off’ system appears to be
the only practicable way to improve the finances of the unions.
 The system imposes an obligation on the employer under a

collective agreement or other device to deduct union fees and

dues from the workers’ wages and transfer the same to the union
fund.
 Apart from ensuring a regular income for trade unions, the

system has the advantage of ascertaining the relative strength of

the unions based on continuing loyalty reflected by regular
payment of union subscription and helping in the avoidance of
dual membership. The second National Commission on Labour
has generally recommended the adoption of the system but in
the context of the determination of the representative
negotiating
Check-off’ system : Solution by 2nd
National Commission on Labour
 Apart from ensuring a regular income for trade
unions, the system has the advantage of
ascertaining the relative strength of the unions
based on continuing loyalty reflected by
regular payment of union subscription and
helping in the avoidance of dual membership.
The second National Commission on Labour
has generally recommended the adoption of
the system but in the context of the
determination of the representative
negotiating
Check-off’ system: observations and
recommendations
 A check-off system has the advantage of
ascertaining the relative strengths of trade
unions based on continuing loyalty reflected by
the regular payment of union subscription,
even if such subscriptions are deducted from
the wages as permitted under the Payment of
Wages Act, 1936.
 The system, by and large, avoids the incidence
of dual membership under which, for a variety
of reasons, a worker may become a member of
more than one union.
Check-off’ system: observations and
recommendations
 With regard to the fear of possible victimization by the
management or persecution by members of other unions
as a result of the introduction of the system, the
commission held the view that legal rights of workers to
join or not to join a union have been accepted by all
concerned.
 The check-off system should be the general pattern, and

wherever there is legitimate apprehension that the

system may not achieve the purpose of verification or
may create the possibility of victimization, it should be
open to unions to petition the Labour Relations
Commission to determine the method that should be
adopted in a particular case.
Check-off’ system: observations and
recommendations
 The check-off system in an establishment
employing 300 or more workers must be made
compulsory for members of all registered trade
unions. Deductions of membership fees from
wages can be done only on written authorization
of workers.
 Though the check-off system will be preferred in
the case of establishments employing less than
300 persons too, the mode of identifying the
negotiating agent in these establishments may be
determined by the Labour Relations Commissions.
QUESTIONS ON UNIT 2
 Describe the factors responsible for the small
size of the Indian trade unions.
 Explain the consequences of the small size of

trade unions in India.

 Describe the sources of income of Indian

trade unions. Is their income adequate to

meet their requirements?
QUESTIONS ON UNIT 2
 Suggest measures to improve the finances of
Indian trade unions.
 Describe the expenditure pattern of Indian
trade unions. Will you suggest any
improvement in it?
 What is ‘check-off’ system? Explain its merits
and demerits.
 Explain the recommendations of the second
National Commission on Labour in regard to
the adoption of the ‘check-off’ system in India.