<b>Jaimini Bhagwati:</b> Reform Indian trade unions

Unions could become relevant by representing informal sector workers

Last weekend I chanced upon a dated documentary on Cesar Chavez. Chavez, a labour leader and civil rights activist of Mexican origin, was the force behind the setting up of the National Farm Workers Association in the United States in the 1950s. This association became the United Farmer Workers Union (UFW) in 1972. Chavez faced seemingly insuperable obstacles and his rallying cry was “si, se puede” (Spanish for “yes, we can” used by Barack Obama during his presidency campaign). Chavez’s life is an uplifting story about how the socially and economically weak can obtain fair outcomes in their negotiations with the rich and powerful through collective bargaining. 

In India there are currently about 20,000 trade unions registered under the Trade Union Act of 1926 (which needs updating). Almost all these small trade unions scattered around the country are affiliated to one of the following five major central trade union organisations (CTUOs).

These membership numbers are claimed by the CTUOs and around 80 per cent of their members are said to be from the formal sector and the remaining 20 per cent are informal sector workers. There is no independent confirmation of these numbers, e.g. from the Labour Bureau of the central government’s Ministry of Labour and Employment. Given that the total Indian work force, formal and informal, is around 500 million and assuming that these CTUO membership numbers are not too inflated, trade unions cover about 15 per cent of the workforce with a ratio of 4:1 for formal to informal sector workers. 

IMF’s World Economic Outlook (WEO) Database (October 2016) does not include any unemployment numbers for India. This is probably because our data does not reliably cover the large numbers of the marginally employed in the informal sector. By contrast, unemployment in China is shown at four per cent in 2015 and is projected to remain at this level through 2021. China’s unemployment numbers must carry a measure of credibility with the IMF since these are included in the WEO Database. 

 

 

Indian per capita income is about one-tenth, even in purchasing power parity terms (PPP) terms, of the highest incomes among developed countries. Indian informal sector workers, about 90 per cent of the workforce, are not adequately covered by social safety nets. The railways strike in 1974 and the Bombay textile strike in 1982 stand out as long periods of stalemate between organised workers and owners. Such strikes by formal sector workers, who are mostly better off than those working in the informal sector, had the rest of India questioning whether confrontational trade union activism is in the nation’s interest. 

In the developed West, the social, economic and political importance of trade unions has decreased considerably since the 1980s. For example, then UK prime minister Margaret Thatcher was able to successfully confront coal miners in 1983. Thatcher’s Conservative party weakened unions by making it difficult for them to strike legally. And, Tony Blair’s Labour government did not reverse any of these Thatcher “reforms”. Membership of trade unions in the UK declined from 13 million in 1979 to below 6 million in 2013. In the US, the American Federation of Labour and Congress of Industrial Organizations (AFL-CIO) is the largest federation of trade unions. AFL-CIO saw its membership reduce from 17.7 million in 1983 to 14.5 million in 2013. The proportion of US workers who belong to any union was 20 per cent in 1983 and is currently 10 per cent. Trade union membership was about seven per cent in France, 18 per cent in Germany and 27 per cent in Canada in 2013. 

It is perhaps the very success of trade unions in developed countries, particularly in Western Europe, to get governments to enact legislation which provides for generous education, minimum wages, safe working conditions, unemployment, health and pension benefits which eroded their importance for workers. However, as evidenced by the Brexit vote and the Trump victory there seems to be a deep sense of angst and alienation among workers in the UK and the US. Are the current extremely high income and wealth disparities around the world, even to a little extent, due to the reduced bargaining power of shop-floor workers? 

Till the late1980s, the views of Indian trade union leaders on employment conditions and political-economy issues were widely covered in the media. Since the 1990s the bargaining strength of Indian trade unions and their ability to provide inputs on nationally important issues has diminished. What is it that Indian trade unions are signalling by their relative silence about political and economic issues confronting the nation? Perhaps they no longer have the required leadership with pan-national understanding of issues and articulate enough to express their views convincingly. Another reason for the atrophy of the major Indian trade unions could be that their affiliation with political parties has over time stunted their ability to think independently. 

Even as leadership issues in CTUOs are addressed they could enhance their relevance by enlisting more informal sector workers. These workers too need dedicated champions so that fair compensation levels and living condition rights are observed. It would have been difficult to enlist informal sector workers in trade unions just 10 years ago. Now the 900 million Aadhaar card holder database is a valuable resource which could be made available to CTUOs on a read-only basis. This would help CTUOs to recruit and keep a better record of their informal sector membership. This in turn would be invaluable for trade union leadership and the political parties to which they are connected to obtain feedback on the pressing issues of the day and empower them in their collective bargaining efforts with managements or governments. 

The writer is the RBI chair professor in ICRIER

j.bhagwati@gmail.com