Who’s afraid of unions?

On the face of it, the Tamil Nadu government’s recent decision that “IT employees are also free to form trade unions and redress their grievances through evoking the provisions of the Industrial Disputes Act 1947” should be no cause for surprise. It only reiterates the fundamental right of an Indian citizen (under Article 19) to form associations or unions. To view the statement as undermining the basis of the Indian IT sector’s global success, predicated on its efficient and low-cost labour force, would be going too far. Yet, if Indian industry in general baulks at the thought of unions, the reasons are not far to seek. Trade unions, often backed by political forces pursuing their own agendas, have at times taken the law into their hands. The textile workers’ strike in Mumbai three decades ago degenerated into mayhem, leading to the end of the era of integrated mills and the technology benefits associated with it. Instead, it spawned sweatshop towns such as Bhiwandi. Our textiles industry lost out on global standards, leaving workers, pushed into the unorganised sector, far worse off. A saga of strikes and equally retaliatory lockouts in West Bengal led to the decline of Kolkata as an industrial centre.

Yet, a pendulum swing to the other extreme of ‘no unions, please’ is neither legally feasible nor practical. What we need is an institutional framework for trade unions to function as equal partners in the production process, and as agencies for collective bargaining and expression of dissent. To suppress the second is to invite an exaggerated outburst, as the auto sector has learnt the hard way. The IT sector would benefit from adopting a more participatory approach than has been in evidence so far. A series of peremptory layoffs last year has set off an undercurrent of resentment among employees, which can work to the detriment of the sector. Most Indian IT firms do not seem to have SA 8000 certification, a standard for “decent workplaces”. This situation could only add to the resentment against outsourcing. That said, IT companies are up against technological headwinds. Cloud computing could reduce the number of jobs and make new technological demands, for which a section of the existing 7-8 million workforce may not be equipped. The sector needs to adapt to this transition — not dissimilar to the process of automation in the banking sector in the 1990s — by reskilling and retraining its workforce. A body along the lines of the National Renewal Fund, set up in the wake of public sector reform, can be set up as a public-private partnership so that the economy continues to benefit from the skills of the earlier generation of IT workers and staves off large-scale unemployment.

Labour reforms are necessary to bridge the divide between the organised and unorganised sectors and lift productivity. The Labour Code on Industrial Relations Bill 2015, which seeks to merge the Industrial Disputes Act and the Trade Union Act, is a step in this direction. However, a more balanced approach from all stakeholders is called for.

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