Over the years trade unions have been criticized as agents who, in pursuit of their own interests, (improving wages and working conditions, establishing more permanent employment), often oppose measures taken under labour market deregulation and liberalization policies which might undermine these objectives. However, to base our understanding of trade unions on this idea can lead to a narrow view of a labour institutions which plays an important part in securing and extending the rights of the workers and their social security by representing them in tripartite social dialogue with the government and employer associations. Collective bargaining between unions and employers can even produce beneficial outcomes for both through reduced conflict and greater trust. This line of thought is supported by the experiences of Central European and Nordic countries with high rates of unionization and collective bargaining models which have been associated with greater productivity and reduced strike rates.
The possibility of various trade unions generating positive outcomes for workers and employers is not necessarily limited to developed countries with high rates of unionization. In countries like India and the Philippines, the informal sector, which has traditionally lacked access to social security and insurance, constitutes a large proportion of the workforce. Even though union density rates are lower in these countries, trade unions can play a key role in bringing larger sections of the informal workforce under protected employment, increasing their access to social security and ensuring legal compliance on the part of employers with respect to minimum wages and decent working conditions.
The case of the Self- Employed Women’s Association (SEWA), a labour union based in Gujarat with members mostly from the informal sector, serves as a good example of how unions can engage directly with members to widen social security coverage. SEWA has its own voluntary insurance scheme (in partnership with an insurance company), under which members can get life, accident, asset loss and health insurance for very low premiums. There are full time SEWA workers who operate at a grass- root level, promoting insurance and collecting premiums.
Another example of a union consisting of informal sector workers is the Learn Mahila Kaamgar Sanghathana (LMKS), a Maharashtra-based state level trade union of home-based workers and garment factory workers. By organising themselves, these workers have been able to present demands for better social security and enter into negotiations with employers using their institutional weight as a legally registered trade union. The union also allowed workers to deal directly with the garment producers and earn more for their products by removing the need for contractors who charged very steep commissions. Over time, LMKS has been able to form a network with public hospitals, NGOSs and charitable trusts to offer workers free health check- ups and medication, vocational training and assistance with social security access. As a result, members now earn more in real terms and have better social security coverage. It is important to note here that these improvements have come as a result of organisational unity among workers and by utilizing existing institutions by the union with hardly any compromise necessary on the part of employers.
Evidence from the Philippines also seems to suggest that unions can improve outcomes for workers without compromising on the needs of employers. Results from the 2008 Bureau of Labour and Employment Statistics (BLES) survey show that incentive schemes (such as profit- sharing) and merit or skill-based pay schemes were more likely to be adopted by firms with unions. Such schemes have the potential to motivate workers to put in more effort and improve productivity, which eventually benefits employers as well. The presence of strong unions can help ensure that workers get their due share of the benefits arising from increased productivity. Unionized firms were also found to be more inclined towards providing their workers with health care benefits and social security. An ILO study on productivity-based incentive schemes and wages offers some promising insights in this respect. It was observed that the unionized company was able to produce better results than non-unionized ones in terms of improving productivity among workers and linking wages to it. Union representatives, along with the management, set up a ‘productivity committee’ which provided guidance and assistance to workers with poorer performance and succeeded in raising productivity by 86% between 2012 and 2013 and then by 87% between 2013 and 2014. The incentives also succeeded in raising worker attendance, a sign that relatively simple institutional changes and cooperation between unions and producers can ensure mutual benefit in the end.
A survey of 16 unionized firms in the Philippine service sector also showed that mutually beneficial provisions such as training facilities and understudy programmes for enhancing the human capital of workers can be included in collective bargaining agreements between the union and employers. Unions in these firms have been able to secure a number of benefits which are not required by law such as training opportunities, performance bonuses, paid holidays, maternity benefits and disability and health insurance. In return, they have had to include ‘no strike’ and ‘no lockout’ clauses in their collective bargaining agreements. Strikes and work stoppages are some of the biggest concerns associated with union bodies but the surveyed firms have managed to overcome them by taking care of the basic needs of their workers. Such measures promote good faith among workers, increase their loyalty towards the company and may eventually lead to positive outcomes for employers such as greater productivity. Thus, collective bargaining does not always need to be a zero- sum game.
While we do not intend to draw any sweeping conclusions from these examples, they do illustrate an important point, that such trade unions are not necessarily a hindrance and can benefit both workers and employers. However, if labour institutions and unions are weakened, the opportunity for such gains may be lost. Recent trends in India set a worrying example in this respect and might even cause permanent damage if they become a norm.
In India, the option of union membership is available to less than 10% of the working population and is limited mostly to the organized sector. The decline in wage shares in organized manufacturing and an increasing proportion of contractual jobs within the organized sector point to the failure of unions in protecting worker interests. The drop in union density rates and collective bargaining agreement coverage in private sector enterprises in the Philippines from around one fifth of total employment in 2003 to less than one tenth in 2014, was also a result of the inability of unions to oppose the growth of informal employment, casual employment and short-term employment.
In recent times, social dialogue between the government and unions also seems to have taken a backseat even though India has ratified ILO Convention No. 144 on Tripartite Consultation. Certain features of the Industrial Relations Code 2019 (one of the four new labour codes which are being framed to amalgamate the numerous existing labour laws), have stirred up significant debate. The stricter requirements for strikes and the high proposed threshold of worker representation (75%) for the status of ‘sole bargaining agent’ in industrial units are seen by unions as attempts to weaken their position.
The gradual erosion of the rights of labour organisations is not limited to India. The industrial peace prevailing in the Philippines over the past few decades has primarily been attributed to effective dispute resolution and mediation; however recent events have raised concerns over the accuracy of this analysis. According to critics, laws restricting the right of workers to strike and the use of violence against unions are actually responsible for the decreasing incidence of strikes. Between 2010 and 2016, 545 cases of human rights violation against trade unions were reported in the Philippines. India has also faced some criticism in this regard for its use of force against protesting workers.
The decline of social dialogue forums over time and the legal weakening of workers’ ability to strike and organise in India and the Philippines is a matter of concern. They were both included in the International Trade Union Confederation’s ‘Ten Worst Countries for Workers’ list in 2020 on the grounds of brutal repression of strikes and violence against workers. India and the Philippines also fare poorly in terms of existing social protection coverage and undermining labour rights will not improve the situation. In the absence of proper representation for worker voices, if the balance of power becomes skewed in favour of employers then worker interests (improved social security, better conditions of work, adherence to wage laws), may suffer as a result. Weak labour institutions also diminish the possibility of the mutual gains made through union-employer cooperation which we elaborated upon. Hence, the institutions of trade unions and tripartite consultation should be strengthened and used appropriately to ensure the benefit of all stakeholders.
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Preeti Kapuria was a Fellow at ORF Kolkata with research interests in the area of environment development and agriculture. The approach is to understand the ...
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