Chapter 2: Prerequisites of Collective Bargaining

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

PRERREQUISITES FOR THE COLLLECTIVE BARGAINING: For a successful collective bargaining process there are certain

prerequisites to be followed. In other words there are certain conditions to be fulfilled which are briefly discussed below: 1) RIGHT TO ORGANISE AND RIGH TO COLLECTIVE BARGAIN: The extent to which, the workers enjoy the right to organize and bargain is the key success factors to which collective bargaining works in any country. There are two prerequisites for the successful implementation of this condition, first is the effective enjoyment of the freedom of association in accordance with the principles set out in the Freedom of association and the protection of right to organize convention, and the second is the workers and the employers organization should be free and sufficiently strong but also relatively equal in strength with the management. 2) STRONG AND STABLE TRADE UNIONS: The impact of unionization has a strong influence on the growth and development of collective

bargaining in a country. The rate of unionization varies from country to country. The strong and stable trade unions lead to the success of collective bargaining. Whereas the fragmentation of the unions, inter union and intra union rivalries hinders the progress of the collective bargaining process. This also leads to the host of other problems both for the employer as well as the state, in addition to the above said. Example: A union in the plant level may have conflict with the central union, ultimately affecting the collective bargaining process. 3) RECOGNITION OF TRADE UNIONS: The collective bargaining can take place only if the employers recognize trade unions or the workers association for that purpose. The refusal of employer to recognize the trade union or the complications that might arise in achieving recognition greatly complicates the process of collective bargaining. Recognition of union is achieved in two ways: it can be made compulsory under the law or some systems must be developed by which the unions can be recognized. For example: There are some countries where there is no legal provision regarding the recognition of trade unions and hence such unions have to struggle for getting the same. 4) ATITUDE OF EMPLOYERS AND TRADE UNIONS: The attitude of the parties involved is also a crucial factor in the success of the bargaining. If the parties are rigid, non-compromising and close minded it will be impossible for collective bargaining to function. In that case the common consensus is hard to be reached upon. On the contrary, if, the parties have a compromising and flexible attitude, then only the possibilities of an agreement can take place. 5) A SUITABLE FRAMEWORK: A set of established procedures and a governing body is required for the smooth and effective functioning of the collective bargaining procedures. In case of developing countries the lack

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

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

is the most common type of bargaining & involves zero-sum negotiations, in other words, one side wins and the other loses. Both parties try to maximize their respective gains. They try to settle economic issues such as wages, benefits, bonus, etc. For Example, Unions negotiate for maximum wages & the

management wants to yield as little as possible while getting things done through workers. Union workers may try to convince the management that they will go on strike if they dont get the wages or working conditions they desire. Management, in turn, may be willing to try to ride the strike out; especially if they have cross trained other workers or have external replacements to fill in for those on strike. In distributive bargaining, unions and management have initial offers or demands, target points (e.g.: desired wage level), resistance points (e.g.: unacceptable wage levels) & settlement ranges (e.g.: acceptable wage level). Another name for this type of bargaining is conjunctive bargaining. Cooperative /Integrative Bargaining: Integrative bargaining is similar to problem solving sessions in which both sides are trying to reach a mutually beneficial alternative, i.e. a win-win situation. Both the employer & the union try to resolve the conflict to the benefit of both parties. Both sides share information about their interests and concerns and they create a list of possible solutions to best meet everyones needs. For Example, when companies are hit by recession, they cannot offer the kind of wages and benefits demanded by workers. At the same time they cannot survive without the latters support. Both parties realize the importance of surviving in such difficult times and are willing to negotiate the terms of employment in a flexible way. Labor may accept a cut in wages in return for job security and higher wages when things improve. Management, on the other hand, agrees to modernize and bring in new technology and invest in marketing efforts in a phased manner. In India, companies like TELCO resorted to integrative bargaining during the recession in the automobile sector. Another name for this type of bargaining is interest-based-

bargaining and some people term it as cooperative bargaining. The objective for both parties is to find the common ground between them, to build relationship and to eliminate the adversarial elements of traditional bargaining. Productivity Bargaining: The concept of productivity bargain

involves a good understanding of the following concepts. Based on these concepts both the parties must develop a productivity linked scheme. Difference between productivity & work intensity How to conduct work study ILO guidelines for work study Personal needs allowance, Fatigue allowance, hazardous allowance, etc. Other Methods like MOST (Maynard Operational Sequence Techniques) Systems improvement and method improvement Required settlement Composite Bargaining: Workers believed that productivity Skills and Knowledge for productivity

bargaining agreements increased their workloads. Rationalization, introduction of new technology, tight productivity norms have added to this burden and made the life of a worker somewhat uneasy. As an answer to such problems, labor has come in favor of composite bargaining. In this method, labor bargains for wages as usual, but goes a step further demanding equity in matters relating to work norms, employment levels, manning standards, environmental hazards, sub-contracting clauses etc. This works in

the favor of the workers, for e.g., when unions negotiate manning standards they ensure the workload of workers dont exceed. Workers are no longer interested in monetary aspects to the exclusion of work related matters. However, there is no doubt that wages, bonus and other monetary benefits continue to occupy center stage in the bargaining sessions, but there is a definite shift towards composite bargaining. Without such a proactive stand workers may not be able to withstand the forces of liberalization, automation and outsourcing. Through composite bargaining, unions are able to prevent the dilution of their powers and ensure justice to workers by putting certain limits to the freedom of employers. And for employers, this is lesser evil than strikes and lockouts. This situation may not continue for long though, with the compulsions of the free market, reduction in labor or wages. Concessionary Bargaining: Quite opposite to the other forms of bargaining, where the unions demanded from the employers, in concessionary bargaining, the objective is to giving back to management some of what it has gained in previous bargaining. Why should labor be willing to give back what it has worked so hard to obtain? Usually such a move is prompted by labor leaders who recognize the need to assist employers in reducing operating cost in order to prevent layoffs and plant closings. Thus, it is often economic adversity that motivates concessionary bargaining. A good example is the agreement between General Motors & the International Union of Electric Workers that granted GM aroundthe-clock operations, wages and benefits concessions for the new hires, and a two-week mass vacation. The concessions were made to save over 3,000 jobs at a plant in Ohio. In some cases, despite a financial crisis, the union may not be willing to concede. This may

be because the union doesnt view managements arguments as credible. Thus, the degree of trust and credibility between the management and the union may influence the extent to which concessionary bargaining occurs.

Systems of Collective Bargaining: There are varied systems for collective bargaining across South-East Asia; it varies from informal oral agreements to a very formal & detailed agreement. Broadly, there are three different systems of collective bargaining; Single Plant Bargaining (Unit Level): Bargaining between management and a single trade union at its specific plant or business unit is single plant bargaining. The out come of the bargaining would not be applicable to other plants of the same company. This type of collective bargaining prevails in the United States of America & India. Multiple Plants Bargaining (Plant Level): Bargaining within a single company/establishment, having several plants, and the workers employed in all of these plants. Here the result of the negotiation would affect all the plants even if they are at geographical distances. A collective agreement at plant level or unit level is reached only for the plant or unit for which it has been drafted, and its scope and extent are limited only to that particular unit or undertaking. The agreement generally provides for certain common norms of conduct with a view to regulate labor management relations and eliminating hatred and misunderstanding, It contains provisions for a quick and easy solutions

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