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CHANAKYA NATIONAL LAW UNIVERSITY
CONTENTS
I. Introduction …………………………………………………………..5-8
-trade union definition
-origin and early history
-objectives of trade union
II. Trade union movement in India……………………………………..9-16
-phases of trade union
-central trade union organizations in India
III. Trade Union Act,1926……………………………………………………..17-18
IV. Importance of trade union and social justice……………………………..19-24
-reasons for joining trade unions
-functions of trade union
-advantages and problems of trace union
V. Conclusion…………………………………………………………………25
Bibliography………………………………………………………………26
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CHAPTER I : INTRODUCTION
TRADE UNION
Definition
Organization whose membership consists of workers and union leaders, and whose principal
purposes are to (1) negotiate wages and working condition terms, (2) regulate relations
between workers (its members) and the employer, (3) take collective action to enforce the
terms of collective bargaining, (4) raise new demands on behalf of its members, and (5) help
settle their grievances. Trade unions are generally classified as: (a) Company union that
represents interests of only one firm and may not have any connection with the trade union
movement. Also called house union, a company union is often a bogus one and generally
illegal. (b) General union that represents workers from several firms from the same industry.
Also called industrial union. (c) Craft union that represents skilled workers in a particular
field such as carpentry or welding.
A trade union or labour union is an organization of workers who have banded together to
achieve common goals in key areas such as wages, hours, and working conditions, forming a
cartel of labor.
The trade union, through its leadership, bargains with the employer on behalf of union
members and negotiates labor contracts with employers. This may include the negotiation of
wages, work rules, complaint procedures, rules governing hiring, firing and promotion of
workers, benefits, workplace safety and policies. The agreements negotiated by the union
leaders are binding on the rank and file members and the employer and in some cases on
other non-member workers.
These organizations may comprise individual workers, professionals, past workers, or the
unemployed. The most common, but by no means only, purpose of these organizations is
"maintaining or improving the conditions of their employment".
Over the last three hundred years, many trade unions have developed into a number of forms,
influenced by differing political and economic regimes.
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ORIGIN AND EARLY HISTORY
The traces of trade unions' existence could be traced from the eighteenth century; the rapid
expansion of industrial society was to draw women, children, rural workers, and immigrants1
to the work force in larger numbers and in new roles. Trade unions have sometimes been seen
as successors to the guilds of medieval Europe, though the relationship between the two is
disputed. Medieval guilds existed to protect and enhance their members' livelihoods through
controlling the instructional capital of artisanship and the progression of members from
apprentice to craftsman, journeyman, and eventually to master and grandmaster of their craft.
A labor union might include workers from only one trade or craft, or might combine several
or all the workers in one company or industry. Since the publication of the History of Trade
Unionism2 by Sidney and Beatrice Webb, the predominant historical view is that a trade
union "is a continuous association of wage earners for the purpose of maintaining or
improving the conditions of their employment."
A modern definition by the Australian Bureau of Statistics3 states that a trade union is "an
organization consisting predominantly of employees, the principal activities of which include
the negotiation of rates of pay and conditions of employment for its members."
1 From other nations
21894
3 ABS
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OBJECTIVES OF TRADE UNION
Trade unions are formed to protect and promote the interests of their members. Their primary
function is to protect the interests of workers against discrimination and unfair labor
practices. Trade unions are formed to achieve the following objectives:
Representation
Trade unions represent individual workers when they have a problem at work. If an
employee feels he is being unfairly treated, he can ask the union representative to help
sort out the difficulty with the manager or employer. Unions also offer their members
legal representation. Normally this is to help people get financial compensation for
work-related injuries or to assist people who have to take their employer to court.
Negotiation
Negotiation is where union representatives, discuss with management, the issues
which affect people working in an organization. There may be a difference of opinion
between management and union members. Trade unions negotiate with the employers
to find out a solution to these differences. Pay, working hours, holidays and changes
to working practices are the sorts of issues that are negotiated. In many workplaces
there is a formal agreement between the union and the company which states that the
union has the right to negotiate with the employer. In these organizations, unions are
said to be recognized for collective bargaining purposes.
Voice in decisions affecting workers
The economic security of employees is determined not only by the level of wages and
duration of their employment, but also by the management’s personal policies which
include selection of employees for lay offs, retrenchment, promotion and transfer.
These policies directly affect workers. The evaluation criteria for such decisions may
not be fair. So, the intervention of unions in such decision making is a way through
which workers can have their say in the decision making to safeguard their interests.
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Member services
During the last few years, trade unions have increased the range of services they offer
their members. These include:
o Education and training - Most unions run training courses for their members
on employment rights, health and safety and other issues. Some unions also
help members who have left school with little education by offering courses
on basic skills and courses leading to professional qualifications.
o Legal assistance - As well as offering legal advice on employment issues,
some unions give help with personal matters, like housing, wills and debt.
o Financial discounts - People can get discounts on mortgages, insurance and
loans from unions.
o Welfare benefits - One of the earliest functions of trade unions was to look
after members who hit hard times. Some of the older unions offer financial
help to their members when they are sick or unemployed.
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CHAPTER II : TRADE UNION MOVEMENT IN INDIA
During the freedom movement, trade unions were patronised by political parties and the
freedom movement helped trade unions to be recognised as legal labour organisations to
promote the interests of the working class, more especially in the organised sector of the
economy. Trade unions during the post-independence period preferred state-led planned
industrialisa-tion. The national government also passed a number of Acts with which they
codified the roles of trade unions as instruments of collective bargaining on behalf of the
workers. Tripartite structures of consultation were created like the Indian Labour Conference,
wage boards, Central Industrial Relations Machinery, joint management councils etc. The
entire idea was that these institutions should be used to reduce the areas of conflict by
dialogue, rather than resort to strikes. In case of failure by dialogue, the government used the
instrument of compulsory adjudications, by appointing state as well as national level
tribunals. The result was that trade unions felt that the state has given them a respectable
place to voice their concerns and thus they were able to extract with the help of the state good
amount of power to protect and promote the interests of labour. In other words, this period
was marked by a social cohesion between the state and the trade unions to improve the
miserable conditions of the working class.
Growth and Development of the Trade Union Movement (The Trend)
The growth and development of the labour - movement , and for that part of the trade unions,
in India, can be divided into following periods, each of them revealing different tendencies
that mark it from others.
1. Social Welfare period( From 1875 to 1918)-
2. Early Trade Union period ( From 1918 to 1924) -
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3. Left- Wing Trade Unionism period ( From 1924 to 1934)-
4. Trade Union Unity Period ( From 1935 to 1938)
5. Second World War ( From 1939 to 1945)
6. Post Independence period ( From 1947 to date)
7. Present scenario-
SOCIAL WELFARE PERIOD (1875 TO 1918)
The most noticeable features' of the period, 1875-1918 - were:
(1) Complete absence of radicalism in the labour movement. The methods used by the
workers were characterised by a tendency to petition, memorials and seek redress of
grievances by mild pressure.
These methods reflect the influence of leaders like Naryan Meghajee Lokhanday, Shapurjee
Bengali, S.N. Baneijee, and others who were all political moderates and law abiding persons.
They were rather social workers desirous to serve the society through amelioration. "With
these characteristics," writes Punekar, "the labour movement could hardly tackle such
problems as excessive hours of work, few holidays, irregular payment of wages,
incompetency of mill managers, inadequate fencing of machinery and the ill-ventilated and
filthy state of many work places.
(2) The movement depended greatly on external philanthropy. "Philanthropic agitation was
the fore-runner of labour movement in India and having originated in philanthropy its motive
force was sympathy rather than justice. Born of philanthropy. It was a movement for the
workers rather than by the workers.
(3) Most of the organisations were unstable and of loose type, as they lacked definite aims
and constitution. Once the particular grievance was settled the association would disband.
(4) There was little conception of permanent trade union membership, 'the payment –dues or
organised collective bargaining. About the Bombay Mills and Association, Dutt observed,
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"The Association has no existence as an organised body, having no roll or membership. no
funds, no rule..."
(5) The movement developed mostly among the educated class of workers such as the postal
clerks and railway employees. It, however. did not make much progress in organised
industries like textiles, mining and plantations.
(6) The early leadership was provided by three types of persons. First, intellectuals such as
lawyers, reformers, editors, teachers and preachers, who readily came forward to organise
and lead the workers. Second, the careerists, who saw in the needs of workers opportunities
for furthering their own ends, jumped in masquerading as labour leaders.The third group
from which labour leaders emerged consisted of politicians and nationalists like B.P. Wadia,
V.V. Giri, M. Vardarajulu Naidu, B. Shiv Rao, Annie Besant and B.G. Tilak, N.M. Joshi.
According to Pandey. the important factors which have helped in the emergence and growth
of the industrial labour movement are:
(1) While the economic hardships of workers have been present as a latent force. The impetus
for the growth of labour movement is provided by the major political currents, particularly
movement for 'national independence.
(2) The failure of workers' initial attempts to organize led them to seek the help of.
Philanthropists and social workers to generally came from classes higher in economic and
social status.
Thus the main characteristics of these early efforts of forming labour associations were their
lack of continuous organization. These associations existed but they were not an organic
growth out of the working class. Workers supported their association when it suited them
such as during, strikes or in order to get benefits from welfare activities. Otherwise they
ignored the associations. Hence, they were usually weak.
EARLY TRADE UNION PERIOD (1918-1924)
The main points in this period are
Rise of cost of living which lead to collective action
The intensified swaraj movement
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The success of the Russian Revolution of 1917
The establishment of the I.L.O., in 1919
Immediately after the war many Indian soldiers in the British army were demobilized
and forced into the labour market. By 1920, a large class of genuine proletariat
developed. Hence, these were new' opportunities for the creation of trade unions
The non co-operative movement of Gandhiji during 1920-21
Formation of more and more unions in different parts of the country.
Eg. The Textile Labour Association was formed in 1920 at the initiation of Gandhiji
Formation of All India Trade Union Congress (AITUC) under the leadership of Lala
Lajpat Rai.
The trade unionism, after 1919, spread to centers other than Chennai; Ahmadabad and
Bombay and it is estimated that between 3-5lakh of workers were joined the various
unions.
Among the political leaders who entered into the trade union movement at this time
were
such national leaders as C:R. Das, Moti Lal Nehru, Jawaharlal Nehru, Subhash Chandra
Bose, V.V. Giri
LEFT-WING UNIONISM PERIOD (1924-1934)
The rapid growth of the trade unionism was facilitated by the growth of anti-
imperialist national movement, the brutal violence and repressive measures let loose by the
British government, particularly the Jallianwala Bagh massacre, Rowlatt Act, indiscriminate
arrests and imprisonment of national leaders and Satyagrahis, the phenomenal profits earned
by the capitalists in the face of falling real wages during the post-war period. The formation
of All India Trade Union Federation (AITUF) and Red Trade Union Congress(RTUC) lead
by the communist was another noticeable change that happened during this time. Now there
are three unions namely
1. AITUC, led by the Royists and militant nationalists
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2. AITUF,led by Congress nationalists and moderates
3. RTUC, consisting of orthodox communists
Besides, there were some other independent organisations which followed their own methods
and policies notable among them being the All India Railwaymen's Federation (AIRF} and
the Textile Labour Association(TLA)of Ahmadabad.
TRADE UNION'S UNITY PERIOD (1935-1938)
The division in the Indian labour movement was proving very costly for the Indian working
class. By 1934, almost every mill in Bombay brought down wages by a substantial reduction.
The total number of mandays lost was 47.7 lakhs as against 21.7 lakhs in 1933. All India
Railwaymen's Federation in its conference at Bombay, formed a Trade Union Unity
Committee in 1932. The Committee adopted the following "platform of unity": "A trade
union is an organ of class-struggle; its basic task is to organize the workers for advancing and
defending their rights and interests. Negotiation, representations and other methods of
collective bargaining must remain an integral part of the trade union activities. It also laid
down certain broad conclusions agreeable to both wings of labour – the AITUF and the
AITUC. The final decision was taken in Delhi in 1933~when National Federation of Labour
(NFL) was formed to facilitate the attempt towards unit. The AITUF and the railway unions
amalgamated themselves with the NFL under the name of the National Trade Union
Federation (NTUF). Under the circumstances unity in labour movement was essential, In
1935, the RTUC was merged into the AITUC. The Indian National Congress approached the
working class. The number of trade unions increased from 271 in 1936-37 to 562 in 1938-
39,'and the membership rose from 2.61lakhs to 3.99 lakhs. The path to unity was paved in
1938 in Nagpur when the AITUC finally decided to accept the conditions of merger as laid
down by the NTUF. 37 Thus, after 9 years of split the trade union unity was complete in 1940
when the NTUF dissolved itself and merged with the AITUC and the AITUC again became
the sole representative of the organized labour.
SECOND WORLD WAR PERIOD (1939-1945)
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The Second World War, which broke out in September 1939, created new strains in
the ,united trade union movement. These strains arose because of the different political
factions in the AITUC related in different ways to the role of India as a protagonist in the
war. A large group of trade unionists led by the members of the Radical Democratic:-Party
was of the opinion that the AITUC should, support and participate in the anti-fascist war
irrespective of the acts of omission and commission of the British' government. An equally
large number were opposed to that view on the ground that it was an imperialist war of Great
Britain with which India had no concern. Hence, again a rift took place in 1941 and 'the
Radicals left the AITUC with nearly 200 unions with a membership of 3, 00,000 and formed
a new central federation known as the Indian Federation of Labour. Hence, again a rift took
place in 1941 and 'the Radicals left the AITUC with nearly 200 unions with a membership of
3, 00,000 and formed a new central federation known as the Indian Federation of Labour. IFL
grew very rapidly and by 1944, it claimed 222 unions with a membership of 407,773
workers. During war-time certain factors helped to enhance the status of the trade unions in
the country, namely, (a) The government as well as employers launched number of labour
welfare measures with a view to increase production of war materials and other essential
goods and maintain high profits. (b) Recognition to trade union was accorded by many
employers. This fact gave a moral strength to the unions. (c) Ban was placed on the strikes
and lockouts, during war-time, under the Defence of India Rules 8J-A, and all disputes had to
be referred to adjudication and their awards were enforced. (d) A Tripartite Labour
Conference was convened in 1942, for the first time, to provide a common platform for
discussions and mutual understanding between the labour and the employers. During war-
time, the trade union –strength grew from 420 in 1937-38 to 865 in 1944-45; and the
membership from 3.90 lakhs to 8.89Iakhs. One great qualitative change that had taken place
in Indian trade unions related to their ability to participate in negotiations with employers and
the tripartite deliberations.
THE POST INDEPENDENCE PERIOD (From 1947 to 2000)
As pointed out earlier; when attempts to restructure the AITUC failed, those believing
in the aims and ideals other than those of the AITUC Separated from the organization and
established the Indian National Trade Union Congress (INTUC) in May, 1947. The INTUC
was formed by Hindustan Mazdoor Sevak Sangh, a creation of pro Gandhi wing in the
Congress, who was associated with the Textile Labour Association of Ahmadabad. The
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INTUC was founded for establishing an order of society which is free from hindrances to an
all-round development of its individual members which fosters the growth of human
personality in all its aspects and which goes to the utmost limit in progressively eliminating
social, political and economical exploitation and inequality, the profit motive and economic
activity and organization of society and the anti-social concentration of power in any form.
The post-war period has been marked by the most rapid strides so far made by the trade union
movement in India. The most important factors being:
(i) The constant inflow of outside and international influences;
(ii) The pressure of trade union rivalries often based on political or ideological differences;
(iii) Government's Industrial Relations Policy with its provision for compulsory adjudication
machinery.
(iv) The enactment of labour laws conferring special privileges on registered trade unions;
(v) Desire of workers to unite for safeguarding their interests especially to face harder
conditions for labour such as retrenchment, lay-off, etc and
(vi) Attempts made by some employers to set up unions under their influence.
PRESENT SCENARIO OF THE TRADE UNION MOVEMENT
The Indian trade unions have come to stay now not as just ad hoc bodies or strike
committees but as permanent features of the industrial society. The political, economic,
historical and international factors have all helped the unions to get a legal status and they
now represent the workers. They have succeeded in organizing Central Union Federations
which help the determination of principles, philosophy, ideology and purposes the unions and
give some sense of direction to the otherwise scattered and isolated large number of unions.
The unions have achieved a remarkable status where' their voices are heard by the
Government and the employers, they are consulted on matters pertaining to improvement in
conditions of work, health and safety, job security, wages , productivity all matters
concerning the interests of labour. The unions have created for them a platform to air their
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views; policies and ideologies both at the state level and national level in the Standing Labour
Committee and the, Indian Labour Conference.
At present there are twelve Central Trade Union Organizations in India:
1. All India Trade Union Congress (AITUC)
2. Bharatiya Mazdoor Sangh (BMS)
3. Centre of Indian Trade Unions (CITU)
4. Hind Mazdoor Kisan Panchayat (HMKP)
5. Hind Mazdoor Sabha (HMS)
6. Indian Federation of Free Trade Unions (IFFTU)
7. Indian National Trade Union Congress (INTUC)
8. National Front of Indian Trade Unions (NFITU)
9. National Labor Organization (NLO)
10. Trade Unions Co-ordination Centre (TUCC)
11. United Trade Union Congress (UTUC)
12. United Trade Union Congress - Lenin Sarani (UTUC - LS)
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CHAPTER III: TRADE UNION ACT,1926
Trade Unions Act: The trade unions act was passed before independence to provide legal
protection to employee’ collectives and regulate them. Under the act, trade unions are to be
registered with the appropriate government appointed Registrar of Trade Unions.
Maintaining smooth relations between management and labor has been one of the main
objectives of Indian Industrial relations. Laws falling under this domain are mainly regulative
in nature. They specify the dos and don’ts.
The Trade Unions Act, 1926 allows freedom for any seven employees to apply to register a
trade union, but a later amendment (2001) specified the minimum membership as 10% of
unionizable employees or 100 employees, which ever is less. The act does not make
registration compulsory. However, the registered trade union protection from certain civil and
criminal actions.
The act does not specify any criterion or method for recognition of trade union by the
employer as the representative of employees. Various state governments, like Maharasthra,
have enacted separate legislations to deal with recognition.
The Industrial Employment (Standing Orders) Act, 1946 is regulatory in nature and is
applicable to industrial establishments under the jurisdiction of central and state governments.
By formally defining conditions of employment, the act serves to reduce conflict and also be
a communication mechanism between management and labor.
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Industrial establishments have to frame standing orders and apply for certifications for those
as well. Certifications will be done by designated certifying officer after inviting objections
from workmen or trade unions and considering the objections. In the absence of certified
standing orders, the model standing orders provided in the act automatically apply, except in
Gujarat and Maharasthra.
The primary tone of the Industrial Disputes (ID) Act of 1947 is regulatory since it puts
restrictions on the direct actions that can be taken by both the parties involved in the
industrial dispute. Different conflict resolution forums have been proposed, including works
committees (Section 3), conciliation officers (Section 4) boards of conciliation (Section 5)
courts of inquiry (Section 6) and labor courts (Section 7) tribunals (Section 7A) and the
national tribunal (Section 7B). The act also allows the government to intervene in the interest
of maintaining industrial peace. Since it came to force, the act has been amended many times.
In the context of demand for labor reforms, the suitability of the different provisions of the
act has been questioned from the perspective of increasing employment productivity, and
flexibility. The debate on the ID act starts with the definition of the industry itself, which got
widened by the Supreme Court in the landmark Bangalore Water Supply and Sewage Board
v. Rajappa, (1978) case.
The act also requires organizations to give a notice of change (Section 9A) – and advance
notice of 21 days – if there is any change at the work place affecting the workers. However
Section 9B allows the government to exempt firms from Section 9 A in terms of public
interest. Section 10 gives the government power to refer industrial disputes to boards, courts
or tribunals for the purpose of arriving at a settlement.
The act also places restrictions on employees in public utilities going on strike (sections 22,
23, and 24) without appropriate notice (6 weeks and 14 days before giving the notice) or
when any conciliation effort is operational. It also has provisions for firms employing more
than 50 workmen (Section 25 A) regarding layoffs, payment of layoff compensation (Section
25 C) retrenchment of workmen after giving sufficient notice (Section 25F) and for closure of
undertaking .
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CHAPTER III : IMPORTANCE OF TRADE UNION AND
SOCIAL JUSTICE
The existence of a strong and recognized trade union is a pre-requisite to industrial peace.
Decisions taken through the process of collective bargaining and negotiations between
employer and unions are more influential. Trade unions play an important role and are
helpful in effective communication between the workers and the management. They provide
the advice and support to ensure that the differences of opinion do not turn into major
conflicts. The central function of a trade union is to represent people at work. But they also
have a wider role in protecting their interests. They also play an important educational role,
organizing courses for their members on a wide range of matters. Seeking a healthy and safe
working environment is also prominent feature of union activity.
Trade unions help in accelerated pace of economic development in many ways as follows:
by helping in the recruitment and selection of workers.
by inculcating discipline among the workforce
by enabling settlement of industrial disputes in a rational manner
by helping social adjustments. Workers have to adjust themselves to the new working
conditions, the new rules and policies. Workers coming from different backgrounds
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may become disorganized, unsatisfied and frustrated. Unions help them in such
adjustment.
Trade unions are a part of society and as such, have to take into consideration the national
integration as well. Some important social responsibilities of trade unions include:
promoting and maintaining national integration by reducing the number of industrial
disputes
incorporating a sense of corporate social responsibility in workers.
achieving industrial peace.
REASONS FOR JOINING TRADE UNIONS
Minimize Discrimination
The decisions regarding pay, work, transfer, promotion, etc. are highly subjective in nature.
The personal relationships existing between the supervisor and each of his subordinates may
influence the management. Thus, there are chances of favoritisms and discriminations. A
trade union can compel the management to formulate personnel policies that press for
equality of treatment to the workers. All the labor decisions of the management are under
close scrutiny of the labor union. This has the effect of minimizing favoritism and
discrimination.
Sense of Security
The employees may join the unions because of their belief that it is an effective way to secure
adequate protection from various types of hazards and income insecurity such as accident,
injury, illness, unemployment, etc. The trade union secure retirement benefits of the workers
and compel the management to invest in welfare services for the benefit of the workers.
Sense of Participation
The employees can participate in management of matters affecting their interests only if they
join trade unions. They can influence the decisions that are taken as a result of collective
bargaining between the union and the management.
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Sense of Belongingness
Many employees join a union because their co-workers are the members of the union. At
times, an employee joins a union under group pressure; if he does not, he often has a very
difficult time at work. On the other hand, those who are members of a union feel that they
gain respect in the eyes of their fellow workers. They can also discuss their problem with’ the
trade union leaders.
Platform for self expression
The desire for self-expression is a fundamental human drive for most people. All of us wish
to share our feelings, ideas and opinions with others. Similarly the workers also want the
management to listen to them. A trade union provides such a forum where the feelings, ideas
and opinions of the workers could be discussed. It can also transmit the feelings, ideas,
opinions and complaints of the workers to the management. The collective voice of the
workers is heard by the management and give due consideration while taking policy
decisions by the management.
Betterment of relationships
Another reason for employees joining unions is that employees feel that unions can fulfill the
important need for adequate machinery for proper maintenance of employer-employee
relations. Unions help in betterment of industrial relations among management and workers
by solving the problems peacefully.
FUNCTIONS OF TRADE UNION
Trade unions perform a number of functions in order to achieve the objectives. These
functions can be broadly classified into three categories:
(i) Militant functions,
(ii) Fraternal functions
Militant Functions
One set of activities performed by trade unions leads to the betterment of the position of their
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members in relation to their employment. The aim of such activities is to ensure adequate
wages, secure better conditions of work and employment, get better treatment from
employers, etc. When the unions fail to accomplish these aims by the method of
collective bargaining and negotiations, they adopt an approach and put up a fight with the
management in the form of go-slow tactics, strike, boycott, gherao, etc. Hence, these
functions of the trade unions are known as militant or fighting functions. Thus, the militant
functions of trade unions can be summed up as:
To achieve higher wages and better working conditions
To raise the status of workers as a part of industry
To protect labors against victimization and injustice
Fraternal Functions
Another set of activities performed by trade unions aims at rendering help to its members in
times of need, and improving their efficiency. Trade unions try to foster a spirit of
cooperation and promote friendly industrial relations and diffuse education and culture
among their members. They take up welfare measures for improving the morale of workers
and generate self confidence among them. They also arrange for legal assistance to its
members, if necessary. Besides, these, they undertake many welfare measures for their
members, e.g., school for the education of children, library, reading-rooms, in-door and out-
door games, and other recreational facilities. Some trade unions even undertake publication
of some magazine or journal. These activities, which may be called fraternal functions,
depend on the availability of funds, which the unions raise by subscription from members and
donations from outsiders, and also on their competent and enlightened leadership. Thus, the
fraternal functions of trade unions can be summed up as:
To take up welfare measures for improving the morale of workers
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To generate self confidence among workers
To encourage sincerity and discipline among workers
To provide opportunities for promotion and growth
To protect women workers against discrimination
ADVANTAGES AND PROBLEMS OF TRADE UNION
When Mrs Thatcher came to power in 1979, her stated aim was to reduce the power of
unions. She felt that unions were a major contributor to the declining competitiveness of the
UK economy. To a large extent Mrs Thatcher was successful in reducing the power of
unions. However, it is worth considering whether unions are necessarily the demonic forces
that some commentators have made them out to be.
ADVANTAGES OF TRADE UNION
1. Increase wages for its members.
Industries with trade unions tend to have higher wages than non-unionised industries.
2. Counterbalance Monopsonies.
In the face of Monopsony employers, Trades Unions can increase wages and increase
employment. Monopsony employers are those who have market power in setting wages and
employing workers. Traditionally, monopsonies occur when there is only 1 firm in a town, or
type of employment. However, in modern economies, many employers have a degree of
market power (monopsony).
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3. Represent Workers
Trades Unions can also protect workers from exploitation, and help to uphold health and
safety legislation. Trades unions can give representation to workers facing legal action.
4. Productivity deals.
Trades Unions can help to negotiate productivity deals. This means they help the firm to
increase output; this enables the firm to be able to afford higher wages. Trades unions can be
important for implementing new working practices which improve productivity.
5. Important for Service Sector.
Modern economies have seen a fall in trade union power. This is because of a decline in
manufacturing and rise in service sector employment. Service sector jobs tend to more likely
to be part time and temporary; unions are needed to protect workers in these kind of jobs.
PROBLEMS OF TRADE UNION
1. Create Unemployment.
If labour markets are competitive, higher wages will cause unemployment. Trades unions can
cause wages to go above equilibrium through the threat of strikes e.t.c. However when the
wage is above the equilibrium it will cause a fall in employment.
2. Ignore non Members
Trades unions only consider the needs of its members, they often ignore the plight of those
excluded from the labour markets, e.g. the unemployed.
3. Lost Productivity.
If unions go on strike and work unproductively (work to rule) it can lead to lost sales and
output. Therefore their company may go out of business and be unable to employ workers at
all.
4. Wage Inflation.
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If unions become too powerful they can bargain for higher wages, above the rate of inflation.
If this occurs it may contribute to general inflation. Powerful trades unions were a significant
cause of the UK's inflation rate of 27% in 1979.
The benefits of trades unions depends on their circumstances. If they face a monopsony
employer they can help counterbalance the employers market power. They can increase
wages without causing unemployment.
If unions become too powerful and they force wages to be too high, then they may cause
unemployment and inflation
It also depends on whether they cooperate with firm or not on increasing productivity.
CHAPTER V: CONCLUSION
Trade unions are unique organizations whose role is variously interpreted and understood by
different interest groups in the society. Traditionally trade unions role has been to protect jobs
and real earnings, secure better conditions of work and life and fight against exploitation and
arbitrariness to ensure fairness and equity in employment contexts. In the wake of a long
history of union movement and accumulated benefits under collective agreements, a plethora
of legislations and industrial jurisprudence, growing literacy and awareness among the
employees and the spread of a variety of social institutions including consumer and public
interest groups the protective role must have undergone, a qualitative change. It can be said
that the protective role of trade unions remains in form, but varies in substance.
There is a considerable debate on the purposes and role of trade unions. The
predominant view, however, is that the concerns of trade unions extend beyond 'bread and
butter' issues. Trade unions through industrial action (such as protests and strikes) and
political action (influencing Government policy) establish minimum economic and legal
conditions and restrain abuse of labor wherever the labour is organised. Trade unions are also
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seen as moral institutions, which will uplift the weak and downtrodden and render them the
place, the dignity and justice they deserve.
BIBLIOGRAPHY
1. Labour Monthly, Vol. 9, October 1927, No. 10.
2. Marxists Internet Archive (2009). You may freely copy, distribute, display and
perform this work; as well as make derivative and commercial works. Please credit
“Marxists Internet Archive” as your source
3. The Indian Trade Union Movement- By: Philip Spratt
(http://www.marxists.org/archive/spratt/1927/10/x01.htm)
4. CiteHR.com
5. Article on Trade Union Analysis
6. Trade Union Movement in India By Sohail Jawaid
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7. Trade Unions: Global Concerns and Experiences: Pramod Verma
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