CHAPTER 24

Trade Unions

CHAPTER OBJECTIVES

After reading this chapter, you should be able to:

1. List the objectives, features and history of trade unions
2. Enumerate the types of trade unions
3. Understand the strategies and actions of unions for goal accomplishment
4. Detail the reasons for which workers join trade unions
5. Overview the Trade Union Act, 1926
6. Understand the challenges facing the trade union movement
7. Discuss union-free organizations

Indian Railways is one of the largest employers of the country with a 1.54 million strong workforce. It has a strong presence in terms of trade unions. The trade union movement began in 1924 since the first railway union, the All India Railwaymen’s Federation (AIRF), was formed that year. The AIRF has conducted several strikes against the railway administration for various demands. It has won most of its demands and the employees now have the Joint Consultative Machinery (JCM) for the resolution of grievances and for a collective bargaining system.

Traditionally, two unions—the National Federation of Indian Railwaymen and the All Indian Railwaymen’s Federation—were recognized. Later, the Supreme Court ordered the railway administration to hold a secret ballot for awarding recognition to a select number of unions a few years back. This was necessitated by the mushrooming of trade unions in recent decades.

As per the court order, only those unions that get 35 per cent of the polled votes or 30 per cent of the total electorate will be considered by the management. If a union gets over 50 per cent of votes, it should be the single recognized union in that railway zone. If no union gets even 20 per cent of the valid votes polled, no union will stand recognized in that zone. After the elections, each railway zone has one or two recognized trade unions depending upon the poll outcome. Clearly, the working of the railway unions has now been streamlined and the recognized unions alone participate in the collective bargaining. As a result, the bargaining strength of the unions has been preserved to the advantage of the employees. Given this context, we shall see the importance of trade unions for an organization in this chapter.

Introduction

A trade union is basically the joining together of workers to resist the dictates of employers through collective strength and actions. The purpose of trade unions is to maintain or improve the working lives of wage earners.¹ The employee as an individual can never be a match for the employers, who control the economic resources. In a lop-sided competition between the employees and the employers, the chances of equity and fairness in the sharing of profits and wealth are extremely slender. To overcome this inherent weakness in their never-ending struggle against the employers, the employees formally or informally unite themselves. They may unite themselves informally to fight for their rights and interests, but such loose-knit groups may not be able to withstand the concerted pressures and forces of the genuinely powerful employers. Thus, the employees may need a formal organization with the necessary statutory protection to oppose the unfair acts and to resist the exploitations by the owners of the business effectively.

Employees form trade unions in the organizations to regulate their relationship with the employers.² These unions work for the well-being of the employees in a complex way. Trade unions constantly strive to achieve the twin goals of protecting the existing rights and securing new benefits for the employees. In countries like India, governments play a proactive role in protecting the interests of the employees and their unions through the enactment of legislations and the establishment of quasi-judicial and non-judicial forums. The Trade Union Act, 1926 plays a pivotal role in the promotion and protection of trade unions in the country. The act specifies the guidelines for the establishment, administration and dissolution of trade unions. It also deals with the rights, duties and privileges of the unions in detail.

Regulating the employees’ relationship with the employer is the essence of many definitions of trade unions. We shall now see a few of these definitions in Box 24.1.

We may define a trade union as a formal association of workers for the purpose of protecting and promoting their rights and interests through collective bargaining and actions.

Features of Trade Unions

Based on these definitions, trade unions can be characterized as:

A Voluntary Association

A trade union is basically a voluntary association of employees for any common purpose. Individuals agree on their own to join and act together in order to try and fulfil the purposes for which they come together.

Possessing Common Goals

A trade union is organized to achieve a few common goals and all its activities are driven by those goals. On the basis of the goals, voluntary associations, including trade unions, can be classified into two categories. These are expressive associations and social influence associations.⁷ The goal of an expressive association is the satisfaction of the self-interest of the members. On the other hand, the goal of a social influence association is social improvement and social welfare. Typically, the trade unions belong to the category of expressive association.

Having Authority Flow from the Members

Since trade unions are voluntary associations of employees, the leaders are elected by the members. Thus, the real authority is vested only with the members of the unions. This is in contrast to the formal organizations, where authority flows from the top to the bottom.

Acting as an Intermediary

The role of the trade unions within an organization is similar to that of mediators. Though a trade union is primarily meant for the protection of its members’ interests, it actually plays the role of intermediary between employers and employees. It indeed eliminates the employers’ need to consult each and every employee before taking decisions affecting him. Instead, the employers talk to trade unions that represent the employees. The trade unions, in turn, pass on the information to the employees through their own sources. They also undertake the responsibility of convincing the employees about the decisions taken by the employers in consultation with them.

Dealing with Collective Action

By means of collective action, trade unions attempt to match the power and resources of the employers. This collective nature of activities alone helps the trade unions to establish equality with the employers. It also facilitates better bargaining with the employers on matters relating to the interests and rights of the employees.

Objectives of Trade Unions

The primary objectives of trade unions are protecting employment and raising levels of the wages. These two objectives form the basis for all other micro and macro objectives of the unions. For instance, when the wages of employees increase to reasonable levels, it leads to a broader distribution of the wealth of the society. This, in turn, can narrow down the wealth gap prevailing in the society. Similarly, improved wages lead to an increase in the purchasing power of the employees, and this, in turn, creates more demand for the products and goods in the market. An improved buying power and demand creations at the macro level benefit the employers since they would find the market for their goods and services expanding and their profit margins widening. Thus, trade unions serve multiple objectives directly and indirectly. We shall now see the important objectives of trade unions.

Providing Income Security

Trade unions strive to improve the economic life of the employees by getting better wage deals from the employers through collective action.

Maintaining Job Security

Trade unions aim at protecting the jobs of the employees. Whenever the employees face a threat of elimination from the employers, in various forms like dismissal, discharge, lay-off, retrenchment or compulsory retirement, trade unions resist strongly such designs of the employers to terminate the employees’ services. In fact, trade unions act as an instrument to safeguard the workers from arbitrary and impulsive policies and practices at the workplace.⁸

Preserving Physical Security

Trade unions seek to preserve the health and safety of the employees by asking the employers to provide suitable physical work environment and by insisting on their adherence to safety policies and provisions.

Providing Social Security

Trade unions endeavour to provide a peaceful retirement life to the employees by asking the employers to provide adequate retirement and other benefits. They may ensure that the employers contribute adequately and regularly to the statutory funds meant to protect the future well-being of the employees. They may also insist on the employers offering organizational-level schemes for improving the employees’ retirement benefits.

Providing Emotional Security

Trade unions make every effort to improve the employer–employee relationship by constantly engaging in negotiations with the management. They also work systematically to improve the superior–subordinate relationship by resolving the workplace grievances of the workers thorough appropriate means. Thus, the trade unions, by ensuring peace and harmony at the workplace, provide emotional security to the employees.

Procuring Political Prowess

Trade unions attempt to improve the bargaining power of the employees by working closely with the political parties of the country. Interestingly, the inter-relations and interactions between trade unions and political parties are quite common in India. In fact, trade unions may even function as wings or affiliates of political parties. Obviously, the political power of the unions is used for safeguarding the employees’ interests.

Fostering Industrial Democracy and Equity

Trade unions attempt to promote democratic values by holding elections at periodic intervals to choose their leaders. The democratic exercise empowers the grass-roots workers to participate in the organizational decision-making process indirectly by choosing their own leaders. Most of all, it enables even the lowest-cadre employee to become an office-bearer of a union and participate in collective bargaining at the highest levels of the management. Thus, it aims at achieving industrial democracy, peace and equity.

In addition to these objectives, the unions also work towards the socio-economic development of the dependents of the employees. The present-day trade unions provide educational and medical facilities to the family members of the unionized employees. Thus, the objectives of the trade unions have individual, economic, social and political dimensions. However, hardly any union can accomplish all these objectives and the degree of accomplishment alone can determine its success.

Types of Trade Unions

It is difficult to classify the trade unions on the basis of a few specific characteristics. Such classifications are irrational and complex since the unions can assume a specific posture depending upon the situation. For instance, a calm and indifferent union may turn violent when there is a dramatic change in the external situation affecting the interests of the union and its members.⁹ The objectives, operating environment, employer’s attitude, nature of organization and industry, socio-economic conditions, political climate, legislative protection and strength of the membership can form the bases for classifying the unions. Even when trade unions operate in the same region with some common features, they may have fundamentally different characteristics that may distinguish one from another.¹⁰ Generally, trade unions are classified into occupational unions, industrial unions, general unions and, white collar unions.

Occupational Unions

In this type of trade union, the union members mostly belong to a specific occupational category. For instance, unions may exist exclusively for technicians, pilots, marine engineers, hairdressers, welders, journalists, freelance photographers, and so on. The primary purpose of such unions is to protect the skill status of their members. They keep the power to control the supply of skills and thereby preserve the value of the skills. These unions also control the entry into the occupation by placing restrictions on skill transfers by the existing members. The earliest kind of occupational union was the craft union. The strength of the craft unions lay not in their numerical strength but in their numerical scarcity. However, the introduction of technology to replace manual skill made these unions lose their relevance and utility as the skills or crafts began to wane.

Industrial Unions

In an industrial union—the most common form of union—members usually belong to a specific industry. For instance, when the workers belonging to textile or steel industry form a trade union, it is commonly called an industrial union. The primary purpose of the industrial unions is to promote sectoral collective bargaining. When a single industrial union represents all the workers of a specific industry, it is a monopolistic union. The emergence of such a single union for the entire industry helps improve the bargaining strength of the union. Similarly, the collective actions of such a union will have a total impact on the industry. Single unions are also convenient for the employers as they need to transact with only one union. The examples of collective unions are the All India Bank Employees Association (AIBEA), the All India Insurance Employees Association, and the National Federation of General Insurance Employees.

General Unions

When the unions represent workers from different industries and organizations, they are known as general unions. A general union may be a single union for the entire working class or an amalgamation of several unions representing workers of different industries. Normally, it does not place restrictions on membership as it is open to all the workers, irrespective of their industrial background. Besides, it admits both skilled and semi-skilled workers without making any reference to their skill levels. Such unions are capable of organizing general strikes at the national level by converting the entire working class into one body or federation with maximum consequences. The All India Trade Union Congress (AITUC) and the Indian National Trade Union Congress (INC) are some examples of the general unions in India. The International Trade Union Confederation of Regional Organization for Asia and Pacific (ITUC Asia–Pacific), which is a federation of unions belonging to countries in Asia and Oceania regions, is an example of an international general union.

White-collar Unions

They are similar to occupational unions except for the fact that the uniting factor for the workers of such a union is the nature of their job and not their skills. The employees who perform non-manual jobs and belong to the salaried class often form white-collar unions. They normally engage in administrative activities of the organization. According to David Lockwood,¹¹ the main reason for the growth of clerical unionization was the bureaucratization of the workplace, which paved the way for the collective representation of clerical-level workers. The growth in the number of white-collar employees in organizations and their increasing grievances has necessitated the formation of exclusive unions. The white-collar unions normally focus on employees belonging to a particular industry. In recent years, factors like technological development, the emergence of the services sector as an important segment of economy, and globalization have all provided impetus to the growth of white-collar unions in the country.

Apart from this classification, Edwards et al.¹² classified the western-style unions into three categories based on their approach towards goal accomplishment. These are:

1. Unions which act as the collective bargaining agents of the employees. These unions play no role in the political system of the country. This kind of union is widely seen in counties like the U.S. and England.
2. Unions which operate as partners within the socio-democratic governing arrangements. This kind of union has been seen in countries like Sweden and Austria.
3. Unions which act as the constituent elements in the system of political unionism. This type of union is closely linked to the political parties. Countries like France, Italy and Spain have this type of trade union.

Trade Union Goal Accomplishment Strategies and Actions

The main goal for which unions came into existence was to protect the interest and rights of the employees. This goal can be achieved only when the unions are able to match the strengths and resources of the employers. The ability of the unions to organize collective actions can provide the employers with the necessary bargaining power and equality. However, unions cannot depend solely on collective actions for accomplishing their goals. The failure of collective actions may leave the unions without any further options. Thus, collective actions like strikes should indeed be the last resort of the unions in their plans and programmes to pressurize the employers. As shown in Figure 24.1, unions require multiple steps and strategies to get their demands met by the unions. We shall now see the strategies usually adopted by the unions to achieve their goals.

Collective Bargaining

Trade unions often view collective bargaining as a major forum for conducting negotiations with the employers regarding the demands of the employees. The unions negotiate in the collective bargaining on behalf of the workers and reach a collective agreement with the employers. By allowing the unions to represent the employees in the collective bargaining process, the employers recognize their right to being the representatives of the workers. Thus, the unions make use of collective negotiations with the employers to fulfil the employees’ needs and aspirations.

Participation in Internal Consultative Forums

Trade unions through their representatives may participate in various decision-making activities of the organization on a continuous basis at different levels. For instance, they may have their representatives in joint management councils, plant councils, and shop floor councils and even at the board levels to influence the decisions of the management. This enables the trade unions to gather information on a real-time basis and act on it to protect and promote the interests of the employees. The unions can also use the participative forums to exert pressure on the management to get their demands fulfilled. They normally play a proactive role in settling the grievances of the employees and protect them in disciplinary matters with the help of their presence in various forums.

Membership in National and International Federations

Trade unions often join together to expand their support base in order to enhance their bargaining strength with the employers. This may also happen as a consequence of the employers’ move to combine themselves to assert their rights with the employee unions more forcefully. In this regard, the unions would form a federation and affiliate their unions to it. A federation is a national- or international-level organization that represents and aggregates multiple individual unions. Federations help the unions bargain with the government and employers’ associations effectively. A few examples of international federations are International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM), International Textile, Garment and Leather Workers’ Federation (ITGLWF) and International Federation of Journalists (IFJ). Similarly, federations of unions exist at the national level as well. All-India Federation of Trade Unions, All-India State Government Employees’ Federation, and Electricity Employees’ Federation of India are a few examples of federations.

Collective Action

The major instrument in the hands of the unions to show their strength to the employers is collective action like strike and picketing. Since the outcome of bargaining between the employers and the unions depends crucially on the balance of power between them, the unions are often compelled by the situations to prove their strength through collective actions. Sometimes, collective actions become necessary even to persuade the employers to call the unions for negotiations. However, the unions consider collective actions as the last resort to achieve their objectives. This is because strikes and other agitations require meticulous planning, preparation and resources. Besides, the success of collective actions of the unions is determined by a variety of factors including government attitude, employers’ reactions, public response, members’ cooperation and their economic endurances. Thus, the trade unions consider major collective actions like strikes and boycotts seriously only when all other measures fail to produce the desired results.

Playing a Political Role

Trade unions often use political powers as a means to achieve their objectives. They utilize their huge membership base for political empowerment by either affiliating their unions to the political parties or by converting themselves as political parties. The latter development can be seen in England where the Labour party had been a powerful trade union of that country before it became a political party.¹³ Trade unions benefit greatly from their political role as it provides leverage for effective bargaining with the government establishment on matters relating to the protection and welfare of the working class. They can influence friendly political establishments easily to enact necessary legislations to protect the rights and interests of the labour.¹⁴

Employee Empowerment

Trade unions empower the employees by educating them about their fundamental rights and privileges in the workplace. This kind of awareness helps the employees understand the exploitative attitude of the employers easily and resist them immediately. In addition to the general awareness programmes, large unions also provide specific training programmes to the workers to make them fit for future promotions in the organization. Besides, trade unions with societal outlook conduct social awareness programmes among the employees by enlightening them about the evils of drugs and alcohol. This kind of social awareness programme helps the unions prevent the possible employee misbehaviours within the organization and the resultant confrontation with the management.

Why do Workers Join Trade Unions?

Generally, the employees’ desire for a decent work life prompts them to think of joining trade unions. However, their ultimate decision depends on their confidence in the unions’ ability to get them that decent work life. In earlier days, the employees’ decisions of joining unions were solely influenced by their need to be united against the economically powerful and exploitative employers. In modern days, individual employees have several ways of protecting themselves from the exploitations of employers due to strong statutory protections, skill shortage in labour market and better labour mobility. Thus, the employees’ expectations from the unions have changed vastly since the introduction of economic reforms in the country.

Today, the trade union movement as such is facing a paradoxical situation in the country. On the one hand, public sector organizations provide continuous patronage to the trade unions as before and their employees join the unions in large numbers to protect their rights and interests. On the other hand, the new-generation employees working in private sector companies, especially in sunshine industries, prefer direct bargaining with their organization. They desire to conduct individual negotiations and bargaining with their employers on the basis of their skills and knowledge. These employees often seek better job challenges and scope for personal development instead of mere job security and conventional benefits. Trade unions must be prepared to satisfy both the conventional and unconventional needs of the employees. Thus, they need to understand the actual needs of the employees and should act appropriately on those needs to make themselves relevant to the employees.

Though it is very difficult to pinpoint the exact reasons for employees joining the unions, some reasons are common and frequent. We shall now see some of the general reasons which influence employees to join the unions.

Defence against Exploitation

The foremost reason for employees joining unions is security, especially that against all forms of exploitation by the employers. There is always an inherent conflict of interests between the employers and the employees in organizations, whether it is in sharing the profits and wealth of the organization, or in deciding the priorities for the future. In their scheme of things, the employers often consider the workers as expendable resources and tend to treat the organizational interest as supreme. This makes the employees vulnerable to exploitations by the unscrupulous employers, thereby adding an uncertainty to their future. The employers’ total disregard for the workers’ interest and their exploitative attitude often forces the employees to join trade unions to defend themselves against exploitations and preserve their rights. The employees’ perception of inadequacies in working conditions, safety and health measures, wage benefits, promotion policies, working hour practices and others can influence them to join trade unions.

Besides, employees expect not only mere protection of their existing rights and interests but also a continuous improvement in them. For instance, the employees can not satisfy themselves with the promise of job security and minimum wages for ever. Rather, they must get a periodic rise in the wages and other benefits commensurate with the improved standard of living and social status. They would naturally expect a continuous growth in their standard of living, for which they would seek wages above the competitive levels. They may decide to join unions when they feel confident that the union is the best means of promoting their well-being on a sustained basis.

Sense of Empowerment

Even when the employers are reasonable, fair, trustworthy and considerate, employees may join trade unions. They may decide to join unions perhaps due to their perception that the unions are their natural allies and more reliable than the employers. Membership in a strong union also makes them feel empowered and provides them a sense of security and parity in their dealings with the superiors. Thus, the workers join trade unions to acquire informal powers and prowess by making use of union clout.

Fulfilment of Social and Esteem Needs

Employees may join trade unions just to fulfil their social needs. They may like to have the company of people with similar interests and attitudes. If they find that the unions provide them social satisfaction, they would decide in favour of joining the unions. In such a situation, the need for joining trade unions arises not out of their physiological or security needs, but out of social needs.

Similarly, employees may join unions to fulfil their desire for power. Some employees may nurse leadership desires in life, but if they get leadership opportunities in their formal organization, they may not feel the necessity of joining unions for acquiring power. On the other hand, when they lack such opportunities in their formal organization, they may choose unions to accomplish their quest for power and authority. Since trade unions are basically democratic organizations, they provide equal opportunities to all the members to become leaders and office-bearers, irrespective of their positions and status in the formal organization.

Compulsion to Join

In some organizations, union membership is almost compulsory, especially where there is a single union with near-monopoly. Employees may not have the desire to join the union, yet compulsory membership in the union might be a custom of the organization. In such a situation, the employees will have no options other than joining the union. In the United States, this practice is popularly known as union-shop agreement, where the new employee must join the union at the expiry of a specific period.¹⁵ In addition to union-shop practice, the United States has two other union-related practices called closed-shop and agency-shop practices.¹⁶ In case of closed-shop practice, an organization can recruit employees only through unions, whereas the agency shop makes it compulsory for the all the employees to pay the union subscription, whether they are members or not. This is justified on the ground that the union struggles for all the employees and not for its members alone.

Peer-group Influence

Peer influence refers to the influence exerted by friends and co-workers on an employee to change his attitudes in order to conform to group customs and norms. In some cases, the employees may decide to join the unions due to peer influence. For instance, the friends and the colleagues may prevail upon a non-union employee to join the union. When the unionized friends put constant pressure, the employee may ultimately yield to such pressure and decide in favour of joining the union. In such a situation, peer pressure becomes the dominant factor in influencing the employee’s decision. Box 24.2 outlines the relevance of employer–union cooperation in industries.

History of Trade Unions

In many countries, the establishment of trade unions was seen as a direct outcome of industrialization and the factory form of organization. In fact, trade union is a workers’ social response to industrialization and capitalism.18 The workers belonging to the skilled-labour category were emboldened to begin their own unions as their skill was in short supply and the chances of victimization by the employers was relatively less as compared to the unskilled labour. As a matter of fact, prior to industrial revolution, a section of England’s crafts workers kept trade guilds to protect their profession but these can not be compared with the trade unions as they do not seem to have engaged in any form of bargaining.

In the recorded history of world unionism, the earliest labour strike was reported in 1786 in America when the Philadelphia printers struck work, demanding wage hikes.¹⁷ The second strike was recorded in 1791, again at Philadelphia, but this time by the carpenters, who struck work for nearly ten days. Yet, there was no symptom of trade unionism before or after these strikes. The first trade union in America was established at New York on 14 August, 1833.

However, as early as 1824, the first full-fledged trade union was started in England in the name of General Union of Operative Spinners of Great Britain. Again, in 1834, another union was started in England by the name of the “Grand National Consolidated Union” by Robert Owen, an industrialist and philanthropist. In fact, the trade union movement originated in England as an offshoot of the Industrial Revolution and with the intention of protecting the interests of employees.¹⁸ However, these unions did not last long.

The present-day forms of unions came into existence only 1850 onwards. For instance, the engineers in England started their own union in 1850 to improve their bargaining powers. Similarly, the cigar workers in Germany began their union activities in 1865. The unskilled and semi-skilled workers began their union activities in the 1880s when they established unions to protect their interests. This period also witnessed the establishment of industrial, general and while-collar unions. However, trade union as a concept gained momentum only in the 19th century, when the trade unions began to be viewed as a potent force in the industrial and political arena both. Since then, there was a mushrooming of trade unions in the world with the unions achieving success even in politics through their collective strength and actions.

Trade Union Movement in India

In India, the factory form of production came into existence in 1860. During the same year, the then government introduced the Employers’ and Workmen’s Dispute Act.¹⁹ The purpose of this act was to settle instantly the wage disputes between employers and workers through magistrates and penalize the workers if they breached the contract. In 1863, the then government introduced the Transport of Native Labourers Act as per the report of the Indigo Commission. Around this time, cotton textile factories were established in the erstwhile Bombay and Madras. Similarly, jute mills were established in Calcutta. In the initial stages, the factories were exporting goods predominantly to countries like England.

However, trade union movements were unknown in India during this period. Due to the efforts of a few individuals in India and English entrepreneurs, the British government introduced the Factories Act in 1881 to regulate the working conditions of the labour in factories which employed more than 100 workers. This act reduced the working hours of women to 11 hours and those of children to seven hours. It also ensured that the workers were provided with half-an-hour meal break. However, this act left the plight of the workers unattended as they continued to toil for very long hours. Though there were intermittent protests by the workers against the pathetic working conditions, there was no organized union movement.

The First World War and Trade Unions

The First World War (1914–18) brought many industries to India as a consequence of the increased demand for goods, and this resulted in a vast expansion of the working class in the country. Due to the necessity of time and situation, Indian workers were trained to become skilled workers in the organizations and were also considered for supervisory positions. These developments created an ideal situation for commencing trade unions as skilled workers alone made the initiatives for forming unions in different parts of the world. During this period, the workers resorted to strikes at various industrial centres in the country, demanding increased wages to compensate for the surging inflation resulting from the World War. Strikes became widespread and successful and even turned violent in some places. These strikes attracted huge public attention and forced the intervention of great leaders like Gandhi, Jawaharlal Nehru and others. The occurrence of global events like the establishment of the International Labour Organization (ILO) and the birth of countries like the USSR around the same time provided the necessary impetus to the formation of trade unions.

The first trade union in India was established in Madras (now Chennai) in 1918 and was called the Madras Textile Labour Union.²⁰ In 1919, India’s first federation of trade unions, called the All India Trade Union Congress (AITUC), was founded by Joseph Baptista, a close ally of Bal Gangadhar Tilak, and a few others in Bombay (now Mumbai). However, one of the primary purposes of launching the AITUC was to represent India in the International Labour Organization (ILO) of the League of Nations. In the early 1920s, several unions were formed in the country with the chief objectives of protecting and promoting the interests and rights of the workers. Among them, the most prominent ones were the Textile Labour Association, the Railway Workers’ Union, the Indian Colliery Employees’ Association and the Indian Seamen’s Union.

However, the late 1920s witnessed a major split in the AITUC due to ideological differences among the leaders, and this resulted in a major setback to the trade union movement in the country. The cumulative effects of these ideological differences in the AITUC were the formation of another union called the Indian Trade Union Federation in 1930 by V. V. Giri, N. M. Joshi and others. The breakaway group walked away with a sizeable number of unions hitherto affiliated to AITUC.

Meanwhile, the British government constituted a commission called the Royal Commission on Labour to look into the grievances of the workers and suggest legal measures to ameliorate the conditions of the industrial workers. The establishment of the Royal Commission can be attributed to the sustained and successful efforts of the workers’ unions. These unions organized several strikes, which forced the announcement of the constitution of the Royal Commission by the British government. This commission made several recommendations towards the protection of wages and ultimately the government introduced the Payment of Wages act in 1936.

The Second World War and Trade Unions

The Second World War (1939–45) brought another round of misery for workers as the government imposed a freeze on wages even as the inflation was soaring due to an acute scarcity of essential commodities. Unfortunately, there was no unity and cooperation among the unions as they stood divided on ideological grounds. Consequently, the efforts and agitations of the unions to improve the conditions of the workers failed miserably. The leaders of the major unions realized their mistake and decided to merge their unions to improve their bargaining power. Accordingly, the Indian Trade Union Federation merged with the AITUC, and the trade union movement was considerably strengthened.

However, in 1947, the trade union movement witnessed a major split for the second time on ideological basis. Due to their differences with the communists, the nationalist leaders formed a new union called Indian National Trade Union Congress (INTUC) in May 1947. After the split, the communists took complete control of the AITUC operations as the split became complete and unbridgeable. After Independence, the number of unions multiplied due to factors like a simplified procedure for union registration and the political parties’ preference to have their own unions. Today, the country has numerous unions, each with its own political and social ideology. The Hind Mazdoor Sabha, the Bharatiya Mazdoor Sangh, the United Trade Union Congress, the All India United Trade Union Centre, and the Centre for Indian Trade Unions are a few examples of major trade unions in India.

Trade Union Act, 1926

The Trade Union Act, 1926 deals with the registration and regulation of trade unions. It also specifies the rights, privileges, duties and liabilities of the registered trade unions. This act is applicable to the whole of India. It empowers the state governments to appoint a registrar of trade unions for each state. The state government can also appoint additional and deputy registrars of trade unions as it thinks fit for the purpose of exercising and discharging the powers and functions of the Registrar under this Act. We shall now see the salient features of this act.

Minimum Number for Application

Any seven or more members of a trade union can apply for the registration of their trade union under this act. For this, they must subscribe their names to the rules of the trade union and in other way comply with the provisions of this act relating to registration while applying for such registration.

Application (Sections 4 and 5)

The application for registration must be sent to the registrar along with a copy of the rules of the trade union and the following particulars:

1. Names, occupations, and addresses of the members making the application;
2. Name of the trade union and the address of its head office; and
3. Titles, names, ages, addresses and occupations of the office-bearers.

Certificate of Registration (Sections 8 and 9)

The registrar, after verifying and satisfying himself that the trade union has complied with all the requirements of this Act, will register the trade union and issue a certificate of registration in the prescribed form.

Powers of Registered Unions (Section 13)

Any trade union registered under this act will have the following characteristics:

• It shall be a body corporate by the name under which it is registered.
• It shall have perpetual succession (i.e., the entry or exit of its individual members will not affect the continuance of the union).
• It shall have a common seal (independent authority) with power to acquire and hold both movable and immovable property.
• It is vested with powers to enter into contract with others in its own name.
• It can sue others and be sued by others, all in its own name.

Rights and Liabilities of the Registered Trade Unions

The activities of the trade unions registered under this act are regulated through various sections of this act. We shall now see the important sections of this act that deal with the rights and liabilities of the registered unions.

Broad Objectives for the Spending of General Funds (Section 15) The general funds of a registered trade union shall not be spent for any objectives other than those mentioned by this act. A few objectives are:

• the payment of salaries, allowances and expenses to office-bearers
• the payment of expenses for the administration of the trade union
• the prosecution or defence of any legal proceeding to which the trade union or any member thereof is a party
• the conduct of trade disputes
• the compensation of members for loss arising out of trade disputes
• allowances to members or their dependants on account of death, old age, sickness, accidents or unemployment of such members
• undertaking policies of assurance on the lives of the members
• the provision of educational, social or religious benefits for members

Fostering Civil and Political Interests of the Members (Section 16) A registered trade union may constitute a separate fund through contributions and the same may be used for the promotion of the civic and political interests of its members.

Legal Protection to Office-bearers in Certain Criminal Conspiracy Charges (Section 17) The office-bearers or members of a registered Trade Union shall not be liable to punishment under sub-section (2) of section 120B of the Indian Penal Code (45 of 1860), in respect of any agreement made between the union members for the purpose of furthering any of the objectives of the Trade Union specified in Section 15 of this act.

Immunity from Trade Dispute–related Civil Suits (Section 18) No suit or other legal proceeding shall be maintainable in any civil court against any registered trade union or its members in respect of any act done in contemplation and furtherance of a trade dispute to which a member of the trade union is a party. Such an act may involve inducing a person to break a contract of employment, or interfering with the trade or employment of other persons.

Validity of Agreements (Section 19) No agreement between the members of a registered trade union shall become void or voidable just because any of the objects of the agreement are in restraint of trade.

Inspection of Books Maintained by the Trade Union (Section 20) The account books of a registered trade union and the list of members thereof shall be open to inspection by any office-bearer or member of the trade union.

Admission of Minors as Members of Trade Union (Section 21) Any person who has attained the age of 15 years may become a member of a registered trade union and can enjoy all the rights of a member.

Disqualifications for the Holding of Office (Section 21A) A person is not qualified to be the member of the executive or any other office-bearer of a registered Trade Union if

• he has not attained the age of eighteen years.
• he has been convicted by a Court in India of any offence involving moral turpitude and sentenced to imprisonment for a period of five years after his release.

Requirements Regarding Industry-wise Representation in Office (Section 22) Not less than one-half of the total number of the office-bearers of every registered trade union shall be the employees in an industry with which the trade union is connected.

Conditions Relating to Dissolution (Section 27) When a registered trade union is dissolved, a notice of the dissolution signed by seven members and also by the secretary of the trade union shall be sent to the registrar within 14 days of the dissolution.

Filing of Returns (Section 28) A duly audited general statement containing information about receipts and expenditure and the assets and liabilities of the trade union in a prescribed manner shall be sent annually to the registrar, on or before such date as may be prescribed. The general statement must be accompanied by the details about the changes of office-bearers made by the trade union during the same period.

Challenges Facing the Trade Union Movement

In many countries, employees have begun to view trade unions as an outdated institution and keep no place for union activities in their busy schedules. Developments like globalization, intensified competition, labour market changes, the replacement of the public sector by the private sector, modern HR management practices, the emergence of smaller and dynamic organizations and individualistic ideologies among employees have all contributed to a rapid decline in the preference for unions. Apparently, the present-day trade unions are facing multiple and complex challenges. We shall now see the challenges before contemporary trade unions.

Declining Memberships

Worldwide, there has been a declining trend in the membership of the unions.²¹ By and large, the same trend is being witnessed in India, particularly in the private sector. The growth of trade unions in India in its initial stages could be attributed to the interventionist policies of the erstwhile governments. For long, trade unions in India enjoyed several statutory protections that facilitated their growth and popularity. But, the economic reformist policies introduced by the Government of India in 1991 changed the priorities of the state and its attitude towards labour and its rights. Now, the unions no longer enjoy the same protection and patronage as they did before 1991. Investment preferences have overtaken the importance of labour protection in the policies of the central and state governments, and this is certainly a setback for the unions.

Privatization reduced the membership base of the unions clearly. The post-reformist policy measures of the government like recruitment freeze, longer duration of wage agreements, and voluntary retirement scheme for public sector employees,²² and employment generation in the private sector all acted against the interest of the trade unions in the country. Certainly, the growth in union membership did not keep pace with the increase in the number of workers in the country.

Finally, the globalization of the economy led to a greater competition in the market and forced the employers to reduce or, at least, freeze the cost of production and the price of product to survive in the market. In such a situation, the employers were unable to afford any increase in the wages as they could not pass on the cost of increased wage to the consumers due to stiff competitions. Understandably, the employers were forced to act tough on the unions when they resorted to agitations like strikes demanding a rise in wages. The failures of unions in industrial conflicts made them unpopular among the employees. Cumulatively, there has been a steady decline in trade union activity in the country over the years.

The Changing Profile of Indian Workers

Indian trade unions have often been described as bread-and-butter unions.²³ This is because the Indian unions often fight for basic economic issues like wage rise and bonus. In contrast, the present-day elite and urban working class have moved beyond the basic needs and begun to focus on non-economic needs like skills acquisition, job autonomy, job challenges and job mobility. The conventional approaches of the trade unions and their obsession with wages issues act as a stumbling-block in reaching out to the vast majority of the educated middle-class employees.

Multi-unionism and Inter-union Rivalry

Since Independence, most of the Indian trade unions have been functioning as the labour wing of political parties. Almost all major political parties in India, including the regional ones, have their own labour wings to control the trade unions of various industries. The existence of a multi-party system in the country led to the mushrooming of unions in the organizations. As these trade unions are mostly ideology-based, there is a clash of interests among these unions which ultimately affects the unity of the employees. The inter-union rivalry affects the collective bargaining and action abilities of the unions. Thus, the inter-union rivalries due to multi-unionism harm the interests of the workers and alienate these unions from the mainstream working class.

External Leadership

External or outside leadership in trade unions was the vestige of early trade unionism in the country. In the initial stages of unionism, that is, before Independence, the workers were mostly illiterate and, thus, required the support of powerful political leaders and social workers to propagate their cause and to protect their interests. But after independence, these outside leaders instead of relinquishing their positions began to use the unions for promoting their own political interest. The outside leadership has harmed the union in several ways. For instance, when there is an outside leadership in the organizations, the members of the union can not hold the leaders accountable for their actions and failures. As a matter of fact, the union members will have no control over an external leadership. Even though the conditions which necessitated the introduction of outside leadership are no longer relevant, the external leaders continue to have a stranglehold over the trade unions.²⁴

Entry of International Workers

The globalization of economies brought about tremendous changes in every sphere of industrial activities. It has not spared the trade unions either. In fact, globalization has brought in international workers, who face unconventional problems; this phenomenon poses new and multi-faceted problems for the unions. The nation-specific labour legislations lose their relevance in international operations. For instance, foreign companies operating in India may not agree to the Indian industrial practice of collective bargaining for wage fixation. Again, in business process outsourcing, the employees are based in one country but serve the customers in another. The labour laws and practices of the country where the company is located may have little relevance for another country where the employees are actually engaged.

The main challenge for the unions arising out of globalization is the building of networks among the trade unions along the global production system. The trade unions require international agenda and stronger coordination with unions of different nations to ensure holistic protection for its employees. As a matter of fact, the trade unions now have to work in closer coordination with the global unions like International Trade Union Confederation (ITUC), Global Union Federation (GUF) and the Trade Union Advisory Committee to the OECD (TUAC) to accomplish the union goals effectively and to remain relevant for the future.

In a nutshell, the trade unions must be prepared to change their approach, organizational structure and outlook according to the demand of the emerging situations and address new issues, however complex they may be.

Union-free Organizations

Many employers often view unions as obstacles in taking their organization forward in the globalized environment. However, it is not easy for employers to make their organization union-free unless they make concerted efforts to achieve this. This is because the employees view the unions as their natural allies. They also consider the unions as a mechanism for raising their workplace concerns and grievances with the management and an antidote to its unfair action. Thus, the employees turn to the unions to settle their grievances when they are not heard by the management properly. It is, therefore, necessary for the employers to understand situations and events that create an ideal ground for unionization, and they should make all efforts to avoid such situations if they do not want unions in their organization. We shall now see the situations and activities the management should avoid to keep off unions.

• The absence of an adequate two-way communication between the employers and the employees
• Unilateral decision and actions by the management on matters affecting the interests of the employees
• The presence among the employees of a general distrust in the management and the superiors
• A feeling of stress and anxiety in the job environment
• The absence of recognition and respect for the employees and their actions in the organization
• The absence of self-assurance and security among the employees and an unfounded fear about their future in the organization
• Lack of timely response from the management for the grievances expressed by the employees

When an organization is determined to avoid the above-mentioned situations and actions by altering its corporate and HR strategies, philosophies, policies and procedures appropriately, it can become union-free.

An organization which desires to function in a union-free environment must resort to the following specific strategies:

Effective Information Sharing

The organization should promote an open, honest and direct communication with the employees on a continuous basis. The intention of such a communication should be not only information sharing but also gaining the employees’ confidence in management.

Ensuring Employee Participation

The organization should be conscious about involving the employees in the decision-making processes that affect them. It must voluntarily create forums and opportunities for the employees to make their views, opinions, concerns and suggestions known to the management. When the employees are involved in the change management process, the chances of resistance to such changes get reduced considerably. In fact, they even develop a personal stake in the success of change and work for it.²⁵

Sensitivity to Employee Complaints and Concerns

The organization should conduct employee satisfaction surveys to know their levels of satisfaction in general and their specific concerns regarding employment and environment. The grievances must be resolved and the concerns taken care of by the organization on a time-bound basis so that the employees do not feel the need for unions to resolve their grievances. Finally, the organization can also conduct organizational climate surveys to know the perception of the employees about the prevailing organizational climate and its various characteristics. The characteristics may include wages and salary, incentives and welfare facilities, participative management, grievance handling, and objectivity and rationality in decision making.

Fairness in HR Policies and Procedures

Employees often approach trade unions whey they suspect unfairness in the HR policies involving promotion, transfer, compensation, and disciplinary action. The management must follow complete transparency and objectivity in the HR management. Similarly, necessary provisions must be available in the HR procedures to enable the employees to record their grievances with the appropriate authorities when they are unsuccessful in getting promotions, transfers and incentives.

Leadership Training

The supervisors and managers play a crucial role in the union prevention strategies of an organization. The superiors in a non-union organization must develop more than a formal relationship with their subordinates to know their genuine feelings and opinions about the various aspects of the organization. Besides, they must be mature and caring in their relations with the subordinates. They must be able to detect the strains in the relations so as to set them right without any time loss. The organization must educate the managers and supervisors about the union prevention strategies to be adopted by them and should teach them the skills and ability to identify subtle union-formation activities among the employees.²⁶

Vulnerability Test

The organization must conduct the necessary tests to determine its risk levels regarding employee unionization. Depending upon the degree of vulnerability to unionization, it may design appropriate strategies to pre-empt the union activities. For instance, when the organization reaches high-risk levels and unionization is imminent, it may have to make immediate and bold moves to stop it from taking roots.

Summary

1. A trade union is defined as a formal association of workers for the purpose of protecting and promoting their rights and interests through collective bargaining and actions.
2. The features of a trade union are: voluntary association, common goals, authority flow from the members, intermediary role, and collective action.
3. The objectives of trade unions are: promoting the workers’ economic well-being, protecting their employment, safeguarding their health and safety, protecting their life after retirement, promoting industrial relations and peace, procuring political prowess and power and fostering industrial democracy and equity.
4. The types of trade union are occupational unions, industrial unions, general unions and white-collar unions.
5. The strategies and actions of the unions for goal accomplishment are: collective bargaining, participation in internal consultative forums, membership in national and international federations, collective actions, political role and employee empowerment.
6. The reasons for joining unions are creating a defence against exploitation, trade union clout, the fulfilment of social and esteem needs, compulsion to become a member, and peer group influence.
7. The challenges before the trade union movement are declining memberships, the changing profile of the Indian workers, multi-unionism and inter-union rivalry, external leadership, and entry of international workers.
8. The strategies for developing a union-free organization are effective information sharing, ensuring employee participation, sensitivity to employee complaints and concerns, fairness in HR policies and procedures, leadership training and vulnerability test.

Review Questions

Essay-type questions

1. Critically evaluate the different types of unions with relevant examples.
2. Enumerate the strategies and actions of unions for goal accomplishment.
3. Discuss the reasons why workers join unions.
4. Trace the history of the global trade union movement.
5. Write an essay on the trade union movement in India.
6. Critically explain the relevance and application of the Trade Union Act, 1926.
7. Evaluate the challenges facing the trade union movement in India.
8. How will you develop a trade union–free organization in India?
9. “A multiplicity of trade unions hampers their bargaining ability.” Discuss.
10. “Even after 100 years, the Indian trade unions are fighting for bread and butter.” Comment.

Skill-development Exercise

Objective–The objective of this exercise is to show you how to develop an HR strategy in alignment with the business strategy to keep the organization union-free.

Procedure Note–The class is divided into groups. Each group has (1) an HR manager, (2) two HR team members, (3) two employees chosen by the HR manager, and (4) two observers of the meetings. The role of the observer is to observe the various aspects of the role-playing sessions and report on them.

Situation

Viswas Bank is a private sector scheduled bank with branches all over India. It offers a wide variety of schemes to serve its assorted customers. This company has a workforce of 7,200 employees, of whom nearly 70 per cent are unionized. The company has seen several union agitations in the past, which resulted in a significant manpower loss. Recently, the company entered into the capital market business through its new and fully owned subsidiary company, Viswas Capital Market (P) Ltd. The business venture is successful and at present there are 800 employees. The management of Viswas is determined not to allow unionization of employees in the new venture and, therefore, it has instructed the HR manager of Viswas Capital Market (P) Ltd to develop strategies to this effect.

Steps in the exercise

There are three steps in the exercise:

Step 1: The HR manager meets the selected workers to ascertain their views on the strategies required for keeping a union-free environment in the company.

Step 2: He convenes a meeting attended by the two HR team members to finalize the HR strategies for a union-free organization. These strategies will be sent to the top management for approval subsequently.

Step 3: The observers analyse the performance of the members in the role-playing session and give their feedback.

Case Study

Adil Limited is a large chemical unit located in southern India. It has 18,500 employees, including the managerial cadre. It has a well-established organizational structure and an efficient HR department. The HR activities are managed by Mr Prakash Roy, the General Manager (HR). Adil Limited is a unionized company with two major unions, namely, VMS and RMU. It also has a new and budding union—ABS. Since this company is more than 60 years old, it has well-established HR policies and procedures for guiding its HR activities. The top management has made it a policy to decide the wage revisions for the employees only through collective bargaining. Thus, it conducts wage negotiations with the employees’ unions at regular intervals of three years. So far, the management faced no major problems in the wage negotiations as the wage agreements were mostly reached on a give-and-take basis at the collective bargaining.

Since the new wage agreement is to be implemented after two months, the management issued notice to the two recognized unions, VMS and RMU, calling them in for wage discussions. As per the convention of the company, the top management nominated a group of negotiators with Roy, as the chief negotiator. The trade unions were represented by two negotiators, one each from VMS and RMU, at the talk. As per the agenda, the management first made its observations about the performance, problems and prospects of the company and about the need for increased cooperation between the management and the employees. In return, the trade unions made their observations about the implementation of the previous agreements, the employee problems and the need for providing better amenities for the employees.

The management was stunned by the unreasonably high demands of the unions. It was shocked when the unions adopted a tough posture and made a virulent attack on the management and its policies. The negotiators offered reasonable wages hikes but the unions not only turned it down but also threatened the management with industrial actions like strikes. The management negotiators immediately contacted the top management to appraise them about the developments and get their guidance.

Once the wage negotiations resumed, the management offered substantially high wages but less than the demands of the unions. However, the unions refused to scale down their demands even a bit. The management counter-warned the unions of dire consequences if they resorted to strikes and other forms of agitation in the event of negotiations failing, and then adjourned the talks. The company now faced imminent failure in the wage negotiations, perhaps for the first time in several decades, and braced for the likely strike call of the unions. They also tried to understand the reason for the posture adopted by the unions.

Inquiries with the employees revealed the presence of inter-union rivalry among the unions. The new union has already made inroads into the membership base of the other two recognized unions and accused the older ones of being soft with the management. As a result, the other unions are now compelled to prove their credibility among the employees and chosen to adopt a tough posture both at the wage negotiations and outside. As expected, the unions issued a strike notice to the management while it was determined to break it. However, Mr Roy felt that the management must understand the tricky situation regarding the unions and should take this into account as well.

Questions for discussion

1. According to you, what are the causes of the present imbroglio prevailing in Adil Limited?
2. What should the management do now to prevent the strike and bring the unions back to the negotiation table?
3. If you were to be the GM (HR), how would you deal with the new union ABS?
4. State the long-term strategies to be adopted by the management of Adil Limited to prevent the recurrence of such a situation in the future.

Notes

1. Sidney James Webb Passfield and Beatrice Potter Webb, Industrial Democracy 2nd ed. (London: Longmans, Green, 1902).
2. Sonia Bendix, Industrial Relations in South Africa (Cape Town, Juta and Company Limited, 2001), p. 149.
3. The Trade Union Act, 1926.
4. Michael Salamon, Industrial Relations: Theory and Practice (London: Pitman Publishing Limited, 1987).
5. V. V. Giri, Labour Problems in Indian Industry (London: Asia Publishing House, 1972), p. 1.
6. A. L. Booth, The Economics of the Trade Union (Cambridge, England: Cambridge University Press, 1995), p. 51.
7. Orvoell R. Gallagher, “Voluntary Associations in France”, Social Forces, 36, no. 2 (December 1957): 153–160.
8. Edwin F. Beal and James P. Begin, The Practice of Collective Bargaining, 5th ed. (Homewood, IL: Richard D. Irwin, 1982), p. 91.
9. Leopoldo J. Dejillas, Trade Union Behavior in the Philippines, 1946–1990 (Quezon City: Ateneo de Manila University Press, 1994), p. 137.
10. E. M. Kassalow, Trade Unions and Industrial Relations: An International Comparison (New York: Random House, 1969).
11. David Lockwood, The Black-Coated Worker: A Study in Class Consciousness (London: Allen & Unwin, 1958).
12. Richard Edwards and Michael Podgursky, “The Unraveling Accord: American Unions in Crisis,” in Richard Edwards et al. (eds), Unions in Crisis and Beyond: Perspectives from Six Countries (Dover, Mass.: Auburn House, 1986).
13. Sonia Bendix, Industrial Relations in South Africa (Cape Town, Juta and Company Limited, 2001), p. 161.
14. Susan Fernie and David Metcalf (eds), Trade Unions: Resurgence or Demise? (London: Routledge, 2005), p. 189.
15. Gary Dessler, Human Resource Management (Delhi: Pearson Education, 2005), pp. 598–599.
16. Gary Dessler, Human Resource Management (Delhi: Pearson Education, 2005), pp. 598–599.
17. Selig Perlman, A History of Trade Unionism in the United States (Charleston, SC: BiblioBazaar, LLC, 2008), p. 13.
18. Manoranjan Mohanty (ed.), Class, Caste, Gender (New Delhi: Sage, 2004), pp. 106–107.
19. Debdas Banerjee, Globalization, Industrial Restructuring, and Labour Standards: Where India Meets the Global (New Delhi: Sage, 2005), p. 283.
20. S. C. Pant, Indian Labour Problems (Allahabad: Chaitanya Publishing House, 1970).
21. Robert J. Flanagan, “Has Management Strangled U.S. Unions?” Journal of Labor Research (Winter 2005): 33–63.
22. John Benson and Ying Zhu Yi, Trade Unions in Asia—An Economic and Sociological Analysis (London: Routledge, 2008), p. 169.
23. Y. Narayana Chetty, Dynamics of Trade Unionism in India (New Delhi: Anmol Publications, 2004), p. 45.
24. Y. Narayana Chetty, Dynamics of Trade Unionism in India (New Delhi: Anmol Publications, 2004), p. 47.
25. R. M. Kanter, B. A. Stein and T. D. Jick, The Challenge of Organizational Change (New York: Free Press, 1992).
26. Suzanne Smith Blancett and Dominick L. Flarey, Reengineering Nursing and Health Care: The Handbook for Organizational Transformation (Sudbury, MA: Jones & Bartlett Publishers, 1995), pp. 151–155.