What should trade unions in Indian do?

What should Indian Trade Unions Do? An Agenda for Trade Unions at the Risk of Sermonising!
K.R. Shyam Sundar*
Abstract

Collective institutions in general and trade unions in particular have been weakened by the developments in economic and other spheres. But they have taken strong measures both at the local and global level to revive their organisations. Trade unions in India are feeling the heat and they need strategies to revive the workers’ movement. This paper, combining theoretical and empirical aspects, seeks to present an agenda for trade unions in India to act upon.
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Introduction
The history of trade unions in India as in many other countries which came under colonial rule was influenced by the “colonial model” of industrial relations (see Shyam Sundar 2005 for features of the model). Though the objective conditions needed for the emergence of trade unions existed, workers needed the assistance of the outsiders, especially from the social and political spheres, to form trade unions. This facilitated close alliances between political movements such as the nationalist, communist, socialist etc. and the labour movement. These surely led to multiplicity in and fragmentation of the union movement, which feature continued even after political Independence. Political and governance considerations influenced formulations and strategies in the union movement (see Shyam Sundar 2005, 2008). The colonial model of industrial relations in general was continued after Independence for various reasons (see Shyam Sundar 2005). The union movement grew greatly aided by the state interventionist model which determined most of the substantive and procedural rules of the industrial relations system (IRS) and the labour market operations. The union movement won many a privileges more via the “political route” (political exchange, tripartite bodies, etc.), and “judicial route” than by the “market route” (i.e. strikes, collective bargaining). Such benefits and privileges included institutionalization of dearness allowance (D.A.), legalization of bonus and a basket of social security benefits, employment security, regulation of
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Reader, Department of Economics, Guru Nanak College, Mumbai University
conditions of work for vulnerable workers like the contract labour, child labour etc. The judiciary played a significant role in creating an industrial jurisprudence helpful to the cause of labour rights. The state has not accorded the organising and striking rights to its employees and used its “might” to crush “direct actions”; on the other hand, it created a regulatory framework governing strikes (and lockouts) in the private sector which made conduct of “legal strikes” well nigh impossible (Ramswamy 1984). But, the trade unions having achieved some of the rights via easy routes and well armed by these, flexed their muscles and adopted radical pressure tactics like the “gherao”, industrial violence and “bandhs” (owing to their political colour). Pluralism was perceived as inefficient and costly to economic growth; the state and the employers responded with repressive and counter-offensive policies and actions that silenced the unions for a while (see Shyam Sundar 1996). The big and politically costly stoppages like the Bombay textile strike were handled by the state-capital coalition in a manner that spelled disaster to the union movement itself. Factors like the rise in labour militancy, challenges posed by trade unions to efficiency enhancing measures, rise in real wages (labour aristocracy thesis) and the alleged resultant poor employment growth, myopic and sectional organizational vision of the unions (by leaving out the millions and concentrating on the hundreds, so to say), political clout of unions and so on questioned the social legitimacy of trade unions. The economic times meanwhile changed. The state and the political class began to distance themselves from the actions of the unions. The judiciary also changed its tone, arguably conforming to the new economic logic and structure. The new economic environment weakened the collective institutions and the critics chose to question their very relevance. Trade unions in India as elsewhere (see Kaufman 2006) face challenges and need an agenda for survival if not for revival. I map out the challenges and attempt to provide some answers for the same.

The Global Context
Researchers have observed an “inverted U” pattern in union membership and density in many countries (Kaufman 2006; Lansbury et al 2004). But, researchers point out that the declining tendency has not been universal as can be seen from the table below.
Table 1. Trends in Union Density in Selected Countries
Region/Period
Decrease
Increase
Stable/Little Change
OECD
1970 to 2003
Australia, New Zealand, Japan, France, Netherlands, Ireland
Finland, Sweden, Denmark, Belgium, Spain
Norway, Korea, Italy, Canada
Latin America and Caribbean
Argentina, Bolivia, Columbia, Ecuador, Gautemala, Jamaica, Mexico, Panama, Peru, Uruguay
Chile, Costa Rica, El Salvador, Dominican Republic
Honduras, Panama
Others
India (80-96), Malta (80-99), Turkey 84-2001), South Africa (88-93)
Slovakia (96-2000), Singapore (80-2002)
Taiwan (89-2003), Bermuda (92-95)
Note: Figures in brackets indicate years.
Source: Blanchflower (2006)

The number of countries that do not show a decline almost equals those that show itSome European countries (e.g. Scandinavian countries) are exceptions to the so-called “global declining trend” global trends. Secondly, other researchers have noted variations in the extent of decline (Lansbury et al 2004). Thirdly, there have been tales of union revivals in several countries owing to organizational drives, mergers etc. India figures in the category of ‘decrease’ in the table shown above; this has been the estimation by several researchers and union leaders (see Shyam Sundar 2008 for citation of the references). It is surprising even shocking that researchers, especially the ‘foreign researchers’ use the union membership data despite its incurable shortcomings. The weaknesses of membership data stems from poor submission of information by trade unions and processing of data by the state labour departments (see Shyam Sundar 1999, 2008).

Secondly, what has been the picture as far as union rights are concerned? Asia figures poorly in the ratification of C.87 and C.98, while the record of Africa and Americas is far better (see Shyam Sundar forthcoming for more details). In Asia, our neighbours’ record on ratification of core labour standards in general and the two standards on unionism in particular is far more impressive than us (http://www.ilo.org/ilolex/english/docs/declASpr.htm, accessed 5 October 2008). The environment in most developing countries is not conducive to healthy unionism as allegations on employers’ interference, anti-union discrimination and right to strike have been the main issues that have been examined by the ILO Committee on Freedom of Association (CFA) (see Fig. 2.1. in ILO 2000; Table 2.2, p.27 in ILO 2004; Table1.3 in ILO 2008, p.10 A.2.). The Asia and the Pacific regions witnessed massive increase in the allegations in the last few years, though the number of allegations emanating from the Americas is still far higher (Ibid.). But a more comprehensive data is the number of violations annually counted by the International Trade Union Confederation (ITUC) (see Shyam Sundar 2008 for assessments of the data bases on these issues).
Table 2 Number of Violations by Categories and Regions, 2007
Particulars
Africa
Americas
Asia & the Pacific
Europe
Middle Ease
Total
Deaths
24
80
37
0
3
144
Death threats
4
31
10
0
0
45
Torture/beatings/injuries (Physical damages)
133
97
427
14
161
832
Arrests
832
195
2874
23
1035
4959
Detention
65
1
353
8
57
484
Imprisonment
0
3
14
0
3
20
Dismissals
2126
523
4865
964
149
8627
Total
3184
930
8580
1009
1408
15111
Source: http://survey07.ituc-csi.org/stats.php?IDLang=EN, Accessed 5 October 2008

The Asia and the Pacific regions accounted for 57 percent of total violations in 2007. They have worse record as far as deaths (next only to the Americas), physical damages, arrests, and dismissals than other regions – the police state perspective largely applies to this region. The foregoing quick review suggests formidable challenges for trade unions in the world and for those in India.

The Agenda
Back to the Basics: Organising
There are two aspects to the future of union membership, viz. statistical basis and organizational strategies. Some researchers have predicted on the basis of statistical calculations ‘perdition’ of trade unions in the U.K. rather than ‘resurgence’ (Metcalf ?). What is going to be the scene in India?

I present below the annual average growth of registered trade unions in India for over five decades to study the pace of union organization. The data clearly shows that there has been slowing down in organising unions in the last two decades or so.
Table 1 Average Annual Growth Rates of Registered Trade Unions, 1950-2004
Period
%
1950 – 1959
12.55
1960-66
4.97
1967-82
6.60
1980-84
5.30
1986-90
2.93
1992-2004
2.47
Note: Growth rates calculated from the data in Indian Labour Year Book and Indian Labour Statistics (various issues).
The growth rates of the last 10 to 15 years are likely to be different as the Labour Bureau was providing only ‘estimated’ number of registered unions which often meant reppetion of figures of previous year(s) in the case of the states not submitting returns, which were many.

The slow down began immediately after three major show downs, the Bangalore public enterprises strike (1980-81), the Bombay textile strike (1982-83) and the jute industry strike in West Bengal (mid-1980s) and it worsened in the post-liberalisation period. The formation of new unions in Maharashtra and West Bengal showed a decline during this period (Labour in West Bengal (various issues); Shyam Sundar 2008). Secondly, the inadequacy of unionism is evident from the fact that the average number of registered unions in 2000-2004 constitute only about one-fourth of the establishments in the organised sector in 2001 (http://dget.nic.in/publications/aer/annex2000-01/ann1.pdf, accessed 5 October 2008). It shows two things. One, trade unions, especially the central trade union organisations (CTUOs) have been “pounding” only at the “already unionized establishments” which reflects their poverty of organizational skills and vision. Two, it shows that never-organised establishments constituted significant proportion even in the so-called organised sector. The inadequacy becomes sheer poverty of organisation if one considers the proportion of registered unions in the 5.83 lakh establishments employing more than 9 workers (as enumerated by the Economic Census 2005, see GoI 2006). The trade unions have been battling over the “core” segment of the working class and fought many a bloody struggles over two issues: one, displace the existing union or a faction and two, locate themselves in the premium segments of the organised sector like public enterprises, railways, banks, insurance, cotton textiles, pharmaceuticals, engineering etc.

Membership depends on workforce rather than labour force in India where the trade unions do not administer unemployment benefit schemes or provide any kind of service to the unemployed. The basic facts regarding the labour market may be kept in mind while assessing the future of unions. Labour force, workforce and unemployed grew between the recent two rounds of employment estimation by the NSSO GoI 2008, Table 10.9). The growth in employment took place largely in the informal economy (even in the organised sector), indicating poor quality of employment (Bhalla 2008, p.13). The self-employed constitute a significant share of the total employment but is also growing and accounting for a large slice in employment growth, while the casual employment declined marginally and regular employment (surprisingly) showed a rise. The informal economy workers count grew from 361.7 millions in 1999-2000 to 422.6 in 2004-05. The so-called organised sector shed 1.79 million jobs during 1997-2005. The share of contract workers in total organised manufacturing employment has risen in many states (Pages and Roy 2006, p.375). Organised manufacturing sector witnessed considerable hemorrhage of employment during 1997-2005 (1.28 millions), while the new sectors to some extent compensated the loss in it. Male employment declined by 2.17 millions while the female employment increased by 0.38 million. The patterns of employment are not encouraging for unionism and they face formidable challenges.

The verified membership of 12 major CTUOs in 1989 (pre-liberalisation year) and in 2002 (post-liberalisation year) could be used to figure out the tendencies in aggregate union membership – the CTUOs account for 35 percent of the estimated total membership in Maharashtra and about half of the reported membership in Tamil Nadu (2008, ??). I guess that they may be accounting at least half of the total membership in the country (if such “fantasy” exists!). The non-agricultural membership of the 12 CTUOs increased from 1054 million in 1989 to 17.14 million in 2002 (see John 2007 for detailed data). The CTUOs density for the non-agricultural sector declined slightly from 9.71 percent to 9.28 percent. The relative stability in this sector shows that unions are paying attention to “never members” (see Bryson and Gomez 2005 for use of this concept in the U.K. context) and “never organised establishments” within the so-called organised sector.

The total membership of 12 CTUOs (including agriculture) increased from 12.27 million in 1989 to 24.60 million in 2002. The CTUO density rose from 4.50 percent in 1989 to 6.39 percent in 2002 (the number of workers counted on current daily status by the NSSO is the denominator). This shows that most of the organising in the recent past has been in the so-called unorganised sector. Trade unions have been pushed to this frontier because they were myopic and unimaginative (evidenced by the high non-coverage, see below) and helpless in the organised sector (indicated by sharp decline in employment) and the moral sting that they neglected the large unorganised sector.

In countries in the West, there can be talks of union renewal because they peaked in the past only to decline later and hence talks of union membership perdition are relevant there. The question of peak union density depends on what does one take as “potential membership”. There are also issues relating to who should be counted as union members – for example, does one count the unemployed as in the European countries where the “ghent” system prevails. While several European countries with centralised bargaining systems in their heydays peaked to union density scores over 70 percent, the Anglo-Saxon countries with decentralised bargaining systems considered much smaller figure of 30-40 percent as reasonable??. India is yet to peak, even if one considers union density in Asia [it ranges from 4-7 percent (in the lower levels) in India, Thailand to 20-37 percent (in the higher levels) in Singapore, Sri Lanka, Taiwan] (see contributions in Benson and Zhu 2008).

To expand union coverage and to organise atypical and other workers in new sectors, trade unions need to go back to the basics: organising. In other words, there is a need to move from union movement to labour movement. Then, the relevant question to ask here is: how to mobilize workers to join unions. The recent theoretical innovation called “organising model” (as opposed to “service model”) provides some direction in this regard to trade unions. The fact that this debate has not figured in India speaks volumes of the state of things here.

In the traditional model of ‘service unions’ trade unions treated the members as ‘clients’ and catered to their needs and conducted the “routine” businesses of negotiation, grievance redressal, striking, conducting legal battles, etc. In this model, the trade unions revolved around the existing membership and spent their energies catering to their needs. The ‘organising model’, on the other hand, attempts to break new ground by various strategies (such as proactive recruitment drives and campaigning, emphasis on personal contact in organising, workers’ involvement, creation of core activists etc.) to organize historically neglected workers, energise the union movement by enabling active participation of members, and create identities both at the workplace and outside it. It is about transforming the union movement into a labour movement. The declining union membership in several countries prompted organising initiatives and other measures like organizational restructuring to revive the union movement – for example, the AFL-CIO formed an Organizing Institute (OI) (http://www.aflcio.org/aboutus/oi/main-cfm, http://www.tuc.org.uk/extras/10anniversary.pdf), the Trade Union Congress instituted an Organising Academy in 1998, and the Australian council of Trade Unions started Organising Works Programme in 1994. Trade unions claim that these initiatives have paid significant dividends (see http:www.tuc.org.uk/the _tuc/tuc-8365-f0.cfm?theme-newunionism). Organising initiatives in India need to be different from those that have been initiated in the West for we have a large informal economy.

Penetration into New Sectors: Problems and Prospects
While these trends are encouraging, it is well known that trade unions have not been able to penetrate the “new sectors” like the information technology (IT) and IT enabled services (ITES) sector, hospitality, new retail establishments like the shopping malls, units in the special economic zones (SEZ), and so on.

The SEZ has proved to be an “impenetrable” for unions for several reasons such as tight gate security, less scope for socialization of workers (as workers are transported by company busses in and out under security), the absence of “home contact” strategy as workers are dispersed unlike in the past, and so on. The efforts made by CITU in Vizag and other places have not proved to be successful.

Unionization of new segments like new retail sector, IT and ITES establishments (call centres) has become difficult for various reasons. These new sectors employ more women employees and are being perceived as impacting gender equality issues (Piyush and Gayathri 2008; Vijayabaskar 2008). We will firstly talk about the IT sector. The busy work schedules, professional and white collar title, middle class aspirations of the employees, attractive work conditions, human resource policies (providing alternatives to unions like internal grievance mechanism, team leaders, easy access to officers, etc.), the pro-employer state policies (exemptions from restraining legal clauses, protection during ‘bandh’ etc.), mobile character of capital, employer opposition, fluctuating and uncertain business conditions (owing to their links with international trade and currency exchange) etc. are some of the important factors that work against unionization of these employees, though under tremendous stress (see Piyush and Gayathri 2008; Sarkar 2008; Vijayabaskar 2008). Not only the demand for unions is poor (see Chatterjee 2005), but also their supply. Union organizing in the IT industry began recently and the important organizations are, viz. Union for ITES Professionals (UNITES, set up in 2004), West Bengal IT Services Association (WBITSA), the Centre for BPO Professionals (CBPOP) and Young Professionals Collective, (a welfare association representing employees in the call centres in Mumbai since 2006). These organisations have poor membership base and one of them (UNITES) for reasons of survival is seeking affiliation with the INTUC (Sarkar 2008, p.87). It is significant to note that the employers of BPOs do not want a trade union but a NGO (they are ‘soft’ options to the firms) as unions would hamper their growth (http://infotech.indiatimes.com).

Some theoretical constructs could help us to understand the dynamics of industrial relations in these sectors. The discontented employees have basically two choices, to ‘voice’ or ‘quit’ (Freeman and Medoff 1991). The latter is possible if the labour market is tight, i.e. alternative jobs are available. In these industries, easy availability of jobs, relatively higher human capital endowment (in some operations) and young profile of employees have resulted in higher labour turnover (i.e. accessions and separations). Secondly, women employees who populate these sectors (IT or retail) do not see career in this industry and there are several who underemployed (see the survey results of Anthony and Gayathri 2008; Vijayabaskar 2008). Trade unions flourish when employees feel “rooted” in the organisations and not when there are transient workers. Thirdly, the employers adopt “unitarist” perspective of employment relations, where collective institutions are abhorred and employment relations are viewed as internal affairs. Fourthly, state support to these sectors is significant.

The traditional model of trade unionism is ill suited to these sectors. Secondly, the requirements of these professional workers relate more to jobs (cultural and social bonding, some support systems to cope up with work stress) and job market factors like skill upgradation and relevance, advances in technology and job opportunities. Any organisation of these employees doing emotional labour need to incorporate these to establish “organisational space” in them.

Voice Mechanisms to Non-Standard Workers: Role of Trade Unions
Trade unions need to integrate the atypical workers like the contract workers into the mainstream process by providing them “voice” mechanisms. Both trade unions and the regular workers viewed atypical workers like the contract and casual workers in approaches ranging from indifference to disdain. But things are changing. There are instances where both mainstream trade unions and others have organised the contract workers and even reached collective agreements concerning them, e.g. unionization of contract workers in the Airports Authority India in Mumbai and other cities, in the Rashtriya Chemical Fertilizers, in the Reliance Energy Ltd. (REL) (all in Mumbai) (see Shyam Sundar 2007 for further details), in Neyveli Lignite Corporation in Tamil Nadu (see AITUC 2008, b). Again, in a recent meeting of the Central Public Sector Undertakings held in this year a large number of contract workers and their union leaders participated and the conference resolved that the “permanent workers shall fight for the cause of the contract workers also in addition to their own” (emphasis original) (AITUC 2008, a). Similarly 20,000 contract workers in Bokaro steel plant were on the path of struggle demanding the public sector management to pay them higher minimum wages as per the official guidelines and not to deny gate passes which results in loss of work (see AITUC 2008, a; see also AITUC 2008, c). The trade union agenda for these workers should concentrate more on other forms of securities (work, income, skill etc.)than employment security (which was reflected in their demand for automatic absorption upon abolition of contract system) (see Shyam Sundar 2007 for more information on the agenda).

The Challenge of Global Labour Flexibility Strategy
The international and domestic organisations are relentlessly driving the agenda of “deregulation of the labour market and IRS” in three ways, viz. intellectual, empirical and policy prescriptions. First, I briefly outline the theoretical formulations that serve the basis for the other two. There are two aspects of the strategy, decollectivisation and labour market deregulation. The ideas are a combination of Economics and Politics. We will pause here to briefly note the ideas that inform the global strategy. The economic theories have almost always viewed trade unions in approaches ranging from disapproval to disdain. The classical economic logic has been that in the market economy trade unions cannot alter wages owing to the fixity of wage fund and even if they did, it would hurt capital accumulation (as wage rise can only be at the expense of profits), depress wages owing to population pressure (resulting from higher wages), maximize sectional interests or reduce employment. The neo-classical theory accuses trade unions of acting as “monopolies” to drive up the wage rate above the market rate, which act is often achieved by the threat of industrial sanctions and restrictive actions. Thus, these collective institutions are seen as introducing “rigidities” in the functioning of the market economy, which it regards as an “ideal” one. They emphasise individualization of employment relations, where the workers behaving like capitalists would offer their services to the best ‘buyer’ (Hanson and Mather 1988). The “soft” form of the theory sees collective institutions such as free trade unions and collective bargaining as forming integral part of a free and democratic society. They could cause negative effects; but these effects will be nullified by constraints imposed by the competitive market environment and decentralised bargaining (World Bank 1995; OECD 1994, a; Pencavel 1996, 1997).

The empirical and the policy making strategy are often intertwined. The international and national organisations conduct surveys to issue comparative reports of the competitiveness of firms/countries/regions and the ‘ideal-ness’ of business environment in countries. The most popular among these are the surveys by the World Bank, the Institute for Management Development (IMD), and the World Economic Forum (WEF). These exercises are principally from the point of view of the business firms. The rational expectation guiding investment decisions is that capital should flow to regions where there exists an ‘ideal’ business environment. Secondly, social scientists use innovative data construction (on labour regulation) and powerful econometric techniques to “derive” results suiting their neo-classical (neo-liberal) stance. These are well reviewed and do not bear repetition for lack space (see Freeman 2005; Shyam Sundar 2007, forthcoming for a good review of them). The essence of the strategy is that the survey results and the empirical studies are used to derive policy prescriptions that conform to the deregulation perspective and these are pushed on the governments by powerful international financial agencies and the multinational enterprises (MNEs); they are lapped up selectively by the domestic capital.

These challenges are formidable. But these could be countered in three ways. One, social scientists should pick up inconsistencies and flaws in the findings and methodologies of these exercises and publicise them, which is being done by international trade union organisations, the ILO, and the researchers (e.g. Berg and Cazes 2007). The basic argument of the critics is that the surveys are used to promote labour market deregulation in the developing countries and they at the same time do not factor in the fundamental human rights in their assessment criteria, though they have been endorsed by the global society (see Rodgers 2000). For example, there are countries like Saudi Arabia, Uganda which are rated high in terms of employment flexibility, but fair poorly in terms of human rights (see Shyam Sundar forthcoming for a comprehensive critical review of all major exercises). Two, the surveys of labour standards compliance and of labour rights violations should run parallel to the business exercises and there should be negotiations between the global agencies to persuade the business survey agencies to include labour standards as a component of their surveys. It is distressing to note that the dialogue process initiated by the global unions like the ITUC (formerly the ICFTU) and the Global Unions with the Bank on the controversy surrounding the DB exercise failed to produce any concrete results (see ITUC/Global Unions (2007). Three, there exists counter perspectives and trade unions need to seize on them. There are three perspectives that counter the deregulation perspectives. The “voice” model of freeman and Medoff (1991) argues that voice mechanisms like grievance procedures, strikes in fact enhance efficiency in a number of ways (say by reducing labour turnover or reducing transaction costs via collective bargaining). Secondly, the ‘decent work’ perspective of the ILO also envisages an active and meaningful role for trade unions (see Ghai’s volume 2006; Shyam Sundar forthcoming for an elaborate discussion of decent work). Decent work encompasses four dimensions such as work and employment, social protection (security), rights at work, representation and dialogue (see Rodgers 2000; Ghai 2006). Decent work is dignity at work which can be ensured by voice and participative mechanisms. Representation could assume the classic form of trade unionism in the case of wage labour and other social forms in the case of non-wage labourers (Rodgers 2000).

Social Partnership as a Means of Union Revival?
The employers’ organisations, the national commissions and researchers in India and abroad have been advocating ‘social partnership’ as a route to mutual gains and economic prosperity both at the micro and macro levels (see Badigannavar 2007). Social partnership is necessary because (a) union power has been weakened in the new economic environment (shift in balance of power argument), (b) strikes are withering away and irrelevant and costly (strike irrelevance argument), (c) new employees do not want unions and class conflict (workers as capitalists argument) (see Badigannavar 2007; Ramaswamy 2000; Hansen and Mather 1987 for expositions of these and other arguments). But two important justifications for adopting “social partnership” model relate to union institution. Social partnership conceives of inclusion of trade unions in the managerial decision making process which will enable unions to regain their “institutional centrality and presence” in industrial relations. Two, it could foster union growth (see Terry 2004). The issue here is whether cooperation should be understood more as a ‘functional’ necessity (as would do the pluralists), as an ‘ideological’ component (as would the unitarists and HRM theorists) or as a “no alternative option” as would the social partnership theorists.

Some disturbing questions arise in this context. Whether employers want trade unions and collective bargaining? Who does it benefit? Does partnership mean labour quiescence only? What about sanctions by and flexibility actions of the employers? Is it mutual gain or gain for the employer at the expense of labour? The amount of union busting and union avoidance (both enjoy the status of an industry in the U.S., see Logan 2006), de-recognition disputes, lockouts, etc. show employers in poor light. The benefits of cooperation may be meager and too great a price to pay. It is not a coincidence that the share of wages in total wealth created should fall rather steeply should be accompanied with less workers’ strife and a rise in employer militancy in India (see Chandrasekhar and Ghosh 2006; Shyam Sundar 2008; ???).

Trade unions at the micro level in India have largely accepted the competitive theorists’ proposition that workers’ interests are intertwined with those of the firm and cooperation is important for both. But they have used the strike weapon at the macro level for protection of “hard won rights” at least on the “formal terrain” (see Shyam Sundar and Venkata Ratnam 2007). More than a dozen all-India strikes have taken place in the last decade and a half (see Shyam Sundar 2005). Though the number of strikes is declining, workers involved (mobilization aspect) and the work days lost have not been declining consistently. Strikes revitalize union movement, help to protect and sustain hard fought benefits and privileges secured over the years and cannot be ruled out. Finally, the empirical evidence on the impact of social partnership is not encouraging; at least it has not promoted union renewal (see Badigannavar 2007; Terry 2004).

Broad-basing Labour Movement: Space for Non-union Forms of Organisations
The argument here is that coalitions between trade unions and other civil society organizations should be based on ‘organizational logic’. In other words, why should there be alliances between workers’ organizations and others? The organizational logic here is that labour rights are seen as a part of human rights and that these rights are in a sense connected. The conventional argument is that labour rights focus on various aspects related to worksites (such as minimum wages, non-discrimination, union and strike rights etc.) while civil, political, and social rights exist in other realms. This compartmentalization separated the two. Perhaps as a result, labour rights and human rights have moved in parallel lines rather than merging (Hepple 2006). There is definitely a need to integrate the two, as Hepple (2006) argues. Trade unions and social organisations need to coalesce to integrate labour rights in the broader human rights perspective which will inform the labour movement. This is so much necessary as not only political borders between countries but social borders between work and community are fast dissolving. Hence, trade unions and the other civil society organisations should come together. Secondly, there is a need to for alliances because organising the informal economy which consists of varieties of occupations and work forms needs different organising strategies and involvement of other social organisations. The limitations of traditional forms of unionism and the emerging new social agencies to organise various segments of the informal economy are well known (see e.g. Gothoskar 2005; Ramaswamy 2000; Shyam Sundar 2000?). While traditional trade unions confined themselves to factory space and talked divisive language “forma;/informal”, “men/women”, “regular/contract or casual”, the new forms of labour organisation like the SEWA went about organising the informal economy workers and “new social subjectivities” like the consumers’ movement sought to better the conditions of work in the supply chains in the poor countries (see Chang and Wang 2005). Their biggest contribution is the creation of “multi stakeholder initiatives” (MSI).

Trade unions in India have not been warm to the new forms of labour organisations such as the SEWA; the stiff opposition displayed by the CTUOs to the inclusion of SEWA as one of the CTUOs for membership verification and affiliation to the ICFTU cannot be forgotten (see Shyam Sundar 2007 for details on both the episodes). While the NGOs are doing good work in the unorganised sector and provide valuable inputs through their research studies for the labour movement, they basically lack representational legitimacy (non-membership organisation, management by funding agencies, lack of accountability) and are “soft” organisations with “soft” mandate (like Company Codes of Conduct) see http://citucentre.org/org_structure/conference/General_Secretary_Report.html; see also Shyam Sundar 2007). Hence, trade unions should adopt a “cautious” approach towards thw NGOs and should not allow “the NGOS to usurp the role of trade unions” (Ibid.). I take the view that the mobilisation of “new workers” requires an “organic” movement embracing both factory and community spaces, which is the essence of social movement unionism (SMU). And, there exists enough common ground between the two for joint action. While trade unions constitute the pivotal centre of the social movement, there can be, to start with, issue based and local coalitions with other community organisations. There are instances to show it could be done (see for e.g. Gothoskar 2005).

Globalisation of Trade Unions: Trends, Perils and Prospects
Global unionism, rank-and-file internationalism (spontaneous outbursts outside the official organizational framework), social movement unionism and cyber unionism are the responses of the workers to globalisation of capital. The global unionism is based on the premise that while changes in the product market has surely disorganised and weakened trade unions but at the same time they have provided opportunities for new orientation to union movement. The fantastic changes in the transport, information and communication technologies that promoted international divisions of labour also aided the trade unions in (a) building networks and alliances, (b) conducting global as well as local struggles and coordinate them, (c) disseminate information in real time and (d) build solidarity. The basic logic for talking about globalization of the union movement is quite old. Capital has been extending its power and control globally and trade unions should follow the suit (Breitenfellner 1997; Gumbrell-McCormick 2004,). Secondly, the organizational forms and structure of labour organisations are in a sense determined by those of capital. Social movement unionism evolved or erupted to redefine the social, economic and political order wherein trade unions and other segments of the society forge alliances and challenge not only the state but also private institutions (both domestic and international). The logic for social movement unionism is simple: globalization process touches the lives of not only workers but other sections also and pay and conditions of work are no longer determined within the plant but even at the global level (via policy conditionalities). The labour rights issues are intertwined with larger issues like democracy, environmental protection, consumer movement etc. (see Ai Yun 2002; Ramsawamy 2000; Ramaswamy 2005; Moody 1998 for commentaries and case studies of SMU). Web unionism (see the sites like labournet, labourstart.org of Eric Lee, sw@socialistworker.org, China Labour Magazine, labourfile (India) etc.) is another important constituent of gloablising trends in unionism and it is hailed not only as an important instrument of communication but also a membership augmentation, a struggle site (cyber picketing), and democracy promoting mechanism (see Lee 2001 and the references cited in Shyam sundar 2003).

With the onset of new economic forces, the global trade unions are seeking to broaden their base by a process of mergers, alliances and integration. Global unions realized to the need to imitate the corporate forms of restructuring as did the local unions in several countries (as noted above). The ICFTU merged with World Confederation of Labour (WCL) in November 2006 to form International Trade Union Confederation (ITUC) and the ITUC has been welcomed by the International Organisation of Employers (IOE) (ILO 2008, p.29). The objective of the merger is to strengthen the union movement and be able to exert more pressure on governments and companies (see http://www.icftu.org/displaydocument.aspIndex=991225307). The WFTU represents the other polar organisation which lost its steam with the collapse of the Soviet-bloc and survives on members mainly from the developing countries (Gymbruell-McCormick 2004, p.188). Both have attempted consolidating measures within their ranks. The “Global Unions” (see http://www.global-unions.org for more information on this) and the “Council of Global Unions” (to foster closer cooperation between the global unions, see http://www.global-unions.org/spip.php?rubrique27) are some important forms of organisational consolidation at the global level. While the Left-oriented CTUOs and sectoral unions in India like the AITUC, CITU, AICCTU, UTUC etc. are affiliated to the WFTU, HMS, INTUC and SEWA are affiliated to the ITUC. The Asia-Pacific Regional Organization (ITUC-AP) was formed to create regional unification; this is a major attempt to recognise the regional identities and aspirations by the international body.

It is nice to talk of international solidarity and there have been encouraging sings on this front (see Gymbruell-McCormick 2004; Lee 2001; Moody 1997; Ramaswamy 2005; Breintenfellner 1997 for details of positive action). But there are several thorny issues and I briefly review them here. The basic issue that has been at the heart of international solidarity is whether there will be genuine solidarity between the unions in rich and poor countries or will it be characterised by “dependence” (Gymbrell-McCormick 2004). The divide between the North and South within the ICFTU on the issue of social clause (and the probolem of global labour arbitrage) or export subsidies (see ICFTU online for further information on this) is well known. There are other problems in forging solidarity at the global level. Economic nationalism can raise tempers and lead to ill founded fears and accusations such as stealing jobs, protectionism etc. Global diversities in the structure of unions and collective bargaining – both being often chaotic in the developing countries - prove to be operational obstacles. In many countries, union movement is fragmented and unity among the peak bodies is low. The international union movement is divided between the pluralistic Anglo-Saxon model of industrial relations espoused by the ITUC and its GUFs (see for e.g. Greenfield 1998; Gymbruell-McCormick 2004; Hudkinson 2005; WFTU website in general) and the class conflict model followed by the WFTU.
But there are common concerns and there are encouraging signs for global action (see Breitenfellner 1997; GLS 2006; Shyam Sundar 2003). The “International Framework Agreements” (IFA) are a case in point. It is a strategic response to globalization and creation of global production chains (see ILO 2008 for more information on them). The significant aspect of these agreements is that they are founded on the core labour standards. They mostly cover the subsidiaries of the MNEs and in some instances the joint ventures, suppliers, and subcontractors also. There are new issues such as “green jobs” (jobs covering the product and the processes which do not spoil the environment), where global as well as social alliances are possible and the global alliances will benefit the developing countries like India for issue sensitization and adopt a programme of action for both prevention and cure (GLS 2008). To be sure, there will be conflicts. India needs to work on the prospects of forging meaningful alliances for networking (both physical and electronic), information gatheration (especially on the MNCs), global solidarity against local abuses (like in south Korea or China) and build a strategy against the flexibility driving international institutions.
From State Patronage to Voluntarism
The trade unions in India have been accused of using “state patronage” (laws, compulsory adjudication and conciliation, state protection via politics etc.) in lieu of “bipartism” to build the “rules” of employment relationship. There are healthy changes with regard to both. There is some evidence to show that the role of conciliation and compulsory adjudication in settling work stoppages and industrial disputes is declining in some state like Maharashtra and Tamil Nadu (Shyam Sundar 2008 ??). Both the trade unions and the employers in recent times are emphasising the need for greater role for bipartism – this partly stems from the disillusionment with the state, whose approach varies from hostility to indifference to unions (Shyam Sundar 200?; Kuruvilla and Erickson 2000). Adversities have disciplined both the parties and productive forms bargaining such as effort bargaining (in some cases productivity bargaining), cooperative bargaining (accept work reorganization, flexibility measures, etc.), concession bargaining (agreeing to wage cuts, freeze on dearness allowance, increase in workload etc.) etc. are taking place (see for e.g. Shyam Sundar 2008; Venkata Ratnam 2003). It may be noted here that the employers have been aggressive in their bid to reform the substantive rules (such as basis for wage revision, restructuring of dearness allowance, work load revision, etc.) and assert their managerial rights (right to deployment, outsourcing etc.). Two important developments stress the changing role of unions. Trade unions it appears have shelved their ‘ideological approach’ and instead adopted ‘pragmatic approach’. Trade unions have managed to make trade offs necessary to protect the interests of their members - for example, in one company trade union agreed for shutting down unviable departments in exchange for regularization of casual workers (see Shyam Sundar 2007).

Bipartism cannot stand alone and unions do not thrive when the state goes on the offensive (the classic voluntaristic unions in the U.K. and the U.S. showed attrition when the state in both turned hostile). Political and social power need to supplement voluntarism not for state patronage but to become more effective pressure groups in a pluralistic set up. I consider this issue below.

From Politics of Fragmentation to Politics of Consolidation
The involuted and politicized union movement resulted in disillusionment not only to critics but also to those in the labour movement and there have been two responses. Firstly, “un-affiliated (enterprise unionism or independent unionism)” and “new forms of labour organisation (like the SEWA)” have been formed. It is interesting to note that the politically affiliated unionism as symbolized by the CTUOs (excluding Shiv Sena union) accounted for just around 36 percent of the total estimated membership of registered trade unions in Maharashtra in 2002 (see Shyam Sundar 2008). Bombay (now Mumbai) became the home of enterprise unionism (see Davala 1996; Ramaswamy 1988). But the limitations (militant internal leadership, economism, narrow class base and absence of political power) of this form of unionism became obvious to even the union leaders and there were two forms of aggregations: (a) at the group level (e.g. federation of all unions in all branches of Hindustan Lever in India), which was sought to be broken by the employers (e.g. the Hindustan Lever lockout in 1988, see Iyer 1988?) and (b) to form an all-India federation of independent unions, which did not take off in order not to create more competing peak bodies. The result is that the union field is chaotic, central or state political party affiliated (factions according to leadership within), state, occupational, industrial, enterprise, and variations of them. The biggest challenge is how to create some order from this chaos? Secondly, there have been “strains” in the relationship between political parties and their labour wings. Politically affiliated unions (the CTUOs) have not, in recent times, toed the “official or Party” line especially when the basic interests of the workers like employment security were targeted and the parties took strong line (like instructions to their labour wings to moderate militancy, desiring and introducing labour reform measures and protecting investments, etc.) (see Bhattacherjee 200?; Shyam Sundar 2003; 2005, a, b; 2006, 2007). There are three courses open to unions to “rationalise and modernise”: amalgamations and mergers of unions (both horizontally and vertically), less dependence from political parties but not from “political process”, and attempt coordinated wage bargaining. Three premises inform my suggestions. One, union “concentration” rather than union fragmentation is functionally helpful owing to economies of scale (from the organisations’ point of view), better financial position (necessary in these days of high action), stronger political power and stronger control over the affiliates. Two, unions should be as far as possible independent of the political parties and yet be able to pursue political methods to achieve union objectives. While political unionism suffers from too much politics, unionism devoid of politics is not the answer. As Flanders once remarked unions cannot do without politics. Three, there is enough evidence to show that coordinated wage bargaining, even in a decentralised bargaining structure, offers better labour market outcomes than the uncoordinated and chaotic bargaining that take place in India (see Shyam Sundar 2004, 2007, forthcoming).

World over, trade unions have been resorting to mergers and amalgamations to create “super unions” in the last decade and a half to primarily arrest decline in union strength and its financial and political power, though seen as a “defensive strategy” (see e.g. Ebbinghaus 2003; Waddington 2006). I mean by “vertical rationalisation” mergers of affiliated unions within a confederation and by “horizontal rationalisation” mergers or alliances between confederations. Whether these measures have promoted “union revival” is questionable (see Ibid.), but organisational restructuring was beneficial in other aspects such as reducing union pluralism. It is important because these measures cause a shift in the balance of power in the union movement and thus promotes “imitation behaviour”. There are two tendencies that give hope in this regard. One, labour reform proposals or measures have brought the ideologically opposite unions together (Shiv Sena and the Left unions in Maharashtra joined to defeat Congress government’s reform proposals in 2001, see Shyam Sundar 2007). The alliances are temporary and are marked by fluctuating trends in cooperation (INTUC and BMS walk in and out as situations demand, see Shyam Sundar 2003, 2006). Two, the union movement is polarised along four lines, viz. the Left oriented unions in a band, the BMS and the INTUC acting disparately but not joining the Left band, the state level political federations in some states joining the first two depending on political formulations, and the enterprise unions (who at least Mumbai hold views similar to the Left oriented ones). The scattering away of the Left since the early 1960s is too well known to recount, though they have formed alliances for governance (marked by unease, e.g. Singur incidence in West Bengal). There have been conflicting signals as far as merger between the CPI (M) and the CPI (see Financial Express 2005; The Hindu 2002). The historical allegation made in 1964 by the CPI is not easily forgotten (see Ibid.). Further, the ideologues well versed in polemics make sharp distinctions between the Left parties that are not easily digestible to the workers. To wit, “the devil lies in the details!” The formations in the global union movement can be taken to form formations and alliances here. The Left based unions can form a “Mega Left Union Federation” as (a) all of them subscribe to WFTU and thus are bound by it, (b) there is already a thriving alliance between them and (c) the “ideological differences” between them are negligible, if any (see Deshpande 1984). The HMS is not affiliated to WFTU, though they are a part of the Left alliances. Alternatively, they should send signals to the workers that they are snapping their traditional links, they are distancing from their political bosses and they are open to one and all – these are happening in Europe (see Ebbinghaus 2003). The dozen national strikes conducted in the last decade or so and the common front put up on issues like pension reform, labour flexibility, etc. by unions associated with the ruling political parties give hope that some consolidation and integration is possible.

The Unfinished Agenda: the Ratification of Core Labour Standards
An assessment of labour conditions in twenty seven emerging economies by Viederman and Klett (2007) revolving around the ILO Core conventions and the institutional framework (including governance capacity) ranked India lowly; it just betters China and Pakistan. What harmed India is the poor scoring in the governance categories (institutional capacity and implementation of laws). India fares worse in other assessments also. India figured among the top 10 worst performers in terms of their Freedom of Association Index score constructed by Cuyers and van den Bulcke (2007) – Bangladesh figures among the top 10 Best Performers which questions the validity of their assessment (see Kucera’s results cited below; see also Shyam Sundar 2008).
Table 3 Trade Union Rights Indices in the Mid-1990s in Selected Countries in Asia
Country
Trade Union Rights Index (unweighted)
Trade Union Rights Index (weighted)
Bangladesh
1.43
1.73
China
0.00
0.00
India
5.71
5.34
Indonesia
0.48
0.98
Korea, Republic of
1.43
2.93
Malaysia
0.48
2.18
Nepal
6.67
6.39
Pakistan
1.43
2.78
Philippines
1.90
1.95
Singapore
8.10
8.20
Sri Lanka
6.19
6.09
Thailand
4.29
5.04
Note: The perfect score is 10.00 and three countries in the OECD group such as Austria, Ireland and Portugal scored a perfect 10.00; while most of the OCED countries scored between 8 and 10, the U.K. (3-4) and the U.S. (4-5) scored poorly.
Source: Kucera (2007, Table 1, Appendix); see also Shyam Sundar (2008) for criticisms of this exercise.
Kucera’s exercise also shows India’s record on FoA in poor light. Though it is better than Pakistan, China, Bangladesh, but is worse than Nepal, Sri Lanka and Singapore. Again Nepal’s higher score lends doubts on this exercise also. Notwithstanding methodological limitations, the results discussed above surely point out that freedom of association record in India is bad if not worse. The starting point in creating a healthy picture of unionism is the ratification of the ILO Conventions C.87 and C.98 and strengthening democratic framework of unionism by enacting enabling provisions like union recognition and statutory obligation to conduct collective bargaining. It has been noted that the trade in the Asia-Pacific region in general and those in India in particular do not adequately use the supervisory mechanism of the ILO (http://www.training.itcli.it/actrav/courses/2005/A3-00391_work/work/workplace/sindhu_citu.etf). The ILO mechanism is important to exert international pressure on the India government regarding violations of union rights and creating positive rights. Secondly, there should be coordination with the international affiliates of the major peak bodies and a dialogue process need to be made for both ratification of CLS.

It is interesting to note that the question of labour rights as embodied in the CLS has not been explicitly listed in the charter of demands in the all India strikes – the October 2007 strike demanded: “Grant full Trade Union rights including the right to strike to all government employees through appropriate legislation” (see http://www.trade unionindia.org/programs.htm). The all India strike held in August 2008 did not even mention the issue of the right to strike (see http://pd.cpim.org/2008/0518_pd/05182008_10.htm), though the issue of right to strike has been in public domain ever since the pronouncement by the Supreme court in the case of Tamil Nadu government employees’ strike (see Shyam Sundar 2004). The trade unions’ inaction coupled with the state’s indifference on the question of right to strike (see http://www.tradeunionindia.org/tui_programs.htm) have serious implications to the larger issue of labour rights which assumes grave importance in the globalizing economy. The issue of ratification of core labour standards integral to the scheme of establishment of labour rights. The poor implementation of labour laws and the inadequate implementation machinery have led us down in the international assessment and a governance failure in the IRS (see Banerjee 2007; Reddy 2007; Sharma and Kalpana 2007; shyam Sundar 2007,a, b, 2008 for evidence on this). This issue has been figuring in the agitations by trade unions and in the dialogue process.


A Few More Worlds
Though supply constraints (such as absence of economies of scale in organising workers) are relevant in augmenting union membership, the paper’s agenda is based on five organizational logics. One, while union attrition is happening in the organised sector not just because of loss of employment but more due to “never unionism” effects, which shows that there is considerable scope for organising even in the organised sector. The vast informal economy, which the trade unions, new forms of organisations have begun to organise also offers enormous scope for organising. There is a need to transform union movement into a labour movement (the labour movement logic). Two, globalisation of capital have aided, even prompted, the globalisation of unions (the internationalism logic). Three, trade unions need to realize that organising space has moved out of the traditional factories to social and community spaces and they need to work out institutional alliances and strategies to occupy social space (social movement unionism logic). Four, the trade unions need to “restructure” their organisations as do the modern capital and commerce (like mergers, acquisitions, global spread, use of electronic instruments, etc.) to enhance their organisational and social power (the restructuring logic). Five, trade unions earn their legitimacy and commitment by providing “unique products” and that can only be through bipartism (the union commitment logic). Six, labour rights should be seen as sub-sets of human rights and thus the CLS are called fundamental human rights. The marriage between the two ushers in and even promotes social and global angles to union movement. The efficiency of the institutions lie in resisting, if not defeating the change that seek to liquidate or undermine their very existence and respond innovatively and suitably to the changes to prolong their existence and serve new and wider interests. Trade unions in India need to respond to these challenges, though they take two steps back for every single step forward!

From Labour Flexibility to Labour Regulation: Broadening of Agenda

Broadening of the Debate on Regulation

There are important economic (market failure), historical (colonial background) and social (unequal power structure), moral (protection to vulnerable groups and decent jobs) reasons to justify “social regulation” of labour market and IRS. In fact, leaving things to the market may produce socially sub-optimal outcomes such as long working hours, less than minimum wage. Markets may be imperfect and this may lead to outcomes, which are both unfair and inefficient. These necessitate institutional intervention, usually by the government; regulation may also be exercised by formal non-governmental agencies such as trade unions, or informal institutions such as social customs. Employers in their pursuit of the goal of maximization of profits may act in a manner (longer working hours, unsafe working conditions, lower wages) which may not promote efficiency. Regulations seeking to curtail abuses of employers may in fact increase the efficiency and productivity of work. Interventions are stronger where the employer abuses are greater. The most important contribution of regulation is in the “psychological” sphere; workers “feel secure” that there are agencies to ensure safe and decent conditions of work and work is something that they could look forward to doing. Labour regulation performs four vital functions, viz. to protect workers and prevent exploitation by employers, regulate employers’ decisions and actions affecting labour, provide a set of rights to and obligations on workers and their associations, and create ‘rules’ to govern the interaction between the two parties in the labour market. Institutions and processes are created to achieve these objectives and in the process the exercise is often overdone, owing to misplaced or over-enthusiasm. Over-regulation prevails as a result. It is said to be associated with bad outcomes. It (a) introduces rigidities, (b) restricts the freedom of employers, (c) hurts competitiveness of firms, (d) affects productivity, (e) inflates cost of operations, (f) takes away precious time and resources of employers, (g) results in delays, high cost of operations, and corruption and (h) increases transaction costs. The insights from the regulation literature may be further stressed here. Two major labour market outcomes of excessive regulation are (a) reduction of employment generation in the formal sector and creation of huge informal sector, and (b) under or un-employment of vulnerable groups of the labour forcer such as women, youth, coloured and backward class or even withdrawal from labour force by them. It is argued that greater regulation leads to loss of welfare of the persons who are intended to be protected. For example, it is pointed out that the rigid employment laws are strongly associated with higher female unemployment. Secondly, entrepreneurs in order to escape from the ‘regulation net’ employ less workers; this may often result in inefficient firm size. Also, these small units lie beyond the purview of regulation and become a part of the vast informal sector. Naturally workers in these informal units lose legal cover, work for lower than competitive wages, carry no social security and so on. On the other hand, government loses revenue as these units typically do not come under the radar of tax agencies. Thus, it is loss for all actors. It may be well nigh impossible to create enforcement machinery adequately equipped with resources to implement the complex and numerous laws; this is true of especially of poor and large-sized countries. This invariably results in inefficient implementation of laws. Hence the statute books may read tough, but owing to poor and even discriminatory implementation, the system in reality may not be all that rigid. The laws then lose their utility and may even become counter-productive. Some of the developing countries which were under colonial rule have inherited a highly regulatory system, typical of the colonial administration. The system becomes over-regulated after securing political independence with more regulations added to the existing ones. Laws in an over-regulated system are wide ranging, over-lapping and complex and some even outdated. Regulatory systems often suffer from the inevitable disease of corruption. Regulatory power can be a weapon in the hands of government officers to extract “rents”, both material and non-material (like respect, tolerance of their dominance, red carpet welcome by employers during inspection visits and so on). Corruption takes place because of the absence of a system of checks and balances. The irony is that both employers and trade unions complain about corruption.

The debate on labour regulation in India has its own specificities which we will discuss here. Employers in India, foreign investors, global financial agencies and others have tirelessly pointed out that in India labour market is rigid and industrial relations system is not sound and called for reform in both. The basic argument of employers could be summarized here. Labour laws designed during the protectionist and command regime are not relevant for the current competitive and open economic context. In the current economic context of intense global competition employers require freedom to make changes in the price, use and quantity of labour and in quality and quantity of associated inputs such as machinery; labour laws and trade unions restrict the freedom of employers. Laws and trade unions make it extremely difficult for the employers to discharge workers when changes in business make it imperative; as a result labour becomes effectively a “fixed” factor. This discourages the employers recruit workers when the going is good. Hence protection of existing jobs affects creation of ‘future’ jobs. The rigidities inherent in the regulated markets affect the competitiveness of firms, which needless to point out, has assumed importance in modern times. Legal protection has enhanced the bargaining power of labour unions and has resulted in labour militancy and exercise of restrictive practices. The regulations of the labour market and IRS have resulted in inefficient outcomes such as highly protected, complacent, and inefficient workforce, labour militancy, use of restrictive practices, over staffing, and deteriorating discipline. Rigid labour markets and unionized IRS discourage foreign capital inflow. As product market has been liberalized in India, labour market and the IRS should also be deregulated. Employers’ principal grievances are against restrictive provisions in the Industrial Disputes Act (ID Act), Contract Labour (Regulation and Abolition) Act, 1970 (Contract Act), Industrial Employment (Standing Orders) Act, 1946 (IESO Act), and the Minimum Wages Act. Chapter V B of the ID Act require employers to obtain prior permission from the government before effecting lay-off and retrenchment of workers and closure of even unviable firms; this is seen to impede restructuring initiatives of employers. The IESO Act requires the employers to follow prescribed procedures before dismissing even undisciplined workers. Laws and trade union have made dismissal of workers very difficult. Section 9-A of the same law require issue of notice of change of working conditions; this has disenabled the firms to introduce suitable changes in technology, workload, shift work and composition of workforce to enhance competitiveness of them. The ID Act empowers the government to intervene in industrial disputes and this is argued to weaken the growth of collective bargaining. Competition requires the firms to concentrate on “core” competencies and outsource “non-core” operations such as canteen, security, and gardening. Employers want freedom to engage freely contract labour in non-core areas and depending upon market conditions even in core activities. This has affected the firms’ ability to discharge export commitments. Employers call for removal of “prohibition” clause from the Contract Act; they do not mind “regulation” provisions relating to contract labour system. The Minimum Wages Act raises the level of wages above the market-clearing wages and hence becomes a burden on the firms, especially the small and medium establishments. Higher the minimum wages, higher would be the “bargained” wage, the “floor” being higher for bargain. All these introduce “rigidities” and raise the cost of labour adjustment. As a result, employers look for labour-saving technologies. The cost of regulation then is low employment generation or even decline in employment. The business logic ironically then is “give freedom to adjust labour price and quantity, only then more jobs would be generated”. Labour regulation is blamed not only for poor employment growth, but also lower foreign investments, poor industrial growth. The empirical work by Besley and Burgess concluded that pro-worker legislation was associated with lower levels of industrial growth, investment, productivity and employment; in addition, they found the pro-labour regulation in fact did not serve the cause of poor, it increased urban poverty. The oft-cited study by Fallon and Lucas also showed that restrictive industrial relations law caused employment to be less than it would have been in its absence. It is also pointed out that regulation offers protection only to a small proportion (seven percent) of workforce and leaves out a vast majority of workers in the informal sector (93 percent). But both have been criticized by labour researchers.

The debate on labour regulation often revolves around employment laws. Labour regulation is obviously more than restrictions on employment and termination of workers. It is also about other issues like multiplicity and complexity of labour laws, provision of incentives to some industries and so on. There are presently more than 55 central labour laws and more than 100 state labour laws. There are differing definitions of the same variable like child labour, wages, worker etc. Employers demand some meaningful merger and consolidation of labour laws and adoption of common legal definitions. Many provisions are out-dated and restrictive; some are even absurd.

Again, it is not only about laws, it is also about the law enforcement system and the problems surrounding it. Employers point out that License-Raj was lifted more than a decade ago in India but Inspector-Raj is still continuing. They complain that labour inspection system has proved to be “harassment” to them and they need to be freed from it. They point out that (a) the inspectors possess enormous power – some inspectors can imprison the employers, seal the establishment or stop the operations of it and (b) too many inspectors visit the factories too many times (FICCI ??). They also complain that the legal and official data collection system requires them to adopt a lot of procedures like filing of periodical returns, posting of abstracts of laws or selected provisions of laws, maintenance of multiple registers (in physical and not in electronic form) and so on. These result in waste of precious time and energy and badly need simplification. Labour reform thus would achieve following objectives: (a) enhance competitiveness of firms, (b) reduce labour and transaction costs, (c) increase exports, (d) attract foreign capital, (e) generate jobs, and (f) ensure better compliance of laws.

Labour regulations broadly cover laws, institutions, customs and norms and the actions of workers and employers that govern and regulate the conduct of the ‘actors’ in the labour market such as the employers, workers, unions etc. and the IRS and the methods of determination of and the contents of ‘rules’ of employment relationship. It is not just about the legal provisions that restrain employers’ freedom in the labour market, as is often assumed in some quantitative studies and exercises – these seek to code the formal law in different systems. It is well known that labour regulation system as typified by labour laws may read tough but it may not represent rigidities for several reasons. The enforcement may be weak owing to several reasons like inadequate resources and corruption. Informal economy is another factor affecting the efficacy of the both coverage of law and its enforcement. The labour regulation literature especially the quantitative studies either neglect the enforcement questions or implicitly assume homogeneity of law enforcement over time and across systems.

Employers in their pursuit of the goal of maximization of profits may act in a manner (longer working hours, unsafe working conditions, lower wages) which may not promote efficiency. Regulations seeking to curtail abuses of employers may in fact increase the efficiency and productivity of work. Labour regulation seeks to (a) rectify the basic power asymmetry inherent in employer-worker relations, (b) prevent opportunistic behaviour by employers, (c) to correct deviant behaviour of workers and ensure industrial discipline and commitment, (d) to provide social protection, (e) provide a set of rights to and obligations on workers and their associations and employers, and (f) create ‘rules’ to govern the interaction between the two parties in the labour market.

See:
Shyam Sundar, K.R. (2005, a), “Labour flexibility debate in India: a comprehensive review and suggestions”, Economic and Political Weekly, May 28-June 4, pp.2274-85.

Shyam Sundar, K.R. (2005), “Role of state in industrial relations: from corporatist to neo-liberal?”, Indian Journal of Labour Economics, Vol.48, No.4, pp.917-37.

Shyam Sundar, K.R. (2007, a) Impact of Labour Regulations on Industrial Development and Employment: A Study of Maharashtra, Series No.06, Labour Regulation in Industry, ISID, New Delhi.

Shyam Sundar, K.R. (2007, b), Labour inspection in India: Issues and challenges, Sponsored by Social Dialogue Department, ILO, Geneva.

Shyam Sundarm K.R. (2008, a) “Trade unions in India: From politics of fragmentation to politics of expansion and integration?” in Benson, John and Zhu, Y. (eds.), Trade Unions in Asia, Routledge.

Shyam Sundar, K.R. (2008, b), Current State of Industrial Relations in Maharashtra, Report Submitted to the ILO-SRO Regional Office, New Delhi.

Shyam Sundar, K.R. (2008, c), Current State of Industrial Relations in Tamil Nadu, Report Submitted to the ILO-SRO Regional Office, New Delhi.

Shyam Sundar, K.R. and Venkata Ratnam, C.S. (2007), Labour reforms in China and India: reform aggression (China) versus reform allergy (India)!”, Indian Journal of Labour Economics, Vol.50, No.3.

Labour regulation debate in India

Academics, activists involved with the the world labour

A series of monographs concerned with the study of labour regulation in Indian industry is going to come out soon. I am putting up the select titles that might interest the academics and activists especially trade union leaders.
04 Effectiveness of Labour Regulations in Indian Industry
Jesim Pais, Assistant Professor, Institute for Studies in Industrial Development, New Delhi

05 Labour Regulation, Industrial Growth and Employment: A Study of Recent Trends in Andhra Pradesh
D Narasimha Reddy, Visiting Professor, Institute for Human Development, New Delhi

06 Impact of Labour Regulations on Industrial Development and Employment: A Study of Maharashtra
K R Shyam Sundar, Reader, Department of Economics, Guru Nanak College of Arts, Science & Commerce, Mumbai University, Mumbai
09 Labour Regulation, Labour Flexibility and Labour Reforms in Europe: Some Perspectives with Possible Lessons for India
Pietro Garibaldi, Professor, School of Economics, Università degli Studi di Torino, Torino
A V Jose, Head, Education Programme, International Institute for Labour Studies, Geneva
K R Shyam Sundar, Reader, Department of Economics, Guru Nanak College of Arts, Science & Commerce, Mumbai University, Mumbai
for further details see the website of ISID, New Delhi.