CHAPTER 2 LITERATURE REVIEW

Health and strength, physical mental and moral, are the basis of industrial wealth; while conversely the chief importance of material wealth lies in the fact that when wisely used, it increases the health and strength, physical and mental, and moral, of human race. Alfred Marshall (1890) quoted in World Bank Report (1991) 2.1 SCOPE AND IMPORTANCE OF HUMAN RESOURCE DEVELOPMENT The ultimate goal of human resource development is to improve the quality of life of people. The human resource development strategy is not merely providing necessary skills and enabling workers to secure employment rather it encompasses all those activities which lay the foundation for a fuller and more productive utilization of the total human resources. The concept of HRD implies physical, intellectual, emotional, political, spiritual and all other facets of human development. Food, nutrition and freedom from disease are important inputs which make people productive members of a nation. Physical development comes from good nourishment and medical care. Intellectual development comes through the process of education and socialization. Social development involves developing the ability to live as the member of the society or a group and contribute to it, at the same time deriving benefits from it. The need for existence of all human beings makes this development imperative. Political development ensures human dignity through freedom of expression, democratic participation and an opportunity to influence things that in turn influence the individuals living. Moral and spiritual development is required to bring order, discipline and peace in the life and ensure his comfort. Thus all forms of development of people can be included in the definition of HRD. Rao (1995) wrote

8 that HRD leads to human satisfaction and the quality of life which is the ultimate goal. Developing people is an important goal of all development activities (plans, policies, programs, establishment of new structures, mechanism). These developments (economic, technological, ecological, agricultural, industrial, etc) are ultimately meant to serve people in terms of improving their happiness through better quality and standards of life. Human resource development holds the key for economic development by enabling people to become more productive, because economic development depends upon level of industrial activity, which is dependent upon the productivity of human resource. Productivity of human resource depends upon its competencies and conditions (through public policy, programs and other interventions to help the people) to apply these competencies. These conditions are Physical fitness and motivation. Fashoyin (1997) opined that the workers in competitive economic environment become more important agent in mobilizing all factors of production towards achievement of a competitive advantage. But this is possible by motivated workforce. And motivation of the workforce to commit itself to work and maintain uninterrupted and effective operations further depends on satisfaction of workers. Worker would be healthy when they are well nourished and physically fit and motivated when they enjoy better quality and standard of life. This would be achieved when they would receive proper share in the production or development in the form of increased income or financial benefits, enabling them to purchase potent diet, comfortable working conditions, proper working hours, leave for leisure, recreational facilities and self respect. Rao (1995) is of the view that productivity is determined by the number of hours of work and its intensity. And undernourished or sick person can not work long or properly. Absence of medical facilities further reduces productivity. Increased expenditure on food, to the extent it raises productivity, can be termed as investment. Better diet, housing and control of communicable diseases have raised the quality of life everywhere.

9 A World Bank (1991) study quoted a text of 1890 of Alfred Marshall, who wrote that health and strength, physical mental and moral, are the basis of industrial wealth; while conversely the chief importance of material wealth lies in the fact that when wisely used, it increases the health and strength, physical and mental, and moral, of human race. By conducting some studies, World Bank (1991) in its report concluded that better health and nutrition raise workers productivity decrease the number of days they are ill, and prolong their potential working lives. In Sierra Leone, a 10 percent increase in calories in-take of farm workers consuming 1500 calories a day, raised their output by 5 percent. Similar results have been found among Kenyan road construction workers. By reducing morbidity and debility, the malaria eradication program in Sri Lanka in the 1940s led to a ten percent rise in incomes. A study of Basta et al. (1979) on the rubber plantation workers in Indonesia revealed that treatment of anaemic workers with iron tablets for a period of 60 days resulted in an increase in productivity by 15 to 20 percent and the per capita cost of these tablets was $ 0.08. Levin (1986) found that out put increases by about 10 to 20 percent for every 10 percent rise in haemoglobin level. Rao (1995) mentioned study of Behrman and Deolalikar (1998) who came to the conclusion that Nutrient intake might affect productivity without altering indicators of health status, because nutrient changes may be transferred largely to energy expenditure change, including that are productivity related. World Bank (1991) concluded after analysis of household survey data from nine countries suggesting that economic effects of illness may be substantial. An average adult worker in Peru might expect to be ill 4.5 days a month and misses about one day of work as a result; in Ghana, the corresponding figures were 3.6 and 1.3 days. In the United States, workers aged between 18 and 44 miss, on an average, one quarter of a days work in a month. If workers are unsatisfied they will quit the organization. Quah (1993) analyzed the studies of human resource development in four countries i.e. Japan, Singapore, South Korea and Taiwan, and concluded that comprehensive reforms are needed in public personnel management in the direction of attracting, retaining,

10 developing and utilizing competent employees. Rao (1995) expressed that people will be un-satisfied and lose motivation if not properly paid. They will quit the organizations causing increase of turnover and leading to increased expenditure of selection recruitment and training. From the above discussion it is revealed that HRD is to develop competencies of the people and improving their health and quality of life by providing them better share in the income of country or any firm, in the form of better salary and other financial benefits (bonus, health allowance, education allowance, recreation allowance, etc) boasting their motivation by reducing the remuneration gapes between different categories of people, providing them more leisure by reducing working hours, comforting their lives by bettering work places and developing socially by giving them representation, freedom of expression and satisfying them by providing security of job and removing their fears. For expressing the importance of HRD, Tan (1996) quoted the saying of a Chinese philosopher, Guanzi (551 - 479 BC) that; "When planning for one year, there's nothing better than planting grain, when planning for ten years, there's nothing better than planting trees, when planning for a lifetime, there's nothing better than planting men". In his own words Guanzi explained that grain is something that is planted once and produces only a single harvest. Trees are planted once but may produce ten harvests. Men are things that are planted once but may produce a hundred harvests. 2.2 PLIGHT OF WORKERS AND NEED OF INDUSTRIAL RELATIONS Workers or labor class is the major and most important human resource of any country and they are developed through better quality and standards of life. But workers remained undeveloped because of being under privileged, deprived, and victim of the exploitation of employer. Khan (1992) mentioned that labor was considered as a commodity and was subject to economic laws of supply and demand.

11 Conditions of workers remained area of concern for centuries particularly after the industrial revolution. No doubt industrialization, as a consequence of industrial revolution, was most forceful process in the known history that brought many comforts in human life. But it is a very bitter fact that this revolution also brought problem of exploitation of workers, who became enslaved to the dictates of machines and capital owners under their profit motives. According to Shafiq-ur-Rehman (2003) employers exploited workers for maximizing profit. Colman (2000) wrote about USA that the industrial revolution for the first time brought thousands of women and children in the workforce. In New England, textile mills used to employ young unmarried daughters of farmers, and these textile mill girls often worked 12 to 15 hours a day, lived in strictly supervised company boarding houses, had to be silent during work and could be fired for using profane or improper language. Situation is still bad at some places and according to ICFTU (n.d.) report, in Guatemala, in some factories workers usually work for 9-10 hour a day and paid between $1 and $2 per day and sometimes they are forced to work as long as 18 hours. In some factories, to meet the demand of large orders, workers are given amphetamines so that they can work 60 hours without stopping. Similarly Amnesty International (2002) also reported that in China the plight of workers is serious and there are widespread violation of international standards causing serious injuries and deaths. One reason of these hardships, in the words of George (2004) is that a majority of working people possess labor as their only resource to carry on with their lives. There was a need of a system encompassing institutions dedicated for the protection of workers and solution of their problems as well as to maintain industrial peace. Therefore institution appeared in the form of labor unions and system appeared in the form of Industrial Relations.

12 Industrial relations, is a tripartite system having government, employers and labor unions as its three components. The Wikipedia defines this as: Field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a union. Governments set the framework for labor relations through legislation and regulation (Wikipedia-a). 2.2.1 Emergence of Labor Unions The exploitation of workers led them to unite for the solution of their problems at a platform. This platform was labor union. In the words of Brohawn (n.d.) the union was democratic society's original answer for addressing injustices at the workplace which attended the birth of the Industrial Revolution. In fact, unionism was born to bring social and economic justice for working people. Ehrenberg and Smith (1985) asserted that labor unions are the organizations whose primary objectives are to improve the pecuniary and non pecuniary conditions of their members. Workers expected their unions to fight for their rights by organizing and financing strikes. According to Shafiq-ur-Rehman (2003) workers formed unions which had to adopt a confrontational approach towards the employers.About influence of unions Thomas (1999) wrote that trade unions are a large organized group in civil society which brings a unique contribution to the development of community because of direct involvement with economic systems of production and distribution. They also influence the course and content of employment and social and economic policies. What were and still are the problem of union making are discussed in following lines. 2.2.2 Unionization Problem Emergence of unions in every country and society was and is still a difficult evolutionary process. Literature has shown that organization of workers was not an easy task and unions had to bear the wrath of state and employer and those whose

13 interests were against unionization. Unionization is the democratic right which has been acknowledged in UNO declaration of human rights and by ILO conventions. 2.2.2.1 Opposition of unionization by state Rizvi (1973) a Pakistani author wrote that government is one of the important parties in the industrial labor relations, especially when there is high elasticity of demand but low elasticity of supply of labour. But what has been the role of governments is narrated in lines below. Ghayur (1996-a) wrote about Pakistan that State has also erected barriers by framing laws discouraging to unionization to maximum extent, by imposing difficult conditions to fulfill particularly in registration. Government of Pakistan has established Export processing Zone (EPZ) in Karachi which is exempted from the application of certain labor laws especially the right to form a union and to go for a strike. Ghayur also wrote that in Pakistan unionization and collective bargaining is not permitted to all public sector employees and activity has been brought under Essential Services Act in many public sector organizations.

According to report on Human Development in South Asia (2003) in Pakistan the Essential Services Management Act of 1952 was the first hurdle in the history of the unionization process of Pakistan. It restricts the freedom of association and collective bargaining rights of various groups of workers. Employees of Pakistan International Airlines (PIA), Pakistan Television Corporation and the Civil Aviation Authority (CAA), as well as workers in postal, teaching, electric supply and radio stations can form unions but cannot join a strike. The workers in the EPZs are also denied their trade union rights in Pakistan. Export Processing Zones Authority Ordinance (EPZAO) of 1980 and Export Processing Zone Rules (EPZR) of 1982 exempt the workers in EPZs from the provisions of IRO. Workers in EPZs cannot establish trade unions, bargain collectively or organize a strike. Similarly Pakistani researchers Abbas and Hussain (2007) wrote about Pakistan that a range of restrictions deter the activities and effectiveness of union organizers. One of such laws that restrict trade union activities is the Essential

14 Services Maintenance Act of 1952 (ESA) which includes government services and State Owned Enterprises (SOEs) like power generation and transmission, energy production, ports and the state-owned airline. This law generally invoked to ban strikes, and is also used to hold back the right to collective bargaining. Human Rights Watch (1998) reported that in China making of independent trade unions was illegal, union makers were suppressed by the government and their leaders were imprisoned. There is one official union, the All China Federation of Trade Unions (ACFTU), which is under the control of the Communist Party, which appoints all union officials. All workplace unions must be affiliated to the ACFTU. Amnesty International (2002) also reported that in China independent labor unions are not permitted and All China Federation of Trade Unions (ACFTU), a government controlled trade union is the only national body, which governs trade unions activity, but workers had been struggling to create independent trade unions as an alternative to the ACFTU since the late 1980s. For example in May 1989, groups of workers in various cities formed Workers Autonomous Federations (WAFs) but they were shortlived and banned by the authorities and later in a crackdown on 4th June 1989 organizers were arrested and prosecuted on "counter-revolutionary" charges. Since 1989 workers made other attempts to form independent trade union but they were again jailed. In 1994 workers who attempted to set up the League for the Protection of the Rights of Working People (LPRWP) were arrested in Beijing. Bernard (1998) reported about USA that Supreme Court decisions rolled back union and worker rights, as well as amendments to labor law, have restricted union organizers, while freeing management to penalize workers who attempted to exercise their rights. UNDP (2000) in its report quoted that ICFTU in a Press Release dated 6/9/98 reported that in 1997 nearly 300 trade unionists were killed for attempting to organize labor unions, 1681 were tortured or subject to physical mistreatment, 2329 were detained by police or military units, and nearly 3,500 were intimidated. Press release also alleged that even in United States an estimated 10 percent of workers

15 campaigning for unions are illegally fired. 21427 workers lost their jobs in year 1998 for union activities. UNDP (2000) report further revealed that in developed countries despite the force is not employed as frequently as in the third world, many western nations still have strong pro-corporate factions that have tried to render labor unions powerless through legislative channels. As Kremer and Olken (2001) expressed that even in USA, union formation is not so smooth and under Federal law covering most industries, if 30% of workers sign a petition calling for an election, a certification election supervised by the NLRB is held. A union is recognized if more than half the workers vote for it. Similarly Amnesty International USA (2005) reported that in Philippines, despite the government has ratified 22 of the International Labor Organization's (ILO) conventions on labor standards including convention No. 87 and No. 98, the ILO has received several complaints of non-compliance with these conventions. Complaints including instances of alleged extra-judicial execution of trade union leaders have also been received. Even after union formation, governments hamper the smooth functioning of unions by different means. DeSilva (1997) reported that South East Asian countries took measures to restrict trade union actions and control unions, as well as to avoid union multiplicity. However in some countries government has favored unionization. Government in Thailand for development of sound workplace labor relations encouraged employers and employees and their organizations by initiating a program. Similarly in Japan, workplace relations have been facilitated by the enterprise-union system because many issues relating to competitiveness needed to be addressed at the enterprise level and it has also been realized that competitiveness can be enhanced through sound labor relations. Nathanson and Associates (1999) wrote that in Israel, to avoid collective agreements, the government, as an employer, is reducing the proportion of permanent, tenured employees and hiring more and more of its employees through temporary manpower agencies in the public service, and it is very difficult to organize these temporary workers. Waisgrais (2003) reported that in

16 Argentina attempt was made by the state to dismantle the trade union apparatus by measures such as the suspension of all union activity, the abolition of negotiations, the revocation of the right to strike and the removal of social work from the unions sphere of activity. 2.2.2.2 Opposition of unionization by employer Employers in some countries lose no opportunity of exploiting the workers in the form of paying low wages and other facilities, but unions offer resistance and try to protect rights of workers. Employers put hurdles in the work of unions at the time of union registration and defame the unions, by charging that unions are corrupt. It has been elaborated in lines written below by quoting relative researches. Mills (1994) wrote that management has been hostile to unions during most of American history, American employers mostly opposed the growth of unions, often with the help of the law and the courts and in periods of conflicts federal and state governments more frequently supported employers instead of unions. Brohawn (n.d.) expressed that unions are considered by most business executives to be the "kiss of death." Small businesses in particular fear unions as an outside force antagonistic to the interests of the company. Khan (1992) wrote about Pakistan that when worker gets job, he becomes reluctant to take part in unions affairs for fear of being victimized by management, so a common worker does not care to join a trade union. So he concludes that in Pakistan labor is still unorganized and has not been able to develop a sense of unity. Ghayur (1996-a) also analyzed that in Pakistan every effort was made in private sector to resist union formation in private sector, so if employer does not favor the formation of union, the matter can be prolonged for years. Even foreign

companies resist, as in Pakistan union of Korean Company (Daewoo) constructing Motorway could not be registered despite of their best efforts. Shafiq-ur-Rehman (1973) pointed out unsatisfactory relationship between participants of industrial relations in Pakistan and other developing countries and asserted that attitude of

17 employer is still very authoritative and paternalistic requiring a higher degree of obedience and loyalty from their working force. Their practical strategies have been to insist on and claim all economic and non economic rights and for get about their duties. Human Rights Watch (1998) also referred that South Korean companies operating in Asia have been accused from all quarters of violating workers' rights in Vietnam, China, and Indonesia. The Daewoo Construction Company did not allow the free functioning of trade unions. The case of the Daewoo Motorway Project in Pakistan, which began in 1991 where ten thousand employees were working on the motorway between Lahore and Islamabad had been reported of use of violent physical abuse against workers. A complaint for this was lodged with the ILO. Employers are hampering the unions activities in many ways as Hyman (1999) expressed that Management always had hostile attitude towards unions. In some countries there has been a growing unwillingness by employers to accept trade unions as collective representatives of employees; while in other countries if collective bargaining has survived its scope has been reduced, and managements have established new forms of direct communication with employees as individuals. In a report about Lithuania Dovydeniene 2002) wrote that employers strictly forbade their employees to join unions and threatened to dismiss anyone who showed initiative or took part in any union activity. Workers, threatened by unemployment, had little choice in the face of such exploitation. Bray et al. (2005) asserted that according to AWIRS (Australian Workplace Industrial Relations Survey) 1995, overall 88% of managers indicated a preference not to deal with trade unions, and only 7% of unionized workplaces believed that unions effectively represented the interest of their members. 2.2.3 Why Workers Join Unions Bray et al. (2005) wrote that people join unions because of dissatisfaction with economic aspects of job, a desire to influence those aspects of the work environment

18 through union-oriented means and a belief that the benefits of unionism outweigh the expected costs. Holley jr. et al. (2001) expressed that employees join unions when they are dissatisfied with physical characteristics of workplace, low wages, lack of benefits and believe that unions will help them to achieve them job related conditions. Like all formal organizations unions also satisfy the members need by providing means, enhancing a sense of identity and maintaining self-esteem. They satisfy the workers need of affiliation belonging and status that is at higher level than improved wages and working conditions. Aidt and Tzannatos (2001) asserted that the desirability of unions depends on many factors, including (a) what unions do, (b) how collective bargaining is organized, and (c) the effectiveness of dispute resolution mechanisms. According to Shafiq-ur-Rehman (2003) reasons behind workers joining unions are higher wages and better working conditions, job security, social needs, Peer groups pressure and self fulfillment. Freeman (2007) analyzed that 70% of workers in 2005 believed that employers fell short in providing regular cost-of-living raises to employees. So workers tendency towards unions has increased during last decade. Freeman on the basis of his researches with his companions, based on WRPSs, (Worker Representation and Participation Surveys) 1990 and 2006, concluded that workers today want as much or more of a voice in their workplace than they did in the 1990s and want a workplacecommittee form of representation. The proportion of workers who want unions has risen substantially over the last 10 years and workers want unions more than ever before. Because there are substantial gaps, between workers desire to influence the decisions and their actual influence in several important features of workplaces. Bread and butter gaps relating to issues of benefits and pay are greatest, followed by the gaps of training issues. The gap between issues of what workers want in deciding how to organize their work is smallest

19 The issue at the heart of this paper is to discuss the role of unions, in making efforts for solving the problems of workers, in relationship with employers and in relationship with state or government. To avoid this paper from becoming too lengthy actual research has been restricted to determine the efforts of unions only and not the quantitative measure of their outcome. 2.3 UNIONS ROLE FOR WORKERS BENEFITS There have been difficulties in union formation and after formations unions have also faced a lot of problems while running their business. Now it is to see what the role has been played by unions for benefit of workers and to what extent unions succeeded therein. In this regard researches have been conducted in different countries or regions in the past which show struggle of respective unions for benefits of workers such as rise in wages, decrease in wage inequalities, improvement in working

conditions and living standard, betterment in quality of life, reduction of working time, job security, more paid leaves, better pension facility, employer sustained insurance facility, health care and health insurance and better health and occupational safety conditions, workers training and education facilities, workers family welfare and cooperative facilities for workers, giving the workers awareness of their rights, reducing the fear of employer, promulgation of workers favoring laws, getting the enforcement of these laws etc, and during this, what attitudes unions adopted, aggressive or cooperative, constructive or conflicting, selfish or sacrificial, peaceful or militant. Researches are here to support and endorse these points. According to Guisinger and Irfan (1975) government intervention, trade unions and employer himself are responsible for wage increase. Sennholz (1983) asserted that now it is acknowledged that all labor improvements are an achievement of the combined efforts of labor legislation and union activity. The credits for this goes to humanitarian legislators and courageous union leaders for phenomenal rise in wage rates, reduction of daily hours of work, the disappearance of child labor, the limitation of woman labor, and many other results.

20 Khan (1992) narrated that trade unions protect material standards of living for their members and also achieve security of service, status in society and self respect for themselves. According to studies of Nathanson et al (1999) in Israel, Inoue (1999) in Japan and Fahlbeck (1999) in Sweden, in socioeconomic field, unions rose to the challenge of meeting the changing requirements of an industrial society; for example, established themselves as credible partners and provided a variety of services to members, such as mutual aid, credit, insurance, housing and consumer services mostly through cooperatives, linked to union membership. Jose (2000) concluded that unions played a conduit role for turning economic growth and prosperity to workers in the form of improved standards of living, and the benefits of collective bargaining in terms of wage and non-wage benefits, particularly as reduction of working time. Unions also helped to maintain a wage structure, which minimized income disparities between workers. He further expressed that trade unions are to lead an initiative for a social minimum wage, consisting of the right to income security (security of job) and other entitlements such as education, health, shelter and a safe environment (workplace). In Scandinavia the pre-eminent position enjoyed by unions in terms of membership and influence, over public policies was anchored in the services that unions provided to their members. According to Hirsch and Schumacher (2000) on balance unions are detrimental to company performance and economic efficiency but in addition to unions negative effects, unions representation and collective bargaining provide workers with varying degree of workplace democracy, collective voice, monitoring of working condition, protection from discrimination and enforcement of contractual provisions. Lovell et al. (2002), using data of Current Population Survey, U.S. Census Bureau found that workers in the retail food industry who are union members have significantly higher wages, higher rates of health insurance coverage, larger employment-based contributions to health insurance premiums, and higher rates of pension coverage than non-union workers. Full-time and part-time workers, women, and single mothers in the retail food industry all benefit from union membership.

21 Shafiq-ur-Rehman (2003) wrote about Pakistan that now role of labor unions is broad based and in additions to their collective bargaining role unions are involved in social, educational and recreational activities. He also expressed that unionization can the morale and motivation of the work force by improving the nature of jobs or by changing workers perception of their jobs. Robles et al. (2004) are of the view that unions are also promoters of social capital in the economy by representing workers petitions, exerting a pressure aimed to improve conditions at the workplace and acting as employees voice easing communication between workers and employer which leads to help degree of job turnover consequently reducing training cost of new employees. Robles et al. asserted about unions role for wages that empirical evidence has shown that unions exert an upward pressure on wages. 2.3.1 Wage Rise The difference of wages between unionized and non-unionized workers is union wage premium and a major reason of workers joining of unions. Pencavel (1995) asserted that a primary concern of labor unions is to raise the wages of the workers they represent because they act as wage-makers rather than wage takers, this role identifies unions as monopolies and according to Bryson (2001) union recognition by employer for pay bargaining is basis for union influence in the workplace. According to Aslam (1982) a Pakistani researcher wages are of great significance in an economy because they represent income to the workers, cost to the business men and are a major source of their purchasing power, and have an important bearing on the level of economic activity. Freeman and Medoff (1984) concluded that wage effect of union increased in the 1970s when unionized workers won wage gains exceeding those of their nonunion peers. It is greater for less educated than more educated workers for younger than for prime-age workers and for junior than for senior workers and it is greater in heavily organized industries and in regulated industries than in others. As a result of the existence of trade unions in some unionized firms, workers in nonunion firms trying to

22 avoid unions through "positive labor relations," obtain higher wages and better working conditions, because of the threat of unionism. As per findings of Cassoni et al. (2002) the unions increase both wages and employment and promote investment because the firms substitute labor by capital. Below mentioned studies reveal quantitative unions efforts in wage rise or mitigating wage salary differences. Aidt and Tzannatos (2001) referred that workers either union members or covered by collective agreements, on average, get a wage markup over their non unionized (uncovered) counterparts, which is almost 15 percent in the United States and in most other industrial countries is 5 to 10 percent. It appears high in Ghana, Malaysia, Mexico, and South Africa but relatively low in the Republic of Korea. Holley jr. et al. (2001) quoted that unions wages ranged between 10 and 15 percent higher than non union wages. They further analyzed, that by 1970s the union wage differential climbed to 20 to 30 percent. This impact was more on wages of blue collar, younger and less educated employees. Belman and Monaco (2001) using the data source of Current Population Survey 1973-1995, of U.S. Census Bureau, found that union membership remains an important determinant of wages, with members earning 18% to 21% more than their non-union counterparts. The earnings of truck drivers fell by 21% between 1973 and 1995 and the primary sources of wage decline and increased wage inequality have been deregulation, a declining manufacturing wage and declining union membership. Blanchflower and Bryson (2002) concluded that both in UK and USA despite union membership is declining, unions are able to raise wages substantially over the equivalent non union wages and unions in the countries Australia, Austria, Brazil, Canada, Cyprus, Denmark, Japan, New Zealand, Norway, Portugal, and Spain are also able to raise wages by significant amount, and estimates from their 17 examined countries were averaging 17 percent. However in countries like France, Germany,

23 Italy, Netherlands and Sweden, where union wage settlement spill over in to nonunion sector, there is no significant union wage differential. Klaff and Ehrenberg (2003) using the data source of survey conducted in USA by the Association of Higher Education Facilities Officers 1997-1998 investigated that union coverage affected staff salaries at 163 U.S. colleges and universities and estimated a union salary premium of 9- 11%. Cleveland et al. (2003) using Survey data for Canadian childcare workers in 1991, found that the union impact on wages was 15%. Mishel and Walters (2003) found that unions raise the wages of unionized workers by roughly 20% and raise total compensation by about 28%. They also found that in USA according to estimates from household surveys in 1990s there was a union wage premium ranging from 15% to 25%. The unionization's impact on wages goes beyond the workers covered by collective bargaining to affect nonunion wages and labor practices e.g. in USA non-unionized high school graduates earned 2.0% to 5.5% higher wages in industries with 25% unionization than they did in completely nonunionized industries. Hirsch (2003) also reported that in one study, in 2001 the ECEC data showed a large gap in benefits between union and non-union workers and hourly compensation for nonunion workers was $19.98, whereas compensation for union workers was $ 27.8. Unions not only raise wages of unionized workers but also affect nonunion wages, albeit to a far lesser extent than union wages. Kang (2003) in a study in Singapore estimated approximate union wage effect in the range of 0.2 to 3.2 percent. Waisgrais (2003) also narrated in a report about Argentina with reference to several studies regarding the role of the unions, and in particular to collective bargaining, that workers covered by collective agreements receive higher wages than those who are not.

24 Knox 2004 wrote that unionized workers are still doing well, despite the flagging numbers, as in USA with 8% of workers in the private sector, unions still exercise real power over contracts and there are substantial wage mark-ups. In Britain, that isn't the case; there's no wage mark-up anymore. However according to several studies unions could achieve either marginal or no improvement in wages. Inoue (1999) revealed that in Japan, the "automatic annual pay raise" system is widely adopted and wages rise according to years of service, which serve as an indicator for skills. In terms of real wages, unions have gained marginal improvements during the 1990s. Similarly Anyemedu (2002) found that in Ghana government considers wage restraint as a means of attracting foreign investment. Hence the government and employers have succeeded in installing the capacity to pay of employers as virtually the only factor to be taken into account in wage determination. 2.3.2 Reduction in Wage Inequality Labor unions also exert efforts for increasing equality and reducing discrimination in wages of workers. Freeman and Medoff (1984) opined that unions raise blue-collar earnings relatively more than white-collar earnings, thus reducing inequality between those groups. Unions by adopting pay policies that limit managerial discretion in wage-setting reduce inequality among workers in the same establishments and among different establishments. A study of The World Bank (1995) revealed that unions eliminated discrimination of income between workers, so during a study in the Republic of Korea in 1988-90 it was found that unions placed great value on wage equalization and as a result the degree of wage dispersion in the unionized sector was 5.2% lower than in the non-unionized sector. In Mexico union action also helped to reduce discrimination and another study using wage data for 1989 concluded that, in the nonunion sector, men enjoyed a 17.5% wage advantage over women with identical skills and experience, but there was no significant wage differential between men and women in the unionized sector. Similarly, the study

25 found a significant wage disadvantage for indigenous people in the non-unionized sector whereas no discrimination in firms covered by trade unions. Stiglitz (2000) Senior Vice president, World Bank mentioned admiringly the role played by organized labor in developed countries in stabilizing industrial relations; preserving firm-specific knowledge and organizational capital; and mitigating the income inequalities. Aidt and Tzannatos (2001) also concluded that unions reduced the wage differences particularly between unionized workers, and skilled and unskilled workers. Card et al. (2003) reported similar result that within workers groups of same skill, for union workers wage inequality is always lower than nonunion workers. 2.3.3 Fringe Benefits Sennholz (1983) stated that most people expect more from their work than wages. These things are fringe benefits and provide additional remuneration to employees in the form of vacation and holiday pay, sick pay, the cost of pensions, and employer contributions to various benefit systems. Cleveland et al. (2003) found that the union impact on fringe benefits was in line with union effects found in other better-compensated work, and they found substantial returns to education, occupational level, and firm-specific experience. George (2004) concluded that the demand of workers for social justice is justified and workers are entitled to an equitable distribution of the nations wealth on the reasons that labor is an equal partner with capital and management, and laborers are the primary contributors to economic growth of a nation. So the workers should be paid a fair living wage for their labor and certain fringe benefits such as free healthcare, paid holidays and job security. George reported that several claims such as bonuses, overtime payments, working hours, shift duty allowances, gratuities, uniforms, transport allowances, and housing / vehicle loans are negotiated between the union and the employer.

26 Carty (2003) referred that in Mexico, Consequence of replacement of CROC a government backed union by an independent union workers receive a wage increase of 10%, and a 5% increase in cash benefits, and attendance bonuses. Workers now make up to 40% more pay than they were making under the old contract. 2.3.4 Job Security and Employment As per analysis of Inoue (1999) for Japanese trade unions, safeguarding their members from any threat of unemployment has a special importance so Japanese trade unions do not accept lay-offs. During the 1950s and1960s there were many protracted labor disputes caused by threatened dismissal. Trade unions lost most of these big disputes, but the losses incurred by the companies were also enormous. Therefore in Japan there is a tacit agreement between labor and management to avoid massive layoffs as far as possible. This agreement is manifest in employment adjustment practices during the recession in the 1990. Wong (2000) expressed that employment security and fair distribution of the benefits of economic growth have been the primary concerns of the labor movement in Singapore. Farber (2001) quoted the Freemans analysis that, workers in union jobs are less likely to quit, reflecting the higher level of wages and benefits, this is due to unions provision of mechanism for voice as an alternative to exit in addressing workplace concern. Aidt and Tzannatos (2001) also concluded that in unionized firms voluntary job turn-over is lower and the job tenure is longer. The evidence on this finding from Australia, Japan, Malaysia, the United Kingdom, and the United States seems quite robust. On the other hand, layoffs, particularly temporary layoffs, are more frequent in unionized firms than in non-unionized ones. According to Lee et al. (2001) Labor unions in Korea strongly opposed the introduction of redundancy lay-off by massive nation wide strikes.

27 Unions also give courage and awareness, therefore according to Mishel and Walters (2003) Union members have significantly less anxiety about losing their job or suffering other employer-imposed penalties for taking leave. ILO (1999) reported that the trade unions cooperated in Singapore with the state and the employers in efforts to maintain full employment; to set wages at levels which maximize employment, therefore unions have accepted temporary wage cuts in order to save employment. Vedder and Gallaway (2002) asserted that unions are associated with lower rate of growth in income and jobs. Occupations and industries with high rates of union density have had less vibrant job growth in recent decades. Widespread unionization of an industry is often associated with initial sharp declines in employment, as the steel industry demonstrates. Addison (n.d) concluded from survey in UK and reported a retarding role of unions in employment growth, as unionized establishment in 1980s tended to grow 3 percent less per year than their non unionized counterparts. Union plants were more likely to be shedding labor and unions induced reduction in employment growth in 2.6% for 1989-90. To overcome loss of unemployment and slow growth in employment caused by unionization, unions played role in launching unemployment insurance schemes and unemployment benefits. Katz et al. (1993) reported that unions, in Sweden and Denmark, have played a constructive role in the administration of unemployment benefits. Bernhardt et al. (2002) studied the Wisconsin Regional Training Partnership (WRTP) which is an association of 125 employers and unions dedicated to familysupporting jobs in a competitive business environment, and found that the WRTP members have stabilized manufacturing employment, and contributed about 6,000 additional industrial jobs to it over the past five years.

28 According to Mishel and Walters (2003) unions representation increases the likelihood of an unemployed worker in a blue-collar occupation receiving unemployment insurance (UI) benefits by approximately 23%. They also referred that role of unions is pivotal considering unemployment insurance acts as a stabilizer for the economy during times of recession. Unions have also operated Unemployment Insurance themselves as; Zutavern (2005) reported the existence of unions operated voluntary unemployment insurance schemes in Denmark, Finland and Sweden. Budd and McCall (2004) using and analyzing data source of January 1996 Current Population Survey's Displaced Worker Supplement, of U.S. Census Bureau found that eligible blue-collar workers laid off from union jobs are approximately 23% more likely than comparable nonunion workers to receive unemployment insurance benefits. 2.3.5 Time Reduction (Duty Hours) Unions have struggled to minimize the duty time and working hours which were once more than ten hours in a day or more than 70 hours a week (even more than 3000 hours a year) in 19th century. But in 20th century are 8 hours a day or 40 hours a week and in some countries even less than this. However the level of success is different in different countries. Colman (2000) reported that in USA in 1835, General Trade Unions in a number of cities led a successful general strike to shorten the working day from fourteen hours or more to ten hours, and in Philadelphia, a group of Irish laborers struck for time reduction and marched through the city chanting six to six. In same year in Dover, New Hampshire girls and boys struck the citys mills and won a reduction of hours from 13.5 to 12 hours per day. Their effort succeeded after a century and time was reduced to eight hours. As Sennholz (1983) wrote that in USA in 1938, the federal government passed Fair Labor Standards Act, which imposed minimum wage rates, provided for a 40-hour week and also allowed for overtime work if paid at time and one half and it is public opinion that all labor improvements

29 are an achievement of the combined efforts of labor legislation and union activity. ILO (1999) reported that unions in Germany have negotiated for a 35 hours week in some sectors and regions, early retirement schemes, part-time work, educational leave and family leave. Japanese Labor Union Rengo presented a reduction in working hours and adoption of policies favoring labor. Rengo sought the introduction of a five-day week. In 1993 Rengo adopted the policy delineated in the "New Medium-Term Working Hour Reduction Plan" with the target of 1,800 working hours by fiscal year 2000 (Inoue, 1999). This time reduction was prevailing everywhere at large extent as Aidt & Tzannatos 2001) wrote that, hours worked is lower among unionized than nonunionized workers. This is true for both total and normal hours. Buchmueller et al. (2001) also found that union workers, work fewer hours per week than non unionized workers and this difference was 3 hours from 1972 to 1984 and after 1992 this difference is one hour per week. Lee et al. (2001) pointed out that in 1997 in Korea flexible working hour system was allowed with maximum of 48 hours per week cycle with the condition that one week average will not exceed 44 hours or 8 hour a day. 2.3.6 Payment of Over Time Aidt and Tzannatos 2001) pointed out that unionized workers are more likely to get paid for the overtime work that they do. According to Mishel and Walters (2003) employer compliance with the overtime pay regulation rose sharply with the presence of a union, because unions often report violations to enforcement agencies. 2.3.7 Paid Leaves Budd and Mumford (2001) asserted that in UK trade union is one possible institution for improving work-life problem and a primary mechanism for trade unions

30 in this regard is to bargain for additional employer-provided family friendly policies including parental leave and paid family leave. Unions appear to positively affect the provisions of parental leave and job sharing options. Union workers have one week more vacation time than non-union workers. Union workers generally spend on leave slightly more time for illness, their own or illness of others which is approximately 1.4 week per year as compared to one week of non-union members (Buchmueller et al. 2001). Aidt and Tzannatos (2001) stated that fringe benefits are more commonly found among unionized workers than among non-unionized ones (in Australia, Japan, Malaysia, the United Kingdom, and the United States). Benefits can include severance pay, paid holidays, paid sick leave, pension plans, and so on. Mishel and Walters (2003) expressed that union workers also get more paid time off, which includes having 26.6% more vacation than nonunion workers and according to another estimate, the union workers enjoy 14.3% more paid time off, including vacations and holidays. 2.3.8 Working Condition Working conditions are of very importance for workers because they affect their performance and productivity. Khan (1992) wrote that an industrial worker spends at least 8 hours a day, three hundred days a year and about forty to fifty years of his life period at workplace. If the lives of the industrial people are generally healthy, happy and agreeable, it is necessary that working conditions should be healthy, congenial and attractive and work itself should be made as interesting as possible, and relations between workplace, workers and management should be friendly and cooperative. Robles et al. (2004) asserted that enhancement of working conditions, in turn, may increase inputs productivity. Unions exert efforts for pleasant working conditions.

31 Thomas (1999) stated that trade union movement in South Korea fought for basic labor rights and improvement of working conditions and it also has widely known assertive role in the processes of re-structuring. Wong (2000) narrated that in Singapore the fundamental role of trade unions remained to ensure fair wages and working conditions, and to improve the standard of living and quality of life of workers. 2.3.9 Health Care and Social Security Unions role in securing health, safety and welfare benefits for employees has been found in following studies. Weil (1992) in his study made a comparison of OSHA enforcement in union and nonunion construction sites and found that union sites face higher probabilities of inspection and receive greater scrutiny during inspections than do comparable nonunion sites. According to Buchmueller et al. (1999) the role of US trade unions in obtaining health and welfare benefits for their members, dates to the 18th century and in Britain a greater inducement for workers to join the union was support in sickness or unemployment. They also reported that in USA due to collective voice and other factors, union effects on the provision of health insurance are likely to be large, therefore unionized workers are more likely than non-unionized workers to receive health benefits, and the difference is depicted by higher probabilities of insurance offers and higher take-up rates for union workers. They further wrote that plans offered by union establishments are about 20 percentage points more likely to be fully financed by employers (49.4 percent vs. 29.6 percent) than employers of non union establishments. They also asserted that in health plans in unions establishments, proportion of health insurance premiums paid by employers was 14 percent higher in union settings. Buchmueller et al. found that in USA union establishments are 15.3 percentage points more likely to pay the full premium of insurance for family coverage as compare to non-union ones (27.6 percent vs.12.3 percent)

32 Stiglitz (2000) admitted that, unions have played role in Health and safety standards and had played also role in improvement of working conditions for workers. According to another study by Jose (2000) Histadrut a trade unions of Israel, grew in strength until the early 1990s with an impressive membership based on the provision of services, notably health care. According to Farber (2001) union members receive a larger fraction of their compensation in the form of health insurance and pensions. Budd and Mumford (2001) also reported that individuals represented by a trade union are more likely to receive traditional fringe benefits such as health insurance and retirement plans. Adji (2002) expressed that in the Niger, the union representing employees, working for the national social security scheme (CNSS) is preparing a social fund designed to provide a supplementary pension and to pay the 20 per cent of medical expenses which are not covered by the national scheme. In Niger the USTN is developing a health insurance project According to Hirsch (2003) unions workers receive more compensation for risks than non-union workers. Mishel and Walters (2003) narrated that Unions had provided labor protections for their members in three important ways: (1) By identifying, where laws and regulations are needed, and getting these laws enacted; (2) Providing information to members about workers' rights and available programs; and (3) By encouraging their members to exercise workplace rights and participate in programs by reducing fear of employer retribution. Mishel and Walters concluded that unionized workers are given employer-provided health and pension benefits far more frequently as compare to nonunion workers, and also provided with better paid leave and better health and pension plans. Unions also reduce wage inequality between workers and workers groups, because they raise wages more for low and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more

33 for workers who do not have a college degree. Union members are 60 % more likely to file an indemnity claim than nonunion workers. They also mentioned findings quantitatively, that 83.5 % of unionized workers have employer-provided health insurance, and only 62 % of non-unionized workers have such a benefit. Unionized workers are 24.4% more likely to receive health insurance coverage in their retirement. Employers with unionized workforces also provide better health insurance paying an 11.1% larger share of single worker coverage and a 15.6 % greater share of family coverage and deductibles for unionized workers are 18 % less. They concluded that in USA implementation of OSHA seems highly dependent upon the presence of a union at the workplace. ILO (2005) reported that every year some 2.2 million people in the world succumb to work related accidents or diseases so it is the daily grass root work of labor unions to ensure the compliance of health and safety regulations at work. 2.3.10 Post Retirement Benefits (Pensions) Unions also have an eye on the life of workers after the end of service. For this they exert efforts either in the form of arranging employer contribution or launch their own pensions programs. Unions effect on employers provision of retiree benefits is shown in the several researches where unionized workers receive better pension options and opportunities. Freeman and Medoff (1984) opined that unions alter the entire package of compensation, substantially increasing the proportion of compensation allotted to fringe benefits, particularly to deferred benefits such as pensions and accident and health insurance, which are favored by older workers. These changes are, on balance, to be viewed as a social plus. Bernard (1998) was of the view that trade unions in USA had been the most "successful" labor movement in the world by enjoying the highest wage premium and winning benefits like pensions, health care, and paid vacations for their members, that in other industrial countries working people could win only through political and industrial action.

34 Holley jr et al. (2001) expressed that in 1999 unionized U.S. employers per hour paid benefit costs averaging $ 8.53 compared to non-union employer costs $4.66. These costs include pension payments, payments for time not worked (such as vacations, sick leave, paid rest and lunch breaks), insurance costs, and legally required payments (social security unemployment compensation). Buchmueller et al. (2001) reported that in 1983, union workers were nearly twice as likely to participate as compare to non-union workers in an employersponsored pension plan (76.6 percent vs. 38.8 percent.), and between the years 1988 to 1993, the unions effect on employer provision of retiree benefits increased substantially and the unadjusted union effect rose from 10.1 percentage points to 16.7 percentage points. Similarly Mishel and Walters (2003) wrote that 71.9% of unionized workers have pensions provided by their employers, while only 43.8 % of nonunion workers enjoy this facility. Thus, unionized workers are 53.9 % more likely to have pension coverage. Ebbinghaus (2002) found that in Europe trade unions have gained or enhanced their collective bargaining role in the area of private pensions, in addition to mandatory state pensions. 2.3.11 Training Opportunities According to some researches unions are also taking interest in workers training, education and awareness either pursuing government or employers to arrange training or arranging training programs themselves to build their skill and enhance the earning capacity of workers. Therefore Aidt and Tzannatos (2001) wrote that unionized workers tend to receive more training than their non-unionized counterparts, especially companyrelated training. Wong (2000) stated that in Singapore unions urged employers to invest in training of workers, and also negotiated training clauses in collective agreements and

35 sought to ensure higher subsidies from SDF for training of lower- skilled, lowerincome workers. She further wrote that NTUC and affiliated unions urged workers, to enhance their skills as a means to ensure employment security by keeping pace with changing job requirements, and to increase their earning capability in the longer term. In December 1996 to help workers to remain employable throughout life by providing nationally certified skill training NTUC also approached employers to sponsor their employees for skills upgrading programs. On 30th June 1999, a total of 288 companies had committed 21,800 workers for SRP programs in five general launches and nine sectoral launches since December 1996. Katz et al. (1993) wrote that in many countries unions are involved effectively in vocational education programs, so Adji (2002) reported that in Niger The USTN is running a project to provide low-cost training to workers and one of the unions is organizing and training workers in the sectors which it represents. In January 1999 an international cooperation project was launched (ILO/DANIDA) with the aim of supporting the efforts of USTN and CNT to provide workers education in the informal sector. The USTN is also running a training school and an agricultural project. Booth et al. (2003) using data of British Household Panel Survey 1991-96 found that union-covered workers were more likely to receive training and also received more days of training relative to non-covered workers. Among workers who received training, those with union coverage enjoyed greater returns to training and higher wage growth than did those without. Shafiq-ur-Rehman (2003) mentioned about Pakistan that capitalist

entrepreneurs including the past governments have been least interested in development and training but this situation has improved now and many employers with encouragement from Skill Development Fund are actively training their workers and provide all facilities to trade unions. TUC (2006) in a briefing paper reported that union presence has a significant impact on the incidence of training. Analysis of the 2003 Labor Force which showed that 39 % of union members had been engaged in some training in the previous three

36 months compared to only 26 % of non-unionized employees. TUC also reported that employees get more training when the issue is negotiated with employers by unions rather than employers simply consulting with unions about the organization's training strategy. TUC referred research by Francis Green 1996 which demonstrated that unionized workplaces were 17 % more likely to have a training centre and 11 % more likely to have a training plan. TUC referred other studies such as of Heyes et al. (1998) showing that training is more likely to deliver benefits to members when unions not only secure recognition from the employers but also play an active role in decisions about what is provided, and Metcalf's research who found that the pay-off from engaging in training is also much greater for union members than it is for nonunionized employees. For male union members the post-training wage was 21% higher than the pre-training wage, but the corresponding increase for non-unionized male employees was only 4 %. Addison (n.d) wrote that there are a number of theoretical arguments suggesting that unions may stimulate training. The British work on determinants of training has generally reported positive effects. He reported positive relations of unions recognition with the incidence of training, and union recognition also leads to increased hours or days of training. A study of Boheim and Booth (2004) showed positive relations of union recognition with training in private sector. 2.3.12 Workers Education Fahlbeck (1999) reported that in Sweden the extensive training and education programs conducted by virtually all unions. LO for example, has a wide range of educational programs and runs several schools. Anyemedu (2002) also reported that in Ghana the TUC has made the education of its members, one of its priority concerns. The participants of conference on sustainable development (CSD 2001) evidenced it by acknowledging that trade unions have developed capacity for workplace centered education because unions are the foremost providers of adult education in many countries.

37 2.3.13 Recreational and Social Services Unions have rendered service in provision of social benefits, launching cooperative movement and arranging recreational facilities to workers. Jose (2000) wrote that unions over the years embraced a broader agenda including health care, leisure and recreation, retirement and non-wage benefits from employment. Fahlbeck (1999) reported that unions in Sweden provide services regarding the private lives of their members for examples unions actions include contracting insurance policies for their members, such as home and accident insurance. In addition, unions can arrange private bank loans or provide collateral for a loan and Swedish union LO has recently entered in the field of utilities. About recreational services Fahlbeck wrote that unions routinely assist members in realizing meaningful activities during time off, and also help in arranging vacations. One of the leading travel and tour operators in Sweden, which also runs hotels, is a creature of the LO movement. ILO (1999) observed that in the newly industrialized countries, unions have played an important role in shaping social security systems that is different from industrialized countries. For example in Singapore, unions provided welfare benefits to members. Workers and employers together contributed a significant share of their earnings to the Central Provident Fund. Unions also participated in mobilizing savings. The other example is of Hong Kong where unions have also pushed for the establishment of a pension system although this has not yet been functional. In the newly industrialized countries, unions have played an important role in shaping social security systems such as in Singapore, where unions provide welfare benefits to members and also participate in a sophisticated mechanism for mobilizing savings. Workers and employers together contribute a significant share of their earnings to the Central Provident Fund, which has become an important pillar of the Singapore economy. In Hong Kong (China) unions have also pushed for the establishment of a pension system, although this has not yet been put in place.

38 Thomas (1999) reported that in Singapore trade union movement adopted new role being associated with the implementation of welfare schemes so he terms unions this role in Singapore as "accommodating" model. Virmani and Rao (1999) reported that the unions in Singapore have started on non bargainable activities to enrich workers lives as they are promoters of cooperatives in transportation, health care, consumer cooperatives, insurance etc. by running 8000 taxies and 47 cooperative supermarkets. Wong (2000) expressed that in Singapore in 1969 for a socio-economic movement contributing to workers' well being in the wider community, the role of trade unions was broadened, beyond collective bargaining on terms and conditions at the workplace. To start a cooperative movement decision was made to pool resources with the objective to provide services to which private businesses were not offering to lower-income workers, and to give workers a stake in the ownership and management of business ventures. It was also decided to return any surplus to worker and union shareholders and to the labor movement. Wong, further narrated about provision of recreational facilities that in Singapore in 1986, the NTUC pooled resources to set up a union operated Club for affordable facilities for members and their families, today there are eight outlets in the Singapore. Unions with corporate support, developed at state land large-scale projects like NTUC Pasir Ris Resort, NTUC Sentosa Beach Resort, and NTUC Aranda Club for affordable holiday facilities within Singapore and also sat up the Orchid Country Club for workers golfing accessible to all through their union or personal membership. For cooperatives Wong reported that in Singapore NTUC established its first cooperatives in 1970 to provide insurance to ignored workers, now there are ten cooperatives i.e. Denticare, Fair Price (supermarket), Childcare, Healthcare, Food fare (cooked food), Choice Homes, Eldercare, Media, Thrift and Loan providing services to meet the diverse needs of workers and their families Stiglitz (2000) also acknowledged, the highly constructive social and political roles of labor movements in many countries in promoting, adult education movement;

39 the mutualism movement in the form of credit unions, mutual banking, mutual insurance, cooperatives, friendly societies, and other self-help associations. Ebbinghaus (2002) found that even in Europe now unions are involved in the social policy area and participating in self-governing bodies of national social insurance schemes. 2.3.14 Children Education Song (1999) wrote in research report about unions struggle in Korea that working conditions have gradually improved, with a shorter working day and for better fringe benefits including children's education and housing allowances. 2.3.15 Workers Awareness Mishel and Walters (2003) reported that unions created awareness about laws regarding health such as in USA about FMLA's existence and regulations. Unions have also given workers awareness about their rights so union members are about 10% more likely to have heard of the FMLA (in USA) and understand whether or not they are eligible. This is because of awareness given to them by unions. 2.4 UNIONS ROLE FOR STATE, EMPLOYER AND SOCIETY The co-operative role of unions towards state, employer and society by exerting efforts to increase productivity and efficiency, has been studied by several researchers, as quoted in following lines. 2.4.1 Productivity, Efficiency and Profitability According to Hirsch (1997), productivity simply means output for given levels of inputs. A firm that is more productive than another can produce more output using the same combination of inputs or, equivalently produces the same output using fewer inputs. When increase in productivity is referred attributable to unions, it means a real shift in the marginal product schedule. Hirsch concluded from many studies both negative and positive effects of unions on productivity. Even some studies show negative as well as positive effects of unions on productivity at different times in the

40 same study. Hirsch quoted about the effect of unions upon productivity that unions increased total factor productivity by more than 20 percent. Shafiq-ur-Rehman (2003) is of the opinion that unions provide their members both with protection against arbitrary management decisions and voice ant work place and this will be not only increasing wages but productivity as well. He further wrote that collective voice face of unionism suggests important ways in which unionism can raise productivity. There are surprisingly few manufacturing-wide or economy-wide productivity studies and none reports consistent evidence of an overall positive effect of unions upon productivity. Maki (1983), using aggregate Canadian data, concluded that the shock effects of unionization initially increase productivity levels but that unionism is associated with slower productivity growth. British studies of Nickell, Wadhwani, and Wall (1992) and Gregg, Machin, and Metcalf (1993) for differences in productivity growth between unionized and non-unionized firms, evidenced that unions have either a negative effect or no effect on productivity growth during the early years of their analysis but positive effects during the 1980s. Marshall, (1987) is of opinion of negative effects of unions on productivity and economic performance. A study of Morgan (1994), who used aggregate cross-sectional manufacturing data across time found surprising results. Morgans estimates for the years around 1972 were of increasing productivity but declined steadily over time and were negative during the 1980s. Fernie and Metcaf (1995) found that for one dimension measure, the union effect is negative but only marginally significant. Hirsch (1997) referred his own study based on a sample of 531 firms and covering the period from 1968 to 1980 and provides the most comprehensive treatment of unions' effects on productivity growth, where he found that union firms are found to have substantially slower productivity growth than nonunion firms.

41 Aidt and Tzannatos (2001) are of the view that the impact of unions on productivity levels is empirically indeterminate. Some studies suggest a positive impact, but others imply a negative impact or no impact at all. For example, unions appear to have a negative impact on productivity levels in the United Kingdom but a positive impact in Malaysia. Regarding profitability Aidt and Tzannatos concluded that net company profits tend to be lower in unionized firms than in similar nonunionized firms (in Japan, the United Kingdom, and the United States). There seems to be a relatively large negative impact on profitability in firms that have product market power Addison (n.d) wrote about UK, that early British evidence shows negative effects of unionism on the productivity of firm and establishment, but according to later researches there is no short fall in unionized establishments during period of 1979-1984 and unionized firms increased their productivity most at the end of the 1980s. There are several studies showing negative albeit least effects of unionism on productivity as, Gregg et al (1993) found that unions recognition affects negatively but statistically insignificant effect during 1984-97 but positive and statistically significant for 1988-89 (+3 to 4 %). Study of Conyon and Freeman (2001) revealed that union effect is negative but statistically insignificant. According to Vedder and Gallaway (2002), Labor unions in contemporary America have harmful aggregate effects on the economy. They are associated with lower rates of growth in income and jobs. On balance, people move away from unionintensive areas to areas with relatively low rates of union density. Occupations and industries with high rates of union density have had less vibrant job growth in recent decades. Widespread unionization of an industry is often associated with initial sharp declines in employment, as the steel industry demonstrates. The decline in union density in the private sector in the past generation has been sharp, and that decline has added to the vitality of the economy at the beginning of the new century. The increasing weakness of unions in the market economy has contributed to economic growth and a rising proportion of the working age population that actually works.

42 From some researches evidences have been found that unions have worked for enhancing the efficiency and productivity of workers. Freeman and Medoff (1984) are of the view that in many sectors, unionized establishments are more productive than nonunion establishments, while in only a few, they are less productive. The higher productivity is due to lower rate of turnover under unionism, improved managerial performance in response to the union challenge, and generally cooperative labormanagement relations at the plant level. Eaton and Voos (1992) concluded that union firms are more likely than their nonunion counterparts to be involved in workplace innovation, such as those of cooperative arrangements, like teamwork and production gain sharing, which yield higher productivity. Kelley and Harrison (1992) found that unionized firms were as much as 31 percent more productive than non-union firms. In its report the World Bank (1995) concluded that trade unions activities could be conducive to higher efficiency and productivity because they balanced the power relationship between workers and managers, and unions limit employers arbitrary, exploitative, or retaliatory behavior by establishing grievance and arbitration procedures. Unions reduce turnover and promote stability in the workforce conditions that causes an overall improvement in industrial relations, which leads to enhance workers' productivity. The view that the unions can enhance productivity and

efficiency also has been supported by recently analyzing Malaysian data. Pencavel (1995) wrote that presence of union and its representation of workers demands, views and ideas before management, can benefit as well as harm the firm. It benefits when productivity and efficiency is increased and causes harms when wages are raised beyond the firms paying level. For example in many jobs the worker may be better informed about the potential for productivity improvements within his department than his supervisor and he will be more willing to provide that information if he is confident that any change in organization will benefit him. He can communicate his information to management through his agent that is union. The presence of an agent of the worker may make the worker less suspicious that the information he reveals will benefit only management. There is evidence that participation by workers in a firm's

43 decision-making sometimes raises productivity and, if the union involves the workers in efficiency-enhancing activities, then unionism is associated with a more productive organization. However according to Pencavel there were also arguments to suggest that unionism harms productivity, particularly when a union protects indolent or careless workers from disciplinary action or when a union opposes changes especially laborsaving technological changes, and thereby retards an organization's development, or a union may successfully negotiate capital-labor ratios that oblige the firm to use more workers per machine than relative input prices would call for. Fashoyin (1997) is of the view that in Japan the productivity improvement movement has had a much greater impact and unions were an important party to the productivity improvement crusade. According to Tolentino (1997) during the Asian Regional Seminar of ILO on Trade Unions, Industrial Relations and Productivity held in Tokyo in 1982 the participants adopted the view that the goal of high and increasing productivity in industry, agriculture and services is one to which Asian trade unions, no less than management and government, can and ought to subscribe. This position was a clear exemplification of the trade unions' long commitment to national development, and indeed of their perception of the leading role which they could and should play in this process. Tolentino opined that the rapidly globalizing economy calls for dramatic changes in the roles that the trade unions have to play to improve national competitiveness for the sake of workers well-being. As representatives of workers they could play a significant and active role in creating the national economic and business environment that will make their countries competitive in the globalize marketplace of capital, technology, products and services. The trade unions as representative organizations of workers have very important roles in the promotion of productivity. At the macro level, they could participate in the creation of the policy and general business environment conducive to productivity improvement and at the institutional level they could exercise their influence in making productivity related institutions such as vocational training systems, industrial relation bodies, etc. effective. At company level trade unions can participate in the company's productivity improvement efforts by helping to create the enterprise policies and structures that will

44 guide and facilitate productivity improvement, and helping their members directly to participate in the productivity improvement programs of the enterprise. In Poland in the last three years more than 600 enterprises have undertaken productivity improvement programs through the joint efforts of management and trade unions and achieved growth 2 to 5 times the growth rate of the whole Polish economy. Productivity raised by 78 % (in one year) compared to 8 % in the total economy. The tremendous increase of profit made bonuses possible. Some of the enterprise started to increase employment. The personal income of workers increased by an average of 20 % compared to 2 % in the whole economy, due to the 40 % growth in the value added in these enterprises compared to 6 % in the whole economy. According to Human Rights Watch (1998) productivity in Malaysia is actually higher in enterprises where the workers are organized in industrial unions than in nonunionized companies. Cassoni et al. (2002) also reported that unions promote increases in productivity and prevent profitability increases. A study of Bernhardt et al. (2002) of Wisconsin Regional Training Partnership an association of 125 employers and unions concluded that among member firms, productivity is way up, exceeding productivity growth in nonmember firms. Shafiq-ur-Rehman (2003) wrote that in some Asian countries like Korea, and Japan trade unions adopted a cooperative and assisted management in improving efficiency. Ash and Seago (2004) examined the relationship of unionized nursing staff and the mortality rate for acute myocardial infarction (AMI), or heart attack, in acute care hospitals in California, and found that hospitals with union nurses have 5.5% lower heart-attack mortality than do non-union hospitals. Doucouliagos and Laroche (2003) expressed that the economics literature found a positive association of unions on productivity. The positive association of unions with productivity is established for the United States in general and for U.S.

45 manufacturing in particular. Eisenbrey (2007) denied the common myth that unions hurt productivity, supposedly because they impose work rules that make their employers less efficient. He quoted yearly growth of workers productivity in the form of bar chart showing productivity increase of 1.8, 1.8, 1.5, 1.5, 1.4, 1.7, 2.3 and 1.7 % for Belgium, France, Germany, Italy, Netherlands, Spain Sweden and USA respectively for years 1979 to 2005. Productivity in USA did not increase even as consequence of dropping of unionization to 12 % during this period while productivity increased in the seven largest European countries with union density greater than 60%. Regarding profitability Freeman and Medoff (1984) are of the view that, as compared to non-union employers, unionized employers tend to earn a lower rate of return on capital because of increase in wages and the greater amount of capital used per worker. These increased costs are not compensated for by the higher productivity of labor associated with unionism. About profit Hirsch (1997) analyzed that union wage gains lower firm profitability unless offset by productivity enhancements in the workplace or higher prices in the product market. He concludes from several studies that, although there is diversity in results, most studies obtain estimates suggesting that unionized firms have profits that are 10 percent to 20 percent lower than the profits of nonunion firms. Saavedra and Torero (2002) referred evidence from some studies showing negative effect of unions on profits and also a negative albeit less robust impact on labor productivity in Peru. Studies of Addison and Hirsch (1989) and Machin and Stewart (1996) about North America and Meneses-Filho (1997) for the United Kingdom, reveal that unions have a negative effect on profits and on shareholders wealth. About profitability Addison (n.d.) expressed that almost all early British studies showed negative effects of various indicators of presence of union on the financial performance or profitability.

46 2.4.2 Work Place Harmony and Cooperative Role Unions are blamed for harsh and quarrelsome attitude, non-cooperation and always demanding for benefits. Following studies shed light on it. Katz et al. (1993) concluded that despite in some cases unions have defended the traditional ways by fighting against the changes but in some other, cases unions cooperated for saving jobs and promoting human-side benefits of more flexible work organization. Unions have also played a proactive reformist role, by pushing management toward new forms of organization such as group work. Wagar (1997) in his paper investigated the relationship between labormanagement climate and perceptions of productivity, product or service quality, and customer or client satisfaction using a regional and national sample of Canadian organizations and a regional sample of local unions. Results reveal a strong relationship between labor-management climate and measures of organizational performance with a more positive labor-management climate associated with more favorable scores on the performance variables. About India DeSilva (1997) concluded that the unions and management which are social partners after decades of conflict have gradually recognized the importance of bipartite relations, which emphasizes on workplace harmony. Preuss (1998) during a study of Management Cooperation and Hospital Restructuring in USA found that union labor-management committees improve communication and ease the process of implementing new hospital practices in response to changing market demands Song (1999) wrote that South Korean unions struggled to promote worker compliance and commitment to firms, and brought the employees back from street rallies into the workplace. ILO (1999) reported that in countries like Denmark, Germany, Italy, and the Netherlands governments want to associate trade unions with social and economic policies, which are translated into "employment and "social pacts" whereas in the UK

47 and New Zealand during last two decades, trade unions and governments relations have deteriorated and the position of the trade unions, weakened by a hostile political environment. ILO report quoted instances of union and state cooperation. In Italy because of state and unions mutual affinity, a tripartite pact to promote employment, with special attention to the less developed areas and agreement including significant elements on educational reform, training and the reduction of working time was signed in September 1996. In Spain trade unions are cooperating with government policies in, regarding job creation and regional development. In Greece the General Confederation of Workers has associated with the State and with employers' organizations in committees formation, on the specific problems of long-term unemployment. Similarly in Germany a similar national pact was proposed in Germany but not finally agreed. ILO report also revealed that, trade unions in Singapore cooperated with the State and the employers in efforts to maintain full employment; unions cooperated with other social partners in attempt to set wages at levels which maximize employment. Unions are members of tripartite committees, including National Wage Council, and in the past have accepted temporary wage cuts in order to save employment. About unions cooperation with employer or management ILO reported that because of trend towards decentralization importance is given to Works Councils and new institutions like this, one example is of Italy where the trade union movement, in agreement with the State and employers' associations, has created a new institution in the workplace and all workers can elect representatives from within or outside the union. Majority of seats (in this, have been) won by the unions. The employers are reportedly satisfied with the new institutional structure for workers' representation. The other example is of South Africa where workplace forums were created in 1996, in order to establish joint decision-making and consultation between management and workers at shop floor level. Virmani and Rao (1999) expressed that responsible trade unions in Singapore are one of attractions of doing business in Singapore, because with industrialization process trade unions have developed disciplinary spirit therein and became conscious to develop the country economically.

48 Wong (2000) also wrote about unions in Singapore, that the unions approach to industrial relations moved from conflicting to cooperative after independence of Singapore. And during recent economic crisis the importance of constructive tripartite relations and the positive role of the labor movement has been highlighted when many union leaders had been involved in working out mutually acceptable measures to overcome the recession in 1986 and they reached on a consensus, when Government, union leaders, and employers were able to gain worker support for wage cuts. Hirsch and Schumacher (2000) referred the analysis of Freeman and Medoff 1984, concluding that Unions have had success in pushing for workplace mandates applicable to both the union and nonunion workforce as there is strong public demand for many forms of protection in the workplace. Hence Aidt and Tzannatos (2001) wrote that unions facilitate workerparticipation and worker-manager cooperation in the workplace. This can have efficiency-enhancing effects that jointly benefit workers and management. Yates (2001) expressed promising views, about role of unions in faster growth of New Economy, that unions can overcome certain inefficiencies inherent in the marketplace and at the same time helping individual workers to fulfill their goals more easily and at less personal cost. However Yates stressed on transformation of unions, which can begin to provide an array of personal services to members and help to negotiate and to finance contract provisions that provide skill training for workers. Presently when new employers are promoting multi-skilling for workers, unions can help the employers to attain greater flexibility by agreeing to eliminate job descriptions and allow employers to assign workers to a variety of jobs. Unions can also support employers in their efforts to achieve greater time flexibility through the implementation of longer work shifts and more elastic shift scheduling, and they can agree to allow the employer to schedule mandatory overtime, albeit at premium pay. Unions encouraged higher wages and protected economy in USA. About the union role in economic depression of 1930s Lichtenstein (2002) quoted from his book State of the Union: A Century of American in the 1930s as political leaders saw the value of unions. Unions offered the opportunity to protect and encourage higher

49 wages, resulting in increased consumption, and a stronger economy. Where the Depression was seen as the failure of American capitalism, labor unions offered a countervailing force, both economic and political. Industrial democracy re-enforced political democracy and so unions were seen, especially by the Roosevelt Administration, as important pillars of the American identity. Labor unions are also extending cooperation in Sustainable Development. According to Conference on Sustainable Development (2001) trade unions want to cooperate with local and national governments, international agencies and other Major Groups, to bring about patterns of decision-making that are consistent with the goals of sustainable development (CSD 2001). About Europe Knox (2004) wrote that strikes are rare in Germany and in Volks Wagen's 67-year history, there has never been a strike only warning demonstrations to pressure management. Therefore in Germany working days lost to strikes run about five per 1,000 employees a year, vs. about 43 days in the United States But there have been several strikes in Germany and elsewhere in Europe in recent months as workers protest company demands for longer workweeks for the same or less pay. The demonstrations, however, have been short-lived, and the unions usually have backed down against the threat of layoffs or job relocations. Therefore in recent contracts unions cooperated and gave several concessions to employers such as at Karstadt Quelle, a big retailer in Germany, trade unions agreed to a three-year wage freeze in exchange for a promise the company would cut 5,500 jobs through attrition, not firing. Similarly in France, workers at a Robert Bosch car parts factory voted to work an extra hour a week without pay to stop the car components company from moving the work to the Czech Republic.

50 2.5 STRATEGIES AND TACTICS OF UNIONS For the achievement of objectives of securing benefits for the workers and solution of their problems, unions adopt peaceful and violent means and succeed when they have strength or fail in their struggle if they have no strength. Numerous researches have highlighted it. Jose (2000) is of the opinion that the unions capacity to influence depends on their strength and support among the unionized and non-unionized sections of society. Bryson (2001) opined that the employer and employees perception of legitimacy of union in representing workers interest is influenced by higher union density and where unions represent most of the workforce they can represent workers interest with a strong voice. Huber and Stephens (2001) are of the opinion that in the neo-corporatists view, large and centralized unions are more functional and influential than fragmented unions. 2.5.1 Source of Strength of Unions Thomas (1999) is of the view that trade union organizations largely derive their characteristics, heritage, identity, and future strategic options from the parameters that are set by the country in which they function. Jose (2000) expressed that union success depends on its capacity to incorporate workers' rights and interests into legislation or other regulatory instruments of the labor market. For building institutional capacity, the following objectives have been prominent on the agenda of unions: (i) legislative provisions guaranteeing job security, unemployment insurance, and special benefits on termination of employment; and social security providing for health care and pension schemes; (ii) multi-employer agreements on employment, wages, working conditions, hours of work, and non-wage benefits of workers; (iii) ability to influence economic and social policies through consultation and dialogue with employers and public authorities.

51 2.5.1.1 Unions density and their strength to effect Jose (2000) wrote that labor legislation, collective agreements, social security and minimum wages already in place are clear indicators of the strength and influence of trade unions. They reflected a capacity to influence public opinion and mobilize action in support of the demands of their constituents. In developing countries, notably in Asia, unions have had significant achievements in maintaining or upgrading statutory safeguards on employment and working conditions. Nonetheless, such gains are mostly restricted to workers in the formal sector. But to cast influence the unions should be stronger and unions can be stronger if they have a minimum density called threshold density. Aidt and Tzannatos (2001) are of the view that Industries with high overall union density tend to have a higher wage markup. Mishel and Walters (2003) found that 30% to 40% is the minimum level of unions density to produce any threat effect. Therefore the unionization of 20% in a particular industry may have no impact but 40% unionization may be sufficient to make employers aware of union organizing and union pay and practices. Unions presence of 60% to 70%, may provide as strong a threat, or ability to set standards, as unionization of 80% or more. Therefore, unions can put a greater effect when density is higher. 2.5.2 Peaceful Means of Achieving Objectives Unions adopt peaceful means like negotiation, reconciliation, arbitration and suits in the courts as well as violent means like tension, strikes and processions for achieving objectives of securing benefits for workers. In Japan trade unions have achieved improvement through collective bargaining on pay, working hours, fringe benefits and in house welfare programs. Unions efforts have become more important in recent years (Inoue 1999). Among the peaceful means of obtaining objectives is Collective Bargaining. Jose (2000) reported that the value of collective action initiated by unions for attaining common objectives is now widely recognized by a broad spectrum of interest groups.

52 But unions have moved from collective bargaining to voice in continental Europe and Japan due to high density of unionism. There is growth of trade unions from the collective bargaining function towards a role dominated by voice and representation of workers. The broad membership base which unions commanded and the equitable distribution, which they promoted in major sectors and enterprises, strengthened the position of unions, giving them more power to bargain or collaborate and to derive successful outcomes. 2.5.3 Violent Means When the peaceful means are not successful in achieving the objectives then unions go on strikes. Unions have resorted to this option according to following researches. Colman (2000) wrote about USA that in 1824 women and men in a textile factory in Pawtucket, Rhode Island led the countrys first strike demanding the owner to reverse his decision to increase work day by one hour and cut their wages. After four years women went on strike in Dover, New Hampshire demanding the elimination of ban on talking at work and fine to employees 12.5 cents for being one minute late. In 1831, 1,600 women tailors in union of tailors society in New York struck for higher wages. In 1834 in Lowell, Massachusetts, over 800 looms and spindle operating women in the textile mill called a strike to protest wage cut. In Israel Before 1995, the famous labor union Histadrut seldom resorted to "general strikes" in the public sector but since July 1997 The New Histadrut, has called three extensive strikes. In July 1997 strikes were of government owned corporations; in December 1997 and in September 1998 the entire public sector went on strikes. During the strike in September 1998, the threatened closure of Ben-Gurion International Airport contributed to reaching an agreement (Nathanson and Associates 1999). CLR reported that in June of 2000 workers at the Duro (a gift bags manufacturing firm) plant, in Rio Bravo (Mexico) went on strike to establish an independent union and forced the reinstatement of their elected leaders who were

53 illegally fired as a result of strikes. Mexican government officials in August 2000 granted official registration as first independent union to the Duro workers (Carty 2003). Unions weakened due to effects of Multi National Companies and Globalization. According to UNDP (2000) report conventional weapons of strikes, boycotts, and demonstrations became useless because of emergence of MNCs and Globalization unions power has weakened. In the past labor groups could combat with economic power of employer by seeking redress at the national level, appealing to sympathetic politicians and government officials to enact protective labor legislation, or alternatively labor unions could resort to offensive strategies like strikes, boycotts, and demonstrations. Unions could rely on this power because capital in the past was immobile, but in present era if these techniques are exercised capital will move across the borders, therefore the labor unions conventional weapons strikes, boycotts, and demonstrations have became ineffective and unions have been rendered weak. 2.6 CORRUPTION OF UNIONS Though unions exerted efforts for securing benefits, gaining respect and building a fearless atmosphere for their workers but unions history is also plagued by corruption which has been brought to light by following researches. 2.6.1 Corruption and Selfishness of Officials Ware (1935) wrote that labor leaders in USA are trade unions officials and they have been accused of, the complete unconcern for any worker but the members of their own craft union, interest in holding their own job, a close association and cooperation with employers in dealing with industrial problems, and racketeering. For unions in Pakistan Khan (1992) expressed that the numerical increase of trade unions leads to personal rivalry of union leaders, competing for command over small unions. The trade unions leaders fight among themselves instead of fighting

54 against management or government, and every leader is status seeker, caring more for his own prestige and image than to cause of common worker or unionism. Pencavel (1995) opines about union pluralism that a policy permitting the formation of more than one union per enterprise will lead to disputes and rivalry among unions. He quoted the example of the situation in the Indian sub-continent where the strength of unions is sapped through disputes among themselves rather than in bargaining with employers. Bezuidenhout (2002) narrated that in South Africa Industrial and Commercial Workers Union (ICU) was also plagued by internal corruption and bureaucratization. According to a report of Weinstein (1996) in USA during two decades, LIUNA (Laborers International Union of North America) officials have recorded over 80 convictions for crimes ranging from racketeering to bribery, extortion, tax evasion, and even of attempted murder. Horowitz (1999) reported about USA that unions corruption is not a new phenomenon but, as government reports documented, even in the 1920s among construction trade unions in New York City a widespread corruption and racketeering was also prevailing. 2.6.2 Financial Corruption Weinstein (1996) wrote the instances of unions financial corruption e.g.; the House Judiciary Committee's Subcommittee on Crime (in USA) held hearings, that union official lent $100,000 of LIUNA money to the Clinton Inaugural Committee; and in 1993 and 1994, the Laborers' Political League (LPL) donated over $1 million to Democratic Party congressional candidates. During 1995 and the first quarter of 1996, the LPL has contributed $747,000 to over 200 liberal congressional candidates. Weinstein and Wieglus (1996) expressed that unions keep the workers ignorant from their rights for example Labor Secretary Robert Reich, who frequently proclaims the Clinton Administration's concern for workers' rights, told the AFL-CIO recently that "collective bargaining is not a privilege, it is a right." Yet the Administration has

55 cooperated with union officials to keep workers in the dark on their Beck rights. They further quoted example of AFL-CIO for the misuse of unions funds for political campaigns as AFL-CIO has launched $35 million "voter education project" funded mainly with mandatory union dues, to defeat conservative members of the 104th Congress. Horowitz (1999) brought in to light that the Federal Election Commission in (USA) reported that "soft" donations by labor unions to national political parties during the 1997-98, election cycle totaled some $8 million, nearly all of it to the Democratic Party. In the research report conducted in USA, Sherk (2006) expressed that it is true that union members elect their leaders; but union leaders appear to pursue an agenda disconnected from the concerns of their members. Some unions are heavily involved in political activism they spend their members mandatory dues to elect candidates favored by the union leadership, which means union leaders pursue an agenda that their members do not support. Therefore, several states have passed paycheck

protection laws that require unions to obtain written permission from their members before they can spend membership dues on political causes. He further wrote that unions received from their members annual dues, averaging $125 per member in 2004, and used only a portion of that money to represent their members. Americas 10 largest unions used an average of only 30 percent of their dues to represent their members and negotiate with employers and spent the other 70 percent on lobbying, political activities, gifts, grants, overhead, and compensation for their staff. These other activities might or might not reflect the priorities of the unions membership. Unions generously spend their members mandatory dues on politics. He quoted that in 2005, a non-election year, the AFSCME (American Federation of State and County Municipal Employees) spent almost 20 percent of its budget on political activities and lobbying. The AFL-CIO spent 30 percent of its budget on the same causes. In the 2004 elections, both these unions gave over 97 percent of their donations to Democratic candidates. Despite of misusing members contributed funds, union leaders do little to inform their members of many of their activities, and it is doubtful whether union

56 members would approve of many of the decisions of their leaders. Misplaced union priorities extend beyond six-figure salaries and comfortable retreats for union bosses. 2.6.2.1 Embezzlement examples Horowitz (1999) quoted many examples of unions office bearers embezzlement in his report such as Bernard Rubin, president of South Floridas Laborers District Council, was convicted in 1975 on embezzlement, racketeering and tax evasion. He misappropriated more than $350,000 in union funds. Similarly in April 1998 a federal court convicted Eileen Cibellis, former longtime office manager and fund administrator for the Bloomfield, New Jersey-based District Council 10 of the International Brotherhood of Painters and Allied Trades, for embezzling more than $400,000 from union funds. There are other examples such as; Carol Sue Fisher, a former bookkeeper for the local Painters union in Evansville, Indiana, in 1992 pleaded guilty to embezzling some $135,000 from the union fund. John Ducey, the former financial secretary and business manager of the Carpet, Linoleum and Resilient Tile Layers union received a prison sentence for embezzling more than $51,000. A federal jury, of embezzling union funds found George Osley Jr., secretary-treasurer of Laborers Local 872 in Las Vegas guilty of embezzlement of unions funds. The National Maritime Union (NMU), a representative of some 2,000 unlicensed seafarers working on U.S. flag commercial ships, deserves special mention as over the years it has served as a private bank for its leaders. In January 1997 NMU President Louis Parise, Sr. had to resign and sever all connections to the union following his conviction in federal court on racketeering and embezzlement to the tune of more than $700,000. Robert Hickerson, former business manager of Local 919 in Quincy, Illinois, in 1982 was sentenced to three years in prison for embezzling union funds, and hiring vandals to smash more than $250,000 worth of equipment owned by nonunion contractors. In Lancaster, N.H., Paul Wilson, former treasurer of United Paper workers Local 61, in 1993 was sentenced for theft of more than $67,000 in union funds. This year Robert Kellas, a former official of an amalgamated Transit Union local in Bellingham, Washington, pleaded guilty to embezzlement of up to $120,000 from the union over a four-year period. These were few examples otherwise report has numerous other events worthy to be mentioned but they would render the thesis very

57 lengthy. Horowitz in his report wrote for different types of unions corruption in USA and quotes numerous events e.g. In New York City in 1995 federal investigators discovered that around $8 million had vanished from the pension fund of Teamsters Local 875. Local 875 had a long history of corruption; in the previous 25 years, five of its officers and financial advisers were convicted of embezzlement or accepting payoffs to keep labor peace. He further wrote For good measure the AFL-CIO in 1957 expelled the Teamsters for corrupt practices, in the light of widely-publicized hearings before Government Operations Committee, headed by John McClellan, Arkansas Democrat in the Senate. Sherk (2006) in his report about American unions also quoted examples of suspected incomes of unions leaders; such as; Gerald McEntee, president of the American Federation of State and County Municipal Employees earns $580,000 a year, from the dues paid by his unions far less compensated members. The president of the National Education Association earns $439,000 a year, which is almost ten times what the average teacher earns. It means union elected leaders earn salaries several times larger than those paid to members of Congress. Unions also spent over $7 million in 2005 to hold conferences and workshops at resorts, including the Pheasant Run Resort & Spa near Chicago and the Palm Springs Riviera Resort in California, a use of funds which also may not reflect their members priorities. Sherk further quoted that unions pay for political campaigns from members contributions, and Supreme court in a suit communication workers versus Beck (1988) established a precedent that, workers can not be forced to donate to political causes, and are entitled to demand the refund of the portion of their dues spent for political cause, but unions erected roadblocks in front of the workers who wanted to exercise their Beck right. 2.6.3 Unions Officers Monopoly Union officials enjoy what amounts to a monopoly, and these union monopolies, shielded from competition, provide them lax from accountability toward the people they serve and individual worker, or a group of workers, demanding accountability from their union may be risking their jobs or safety. Union funds to pay

58 nonexistent "employees", is a common way of rewarding friends at the expense of dues-paying rank and file, Horowitz (1999). Brohawn (n.d) is of the view that in some cases, it can be fairly said, that unions have empowered their leaders, not their members. Ghayur (1996-b) wrote that in Pakistan the labor leaders are feudal minded and they never bothered to make their action accountable to the members. 2.6.4 Bribes (Extortion and Pay-off) Horowitz (1999) Revealed in his report with example that the Construction trade unions are notorious for extortion from contractors by threatening labor problems such as work slowdowns, disruption, sabotage or assault. In the 1980s a

civil suit against Local 6A of the Cement and Concrete Workers of the Laborers International Union of North America (LIUNA) alleged that the local, its district council, their officers and certain organized crime figures extorted one percent of the contract price from ready mix contractors by threatening "labor problems. For a while, that bought labor peace. FBI investigation of building trades practices in Long Island led to the indictment of the president of the District Council of Carpenters and five other union officials connected to organized crime families for extorting more than $100,000 from a drywall contractor. In Philadelphia Joseph Fiorelli, founder and former boss of Local 1955 of the Drywall Finishers Union was sentenced to more than 10 years in prison on extortion payoffs from contractors, theft of union funds, and racketeering charges. Fiorelli had extorted payments from 25 contractors from 1967 to 1991. Contractors testified that in exchange for their payments, Fiorelli gave them labor peace and allowed them to sometimes use nonunion workers, and to delay or avoid payments to the union's health and welfare fund. About Bribery for securing jobs Horowitz expressed that unions, protect their members from competition by non-union members. But when a contractor or employer decides to hire non-union labor, the unscrupulous unions make life uncomfortable for contractors until they hire union labor; or allow the contractor to hire nonunion labor--if the price is right. In 1981 Louis Sanzo, president of Local 29

59 of the Blasters, Drill Runners and Mines Union in Queens, N.Y., affiliated with LIUNA, and the others took a combined $400,000 in payoffs from construction firms to buy labor peace. The owner of a Florida-based construction firm said he tried to get out of the deal, but Sanzos men threatened to kill him, his wife and three children. The contractor would say in his bid that he needed 30 men and he would be paid for 30 men by the people who hired him to do the job. But then Local 29 would send over only 15 men. They could keep the rest of the money. 2.6.5 Sound Labour Relations at the Workplace no Important Concern of Employers and Unions Unions some times do not take interest for sound labor relations - especially at the workplace. De Silva (1997) wrote that in many South East Asian countries and republic of Korea sound labor relations have not been an important concern of employers and unions. Bacon (2005) expressed that in USA George Meany and Lane Kirkland, AFLCIO leaders, treated unions as a business, representing members in exchange for dues, while ignoring the needs of workers as a whole.