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Mainstream, Vol XLVI, No 20

Emerging Trends in Trade Union Movement

Friday 9 May 2008, by Ruddar Datt


May 1 is the International Working People’s Day. On this occasion we are carrying the following article.

Historical Background

Before understanding the emerging trends in Indian trade union movement, it would of interest to understand the historical context in which unions functioned during the first four decades in the post-independence period.
During the freedom movement, trade unions were patronised by political parties and the freedom movement helped trade unions to be recognised as legal labour organisations to promote the interests of the working class, more especially in the organised sector of the economy.
Trade unions during the post-independence period preferred state-led planned industrialisa-tion. The national government also passed a number of Acts with which they codified the roles of trade unions as instruments of collective bargaining on behalf of the workers. Tripartite structures of consultation were created like the Indian Labour Conference, wage boards, Central Industrial Relations Machinery, joint management councils etc. The entire idea was that these institutions should be used to reduce the areas of conflict by dialogue, rather than resort to strikes. In case of failure by dialogue, the government used the instrument of compulsory adjudications, by appointing state as well as national level tribunals. The result was that trade unions felt that the state has given them a respectable place to voice their concerns and thus they were able to extract with the help of the state good amount of power to protect and promote the interests of labour. In other words, this period was marked by a social cohesion between the state and the trade unions to improve the miserable conditions of the working class. The arm of the state was in favour of the working class.

Liberalisation Model, Change in the Nature of the State and Labour

HOWEVER, the economic reform process initiated by Rajiv Gandhi, and later strengthened in 1991, adopted the Liberalisation, Privatisation and Globalisation, popularly referred to as the LPG, model of development. In other words, the country accepted the market-based strategy to accelerate development with least amount of state intervention. This had an impact on the trade unions. The arm of the state started strengthening the capitalist class and they were considered as the chief instrument to promote development. Globalisation added strength to the Indian capitalist class. Thus, capital—Indian as well as foreign—argued for labour reform. A new meaning was given to the term ‘labour reform’ which implied the power to ‘hire and fire’ workers, freedom to determine wages according to the market demand and supply. Although the state did not undertake ‘labour reforms’ by introducing a new legislation to legitimise the demand of the capitalist class, it silently worked to reduce state intervention. Consequently, the employers used different methods to reduce the size of the labour, by decentralising production and even sub-contracting for various operations to small businesses. This led to reduction in the growth of jobs in the organised sector and increase in the share of the informal sector in industrial employment. Regular workers were replaced by contract workers to reduce wage costs, so that business firms could compete in the market. This started the process of weakening the trade unions. Lockouts were used by the employers to retrench workers and prolonged lockouts were used as the instruments of pressurising labour to accept humiliating conditions of work before lifting lockouts. This process gathered momentum in all States—whether ruled by the Left or the Right or moderates in India. This further weakened the trade unions.

Reduction of Employment in the Public Sector

THE state itself started the process of ‘shedding the load of surplus workers’ by adopting various methods like freeze on fresh recruitment, by offering workers voluntary retirement schemes (VRS). During the last decade, the public sector accounted for 60 per cent of reduction in employment in the organised sector. The process of privatisation of state enterprises, by the instrument of disinvest-ment, further led to a decline in employment, dilution of collective bargaining, worsening in working conditions and reduction in wages. This emboldened capital to raise the demand for reduction of workers in the private sector, by using a sophisticated term—the provision of ‘labour flexibility’.

Labour Flexibility permitted by the State in Practice

THE capitalist class has been pressurising the state to permit labour flexibility in business, which implies the right to retrench labour, to permit business firms to replace regular workers with either temporary or contract labour so that the benefits of provident funds, gratuity, paid leave etc. are denied to a part of the working class. All this is being argued with a view to reduce costs so that firms can face competition while earning reasonably good profits. Though the state, due to strong resistance by the trade unions, did not amend section VB of the Industrial Disputes Act, in practice, it only winked at downsizing the labour force as also increasing the percentage of workers employed as contract workers. Data provided by the Annual Survey of Industries indicates that the total number of workers employed by factories declined from 62.8 lakhs in 1999-00 to 60.8 lakhs in 2003-04. However, the proportion of contract workers increased form 19.7 per cent in 1999-2000 to 24.6 per cent in 2003-04. During 1999-2000 to 2003-04, total profits increased from Rs. 47,334 crores to Rs. 92,366 crores—an increase of 95 per cent. Obviously, the benefits of growth were appropriated by the capitalist class at the cost of labour. Not only that, the Labour Department has been granting permission for closures more liberally in recent years, thus facilitating labour flexibility.

Repression of the Working Class by the State

DURING the last few years, cases of repression by the state of the working class have further weakened the trade unions. A few instances are being mentioned. The Government of Haryana unleashed ruthless violence by the State Police against striking workers in Honda Motorcycles. In this respect, the Left Government of West Bengal also used both the police and CPM cadres to repress people in Singur so that the Tata Motors can establish their small car factory. The government promised compensation to displaced farmers, but provided pretty little compensation to displaced tenants whose livelihood was destroyed. The UP Government used ESMA (Essential Services Maintenance Act) and the National Security Act (NSA) in the UP Electricity Board’s strike in January 2000. The Tamil Nadu Government enacted Tamil Nadu ESMA in September 2002 to suppress the State Government employees’ strike. It also armed itself with radical powers to deal with another strike by its employees and teachers in 2003.

Role of Judiciary

WHEREAS during the sixties and the seventies, the judiciary played a very progressive role in protecting the rights of labour, there is a sea- change in its role after the introduction of reforms. The Supreme Court judgment in 2003 declared that the government employees have “no fundamental, legal, moral or equitable right to go on strike.” The judiciary had also reversed its own judgment on contract labour absorption in the case of SAIL. This was a big blow to the trade unions who were opposing flexibility of labour. All these judgments indicate that whereas the workers and trade unions could seek redress of workers’ abrogation of labour rights from the judiciary earlier, in recent years, there appears to be a compact between the state and judiciary to promote the LPG model of development.

Contracting Base of the Trade Unions

WITH increasing demands for more skilled workers, especially in the IT sector, a new class of managers and skilled workers are being recruited by business firms. These workers place individual interest at a higher level than group interest. Business firms offer high wages and perks to these knowledge workers and further promise frequent promotions on performance or merit basis. Consequently, a new class of highly paid workers is emerging—they do not like to be members of trade unions, but form their own associations to seek larger benefits.

Closures, retrenchments, increasing proportion of casual/contract workers have further led to contraction of the union-base. The unions, in order to increase their penetration are now to organise the unorganised workers in the informal sector.

Rise of Independent Industry Unions

IN recent years, instead of getting affiliated to unions supported by political parties, the employees are organising independent industry-wise unions, for examle, the United Forum of Bank Employees, the National Co-ordination Committee of Electricity Employees and Engineers (NCCOEE), unions formed in banks, insurance companies and financial institutions. The rise of independent unions have also weakened the role of politically affiliated unions.

Absence of Cooperation and Consolidation among Major Unions

POLITICALLY affiliated unions have shown a change in attitude with the change in the ruling party. For instance, the INTUC cooperated with the Congress Government during the Emergency, and reversed its attitude towards the government when Janata Party came to power. Similarly, the CITU, an affiliate of the CPI-M, does not force the West Bengal Government to check the rampant phenomenon of lockouts, but is very vocal in other States as a defender of labour rights. The Left unions play a different role in States ruled by the Congress or BJP, but connive with the governments in Left-ruled States.

Moreover, attempts of merger among major politically affiliated unions have not succeeded. The CITU and AITUC, while they believe in “workers of all lands unite” as suggested by Marx, have failed to come together. The Left unions treat the BMS, the biggest trade union, as an untouchable and would not cooperate with it in any struggle. There are occasions when unions have come together “for some struggle” but parted ways as soon as the struggle came to an end.

All these tendencies show absence of unity among trade unions which are politically affiliated. This is exploited by both the government and the employers.

Trade Unions and Emerging New Sectors

NEW sectors, such as Information Technology (IT), Business Process Outsourcing (BPO) and Retail Sector, with large potential for increasing employment opportunities, are emerging. They engage a large number of blue-collar workers. The knowledge sector employees get hefty pay packets which give them a certain kind of arrogance not to be a part of trade unions with other industrial workers. Individual bargaining is the key mode of determining rules of employment relationship. These employees of the IT and BPO sectors are called ‘cyber coolies’ since they have to work for long hours and always suffer form tension arising out of the attitude of the employer to ‘hire and fire’ at any time. They also become victims of emotional stress resulting in nervous and physical disorders. The government wants to declare the IT and BPO sectors as ‘public utilities’. The trade unions are making efforts so that workers in IT and BPO sectors are permitted to become members of unions. Other additions to the list are Retail Sector and Special Economic Zones (SEZs). The strategy of the government is to exempt the Retail Sector from the purview of Shops and Establishment Act. In the name of promotion of exports, earlier Free Trade Zones were exempted from the application of labour laws. Now several Ministers are in favour of SEZs being also declared ‘public utilities’ so as to provide them the exemption from labour laws. It is really strange that without providing any social basis of its decisions, the government intends to use its discretion to declare any activity as public utility. Such an anti-labour attitude must be resisted by the trade unions. The unions are faced with two sets of challenges: first, they have to convince blue-collar workers to shed their class arrogance and be part of the broad labour movement; second, the trade unions have to force the government not to go ahead declaring any sector as ‘public utility’. Both challenges are quite formidable in the new business environment.

Is the Response of the Trade Unions to New Challenges Adequate?

THE liberalisation, privatisation and globalisation model has generated an anti-labour economic environment in the post-reform period as against the pro-labour environment in the pre-reform period. The manifestation of new ideology can be observed in a number of ways: Firstly, the collective bargaining power of the unions has been weakened. As against it, employer militancy has increased in the form of lockouts, retrench-ments and closures which lead to shrinkage of employment in the the organised sector. As things stand today, the share of the organised sector has declined to seven per cent and that of the unorganised/informal sector has gone up to 93 per cent. The Eleventh Plan Approach Paper states: “The wage share in our organised industrial sector has halved after the 1980s and is now among the lowest in the world. One reason for this is increasing capital intensity in organised sector, another is outsourcing.” Obviously, the benefits of growth are being appropriated to a much larger extent by the capitalist classes, and the real wages of workers indicate a decline; however, the remuneration of managerial and technical staff has been increasing at the astounding rate of 15 per cent per annum. Capital has made a strong compact with the state. Even the judiciary has been pronouncing judgments castigating labour as happened in the Tamil Nadu workers’ strike and reversal of its own judgment regarding absorbtion of contract labour.

Labour flexibility measures have either replaced regular jobs with contract labour or have at least created ‘bad jobs’. Flexible labour laws are likely to lead to less hiring and more firing. The argument that more jobs might be created in the medium and long-term has not gone down the throat of the working class. It is considered only a mirage.

Labour penetration by the union in the unorganised sector is only at the stage of infancy and needs to be fostered at an accelerated pace.

In this grim scenario, it was incumbent on the part of the trade unions to close their ranks so as to meet the offensive of the capitalist class working in collusion with the state. But alas! The response of the trade unions is rather disappointing. Unity moves initiated by the CPI were brushed aside by the CPM. No effort has been made to foster even a loose federation of trade unions to put up a joint front. The INTUC or BMS or the Left unions like CITU and AITUC have been pulling in different directions to suit the interests of political parties. The duplicity exhibited by the Left unions of their behaviour about issues pertaining to labour like SEZ at the State level in favour of the ruling party and diametrically opposite behaviour against the Central Government has confused the working class. Moreover, to extend cooperation to the state when their affiliate political party is in power and have an attitude of confrontation when a rival political party is in power, has created the impression that political affiliations rather than genuine response on labour issues is the touchstone of cooperation or confrontation.

Very little efforts have been made to organise the informal workers by the all-India trade unions. It was extremely disgusting to find the application of SEWA, a genuine trade union working among women in the unorganised sector, for giving a status to SEWA at the National Centre for Labour was rejected by the Standing Committee of twelve Central Trade Union Organisations on the specious plea that it was not a registered trade union. From all this, it becomes evident that the trade unions have not realised the grim realities and continue to move in grooves of their own making.

Since the bargaining power of the trade unions has weakened, it is relevant for trade unions to shed the old strategy of confrontation and conflict and shift to cooperation and collaboration. The BMS President, Hansubhai Dave observed in this connection: “These Leftist unions always resort to a ‘Bharat Bandh’ and call for a strike.” But the BMS wants to utilise other options of dialogue, negotiations and presentation of convincing analysis of the prevailing situation. The INTUC has also come round to the view of Gandhian philosophy of cooperation to secure benefits for the working class.

The independent unions, though non-political and strong, have not become very effective in labour penetration and do not have a large following.

In this atmosphere of mutual distrust among trade unions and their weakening bargaining power, the capitalist class is able to push through its agenda of economic reforms, knowing fully well the hard reality that unions will only bark and not bite. It is high time that the unions realise the prevailing social and economic scenario buttressed by the forces of globalisation so as to bring about a change in their strategy, rather than getting sidelined by the state and capitalist class.

The author, a well-known economist, is a Visiting Professor, Institute of Human Development, New Delhi.

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