Role and Relevance of Trade

Unions in Contemporary
Indian Industry

Mukesh Bhavsar
First Year, MA HRM
Tata Institute of Social Sciences
Hyderabad

Introduction
With the changed social, political and educational environment in terms of awareness of right,
trade unions are considered a major component of industrial relations system. Workers union
plays a crucial role to protect the interest of its members.
Trade unions traditionally performed different roles in their relations with individual employers,
employer associations, the state and the public at large. Unions directly or indirectly played an
economic role of facilitating production and distribution in society. Unions played this role
largely by promoting cooperation between capital and labour in production and in enterprise
restructuring, to secure sustainable growth consistent with social equity, employment
opportunities, improved living and working conditions. Unions also have argued for ensuring an
equitable distribution of the value-added by the production process. Unions perform the
democratic and representative role by providing an identity to labour at the workplace, and in
society at large.

Liberalisation, Change in the Nature of the State and Labour

In 1991, India adopted the Liberalisation, Privatisation and Globalisation. Least amount of state
intervention had an impact on the trade unions. The arm of the state started strengthening the
capitalist class and they were considered as the chief instrument to promote development. A new
meaning was given to the term labour reform which implied the power to hire and fire
workers, freedom to determine wages according to the market demand and supply. Although the
state did not undertake labour reforms by introducing a new legislation to legitimise the demand
of the capitalist class, it silently worked to reduce state intervention. Consequently, the employers
used different methods to reduce the size of the labour, by decentralising production and even
sub-contracting for various operations to small businesses. This led to reduction in the growth of
jobs in the organised sector and increase in the share of the informal sector in industrial
employment. Regular workers were replaced by contract workers to reduce wage costs, so that
business firms could compete in the market. This started the process of weakening the trade
unions. Lockouts were used by the employers to retrench workers and prolonged lockouts were
used as the instruments of pressurising labour to accept humiliating conditions of work before
lifting lockouts. This further weakened the trade unions.

Role and Relevance of Trade Unions in Contemporary Indian Industry

On the whole trade unions do very significant work and have supplied a long felt need and filled
an important gap. A strong trade union is a guarantee of industrial peace and makes for stability
of industry. Any decision agreed upon collectively by workers is bound to command obedience of
and respect among the general body of workers and employers also cannot afford to treat such
decisions in a light manner. They not only bring about improvement in the conditions of work,
employment and wages of workers but also lead to great efficiency among workers and create a
feeling of self respect and confidence among them. They do useful work for labourers during the
period of sickness and accident benefits and support them during unemployment or during strike
and lockouts. They also arrange the legal assistance to workers, if necessary, besides, they
undertake many welfare measures for their members, e.g. running schools for the education of
children or having their own library or reading rooms, or providing many in-door and outdoor

games and other recreational facilities. Some trade unions go so far as to undertake housing
schemes for their workers and undertake publication of some magazines or journals
Trade unions are a legitimate system for organising workers to voice their rights and grievances.
Without unions, companies would become either too paternalistic or too dictatorial. Responsible
unions play an important role in maintaining cordial relations between management and labour.
The aims and objectives of the major trade unions in India are seen to vary according to their
political ideologies. For instance, some unions are influenced by Leftist principles aimed at
overhauling the capitalist mode of production as a whole.

Emerging need of workers

One of the important thrust areas in the literature on globalization and labour has been the
changing notion and nature of work. While most of the literature tries to capture the changing
landscape of labour relations through the frame of work; it is equally important to understand
the spatiality within which the nature of the work is shifting, eroding or continues to exist. The
changing nature of work is closely linked to the ideas of zoning that has been appropriated by
economies worldwide and India is no exception.
As the skill levels and educational qualifications of employees advance, the role and significance
of trade unions tend to diminish. This is because (a) employees are able to represent their own
case and (b) managements are more sensitive to the needs of individual employees, whose
intellectual skills become almost uniquely valuable.
This is already happening in the sunrise industries based on brainpower such as IT and
telecommunications. Another phenomenon in these modern industries is that employees have
greater opportunity and tendency to move from one company to another, not only because of
better terms of employment but also because of their yearning to learn new skills.

Response to macroeconomic changes

The changing role of the government in India and the introduction of new technology have both
radically altered the employment scenario. Shifts in job opportunities from the formal to the
informal sector and increasing employment opportunities for educated and skilled workers have
necessitated a paradigm shift in the approach and function of unions. Indian trade unions have,
however, been slow in reacting to these changes. This, in turn, has resulted in the loss of
membership within these unions.

Make in India
In recent years, concerns have been expressed about the Indian economy's reliance on the services
sector. It is felt that there is a need to build a larger manufacturing sector. With make in India
program government is planning a major new national program designed to transform India into a
global manufacturing hub. It will bring more investment in manufacturing and create more
employment. Thus trade unions will have to reposition themselves in changing investment
scenario.

Challenges
Some of the major problems faced by trade unions in India are small size, poor finance, and
politicization, multiplicity of unions and lack of enlightened labour force. But among others the
key challenges before Indian trade unions are as follows1. Labour flexibility measures have either replaced regular jobs with contract labour or have
at least created bad jobs. Flexible labour laws are likely to lead to less hiring and more
firing.
2. Labour penetration by the union in the unorganised sector is only at the stage of infancy
and needs to be fostered at an accelerated pace.
3. The increasing integration of national economies in a single global market and the
appearance of new world production systems are demanding stronger coordination of
national and international trade union agendas.
4. With the deepening of reform and opening-up, India has continued to face enormous
employment pressures. The Indian trade unions have heavy tasks in promoting
employment and protecting workers.
5. With the expansion of economy, Indian enterprises are gradually entering into the
international market, and labour relations in the India-funded enterprises overseas are one
of new concerns of the trade unions.
6. Politically affiliated Trade Unions failed to fulfill the aspirations of India workers and as
such there is urgent requirement of more professional body which is not politically
inclined and can give voice to the rights and welfare of workers.

Rise of Independent Industry Unions

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

Change in profile of workers

NSDCs original reports (2011) identify serious skill gaps in some relatively educationunintensive industries such as construction, textiles, garments, leather, and food-processing. Due
to rapidly changing technology and work environment workers have to upgrade their skills
frequently. According to the Talent Shortage Survey by global employment agency Manpower
Group, In India 61% had trouble recruiting the right workforce. Developing nations have to
narrow the skills gap and produce more workers capable of doing talent intensive jobs that
require higher qualifications.

Transition from manufacturing to service

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

New functions of the trade unions

With the change in time and type of work trade unions have different challenges in front of them.
Trade Unions are trying to catch up with the changes, tapping the new requirements and changing
their working style with time. Some of the new functions of the trade unions include1. Communication- Many large unions publish a newsletter or a magazine, with the main aim of
clarifying their policy or stance on certain principal issues, as well as to pass on information
about their activities.
2. Welfare activities- Many unions are engaged in a number of welfare activities, such as
providing housing and organising cooperative societies to improve the quality of workers'
lives. The Textile Labour Association (TLA), Ahmedabad, for example, has ventured to
organise self-employed women (in the Self Employed Women's Association [SEWA]) and has
even started banking activities for this purpose.
3. Education- Unions make efforts to launch educational programs for workers to enhance their
knowledge of the work environment and to inform them about issues concerning them,
particularly those regarding their rights and responsibilities and regarding procedures and
systems that exist in the workplace for redressing grievances.
4. Research- Union negotiators need updated information to be systematically collected and
analysed at the bargaining table. They also need to backup their wage demands with
knowledge of the industry, of productivity, and of comparative industry practices.

Conclusion
Trade Unions are vital institutions in an Industrial Relations System. Since 1991, the IR scenario of
the country has been changing. The State Governments industrial policy is mostly favoring to the
employers. Decisions are coming for the industries. Their interest is given priority. Unionism
representing the ethos of collectivism appears to be getting marginalized. These institutions are still
being afflicted by age long maladies like politicization, rivalries. In this context, quest for the future of
unions as an industrial as well as socio-political institution is of great importance.
Trade unions must reinvent themselves to sustain their organization in the years ahead. Most
important challenge for unions in the 21st century will be to shift from the old strategy of
confrontation and conflict to one of cooperation and collaboration. Education and human resource
development activities which have been often cleverly used by the management could be used by
unions as effective policy instruments to reduce the vulnerability of informal sector workers. Trade
unions in India, for example, could play an important role to re-train and rehabilitate the large number
of workforce who will be he required to be separated from the Indian public sector enterprises and
state establishments.

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