AEREN FOUNDATION’S Maharashtra Govt. Reg. No.: F-11724

SUBJECT: INDUSTRIAL MANAGEMENT

(Marks 80)

CASE 1 : (30 Marks)

Trade Unions in the TNC Supply Chain and their relationship with the CSR movement

Chinese enterprises are essentially passive players at the sharp end of CSR in China. They are in a position of having to juggle between the different factors governing the development of industrial relations in China, including trade union reform. In this often tense dynamic, CSR is seen as an external factor and trade unions an internal factor. These two factors have an impact on each other. As part of the research for this case study, the research team (RT) ‘shadowed’ a CSR audit. The factory had come under very heavy CSR pressure in 2004. Altogether, the RT carried out two investigations: in March (see earlier printed report) and August 2006

Initial conclusions:

1) That factories undergoing CSR audits have better working conditions than those that don’t.

2) There is no evidence to suggest that trade unions have an impact on wage levels at enterprise level. However, factories subject to CSR pressure are generally large workplaces and this was perhaps a factor in improving labour conditions. Moreover, CSR-targeted factories are prone to data distortion due to ‘training of workers’ answers’ in interview and double or even triple accounting.

Enterprise Y was established in 1997 and now has 1,200 workers. It was ‘Re-registered’ in 2002 to take advantage of tax breaks etc. It manufactures electronic goods for export chiefly to three retailers and over 50% of goods go to a single US company.

Employment breakdown: 80 managers, 300 skilled workers; remainder are ordinary workers . Managers and skilled workers have contracts and social insurance based on minimum legal standards. The extent of contracts among unskilled workers remains unclear. The enterprise had previously supplied a ‘comprehensive’ contract and social insurance list to CSR audit team (excluding

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AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL

probationary workers) but the RT’s interviews with workers revealed that many had no idea if they had a contract or not or if they were paying into various social insurance schemes such as work injury or pensions. The RT was not given access to formal SI contribution records.

Wages were verified at between 900-1100 yuan per month with on average more than 60 hours o/t but this was subject to orders. There were few disputes and conditions generally were better than at surrounding factories. Up until Aug 2006 accommodation was free and reasonably good. The labour turnover rate for unskilled workers was just 8% and most workers had been there more than two years already. However, in the same period the labour turnover rate for skilled workers had increased dramatically.

Enterprise Trade Union

Established in 2004. Trade union chair M directly elected by workers, largely as a result of pressure from the Brand. By August the follow-up research revealed M had left, apparently for ‘personal reasons’ according to management. Former vice chair C had taken over his position. C’s previous experience had been as a member of a trade union committee in an SOE trade union. He was appointed to the post at Y. The local township union said that there would be fresh union elections ‘soon’. The trade union at Y had three other union committee members. All were mid or senior level managers: human resources manager, one an engineer, and a finance manager. The union had an office in the enterprise but has no bank account or independent accounts/expenses system. All union activities were entirely dependent on management transferral of funds.

Trade Union Work

Approach to union work very similar to work in SOEs – i.e. very traditional. Also the union works very closely with the township union and pretty much depends on it for policy etc. The latter is very pleased with the Y union, which has received a number of awards. Activities include labour productivity competitions, May Day competitions. Prizes include going on holiday to HK. Examples of general day union work included:

Management introduced a charge for canteen food. The service had been franchised to outside contractors. In response the union organised a small group (xiao zu) which negotiated with the company and succeeded in getting the food and food hygiene situation improved.

Dormitory Management Team: made up of company reps and worker reps. Aim was to self-manage the dormitories and avoid management imposing arbitrary fines on workers. The committee’s work was based on a ‘Dormitory Management Contract’ which the union drew up. Any fines imposed had to be in accordance with the contract and workers reported an improvement in the overall dormitory conditions.

Union representing workers in wage consultations

The union was very proud of this aspect of its work. Wages stipulated in contracts were 574 yuan per month – however the real income of workers varied between 900 and 1100 per month due to o/t.

On 1 September 2006 – the government introduced new standards for min. wage which were reset at 690 yuan per month, which at current contract and o/t levels in the factory would mean a 300 yuan

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per month wage increase. Company provided figures which made it clear that if they abided by the wage increase in current market conditions they would go bust. Y’s HR department presented a proposal saying that Y should meet new min. wage requirements but cancel food and board subsidy. However, this would break contracts with workers in which the company agreed to supply food and dormitory accommodation. Management consulted with local government and township trade union and decided to try and solve the problem through consultations with enterprise union.

RT investigation found that the consultation did not follow either the regulations on collective consultations on wages, nor did they constitute a collective contract. Instead: Workers Rep meeting called by boss: mostly production managers but also a small number of line workers present who were appointed as ‘reps’ by the trade union chair. RT observed this meeting and also provided legal advice to worker reps. At the meeting was a deputy managing director and the two managers from the union committee.

Meeting procedures and presentations recorded in report – worker reps presented with an ultimatum regarding bankruptcy plus threat of dismissal from HR dep. for anyone who did not agree with the cancellation of free food and board. Trade union said: it wanted the new min. wage standard met; new charges for food and board should be reasonable and include a self management team for dormitory. Union also called for further consultation with members.

Not much feedback from members. Union held further talks with senior company managers. This led to the Method of New wage Management. New charges 200 for dorm and 60 for food, a rate below market prices but reduced the wage rise itself to between 40-60 yuan. RT interviews with workers showed that most workers agreed with the new arrangements. A minority felt that they had been cheated. All signed the new agreement and anyone who refused was told their contracts would not be renewed.

CSR auditRT shadowed and at times provided translation for a social audit team. Despite the professionalism of the audit team, their task to report actual conditions at the factory was essentially a failure. The audit team asked that the factory management bring o/t levels down to legal levels, although they also expressed an understanding of local conditions and stated that workers were able to take adequate rest time despite high levels of overtime. No workers expressed dissatisfaction with pay and conditions directly to audit team.

The audit team also had an extensive meeting with trade union chair who told them that the new wage levels had been met but did not mention the introduction of dormitory and canteen charges. The audit team also asked that a dispute mediation committee be established at factory level as well as warning management that a complaints system for workers should be implemented as soon as possible. Also discussions over whether the deposit that the factory demanded for work uniform was an illegal job deposit. Audit team agreed that it wasn’t.

Audit team did not discover the fact that some workers who did not meet piece rate targets had to complete quotas in their own time – up to 1-2 hours per day! The trade union chair had told workers it was in their interests to lie to audit team over working hours as trained to do so by enterprise management. He was under no pressure to take this line from the enterprise itself.

Discussion:

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Organisation of the trade union was from CSR pressure not pressure from workers i.e. in effect top down. 2004 US client retailer had cancelled an order due to working conditions and this had caused losses.

Union operated in a cooperative manner with management not confrontational.

With regard to a workers’ complaints and mediation system. The US client did not believe it to be true when management had told them there were no disputes with or among the workers. The real situation was that the union had not taken part in any disputes. RT checked with the MOLSS and found that a dispute had occurred following a death in the dormitory. Management denied it was due to a work injury and police ruled out criminal behaviour. Eventually MOLSS brokered compensation with family and Y enterprise. No details made available. However, RT concluded from this dispute that the company did not have an injury compensation scheme for workers. If they did have, the settlement would have been between the dead worker’s family and the insurance company.

Audit ream did not discover that the HR department pressured workers to hand in their notice when they wanted to cut staff levels rather than simply lay them off. This was to avoid compensation. The union also kept silent on this.

The wage negotiation process was entirely non-confrontational except for HR attitude to the workers, who were threatened with dismissal if they objected to concluding the agreement.

The union helped the enterprise and the brand find an easy way out of the wage dilemma. It did not ‘represent’ the workers in this process.

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Questions:

1. What is the experience of China about Trade Union in the above mentioned case?

Ans:

Cheap labor. Minimal regulations. Bribable officials. Foreign corporations attracted to China because

of its low cost of business have avoided the unionization desired by the Chinese Communist Party

(“CCP”) despite China’s history of weak trade union laws and inconsistent enforcement of union

mandates. However, recent concerns of social unrest have forced the CCP to consider reforming the

political tools used to control Chinese society. The CCP wants to create social stability, avoid

independent unionization, and prevent the westernization of China. Foreign Investment Enterprises

(“FIEs”) present new challenges for labor market regulation in China with their large number of non-

unionized workers revolting at poor working conditions, as well as FIEs' importation of western

values. The Trade Union Law amendment of 2001 affords the All-China Federation of Trade Unions

(“ACFTU”) more avenues of enforcement through which to force FIEs to unionize and obliges the

ACFTU to become a greater presence in private enterprises—especially FIEs.

2. How Trade Union resolved the dispute? By confrontation or by negotiations?

Ans:

With the high-speed growth and liberalization of the Chinese economy over the last decade has come

an equally rapid rise in the number of disputes between employers and employees, especially large

groups of employees. Typically, labour disputes have involved the non-payment of wages, overtime

and social security benefits, lack of compensation for work-related illness or injury or termination of

employment. In 1996, China's labour dispute arbitration committees (LDACs) handled 47,951 cases. 

China does not have a specialist industrial relations or employment court. Labour disputes are dealt

with by civil courts and in accordance with civil procedures. The civil courts operate at three levels

under the Supreme People's Court in Beijing. At the lowest level, district courts handle most labour

disputes in the first instance. If either the plaintiff or defendant is unhappy with the verdict, they can

appeal to the intermediate court, at the municipal level, or the higher court, which operates at the

provincial level.

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3. What is the general impression about the Trade Union movement with reference to this case?

Ans:

The amendment of the Chinese Trade Union Law presented a decisive signal for the further

development of China. As illustrated, the text of the law enables unions to engage in various

activities in order to represent the staff’s and workers’ interests. Nevertheless, the law lacks precision

and the Chinese framework seems to hinder the implementation of most of the articles. In what way

the Trade Union Law really represents an instrument to develop a workers’ representation inside the

union structure is the crucial question. Despite the fact that China still has not yet ratified the ILO

Conventions on freedom of association and collective bargaining, the government has introduced the

Labour Law.

Furthermore, it significantly amended the Trade Union Law in 2001. Later, regulations on

occupational safety and health standards were introduced, improving the legal possibilities to pursue

occupational safety trainings and to implement international standards. Moreover, the court system

will be reformed, including a qualifying examination for judges. Bilateral cooperation between China

and the United States as well as Germany will improve the development of a Chinese constitutional

state. These developments naturally increase the probability of citizens to know their rights and have

them respected. Nevertheless, it remains to be seen whether these recent developments are

comprehensive enough.

In the course of state-owned enterprise reform, the role of unions has greatly changed. Already

relieved from their first assignment in the People’s Republic, the distribution and administration of

social security as a sub-branch of the ministry of labour, their traditional partner, the government, has

mostly withdrawn from its management role and rather supports the management as an independent

institution which reacts on market forces. In spite of the newly acquired possibilities via the amended

Trade Union Law, every union or union-like organization still needs to be part of the ACFTU

structure. This, in turn, is heavily influenced by the Communist Party of China. Unions, overwhelmed

by the new challenges as a consequence of the rampant economic reforms and developments, get

confronted with a complex labour market situation (competition is paramount and leads to lay-offs

and partly to a deterioration of labour conditions), in which workers are at a disadvantage and are

driven to cause social instability.

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4. Give your comments and opinion.

Ans:

The power of the trade union comes from the workers'trust. But when workers encounter contract

trap, salary delay, welfare infringement, overwork, security protection danger, forces and other

unlawful infringements, China sees more individual resistance of different forms. In most cases, trade

unions of Chinese enterprises are quiet defective in effective actions. The loss of trade union's voice

in these core areas is not going to be regained through organizing sports meetings and handing out

film tickets. In a lot of companies, the week position of the trade union is an irrefutable fact.

Any behavior against sovereignties'laws should be prevented, no matter whether it is from trans-

national or local enterprises. But why does this prevailing problem concentrate more on trans-

nationals? One explanation is that "since Wal-Mart's source factories, trade union, insurance, laboring

insurances and other factors are not counted into costs, this part of costs is paid by traditional Chinese

social system. It is a hidden exploitation."

However it has nothing related to the purpose of trade union, which is to "fully protect the legitimate

rights and interests of workers". It is not merely a right of choices. On this point, no matter state-

owned enterprises, trans-national or private entities, they should all implement the same standard. If

new entry qualification is formed or treatment is different due to investment rights, it is equally

something to be regret about.

It is understood that China's National Federation of Trade Unions is planning to put forward the

"Preparation Fund System". According to this system, even enterprises that are not to organize the

trade union, should also pay a certain fee as the preparation fund to organize a trade union in the

future. After the trade union is organized, it will be returned to the enterprise pro rata. Whether this

action could get the support from enterprises and workers is still unclear. And the attitude of Chinese

local governments who want to offer favorable conditions to attract foreign investment is also a key

factor to determine the result.

But in any case, the core problem lies in whether the trade union could realize its functions and prove

its value and reason of its existence in safeguarding workers'rights and interests and negotiating with

other interest entities.

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CASE 2 (30 Marks)

Acas and Essex Ambulance Service NHS Trust: Improvingconsultation and working patterns.

The Challenge

Essex Ambulance Service (EAS) is an organisation dealing with unscheduled care,predominantly accessed via 999 calls. It was established as an NHS Trust in 1990 and employs around 1,300 people who are primarily members of two unions, Unison and the GMB.

The Trust had two inter-related problems. Firstly, relations between management and unions had deteriorated after a national ambulance dispute in 1989. Trade unions did not have recognition at the Trust, and a trade union representative described the management-union relationship throughout the 1990s as “arms-length” and “fairlytense”. During this time, trade union involvement was restricted to representatives attending health and safety committees and representing union members during individual disputes. Consultation between management and the workforce was nonexistent, and this was due in part to the management style of the organisation. A JNCC (joint negotiation and consultation committee) was established at the unions’ insistence, but it was largely ineffective. Decisions made at the JNCC were often overturned or ignored by the Chief Executive Officer (CEO), thereby damaging the committee’s credibility, and the CEO had no involvement in the committee.

This contributed to a second problem: a failure to respond to different staff interests by modernising working arrangements for part-time and relief staff. These workers were unable to influence their work roster and shift patterns to the same extent as full-time and longer serving staff. And because of a lack of consultation mechanisms, it was proving difficult to agree on strategies that would mutually resolve the problem.

The Trust eventually recognised trade unions in 1999. In 2002, following the departure of key managers who had resisted engaging in joint consultation, trade union representatives, supported by management, contacted Acas for help in addressing these problems and improving the employment relations climate. Acas was approached, according to the HR manager, because it was seen as “independent, and expert around this area”.

How Acas helped

In October 2002 the Acas adviser met with management and trade unions to develop two sets of workshop programmes, each addressing the issues identified as problems.Two initial workshop sessions were held to discuss rostering issues. The Acas adviser led these workshops, using techniques to break down barriers between participants, including splitting them into mixed (management-trade union) groups to work on problems and design solutions. Throughout the workshops, the adviser also profiled examples of how problems were resolved in other organisations she had worked with.By the end of the first workshop a number of recommendations were developed, including the need to have clear principles driving consultation, the need for a review of the roster system, and the need to have stronger informal ties between key management-union players. The Acas adviser then put together a report based on the ideas and suggestions

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generated at the workshop, and these were discussed at a further workshop, at which participants ratified and agreed a new system of rosters.

‘Break-out groups’ addressed problems in a way that included the voice of all parties, and stakeholders and the adviser also worked with specific sub-groups of staff – for example relief workers (who fill in for workers on holiday or sick leave) – to tackle particular rostering problems and design improved working practices.

The adviser organised a subsequent facilitated workshop in early 2003, attended by key Trust managers and union groups. Its aim was to establish the purpose of the JNCC and its terms of reference. Whilst no formal output emerged from the workshop, participants felt that it had formed the basis for the renewal of the forum. The HR manager described the imperatives driving this initiative:“… bear in mind we’re coming from a stance where the unions weren’t involved in negotiation at all … We’re moving towards Agenda for Change now and that’s very much about partnership working with staff-side. So we wanted to make sure that the JNCC had the right terms of reference and was going to be working effectively for both sides to benefit.”

The benefits: improved consultation and working patterns:A range of positive outcomes flowed from Acas’ involvement at the Trust, with management and trade union representatives emphasising their significance in light of the relationship difficulties and low levels of trust at the Trust during the 1990s. Firstly, the JNCC has become a central feature of employment relations at the Trust. It now functions effectively, partly as a result of good informal relations between key trade union representatives and HR managers. The Committee has provided a vehicle for regular management-trade union dialogue on a wide variety of issues, including work-life balance and flexible working. The JNCC has also become a crucial medium for discussions around Agenda for Change. Secondly, in terms of work rosters, there is a new system that accommodates the interests of both full-time staff and those on a variety of different contracts. Employees who formerly had little advance knowledge of when they were working can now plan their rest days more clearly. In facilitating changes in working patterns, the Acas project has brought part-time staff closer to the strategic concerns of the Trust. This has meant that human resource planning is clearer and more consensual in nature, and levels of commitment from part-time staff are, according to trade union representatives, higher than in the past.

Thirdly, the process of improving consultative mechanisms and the roster system has helped build relationships between management and union representatives, enabling them to develop other new practices relating to, for example, meal breaks and work-life balance initiatives. A joint approach has also been taken to managing the implementation of Agenda for Change, with trade union representatives reporting that they now feel that they have some ownership over its development. There are now ‘joint management-union chairs’ for sub-groups, including Agenda for Change sub-groups, each tackling a variety of new issues and reforms. These new issues are approached in a very different way to the past, when the level of dialogue was virtually non-existent. There are still differences and problems, but the new framework has sustained a high degree of joint working. Central to this has been the strong explicit commitment and support for consultative mechanisms from the union and senior management, including the interim CEO, who chaired the JNCC. As one trade union representative explained:“(The Acas project) has built a foundation to move forward on the working lives for our relief staff, for full time staff. And we’ve now got the JNCC firmly established as the main staff conduit to the head of the organisation on a formal basis.”

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According to HR managers and trade union representatives, longer term benefits of Acas involvement have become evident over the last two years. These include increased levels of trust between employees, unions and managers, and improved formal and informal workplace relations. Trade union representatives and managers now speak to each other openly and constructively, and improvements to operational systems and practices are the subject of consultation and dialogue to a much greater extent than in the past. Such is the nature of the turnaround that Trust managers and union representatives are often called upon to provide advice to other Trusts who are attempting to improve employer-trade union relationships.

Questions:-

1. Give the brief history of the above mentioned case study

Ans:

Essex Ambulance Service (EAS) is an organisation dealing with unscheduled care, predominantly

accessed via 999 calls. It was established as an NHS Trust around 1990 and employs around 1,300

people, consisting of three core groups of staff: ambulance technicians, paramedics, and ambulance

assistants (who perform nonemergency functions). These workers are organized predominantly by

two unions, Unison and the GMB.

The Trust had two inter-related problems. Firstly, relations between management and unions had

deteriorated after a national dispute in 1989. Trade unions did not have recognition at the Trust, and

consultation between management and the workforce was non-existent. This was due in part to the

management style of the organisation. The problem was accepted to be the case by representatives of

both the trade unions and the Trust’s Human Resources (HR) manager.

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2. What was the problem? How it was resolved?

Ans:

Acas first became involved at EAS in October 2002, when the Acas adviser liaised with management

and trade unions to develop two sets of workshop programmes, each addressing the issues identified

as problems. Two initial workshop sessions were held in relation to the sensitive issue of rosters.

Participants described how the Acas adviser played a lead role during the workshops and the later

construction of reports by providing examples drawn from other organisations, providing records and

notes of progress, and using a variety of techniques in the meetings to break down some of the

barriers between participants. The HR manager described the structure and atmosphere of this first

session.

A variety of staff groupings were represented, as well as key trade union and management

representatives. A series of discussions and group exercises were used, and groups were organised to

include a broad range of individuals. By the end of the first workshop a series of points had been

raised and the basis for recommendations established. This included the need to have clear principles

driving consultation, the need for a review of the roster system, and the need to have stronger

informal ties between key management-union players.

Participants considered the Acas adviser’s role to be pivotal, as she assisted in establishing clear

terms of reference for management-union engagement and deployed a series of techniques to avoid

deadlock situations. Her ability to draw examples from similar cases was also viewed as very useful.

The adviser put together a report based on the ideas and suggestions generated on the day, and these

were then discussed at a further half day workshop, at which participants ratified and agreed a new

system of rosters.

Overall, initiatives developed during the workshop sessions led to a number of improvements to

working practices. Crucial to the sessions was the way dialogue was framed and led by the adviser. In

some instances this involved the adviser working with sub-groups of staff to tackle specific problems.

The Acas adviser also organised a subsequent workshop on consultation with key Trust managers and

union groups in early 2003. The Trust’s JNCC had been ineffective for most of the 1990s, as

decisions made at the JNCC were often overturned or ignored by the Chief Executive, thereby

damaging the committee’s credibility. The aim of the facilitated workshop was to establish the

purpose of the JNCC and its terms of reference. Whilst no formal output emerged from the workshop,

participants felt that it had formed the basis for the renewal of the forum.

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3. What was the effect of solution on the unit’s mechanism?

Ans:

According to HR managers and trade union representatives, the longer term benefits of Acas

involvement include increased levels of trust between employees, unions and managers, and the

improvement of formal and informal workplace relations over the last two years. Trade union

representatives and managers described how they could now speak to each other openly and

constructively. Additionally, improvements to operational systems and practices – such as rostering –

have been the subject of consultation and dialogue to a much greater extent than in the past. The

implementation of Agenda for Change has also been facilitated by the development of a stronger role

for trade unions through increased management-trade union dialogue. Such is the nature of the

turnaround that has taken place that the Trust has become a model ‘reference point’ in the

development of partnership for other Trusts. Trust managers and union representatives are often

called upon to provide advice to Trusts who are also attempting to improve employer-trade union

relationships.

Acas was identified by both parties as an important intermediate body that facilitated dialogue and

supported cultural change in a wholly objective manner. Representatives described how Acas

advisers brought support, trust and expertise to the emerging relations between trade unions and

managers. As the Unison representative explained.

In summary, improvements in the employee relations culture have led to greater management-union

dialogue. The Acas project has also facilitated substantial changes in working patterns and brought

part-time staff closer to the strategic concerns of the Trust. This has meant that human resource

planning is clearer and more consensual in nature. Levels of commitment from part-time staff are,

according to the trade union representative, higher than in the past. And key stakeholders have taken

a joint approach to managing the implementation of Agenda for Change, with trade union

representatives reporting that they now feel that they have some ownership over its development.

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4. What is the message?

Ans:

A range of outcomes and positive impacts flowed from Acas’ involvement in the Trust. Management

and trade union representatives confirmed the significance of these developments given the very

difficult nature of employment relations and the low levels of trust that existed between management

and the unions and staff in the 1990s.

Firstly, the JNCC has become a central feature of employment relations at the Trust. It has provided a

vehicle for dialogue between management and trade unions on a wide variety of issues, including

work-life matters and flexible working. Both parties reported that it has formed the basis of a

consistent dialogue that is regular and ongoing, and not just enacted as and when there is a need to

resolve a problem. It now functions effectively, partly as a result of good personal and informal

relations between key trade union representatives and managers. The JNCC has also formed a pivotal

axis for discussions around Agenda for Change.

Secondly, in terms of work rosters, there is a new system that accommodates the interests of both

longer serving full-time staff and those on a variety of different contracts. Employees who formerly

had little advance knowledge of when they were working can now plan their rest days more clearly.

During the workshop on rosters, ‘break-out groups’ addressed the problem in a way that included the

voice of all parties and stakeholders.

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CASE 3 (20 Marks)

Changing role of trade unions

The curtain has at last come down on one of the most famous marquees in the motorcar industry, with MG Rover finally shutting down production earlier this month.

A company that once employed 40,000 people in the British Midlands, with an equal number employed in the factories of suppliers, had been forced to scale down its operations over the years.

But even skeletal operations with 4,000 people has now ceased. It is an example of what destructive trade unionism can do to an industry.

Arthur Scargil in the 1980s set out to destroy industry in the Midlands with his brand of militant and destructive trade unionism. Finally Mrs Thatcher stood up to him and showed him the limits to which trade unions could push industry.

She privatised industries and Scargil lost his power base, which was mainly in public sector heavy industries. Successive governments in Britain after Mrs Thatcher have refused to bail out public sector undertakings with subsidies and grants.

This has resulted in Britain transforming itself from being the sick man of Europe to one of the more dynamic economies in the West.

In India too we have had examples of the Arthur Scargil brand of trade unionism. What Datta Samant did to the cotton textile and engineering industries in Mumbai was equally devastating.

Almost all the textile mills in the city closed because of the unreasonable demands made by trade unions under Datta Samant. India has the advantages of (a) growing both long staple and short staple cotton and (b) a huge domestic market.

We could have been the cotton textile source for the whole world. But battling militant trade unions, on the one hand, while coping with price controls imposed by unimaginative governments and textile quotas imposed by foreign governments, on the other, proved too much for our textile industry.

It did not have the necessary financial and managerial resources, and it failed to modernize and remain competitive in terms of quality and cost. So it declined and became terminally ill.

Trade unions are a legitimate system for organizing workers and to voice their rights and grievances. Without them companies would become either too paternalistic or too dictatorial.

Responsible unions help to create a middle path in the relationship between management and labour while maintaining the responsibilities of the former and the dignity of the latter.

Where things go wrong is when the management becomes authoritarian, especially in owner/family-managed companies, or when a trade union leader allows emotion and ego to overcome reason.

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Fortunately today, workers have become better informed and aware of the economic forces that impact their industry. The media has helped to create much greater economic awareness.

So it is not so easy to mislead them. Managements too have become more sensitive and skilled in handling relationships with employees. This is true of even family-owned and managed businesses.

TVS [Get Quote] in the South is a prime example of how a large family-managed industrial group has successfully managed its relationship with employees through enlightened management. There are more such examples in other parts of the country.

Perhaps the labour departments of governments at the state and the Centre should sponsor the institutes of management to do case studies of companies that have built up such successful relationships. Instead of merely administering rules and labour laws, these government departments could also act as apostles of good practices in the field.

As the skill levels and educational qualifications of employees advance, the role and significance of trade unions tend to diminish. This is because (a) employees are able to represent their own case and (b) managements are more sensitive to the needs of individual employees, whose intellectual skills become almost uniquely valuable.

This is already happening in the sunrise industries based on brainpower such as IT and telecommunications. Another phenomenon in these modern industries is that employees have greater opportunity and tendency to move from one company to another, not only because of better terms of employment but also because of their yearning to learn new skills.

This appetite for learning is something remarkable, especially in the IT industry. In fact, people in that industry are more bothered about what they can learn in a company than about how much they earn.

This phenomenon is facilitated by the fact that there are plenty of employment opportunities in IT and it is a young industry. That is why one does not notice any union flags in the Silicon Valley of India/Bangalore's Electronic City.

Trade unions have declined in their importance even in the UK, the original home of trade unions. The UK's Labour Party was formed by socialist leaders of trade unions.

Today, Tony Blair does not have to depend on trade unions as much as his predecessors had to do in the 1980s and 90s. The Labour Party's appeal to the public is based on key policy issues such as spending on the National Health Service and the education system, rather than anything to do with labour policy.

In the US, trade unions are powerful in negotiations with individual employers, but have no significant political clout although they generally support the Democratic Party.

The same is the case in Japan. Even in Germany, France, and Italy, the role of trade unions has become more focused on negotiations with employers rather than on politics.

The privatization or corporatisation of many public services such as electricity and water supply has accelerated this shift. Hopefully the same shift in the character and role of trade unions will happen in

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India -- even in places like Kerala and Bengal, as employment starts to move to more intellect-based activities and public sector industries are privatized.

Responsible trade union leaders with a long-term vision will adapt their policies to suit the new realities.

Correspondingly, there has also been a change in the attitude of management, even in family-managed companies. They are now better educated and many of them have been exposed to international education and international markets.

They realise the dignity of human beings more than their previous generation and therefore are less prone to treat employees in a scurvy manner. More and more companies are investing in management training and development.

This has also helped to create much better awareness of the aspirations of workmen, among the managers.

Yet the last vestiges of negative union practices continue to persist in monopolistic public services like the state transport undertakings, state electricity boards, etc.

The only way to correct this is to corporatise or privatise these undertakings or open them up to competition. A prime example of the change that is possible is what has happened in aviation.

Once airline services were opened up to competition, the whole scene changed. Instead of treating passengers with the indifference typical of a public sector employee, Indian Airlines staff learnt even to smile while greeting passengers.

In addition, we have created some world-class private carriers in the domestic market who are now set to take wing on international routes. Even the railways can be privatised.

The rail track in each region can be owned and operated by a company, which then allows competing companies to run their trains on these tracks. Similarly, there is no reason why urban bus services cannot be made more efficient by opening them up to competition.

Today they are run as monopolies due to pressure from unionised labour. For example, in Mumbai the urban bus service is cross-subsidised by BEST Electric Supply services.

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Questions:-

1. What do you know about changing role of Trade Union activities?

Ans:

Over the last two decades trade unions have faced major economic and political change. The kind of

jobs that people do and the type of industries they work in have changed dramatically. The

manufacturing sector, which used to be one of the most important industries in Britain, has shrunk

dramatically and new sectors - like the finance and voluntary sectors - are becoming more important

to the British economy.

There have also been changes to the way we work. Traditional working patterns have declined.

Many people now work part-time or freelance or on short term contracts. Job insecurity is a growing

problem for people at work. Many people are unemployed or work under the constant threat of

redundancy.

At the same time people have less protection and fewer rights at work than they had two decades

ago. New laws have weakened employment rights in areas like pay and unfair dismissal. Legislation

has also curbed trade union activities.

All these changes throw up significant challenges to the trade union movement. The types of

industries where union membership was traditionally high have suffered heavy job losses. People are

less likely to be members of unions in new industries, small organisations and when they are

employed on temporary contracts. New laws on trade union organisation make it more difficult for

unions to represent their members and to negotiate improvements to their working conditions.

But the current economic climate makes trade unions more important than ever. People whose jobs

are insecure need advice and support. They need help on contract terms, pensions and employment

rights. They also need help with getting training so that they have skills which make them more

"employable" if their jobs are restructured or disappear.

The challenge for unions is to adapt to these changes and ensure that they are relevant to all working

people. Unions are responding by:

launching major recruitment drives and trying to attract new members in jobs and industries

which in the past have not had high union membership.

putting education and training high up the bargaining agenda so that their members have the

skills and qualifications to improve their employment prospects

forging a new deal at the workplace by working in partnership with employers on common

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mounting campaigns to defend the rights of working people

2. What is the role of responsible Trade Unionism?

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Ans:

Trade unions recognise that organisations must be competitive in the global markets if they are to be

successful and provide secure employment for employees. The agenda for trade unions in the 1990s

is working in partnership with employers to improve businesses and services.

Trade unions have an important role in:

Improving communication between employees and managers so that employees can

understand and be committed to the organisation's objectives

Negotiating improvements to pay and working conditions so that people feel more satisfaction

at work and stay longer in their jobs

Encouraging companies to invest in training and development so that employees have the

skills necessary for improved products and services

Acting as a positive force for change - by winning employees' support to the introduction of

new technologies and work organisation

3. Is Privatisation a challenge for Union activities?

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Ans:

The curtain has at last come down on one of the most famous marquees in the motorcar industry, with

MG Rover finally shutting down production earlier this month.

A company that once employed 40,000 people in the British Midlands, with an equal number

employed in the factories of suppliers, had been forced to scale down its operations over the years.

But even skeletal operations with 4,000 people has now ceased. It is an example of what destructive

trade unionism can do to an industry.

Arthur Scargil in the 1980s set out to destroy industry in the Midlands with his brand of militant and

destructive trade unionism. Finally Mrs Thatcher stood up to him and showed him the limits to which

trade unions could push industry.

She privatised industries and Scargil lost his power base, which was mainly in public sector heavy

industries. Successive governments in Britain after Mrs Thatcher have refused to bail out public

sector undertakings with subsidies and grants.

This has resulted in Britain transforming itself from being the sick man of Europe to one of the more

dynamic economies in the West.

In India too we have had examples of the Arthur Scargil brand of trade unionism. What Datta

Samant did to the cotton textile and engineering industries in Mumbai was equally devastating.

Almost all the textile mills in the city closed because of the unreasonable demands made by trade

unions under Datta Samant. India has the advantages of (a) growing both long staple and short staple

cotton and (b) a huge domestic market.

We could have been the cotton textile source for the whole world. But battling militant trade unions,

on the one hand, while coping with price controls imposed by unimaginative governments and textile

quotas imposed by foreign governments, on the other, proved too much for our textile industry.

It did not have the necessary financial and managerial resources, and it failed to modernise and

remain competitive in terms of quality and cost. So it declined and became terminally ill.

Trade unions are a legitimate system for organising workers and to voice their rights and grievances.

Without them companies would become either too paternalistic or too dictatorial.

Responsible unions help to create a middle path in the relationship between management and labour

while maintaining the responsibilities of the former and the dignity of the latter.

Where things go wrong is when the management becomes authoritarian, especially in owner/family-

managed companies, or when a trade union leader allows emotion and ego to overcome reason.

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Fortunately today, workers have become better informed and aware of the economic forces that

impact their industry. The media has helped to create much greater economic awareness.

So it is not so easy to mislead them. Managements too have become more sensitive and skilled in

handling relationships with employees. This is true of even family-owned and managed businesses.

TVS in the South is a prime example of how a large family-managed industrial group has

successfully managed its relationship with employees through enlightened management. There are

more such examples in other parts of the country.

Perhaps the labour departments of governments at the state and the Centre should sponsor the

institutes of management to do case studies of companies that have built up such successful

relationships. Instead of merely administering rules and labour laws, these government departments

could also act as apostles of good practices in the field.

4. What is the lesson learnt from the IT sector?

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Ans:

As the skill levels and educational qualifications of employees advance, the role and significance of

trade unions tend to diminish. This is because (a) employees are able to represent their own case and

(b) managements are more sensitive to the needs of individual employees, whose intellectual skills

become almost uniquely valuable.

This is already happening in the sunrise industries based on brainpower such as IT and

telecommunications. Another phenomenon in these modern industries is that employees have greater

opportunity and tendency to move from one company to another, not only because of better terms of

employment but also because of their yearning to learn new skills.

This appetite for learning is something remarkable, especially in the IT industry. In fact, people in

that industry are more bothered about what they can learn in a company than about how much they

earn.

This phenomenon is facilitated by the fact that there are plenty of employment opportunities in IT

and it is a young industry. That is why one does not notice any union flags in the Silicon Valley of

India/Bangalore’s Electronic City.

Trade unions have declined in their importance even in the UK, the original home of trade unions.

The UK’s Labour Party was formed by socialist leaders of trade unions.

Today, Tony Blair does not have to depend on trade unions as much as his predecessors had to do in

the 1980s and 90s. The Labour Party’s appeal to the public is based on key policy issues such as

spending on the National Health Service and the education system, rather than anything to do with

labour policy.

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