Collective bargaining in India 2011

COLLECTIVE BARGAINING: CONCEPT AND IMPACT IN INDIA

Evolution of Collective Bargaining:

 CB rose and grew with the trade union movement.

 Roots of CB lie in Great Britain where it developed in response to the conditions created by
the Industrial Revolution.

 Along with trade unions, the idea of bargaining collectively gained strength in the early part
of the 18th Century.

 Initially, the negotiations were carried out at plant level.

 By early 1900, industry and national level agreements became quite common.

 The idea spread across to France, Germany, and USA.

 And today, through the process of CB, organizations have learnt to cope with industrial
conflict.

What is collective Bargaining?

 Collective bargaining has been defined by different experts in different ways. Nevertheless, it is
treated as a method by which problem of wages and conditions of employment are resolved
peacefully and voluntarily between labor and management. However, the term collective bargaining
is opposed to individual bargaining.

Sometimes, it is described as a process of accommodation between two conflicting interests Here,

power stands against power. 

The I.L.O. defines collective bargaining:

"As negotiations about working conditions and terms of employment between an employer, or a
group of employers, or one or more employers' organisations, on the one hand, and one or more
representative workers' organisation on the other with a view to reaching agreement."

This definition confines the term collective bargaining as a means of improving conditions of
employment. But in fact, collective bargaining serves something more.  

Perlman aptly stated,"Collective bargaining is not just a means of raising wages and improving
conditions of employment. Nor is it merely democratic government in industry. It is above all
technique, collective bargaining as a technique of the rise of a new class is quite different….. from the
 Collective bargaining in India 2011

desire to displace or abolish" the "old ruling class"….. to gain equal rights as a class ... ... to acquire an
excessive jurisdiction in that sphere where the most immediate interests, both material and spiritual,
are determined, and a shared jurisdiction with the older class or classes in all other spheres.”

 The Indian Scenario

 In India, trade unions gained prominence much later – only after 1900.

 In 1918, Gandhiji - as the leader of the Ahmedabad textile workers – advocated the resolution
of conflict through CB agreements.

 But the idea gathered interest only after the Second World War.

 The Government of that time took steps like setting up of machinery for negotiations,
conciliation and arbitration.

 The trade union movement and also CB agreements became popular after Indian
independence.

 Moving from agreements at the plant level, such agreements spread to industries such as
chemicals, petroleum, tea, coal, oil and aluminum.

 In ports and docks, banking and insurance, collective agreements were arrived at, right at the
national level.

COLLECTIVE BARGANING in India has been the subject matter of industrial adjudication since long
and has been defined by our Law Courts.

In Karol Leather Karamchari Sangathan v. Liberty Footwear Company, the Supreme Court
observed that,“Collective bargaining is a technique by which dispute as to conditions of employment
is resolved amicably by agreement rather than coercion." 

According to the Court, the Industrial Disputes Act, 1947 seeks to achieve social justice on the
basis of collective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari , the
Calcutta High Court clarified that this policy of the legislature is also implicit in the definition of
‘industrial dispute.
 Collective bargaining in India 2011

In Bharat Iron Works v. Bhagubhai Balubhai Patel , it was held that “Collective bargaining, being the
order of the day in the democratic ,social welfare State, legitimate trade union activities, which must
shun all kinds of physical threats, coercion or violence, must march with a spirit of tolerance,
understanding and grace in dealings on the part of the employer. Such activities can flow in healthy
channel only on mutual cooperation between the employer and the employees and cannot be
considered as irksome by the management in the best interests of its business.

Dialogue with representatives of a union help striking a delicate balance in adjustments and
settlement of various contentious claims and issues."  

These definitions only bring out the basic element in the concept i.e., civilized confrontation between
employers and employees and the whole process is regulated by statutory provisions.

POSITION OF COLLECTIVE BARGAINING IN INDIA 

Collective Bargaining machinery essentially is a reflection of a particular social and political climate.
The history of the trade union movement shows that union are affiliated to one or the other political
parties. As a result most of the trade unions are controlled by outsiders. Critic says that the presence
of outsiders, is one of the important reasons for the failure of collective bargaining in India.

Assessment of Collective Bargaining in India: Collective agreements have not made much
headway in India.

Reasons:

 Lack of statutory recognition of unions by the country as a whole.

 Lack of provisions requiring employers and workers to bargain in ‘good faith’.

 The historical problem of ‘lack of trust’ between the parties

Have all stood in the way of collective agreements contributing towards industrial harmony.

 Proper conditions have to be created for the success of CB for promoting industrial peace.

 Encouragement to strong and powerful trade unions.

 Satisfactory arrangements for union recognition by statute.

 Creation of conditions in which collective agreements have a chance to succeed.

Causes of limited success of CB in India:

 Collective bargaining in India 2011

Problems with unions:

 CB mainly depends on the strength of unions.

 Weak trade unions cannot initiate strong arguments during negotiations.

 Not many strong unions in India.

 Indian unions are bogged down by the problems of: multiplicity, inter and intra-union rivalry,
weak financial position and non-recognition.

 So, unanimous decision is unlikely to be presented at the negotiating table.

Problems from Government:

 The Government has not been making any strong efforts for the development of CB.

 Imposition of many restrictions regarding strikes and lockouts has removed the `edge` of the
CB process.

Political interference:

 Interference of political leaders in all aspects of union matters has increased over the years.

 Almost all unions are associating themselves with some political party or the other.

Legal problems:

 Now that adjudication is easily accessible, the CB process is losing its importance.

Management attitude:

 In India, managements have a negative attitude towards unions.

 They do not appreciate their workers joining unions.

 Outsiders in the Process of Collective bargaining:- 

 Collective bargaining in India 2011

The Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent of half
the total number of office bearers. So, it permits one to be the leader of the union who does not
actually work in the industry. Sometimes a dismissed employee working as a union leader may create
difficulties in the relationship between the union and the employer. Nevertheless, experience shows
that outsiders who have little knowledge of the background of labour problems, history of labour
movement, fundamentals of trade unionism and the technique of the industry and with even little
general education assume the charge of labour union and become the self-appointed custodian of
the welfare of workers. The employers, therefore, have been reluctant to discuss and negotiate
industrial matters with outsiders, who have no personal or direct knowledge of day to day affairs of
the industry.

Accordingly employees refuse recognition to the unions which are either controlled by the politicians
or affiliated to a particular political party or controlled by a particular individual. Government cannot
morally compel employers to accord recognition to unions without driving out the politicians from
them. The State must outright ban "outsiders" from the trade union body. Further, provision for
political funds by trade unions should be eliminated, since it invariably encourages the politicians to
prey upon them. The National Commission on Labour has overlooked this aspect. The Commission
does not favour a legal ban on non-employees for holding the union office. It says that without
creating conditions for building up the internal leadership, a complete banning of outsiders would
only make unions weaker. The Commission hopes that Internal leadership would develop through
their education and training. Accordingly the Commission suggests proportion of the outsiders and
the workers in a union executive. On realising the problems of outsiders in the Union, the Industrial
Relations Bill, 1988 proposes to reduce the number of outsiders to two only.

 Politicization of Trade-Union Movement in India:-

 It is well known that the trade-union movement in India is divided on political lines and exists on
patronage of various political Parties. Most of the trade-union organizations have aligned themselves
with a political party with whom they find themselves philosophically close. It is because of this that
the Indian National Trade Union Congress is considered to be the labour wing of congress, whereas
H.M.S. is considered to be the labour wing of Socialist party. Bhartiya Majdoor Sangh pledges its
allegiance to B.J.P. and C.I.T.U. has the support of C.P.I. (M). It is also the case with the AITUC which
had started as a national organization of workers but subsequently came to be controlled by the
Communist Party of India and is now it's official labour wing. Political patronage of trade-unions has
given a new direction to the movement whose centre of gravity is no longer the employees or
workmen. The centre has shifted towards it leadership whose effectiveness is determined by the
extent of political patronage and the consequent capacity to obtain the benefit. This shifting centre
of power is the necessary consequence of political parties search for workers votes, which they seek
by conferring benefits on them. Since the public sector which is really the instrumentality of the
State, has emerged as the biggest employer in this country, the collective bargaining -between the
 Collective bargaining in India 2011

union patronized by the party-in-power and the employer has become an important methodology. It
is because of this process that agreements conferring benefits are signed even in those units where
financial losses are mounting. It is also our experience that in spite of wage increase end improved
conditions of service, there has been no corresponding improvement in production or the
productivity. Also,most of the losses are being passed on to the consumers by increasing prices of
the products. It is in this context that Justice Gupta has, in his, 'Our Industrial Jurisprudence" made
the following observations:“If our experience is any guide, it reveals that Ievel of increase in wages
etc., ( in public sector undertaking )is now decided by the Bureau of Public Enterprises which takes
into consideration only the Political impact and 'Consumer resistence' as two dominant factors. This
is the reason why the prices of almost all products of necessity like coal, iron and steel, cement, sugar
etc. have been constantly increasing. A survey of pending and decided industrial disputes of the last
10 years reveals that there was virtually no industrial dispute regarding wage structure or bonus in
any industry of some significance.

 There are also not many collective bargaining agreements which have tried to link wages with
productivity. Clearly,therefore, the basic idea of ‘sharing the prosperity' which developed because of
our commitment to the cause of 'social justice' is no longer current and the expected end product of
the process of ' social justice ' is no longer expected. "

 The process of collective bargaining is not likely to succeed unless the threat of strike/lockout is
there in the back-ground. Strike and lock-out are the weapons used by both the parties daring the
collective bargaining process. Without having these weapons at hands, neither of the party to the
dispute can defeat the claim of the other. The peculiar feature of our country while compared to the

advanced nations of the world is that the economic conditions of the workers is very poor and as a
result they can not afford a long-standing strike.

Critical Evaluation:-

In Indian labour arena we see, multiplicity of unions and Inter-union rivalry. Statutory provisions for
recognizing unions as bargaining agents are absent. It is believed that the institution of collective
bargaining is still in its preliminary and organisational stage. State, therefore, must play a progressive
and positive role in removing the pitfalls which have stood in the way of mutual, amicable and
voluntary settlement of labour disputes. The labour policy must reflect a new approach.Hitherto the
State has been playing a dominant role in controlling and guiding labour-management relation
through its lopsided adjudication machinery. The role of the industrial adjudicator virtually differs
from that of a judge of ordinary civil court. The judge of a civil court has to apply the law to the case
before him and decide rights and liabilities according to its established laws, whereas industrial
adjudicator has to adjust and reconcile the conflicting claims of disputants and evolve “socially
 Collective bargaining in India 2011

desirable" rights and obligations of the disputants. In deciding  industrial disputes the adjudicator is
free to apply the principle of equity and good conscience. 

 However, it is said that the impact of the romantic attitude of the judiciary towards workers has not
proved conducive to the peaceful industrial relations. It is accepted that the end of judicial
proceeding is pain and penalties. It cannot solve the problems of industries.Accordingly it is said
that,"While statutes, rules, regulations, pains and penaltieshave their place in the ordering of
industry, they do not touch the core of the problems of industrial relations."8

Moreover, advocates of adjudication contend that as the collective bargaining procedure might end
in a strike or lockout, which implies a great loss to the parties concerned and the country, so for the
sake of industrial peace, the adjudication becomes necessary.

Industrial peace can be established by the adjudication for the time being. But the conflicts are driven
deeper and it will retard industrial production. In the absence of effective collective bargaining the
anti–productivity tendencies are bound to appear.

Suggestions:

 For an effective Collective Bargaining in India the following suggestions are made : 

 Recognition of trade union has to be determined through verification of fee membership

method. The union having more membership should be recognised as the effective bargaining
agent. 

 The State should enact suitable legislation providing for compulsory recognition of trade
union by employers. 

 Section 22 of the Trade Unions Act, 1926 should be amended. 

 The provision for political fund by trade unions has to be done away with-since it unvariably
encourages the politicians to prey upon the union.
 Collective bargaining in India 2011

 State has to play a progressive role in removing the pitfalls which stand in the way of mutual,
amicable and voluntary settlement of labour disputes.