Collective Bargaining :- Collective Bargaining is a technique by

which dispute as to conditions of employment, are resolved amicably,

by agreement, rather than by coercion. The dispute is settled
peacefully and voluntarily, although reluctantly, between labour and
management. In the context of present day egalitarian society, with its
fast changing social norms, a concept like ‘collective bargaining’ is not
a capable of a precise definition. The content and Scope collective
bargaining also varies from country to country. Broadly Speaking
Collective bargaining is a process of bargaining between employers
and workers, by which they settle their disputes relating to
employment or non-employment , terms of employment or conditions
of the labour of the workman, among themselves, on the strength of
the sanctions available to each side . Occasionally, such bargaining
results in an amicable settlement, arrived at voluntarily and
peacefully , between the parties. But quite often, the workers and
employers have to apply sanctions by resorting to weapons of strike
and lockouts, to pressurize one another, which makes both the sides
aware of the strength of one another and that finally forces each of
them to arrive at a settlement in mutual interest . It is thus the
respective strength of the parties which determine the issue, rather
than the wordy duals which are largely put on for show, as an element
of strength in one party is by the same token, an element of weakness
in another.
The final outcome of bargaining may also depend upon the art, skill
and dexterity of displaying the strength by the representatives of one
party to the other.

Negotiation: Negotiation is one of the principal means of settling

labour disputes. However, due to lack of trust between the employers
and workmen or their trade unions or inter-rivalry of the trade unions
and the employers being in a commanding position, many a time
negotiations fail. Through Amendment in the Act by Act 46 of 1982
Chapter II B providing for reference of certain individual disputes to
Grievance Settlement Authority has been inserted in the Act. Under
this Chapter, section 9 C has made it obligatory for the employers to
make provision for Grievance Settlement Authority for settlement of
industrial disputes connected with an individual workman employed in
an establishment in which fifty or more workmen are employed or have
been employed on any day. In the preceding twelve months. This
amendment however even inspite of having been made twenty one
years back has not seen the light of the day.

Conciliation & Mediation: Through conciliation and mediation a third

party provides assistance with a view to help the parties to reach an
agreement. The conciliator brings the rival parties together discuss
with them their differences and assist them in finding out solution to
their problems. Mediator on the other hand is more actively involved
while assisting the parties to find an amicable settlement. Sometimes
he submits his own proposals for settlement of their disputes.

Conciliation may be voluntary or compulsory. It is voluntary if the

parties are free to make use of the same, while it is compulsory when
the parties have to participate irrespective of whether they desire to
do so or not. Section 4 of the Act provides for appointment for
conciliation officers and Section 5 for constitution of Boards of
Conciliation. The Board of conciliation is to consist of an independent
Chairman and two or four member representing the parties in equal
number. While the former is charged with the duty of mediating in and
promoting the settlement of industrial disputes, the latter is required
to promote the settlement of industrial disputes. The act generally
allows registered trade unions or a substantial number of workers/
employees and also in certain cases individual workman to raise
disputes. The performance of conciliation machinery, though it does
not appear to be unsatisfactory15, causes delays due to casual
attitude of the parties towards conciliation, defective processes in the
selection of personnel and unsatisfactory pre-job training and period-
in-service-training16. Delays in conciliation are attributed partly to the
excessive work-load on officers and partly to the procedural defects.
Since conciliation officer has no powers of coercion over labour and
management , he can only persuade them to climb down and meet
each other. The settlements that are claimed to result from conciliation
are increasingly the result of political intervention. Success of
conciliation depends upon the appearances and their sincere
participation in conciliation proceedings of the parties before the
conciliation officers. Non-appearance and non- participation of the
parties in conciliation proceedings poses a serious hindrance in this
direction. On the attitude of the parties National Commission on Labour
observed conciliation is looked upon very often by the parties as
merely hurdle to be crossed for reaching the next stage. The
representatives sent by the parties to appear before him are generally
officer who do not have the power to take decisions or make
commitments: they merely carry the suggestion to the concerned
authorities on either side. This dampens the spirit of a conciliator. We
have been told by the employer’s and workers, organizations alike that
the conciliation machinery is weakened because of its falling into this
type of disuse in recent years,Section 11 of the Act has clothed the
conciliation officers with the power to enter premises occupied by any
establishment and also has been invested with the powers of civil court
under the Civil Procedure Code, 1908 when trying a suit for enforcing
the attendance of any person and examining him on oath, compelling
the production of documents and material objects and issuing
commission for examination of witness for the purpose of inquiry in to
any existing or apprehended industrial dispute. These provisions are
seldom enforced. Moreover, conciliators most often do not have
requisite information on the employers and trade unions, up to date
wage/productivity, information and relevant up to date case laws which
affect his capability to conciliate effectively . The National commission
on labour in this context laid emphasis for pre job and on the job
training of conciliation officers.

Arbitration: The resort to arbitration procedure may be compulsory or

arbitrary . Compulsory arbitration is the submission of disputes to
arbitration without consent or agreement of the parties involved in the
dispute and the award given by the arbitrator being binding on the
parties to the dispute. On the other hand in case of voluntary
arbitration, the dispute can be referred for arbitration only if the
parties agree to the same. Section 10 A of the Act, however, provides
only for voluntary reference of dispute to arbitration. This system,
however, has not been widely practiced so far. One of the main
reasons for not gaining popularly of this procedure is lack of arbitrators
who are able to command respect and confidence of the parties to the
dispute. Inter Union rivalry also sometimes makes it difficult in arriving
at an agreement on settlement of an arbitrator who is acceptable to all
the trade unions in the industry.

COLLECTIVE BARGAINING

Definitions:

“Collective Bargaining is a mode of fixing the terms of employment by

means of bargaining between an organized body of employees and an
employer, or an association of employers usually acting through
organized agents. The essence of collective bargaining is a bargain
between interested parties, and not a decree from outside parties”.
- Hoxie.

“Collective Bargaining takes place when a number of work-people

enter into a negotiation as bargaining unit with an employer or group
of employers with the object of reaching an agreement on the
conditions of employment of the work-people”.
- Richardson.

Features of CB:
¬ Collective:
o Workers collectively bargain for their common interests and benefits.
o Workers and management jointly arrive at an amicable solution
through negotiations.
 Strength:¬
o With industrial democracy at work, both the parties bargain from the
position of equal strength.

¬ Flexible:
o CB cannot be rigid or inflexible as its’ aim is to arrive at a consensus.

Voluntary:¬
o Both the parties negotiate voluntarily in order to have a meaningful
dialogue.
o Through negotiations, they try to probe each other’s views
thoroughly before arriving at an acceptable solution.
o The implementation of the agreement resulting from such a
bargaining process is also voluntary.

Continuous:¬
o This process begins with negotiations but does not end with an
agreement.
o Implementation of such an agreement, which is an on-going process,
is also a part of CB.
¬ Dynamic:
o The whole process of CB is influenced by the mental make-up of the
parties involved.
o As a result, the concept of CB changes, grows, and expands over
time.
Power relationship:¬
o Each party wants to extract the maximum from the other.
o To reach a consensus, both have to retreat from their original
positions and accept less than what is asked for and give more than
what is on offer.
o While doing so, the management tries to retain its control on
workplace matters and unions attempt to strengthen their hold over
workers without any serious dilution of their powers.
Representation:¬
o The participants in CB do not act for themselves.
o They represent the claims of labour and management while trying to
reach an agreement.
o Each participant is an authorized representative of workers and
employers.
¬ Bi-partite process:
o This process does not have third party intervention.
Importance of CB:

It helps increase the economic¬ strength of both the parties at the

same time protecting their interests.
¬ It helps establish uniform conditions of employment with a view to
avoid occurrence of industrial disputes.
It helps resolve disputes when they¬ occur.
It lays down rules and norms for dealing with labour.¬
It helps¬ usher in democratic principles into the industrial world.

Bargain able Issues:

Any issue relevant to management and workers.¬

¬ Traditionally:
o Management not too keen on negotiating work methods arguing that
is their exclusive right to decide how the work is to be done.
o Unions do not want negotiations on production norms and
disciplinary matters. They believe that an agreement in this regard
would put limits on their freedom to demand at a later stage.
o Wages and working conditions have been the primary focus areas of
CB.
In recent times, CB has extended to a lot many¬ areas.
o Examples:
Wages and working conditions;
Work norms;
Incentive payments;
Job security;
Changes in technology;
Work tools, techniques and practices;
Staff transfers and promotions;
Grievances;
Disciplinary matters;
Health and safety;
Insurance and benefits;
Union recognition;
Union activities/responsibilities;
Management rights.

Types of Bargaining:
Conjunctive/Distributive Bargaining: Here, the parties try to¬
maximize their respective gains.
o In this method, the parties try to settle economic issues through a
zero-sum game.
 Zero-sum game is where ‘my gain is your loss and your gain is my
loss’.
Neither party is willing to yield an inch.

Co-operative Bargaining:¬
o Both parties are more open to coming down from their high horses
and co-operating.
o They are willing to negotiate the terms of employment in a flexible
way.
o This willingness is because of recession and the need to be able to
survive in such difficult times.
This would not be possible without each other’s support and hence co-
operative bargaining.
o TELCO and Ashok Leyland resorted to co-operative bargaining when
the automobile sector was going through a period of recession.
o Employees may now be willing to accept a cut in wages in return for
job security.
o Management may also agree to modernize and bring in new
technology and invest in marketing efforts in a phased manner.

¬ Productivity Bargaining: In this method, workers’ wages and

benefits are linked to productivity.
o Initially, a standard productivity index is finalized through
negotiations.
o This index is not fixed at an exceptionally high level.
o Workers crossing the standard productivity norms will get substantial
benefits.
o This method of bargaining helps in making the workers realize the
importance of raising productivity for organizational survival and
growth.

Composite Bargaining:¬
o Workers tend to argue that productivity bargaining increases their
workload.
o Rationalization, introduction of high technology, tight productivity
norms hit the unions and workers below the belt.
o As a result, workers tend to favour composite bargaining?
o In this method, labour bargains for wages as usual.
o In addition, they also bargain for such issues that, if permitted, may
result in lower employment in some other plant, diluting the
bargaining powers of unions.
Eg. Workers demand further equity in matters relating to work norms,
employment levels, manning standards, environmental hazards, sub-
contracting clauses, etc.
o We see that workers are no longer solely interested in the monetary
aspects to the exclusion of work related matters.
o Through composite bargaining, unions are able to prevent the
dilution of their powers and ensure justice to workers by putting
certain limits on the freedom of employers.
o For the employer, this is the lesser evil when compared to strikes
and lockouts.

The Collective Bargaining Process

¬ Identification of the problem:
o Nature of the problem influences the CB process.
Is the problem very important?
• Yes; to be discussed immediately.
• No; can be postponed for some other convenient time.
Is the problem minor?
• Yes; can be solved immediately after its’ presentation.
• No; involves the long process of CB.
o Nature of the problem also influences the selection of
representatives, their size, period of negotiations, and duration of the
agreement that is ultimately reached.
¬ Preparation for negotiation:
o This means that the problem can be solved only through CB.

o Representatives have to be selected.

Qualities of representatives: patience, composure while carrying

out negotiations, and the ability to present views effectively.
Selected representatives have to be educated about the complete
problem and its’ pros and cons.

o Powers and authority of the negotiating representatives should be

clarified.
o Fix up the time for negotiations, duration of negotiations, etc.
But once the negotiations begin, the actual period may vary
depending upon circumstances.

Negotiation of Agreement:¬
o These are the people most likely to be found at the negotiating
table:
Chief negotiator – generally from the side of management.
Representatives of both the parties.
o Chief negotiator presents the problem, its’ intensity and nature, and
the views of both the parties.
o Then, the representatives of both the parties are invited to present
their views.
o Principle to be followed by both the parties at the time of
negotiations `being attentive to the other party’
While negotiating, each party, instead of paying attention to the point
of view of the other party, tends to think more about their counter
arguments and how to say `no’ to their offer.
Both the parties need to maintain a positive attitude and should
`think’ rather than `feel’ their way through the problem under
consideration.
o Both parties should try to reach an amicable solution.
o When a solution is reached at, it is put on paper, taking into
consideration the concerned legislations.
o Thereafter, both the parties sign the agreement, which, in turn
becomes a binding contract for both the parties.
o On the other hand, if no amicable solution is reached, both parties
may consider arbitration.
Implementation:¬
o The agreement resulting from CB may be temporary.
In this case, before its expiry, both parties consult each other and can
terminate or renew the agreement depending upon the circumstances.
Depending on the attractiveness of the agreement for either of the
parties, one may want a renewal while the other may want a
termination.
This leads to further negotiations.
o So, in reality, CB is a continuous process and not a temporary
accommodation.

Collective Bargaining vs. Negotiation Skills:

CB is a process by which the terms and¬ condition of employment of
workers are regulated by agreements between their bargaining agent
and their employers.
Negotiation, on the other hand, is a¬ process of resolving conflicts
between two or more parties wherein both or all modify their demands
to reach a workable compromise.
The process of CB also¬ uses negotiations to reach a mutual
consensus.
While negotiating issues,¬ parties shift their stand from an ideal
position to a settlement point, which is mutually agreed upon.
o The position of the settlement point depends on the relative
bargaining strength and skill of the negotiator.
The sacrifices to be made and the concessions to be yielded, depend
to a large extent on the negotiating skills of the bargaining agent.
 If he is powerful, he will have his way. If this power is challenged on
justifiable grounds where other people see reason, he may have to
yield his ground.

Evolution of Collective Bargaining:

CB rose and grew with the trade union movement.¬
Roots of¬ CB lie in Great Britain where it developed in response to the
conditions created by the Industrial Revolution.
Along with trade unions, the idea of¬ bargaining collectively gained
strength in the early part of the 18th Century.
Initially, the negotiations were carried out at plant level.¬
¬ By early 1900, industry and national level agreements became quite
common.
¬ The idea spread across to France, Germany, and USA.
And today, through the¬ process of CB, organizations have learnt to
cope with industrial conflict.

The Indian Scenario:¬

o In India, trade unions gained prominence much later – only after

1900.
o In 1918, Gandhiji - as the leader of the Ahmedabad textile workers –
advocated the resolution of conflict through CB agreements.
o But the idea gathered interest only after the Second World War.
The Government of that time took steps like setting up of machinery
for negotiations, conciliation and arbitration.
o The trade union movement and also CB agreements became popular
after Indian independence.
Moving from agreements at the plant level, such agreements spread
to industries such as chemicals, petroleum, tea, coal, oil and
aluminum.
In ports and docks, banking and insurance, collective agreements
were arrived at, right at the national level.

Assessment of Collective Bargaining in India:¬

o Other than in Ahmedabad and Mumbai, so far, collective agreements

have not made much headway in India.
Reasons:
Lack of statutory recognition of unions by¬ the country as a whole.
Lack of provisions requiring employers and workers¬ to bargain in
‘good faith’.
The historical problem of ‘lack of trust’¬ between the parties
Have all stood in the way of collective agreements contributing
towards industrial harmony.
o Proper conditions have to be created for the success of CB for
promoting industrial peace.
Encouragement to strong and powerful trade unions.
Satisfactory arrangements for union recognition by statute.
Creation of conditions in which collective agreements have a chance
to succeed.
Causes of limited success of CB in¬ India:
o Problems with unions:
CB mainly depends on the strength of unions.
Weak trade unions cannot initiate strong arguments during
negotiations.
Not many strong unions in India.
Indian unions are bogged down by the problems of: multiplicity, inter
and intra-union rivalry, weak financial position and non-recognition.
So, unanimous decision is¬ unlikely to be presented at the negotiating
table.

o Problems from Government:

The Government has not been making any strong efforts for the
development of CB.
Imposition of many restrictions regarding strikes and lockouts has
removed the `edge` of the CB process.
o Political interference:
Interference of political leaders in all aspects of union matters has
increased over the years.
Almost all unions are associating themselves with some political party
or the other.
o Legal problems:
Now that adjudication is easily accessible, the CB process is losing its
importance.
o Management attitude:
In India, managements have a negative attitude towards unions.
They do not appreciate their workers joining unions.

Suggestions for better functioning of CB:¬

o The Indian Institute of Personnel Management has offered the

following suggestions:
A progressive and strong management that is conscious of its
obligations and responsibilities to the various stakeholders.
A truly representative –enlightened and strong – trade union should
come into being and should function on strictly constitutional lines.
There should be unanimity between labour and management on the
basic objectives of the organization and a mutual recognition of their
rights and obligations.
When there are several units of the company, there should be a
delegation of authority to the local management.

A fact-finding approach and a willingness to use new tools should be

adopted for the solution of industrial problems.

Pre-requisites of successful bargaining:

Employer’s recognition of the trade union.¬

¬ Bargaining must precede other measures:
o Neither party should take any unilateral action. Results of bargaining
should be awaited.
Employers’ and¬ employees’ attitude calls for a change:
o The workers and the employers should be quite clear that they are
not looking for third party intervention in the form of litigation and
adjudication.
o They want to sort out their differences in a peaceful way.

Top priority to plant level bargaining:¬

o The representatives of the employees must have a firm resolution to

have an agreed solution to their individual matters.
Negotiations on¬ differences:
o Both the parties should negotiate on their points of differences or
demands with the sole purpose of making an agreement.

¬ Reliance on facts and figures:

o In order to make the negotiations result into success, the workers
and the management agents must rely on facts and figures to
substantiate their claims.

Giving up unfair labour¬ practices.

Written agreement: ¬
o The final decisions should be incorporated in a written agreement.
o The agreement should include the validity of the agreed matters as
also the frequency of its review.
¬ Progress review:
o Agreements should not be signed and forgotten.
o During their implementation, regular meetings should be held
between the representatives of both the parties to watch the progress
of the implementation.
This way any changes, adjustments and amendments can be effected.
Respect of agreement:¬
o Both the parties must respect the agreement and see that it is
implemented in a fair and justifiable manner.
¬ Arbitration provision:
o The agreement must include an arbitration clause.
o Whenever the parties have any differences pertaining to the
interpretation of the terms and conditions, the arbitration clause can
be resorted to.

Recommendations of the National Commission on Labour: The NCL

(1969) offered the following recommendations.
Gradually, withdraw the¬ easy accessibility to adjudication and shift
the emphasis to CB.
Create the¬ conditions to promote CB. How?

o Make the recognition of a representative union as the sole bargaining

agent, statutory.
o Define the employees’ right to `strike’ work and place it in the
overall scheme of things.
Intensify¬ workers’ education for building up internal union leadership
and make workers more knowledgeable.

Industrial Relations Issues In Developing Countries

The changing economic environment confronting third world countries makes it

Imperative, that they take immediate decisions regarding industrial restructuring.

The Economic Context

In the 1980s, the U.N. General Assembly set a target of 7 percent for third world
growth. This target was based on estimations that a 7 percent growth rate was
the bare minimum for developing economies to provide basic needs (food,
shelter, clothing and education) of their populations. However, the record after
1960 has been disappointing, as most developing countries plunged into deep
and continuing economic crises (Singh 1992). On average, GDP growth rates
during the 1980s were well below 5 percent and a number of countries
experienced substantial declines in national income. Although African economies
grew at 3.5 percent between 1960-73, the rate of growth was 1.3 in 1981, and
negative thereafter. Mexico's GDP grew at 7 percent between 1977-1981, but
1982-1988 saw negative growth. Estimates (after GDP figures are adjusted for
terms of trade and net factor payments) indicate that the 4 average per capita
Income in Latin American countries was lower by 15 percent and for African
countries
lower by 30 percent in 1989, relative to 1980. Real wages in Africa have declined
by about 20 percent and in Mexico, by almost 50 recent between 1982 and 1987.
The inability of third world countries to compete in world manufacturing has also
resulted in deindustrialization in many countries (e.g., Tanzania, where
manufacturing production shrank by 25 percent during the 1980s). These
economic pressures have forced developing nations into increased
indebtedness, resulting in an increased burden of debt servicing. In the 1980s
interest payments for most Latin American and African countries comprised
about 30 percent of the national budget, seriously affecting ability to import
necessary capital and technology for production and exports. Sachs (1990)
suggests
that the collapse of living standards in the third world in the 1980s (he calls the
1980s the lost decade of economic development) is intimately related to the
extremely debt crisis and shows that economic performance has been disastrous
in countries that experienced debt service difficulties. In addition, there was in the
1980s a net outflow of capital from the third world, in spite of large transfer
payments via aid into the third world.
Exceptions to this bleak scenario are the experiences of some Asian countries
(mainly
the newly industrializing countries), which showed increases in GDP growth rates
and per capita income, and achieved both ILO and U.N. targets. The three main
features that appear to account for the dramatic relative economic success of the
Asian nations are: economic structure, economic and industrialization policies,
and lower indebtedness (thus insuring relative protection from changes in world
interest rates)
(Singh 1992).

Experts by and large agree that both external factors (world interest rates, terms
of trade
that discriminate against developing countries) and flawed domestic policies are
important in explaining economic decline, although there is debate regarding the
relative impact of both. There is, however, consensus that the central problem for
these countries is that & nigh long-term rate of economic growth is an economic
and social imperative. There is also consensus that developing nations are not
likely to reach target growth rates of 7-8 percent without fundamental changes in
the structure of their economies and economic policies. Finally, there is
consensus that these countries need to improve the utilization and management
of their human resources. Effective Industrial relations practices are needed to
achieve those ends.