Role of Trade Unions in Productivity
Role of Trade Unions in Productivity
Role of Trade Unions in Productivity
The existence of a strong and recognized trade union is a prerequisite 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 role in organizing courses for their
members on a wide range of matters. Seeking a healthy and safe working environment is also
prominent feature of the trade union.
(A) Wages and Salaries: The subject which drew the major attention of the trade
unions are wages and salaries. This item may be related to policy matters. However, differences
may arise in the process of their implementation. In the case of unorganised Senior the trade
union plays a crucial role in bargaining the pay scales.
(B) Working Conditions: Trade unions with a view to safeguard the health of workers
demand the management to provide all the basic facilities such as lighting and ventilation,
sanitation, rest rooms, safety equipment while discharging hazardous duties, drinking water,
refreshment, minimum working hours, leave and rest, holidays with pay, job satisfaction, social
security benefits and other welfare measures.
(C) Personnel Policies: Trade unions may fight against improper implementation of
personnel policies in respect of recruitment, selection, promotions, transfers, training, etc.
(D) Discipline: Trade unions not only conduct negotiations in respect of the items with
which their working conditions may be improved but also protect the workers from the clutches
of management whenever workers become the victims of management's unilateral acts and
disciplinary policies. This victimisation may take the form of penal transfers, suspensions,
dismissals etc. In such a situation the separated worker who is left in a helpless condition may
approach the trade union. Ultimately, the problem may be brought to the notice of management
by the trade union, which explains about the injustice meted out to an individual worker and
fights the management for justice. Thus, the victimised worker may be protected by the trade
union.
(E) Welfare: As stated earlier, trade unions are meant for the welfare of workers. Trade
union works as a guide, consulting authority and cooperates inn overcoming the personal
problems of workers. It may bring to the notice of management, through collective bargaining
meetings the difficulties of workers in respect of sanitation, hospitals, quarters, schools and
colleges for their children's cultural and social problems.
(G) Negotiating Machinery: Negotiations include the proposals made by one party
and the counterproposals of the other. This process continues until the parties reach an
agreement. Thus, negotiations are based on the give and take' principle. Trade union, being a
party for negotiations, protects the interests of workers through collective bargaining. Thus,
the trade union works as the negotiating machinery.
(i) The individual workers all alone feels especially weak in a world of mass production
and mass movement. An organization may give him an opportunity to join others for the
achievement of those objectives that he considers as socially desirable.
(ii) The basic purpose of trade union is to safeguard the economic interests of its
members. One of the problems in the life of the workers is how to provide sufficient food,
clothing and a home for himself and for the members of his family. This is first and foremost
a question of finding a job on a reasonable wage. To improve and maintain the wage at a
reasonable standard is one of the primary reasons for which a worker joins a trade union.
(iii) A worker does not only require the bare necessaries of existence but he also wants
to obtain the amenities of civilized life, e.g., a better home, more leisure, better conditions of
work, etc. The workers also join the trade unions, to a very large extent, because they have
interests such as these to promote or defend.
(iv) The need for trade unions arises due to this fact also that the workers require help
in time of sickness or death, protection from suffering and want when they are not of a job and
an income of some kind when they are too old to work anymore.
(v) There is aesthetic reason for the existence of trade unions, viz., need for adequate
machinery for settling the relations between the employers and employees. In modern industry
the old personal relationship between the employers and the workers largely disappears. The
worker may become dissatisfied with his working conditions or the treatment of his employers
while the employer may feel that he has reason for complaint against the workers. With the
growth to industry the number of such questions to be settled increases and it is much better to
adjust these differences by agreement between the employers and employees through
negotiations. Thus, a trade union is the best and socially most desirable to conduct bargaining
on behalf of the workers and the development of collective bargaining between the employers'
and workers' organizations is an essential basis for the establishment of peace in industry.
(vi) Trade unions developed on proper lines lessens violent class conflicts and, thus, is
beneficial to employers, the employees, the state and the public. It is, thus, clear that no agency
formed or promoted to look after the interests of the workers can be a real substitute for trade
unions. The organization of workers is, therefore, not only necessary but also inevitable.
In May 1947 INTUC was formed by the Congress Party and the top congress leaders like Mr.
Nehru and Patel were associated with it.
The objectives of the union are to adopt peaceful means for the settlement of labour disputes.
The Government of India declared this union in 1948 as the most representative union in the
country. It represented Indian labour organisations at the International Labour Organisation
meets right upto 1978. But the Government of India has broken this monopoly and nominated
a member of the Hind Mazdoor Sangh to represent the working class at the world labour meet
at Geneva on June 3, 1979.
Every union affiliated to INTUC has to submit its dispute to arbitration after exhausting other
means of settlement of disputes. It has strong roots in West Bengal, Assam, Gujarat,
Maharashtra and Bihar. It has large number of members from textiles, tea, jute, transport and
mining industries.
(2) The All India Trade Union Congress (AITUC):
This union came into existence in 1920 mainly on the pattern of the British Trade Unions. It
serves as the labour forum of Communist party of India at present. It is considered as the second
largest union in India. It is very strong in West Bengal, Tamil Nadu, Kerala, Andhra Pradesh
and Punjab.
(3) The Bharatiya Mazdoor Sangh (BMS):
This union was formed as an affiliate to Bhartiya Jan Sangh Party. During the last couple of
years its membership has gone up. This gives it the third position and the H.M.S. has been
pushed down the fourth position.
(4) The Hind Mazdoor Sangh (H.M.S.):
It was formed in December 1981 in Calcutta by the socialists who neither approved INTUC
nor A1TUC. The HMS was organised with a view to keeping its members free from any
political or other outside interference. Its members are generally from industries like railways,
cotton textiles, coal mining, engineering and post and telegraph department. The Praja Socialist
party and Samyuktha Socialist party dominated this union. These parties became constituents
of the Janta Party.
(5) The United Trade Union Congress (UTUC):
It was formed on 30th April 1949 by those persons who were dissident socialists. It functions
mainly in Kerala, West Bengal, Bihar and Tamil Nadu. Its political affiliations are with left-
wing parties.
(6) The Centre of Indian Trade Unions (CITU):
It was formed in 1970. It has 2,231 affiliated unions having 1 1, 12,328 members.
RECOGNITION OF UNIONS:
Code for discipline in industry (became effective from June 1, 1958) lays down criteria for
recognition of unions. The criteria given in the Code is (a) union should function for at least
one year after registration if there is more than one union. Where there is only one union, this
condition will not apply (b) it must have at least 15% of the workers as its members (c) a union
may be recognised as a representative union for an industry if it has a membership of at least
25% of workers (d) if there are more than one unions in an industry, the one with the largest
membership should be recognised (e) only unions which observed the Code of Discipline
would be entitled to recognition.
LITERATURE REVIEW
A particular union initiative the previous government supported financially was the Trades
Union Congress's (TUC) equality representative initiative. The Union Modernisation Fund
financed 8 union-led projects to recruit and train 500 union equality reps by mid-2009. Equality
reps were a new type of union activist appointed or elected from existing employees or reps in
unionised workplaces. Their role is to help promote equality and fairness at work by
encouraging employers to improve equality policies and practices, offering independent advice
and guidance on equality issues to employees, and raising the profile of the equality agenda
within their unions.
The way forward for unions is to adopt a common minimum agenda acceptable to all the
unions. The Swedish Trade Union Confederation (LO) provides an example of forming an
umbrella organization of all the unions. NTUC in Singapore works with the government and is
engaged in training for gainful employment besides a host of other activities. Specifically, the
unions need to continue to deal with the newer issues of atypical employment and others
created by the globalization process. It is, however, equally relevant that unions take up other
development activities at the macro and the enterprise level. The Government too needs to play
a catalytic role to increase the scope of union's involvement through institutional forums of
social dialogue. It also needs to be vigilant on the labour law violations.
But when conservative corporate law blogger Steven Bainbridge avers that, at the very least,
unions do not decrease productivity, one must take the argument seriously. To be sure, unions
often do very good work. New York's Local 3 (electricians) is widely known for the slow pace
at which union jobs proceed, but also for the extremely high quality of their installations. This
is not inconsistent with economic theory. Union electricians get paid more to do the same
work, which predicts that they will get more skilled workers than non-union shops, and the
workers will be keener to keep their jobs. Plus the union, eager to prove that there is some sort
of value proposition to employing their workers, enforces a higher standard on its members.
The economic logic suggests that unions will only keep productivity high so long as they are a
relatively small portion of the workforce. One of the reasons that Local 3 does such a good job
is that New York's construction trades work on an ad-hoc basis; even though their tenure in the
union is permanent, their tenure with an employer lasts only until the building is completed or
the rewiring done. If they want to be hired for the next job, they had better do good wiring on
this one. There is also an excess supply of union members over available work, which gives
the least competent room to sink out of the labour pool, as well as forcing them to compete
with each other to hold the available jobs. This may explain why some unions are equally well
known for their lack of productivity; the American teachers' unions are generally believed (by
everyone outside of the teachers' unions) to be the primary obstacle to improving America's
appalling public schools.
On balance, unionizing raises wages between 0 percent and 10 percent, but these wage
increases come at a steep economic cost. They cut into profits and reduce the returns on
investments. Businesses respond predictably by investing significantly less in capital and R&D
projects. Unions have the same effect on business investment as does a 33 percentage point
corporate income tax increase.
Less investment makes unionized companies less competitive, and they gradually shrink.
Combined with the intentional efforts of a labour cartel to restrict labour, unions cut jobs.
Unionized firms are no more likely than non-union firms to go out of business—unions make
concessions to avoid bankruptcy—but jobs grow at a 4 percent slower rate at unionized
businesses than at other companies.
Over time, unions destroy jobs in the companies they organize. In manufacturing, three quarters
of all union jobs have disappeared over the past three decades, while the number of non-union
jobs has increased. No economic theory posits that cartels improve economic efficiency. Nor
has reality ever shown them to do so. Union cartels retard economic growth and delay recovery
from recession.
PROBLEM STATEMENT
While trade unions have played an essential role in social dialogue between workers, employers
and governments, their membership in many countries has declined dramatically in recent
years.
In this paper, we are going to analyse the workers’ satisfaction level with trade unions and
functioning of trade unions. Our main focus will be aimed at understanding the satisfaction
level of workers with the trade unions and if and how it helps them in different aspects during
their tenure.
Following are the major areas where we are going to do research on in order to find out the
reality and probable solutions with a thorough analysis:
Age,
Gender,
Reason to join the union,
Satisfaction level,
Ensuring safety standards,
Help in Representation at higher levels, etc.
The research methodology that we’re going to use in this research is Descriptive Type. It deals
with describing the feature of any particular individual or of groups. It describes the state of
affairs as it exists at present which includes surveys and the fact finding inquires of different
kind.
RESEARCH METHODOLOGY
Research methods can be defined as “a systematic ad scientific procedure of data collection,
compilation, analysis, interpretation, and implication pertaining to any business problem”.
Types of research methods can be classified into several categories according to the nature and
purpose of the study and other attributes.
General Classification
Quantitative research “describes, infers, and resolves problems using numbers.
Emphasis is placed on the collection of numerical data, the summary of those data and
the drawing of inferences from the data”.
Qualitative research is based on words, feelings, emotions, sounds and other non-
numerical and unquantifiable elements. Information is considered qualitative in nature
if it cannot be analysed by means of mathematical techniques. This characteristic may
also mean that an incident does not take place often enough to allow reliable data to be
collected.
Applied research refers to scientific study and research that seeks to solve practical
problems. This type of research plays an important role in solving everyday problems
that often have an impact on life, work, health, and overall well-being. Applied research
is used to find solutions to everyday problems, cure illness, and develop innovative
technologies.
Fundamental research is scientific research aimed to improve scientific theories for
improved understanding or prediction of natural or other phenomena. It focuses on
creating and refuting or supporting theories that explain observed phenomena. Pure
research is the source of most new scientific ideas and ways of thinking about the world.
Exploratory studies only aim to explore the research area and they do not attempt to
offer final and conclusive answers to research questions.
Conclusive studies, on the contrary, aim to provide final and conclusive answers to
research questions.
Table below illustrates the main differences between exploratory and conclusive research
designs:
Technique Used
By distributing questionnaire data is collected, where respondents have specific limited
alternative response and they are required to choose the closest response to their own
viewpoints. Self-administered questionnaire is used where the respondents have to read and
answer the questions. By adopting this method to gather information, responses are gathered
in standardized way. This practice promotes more objective compare to other methods. It is
also quick and easy to collect information from respondent, which are the workers.
Sample Design
The sampling design is used in this project is simple random sampling in which samples are
selected in random for performing the analysis and to interpret the results. Simple random
sampling comes under probability sampling in which samples are equally taken
Collection Of data -Questionnaire Design
Primary data is useful when the research objectives cannot be achieved by secondary data. All
the primary data are collected by distributing questionnaire. In the questionnaire, 17 questions
are posed related to length of service, trade union- benefits, promises made. The questionnaire
ended with how trade union increase the productivity in organization.
Statistical Tools
The following are the statistical tools used for the study
Chi-Square Analysis
Chi-Square also written as test, is any statistical hypothesis test wherein the sampling
distribution of the test statistic is a chi-squared distribution when the null hypothesis is true.
The chi-squared test is used to determine whether there is a significant difference between the
expected frequencies and the observed frequencies in one or more categories.
In the standard applications of the test, the observations are classified into mutually exclusive
classes, and there is some theory, or say null hypothesis, which gives the probability that any
observation falls into the corresponding class. The purpose of the test is to evaluate how likely
it is between the observations and the null hypothesis.
Mainly used to
According to the survey maximum number of employees in the organisation are under 25 years
followed by employees ranging between 25-35 years old.
2) GENDER
According to the survey male candidates are about 80% of the sample population.
3) LENGTH OF SERVICE
People with work experience ranging from 0-5 years contribute to about 90% of the sample.
4) WHAT PROMPTED YOU TO JOIN THE UNION
We can clearly see that more than 50% of the employees joined union because they have no
one to support if they face problem in job and the union is the only support they can have at
that time. The union is always there to support the employees in whatever crisis situation they
are in. Thus, employees in the organization feels safe and can work fearlessly if they have union
backing them up. As an individual it is difficult to raise voice against the organization. But
when you are backed up by a union, it is far easier to raise your issues against them.
Also, we see almost 20% of the employees joined the union because they think that an Union
can ensure improvements in their pay and working condition. As an individual, asking for a
raise or asking for a correct evaluation is not always possible. Rather with the help of a union
people can share their problem and implement them easily.
Strongly Disagree 0
Disagree 5
Neutral 7
Agree 19
Strongly Agree 40
For the above question employees above 50% supported the fact that they are highly satisfied
with the trade union. So, it is clear that union supports the employees and try to gain their trust.
Unions also try to represent the employees on matters of negotiation of salary. Only a few
employees will disagree with this fact.
Strongly Disagree 0
Disagree 3
Neutral 11
Agree 24
Strongly Agree 36
As mentioned before union plays a strong role in representing the employees during salary
negotiation. The same thing is also reflected in the survey conducted. We clearly see that about
50% of the employee strongly believe the fact that union ensure in improving the pay and
working condition of the employee.
7) DOES UNION PROVIDE SUPPORT AND THE BENEFITS THAT YOU SEEK AT
WORK?
Strongly Disagree 0
Disagree 3
Neutral 1
Agree 35
Strongly Agree 31
There are n number of benefits that an employee may get if he is hired in a company.
Sometimes the employees are not aware of all the benefits because they do not read the terms
and conditions thoroughly. In such case the organization gets the benefit if the employee will
not claim his benefits. For highlighting the benefits and to look through the fact that all the
employees are getting their benefits, the union plays a very vital role. Thus sample employees
strongly believe in union support.
Strongly Disagree 0
Disagree 4
Neutral 6
Agree 13
Strongly Agree 51
The union is always there to support the employees in whatever crisis situation they are in.
Thus, employees in the organization feels safe and can work fearlessly if they have union
backing them up. As an individual it is difficult to raise voice against the organization. But
when you are backed up by a union, it is far easier to raise your issues against them. Thus, with
union backing the employees they can even help in representing at a higher level dealing
directly with higher authorities.
9) DOES YOUR TRADE UNION PRESSURIZE EMPLOYERS TO ENSURE BETTER
SAFETY STANDARDS?
Strongly Disagree 1
Disagree 2
Neutral 7
Agree 28
Strongly Agree 33
With the union having higher power, they can provide us with better safety and also pressurize
the employees to ensure the same. This is clearly reflected in the survey.
Strongly Disagree 0
Disagree 3
Neutral 6
Agree 21
Strongly Agree 40
With trade union providing support, employees will be entitled to more number of trainings
which will intern increase their skills. In long run it will help as a competitive advantage. With
union support employees can get benefits of modern technologies and get themselves updated
to compete against their peers and employees of other similar companies.
Strongly Disagree 1
Disagree 2
Neutral 7
Agree 15
Strongly Agree 47
Trade union will have a strong influence on politics and have connections to high extent which
is why when any legal support is needed for a worker, it could provide the same. Sample survey
also agrees with this fact that if any employee is facing police actions and legal tangles, the
union will back them up.
12) DO YOU FEEL TRADE UNIONS CAN NEGOTIATE WITH MANAGEMENT FOR
MUTUAL GIVE AND TAKE IN MATTERS OF INCREASED PRODUCTIVITY?
Strongly Disagree 0
Disagree 3
Neutral 12
Agree 23
Strongly Agree 38
Union has a big influence on the management of the company and when it comes to matters of
increased productivity, the union is always there to negotiate.
13) DOES THE TRADE UNION PROVIDE THE SECURITY ALLIANCES TO THE
EMPLOYEES IN CASE OF ANY ISSUES?
Strongly Disagree 0
Disagree 0
Neutral 12
Agree 11
Strongly Agree 49
With the union having higher power, they can provide us with better safety and also provide
security alliances to employees in case of any issues. This is clearly reflected in the survey.
Strongly Disagree 0
Disagree 1
Neutral 3
Agree 31
Strongly Agree 39
ANALYSIS OF CHI SQUARE TEST
Null hypothesis H0: There is no significant relationship between worker’s satisfaction level
and functioning of trade unions.
Alternate hypothesis H1: There is significant relationship between worker’s satisfaction level
and functioning of trade unions.
The significant level is 5 percent. As per homogeneity right tail test, rejection region is 0.05.
Degrees of freedom, df = (r-1) * (c-1), r=no. of rows c=no. of column
= (5-1) * (10-1) = 36
From the chi square table, critical value= 23.14389
Expected= (row total) * (column total) / (grand total)
Grand total= 700
1 2 3 4 5 6 7 8 9 10
Strongly 0 0 0 0 1 0 1 0 0 0 2
disagree
Disagree 5 3 3 4 2 3 2 3 0 1 19
Neutral 7 11 1 6 7 6 7 12 12 3 65
Agree 19 24 35 13 28 21 15 23 11 31 208
Strongly agree 40 36 31 51 33 40 47 38 49 39 406
70 70 70 70 70 70 70 70 70 70 700
EXPECTED VALUE
1 2 3 4 5 6 7 8 9 10
0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 2
1.9 1.9 1.9 1.9 1.9 1.9 19 1.9 1.9 1.9 1.9
6.5 6.5 6.5 6.5 6.5 6.5 65 6.5 6.5 6.5 6.5
20.8 20.8 20.8 20.8 20.8 20.8 20.8 20.8 20.8 20.8 208
40.6 40.6 40.6 40.6 40.6 40.6 40.6 40.6 40.6 40.6 406
70 70 70 70 70 70 70 70 70 70 700
By this chi-square test, finally it is clear that there is significant relationship between worker’s
satisfaction level and functioning of trade unions.
We can clearly see that more that the employees joined union because they have no one to
support if they face problem in job and the union is the only support they can have at that time.
The union is always there to support the employees in whatever crisis situation they are in.
Thus, employees in the organization feels safe and can work fearlessly if they have union
backing them up. As an individual it is difficult to raise voice against the organization. But
when you are backed up by a union, it is far easier to raise your issues against them.
We can also conclude that most of the employees are for the support of the union and they
want the union to exist in the workplace. As employees strongly believe that
‘United we stand, Divided we fall’
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WHAT UNIONS DO: HOW LABOUR UNIONS AFFECT JOBS AND THE ECONOMY
James Sherk
The backgrounder published by the heritage foundation
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jobs-and-the-economy
No. 2275 May 21, 2009