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The role of labour unions in emerging sectors

Published: 9th Feb, 2023

Context

There have been many reports of lay-offs in the last few months, especially in emerging sectors. Lay-offs have been taking place not only in India, but in major economies like the U.S. too.

Background:

  • At the global level, Alphabet, Amazon, Meta, Microsoft, Twitter and Apple, among others, have let go of employees. Amazon cited an uncertain economy and rapid hires in the past as reasons for retrenchment.
  • Unionisation attempts in these giant companies have caught our imagination. Amazon workers at the warehouse at Staten Island called JFK8 succeeded in forming the Amazon Labour Union under the leadership of Chris Smalls, who had been fired from the company.

Scenario in India:

  • Lay-offs, such as by Tata Consultancy Services in 2015, have led to the birth of labour unions in this sector in India.
  • Bad human resource policies and practices, too, have provoked or prompted workers to unionise.
  • But the rate of formation of unions and the union activities in this industry (on the supply side) do not instill confidence in the minds of employees.

Role of Trade unions in emerging sectors:

  • Compared to conventional industries such as manufacturing, public utilities, and conventional financial sectors such as traditional banking and insurance, forming unions in modern and emerging sectors is much more difficult.
  • Long ago, Freeman and Medoff examined the effect of trade unionism on the exit behaviour of workers in the context of the ‘exit-voice-loyalty’ model of Albert Hirschman.
  • It is believed that IT employees do not need trade unions as they have competitive compensation pay packages, supposedly good conditions of work and a mechanism to address grievances. And so, they stay on and are loyal to the company and the industry.
  • If these conditions are violated, they switch to other organisations as they have the required skill sets (exit); hence, labour turnover in this sector has been rather high.
  • They do not collectively bargain or strike or resort to legal action as middle-class employees who go to court would be stigmatised (voice). And many survive by simply keeping quiet (loyalty).

What is the Framework Regarding Labours in India?

  • Constitutional Framework: Under the Constitution of India, Labour as a subject is in the Concurrent List and, therefore, both the Central and the State governments are competent to enact legislations subject to certain matters being reserved for the Centre.
  • Judicial Interpretation: In the case of Randhir Singh vs Union of India, the Supreme Court stated that “Even though the principle of ‘Equal pay for Equal work’ is not defined in the Constitution of India, it is a goal which is to be achieved through Article 14,16 and 39 (c) of the Constitution of India.
    • Article 14: It provides for equality before the law or equal protection of the laws within the territory of India.
    • Article 16: It talks about the right of equal opportunity in the matters of public employment.
    • Article 39(c): It specifies that the economic system should not result in the concentration of wealth and means of production to the detriment of the entire society.
  • Legislative Framework: There have been several legislative and administrative initiatives taken by the government to improve working conditions and simplify labour laws. Most recent is the consolidated sets of 4 labour codes which are yet to be implemented.
  • Labour Codes:
    • Code of Wages, 2019
    • Industrial Relations Code, 2020
    • Social Security Code, 2020
    • Occupational Safety, Health and Working Conditions Code, 2020
    • The implementation process is delayed as states are yet to finalise their rules under these codes.

The Madras Labour Union, set up in 1918, is considered the first trade union in India to be formed systematically.

  • Today, there are more than 75,000 registered and an unaccounted number of unregistered trade unions scattered across a large spectrum of industries in India.

Trade union Act:

  • Trade unions in India are governed by the Trade Unions Act (TU Act). The TU Act legalizes the formation of trade unions and provides adequate safeguards for trade unions’ activities.
  • It defines a “trade union” as “any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive condition on the conduct of any trade or business, and includes any federation of two or more trade unions.”
  • The TU Act is administered by the Ministry of Labour through its Industrial Relations Division (IRD) as well as by state governments.
  • The IRD is concerned with improving the institutional framework related to settlement of disputes and amendment of labour laws regarding industrial relations; state governments are concerned with monitoring adherence to the law by all involved parties.
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