Solutions to Assignments
MMPC -002 - Human Resource Management
Question No. 4 -
Define collective bargaining in your own words. Critically evaluate the state of collective bargaining in the present day business scenario. Explain with examples your answer giving due details of the organisations and the sources you are referring to.
Collective bargaining, the ongoing process of negotiation between representatives of workers and employers to establish the conditions of employment. The collectively determined agreement may cover not only wages but hiring practices, layoffs, promotions, job functions, working conditions and hours, worker discipline and termination, and benefit programs.
Collective bargaining existed before the end of the 18th century in Britain; its development occurred later on the European continent and in the United States, where Samuel Gompers developed its common use during his leadership of the American Federation of Labor. Collective agreements are probably least significant in developing countries that have large labour populations from which to draw.
The degree of centralization in the bargaining process and the functions performed by collective agreements vary. Contract negotiation may occur at the national, regional, or local level, depending on the structure of industry within a country. National agreements, which are more common in smaller countries, usually settle general matters, leaving more detailed issues for local consideration. An agreement may, for example, set actual wage rates, or it might simply establish minimum wage rates.
Collective agreements are not legally binding in all countries. In Britain their application depends on the goodwill of the signatories. In some countries—including Germany, France, and Australia—the government may require that the terms of negotiated settlements be extended to all firms in an industry. In the United States similar results have been achieved, albeit less formally, by unions that select a target employer in a particular industry: the negotiation of a new agreement with the targeted employer then sets the pattern for other labour contracts in the same industry.
Like many other countries, in India, collective bargaining got some impetus from
various statutory and voluntary provisions. The Trade Disputes Act 1929, the
Bombay Industrial Relations Act 1946, the Industrial Disputes Act 1947, and the
Madhya Pradesh Industrial Relations Act 1960, provided a machinery for
consultation and paved the way for collective bargaining. Among the voluntary
measures, mention may be made to the different tripartite conferences, joint
consultative machineries, code of discipline, and Central and State
Implementation and Evaluation Units.
In India, collective bargaining was not very popular till the end of the Second
World War. However, there had been a few instances where wages and working
conditions were regulated by collective agreements even earlier. The collective
bargaining agreements have been concluded at three levels – at plant level,
industry level, and national level.
Collective bargaining was traditionally conducted at the plant level as in the
case of TISCO, Indian Aluminium Company, and Bata Shoe Company.
In some
industrial units, detailed grievance procedures have been laid down by mutual
agreements. The collective agreement signed between the TISCO and the Tata
Workers’ Union in 1956 embodies a provision for grievance procedure and closer
association of employees with management. The Belur Report of 1958, which is
a study by Subbiah Kannappan and his associates in the Indian Aluminium
Company is one of the best published case studies on collective bargaining in
India. It throws light on the factors responsible for creating a favourable bargaining
relationship between the management and the union.
The best example of an industry level agreement is offered by the textile industry
of Bombay and Ahmedabad. The agreement between the Ahmedabad Millowners’
Association and the Ahmedabad Textile Labour Association, which were signed
on 27 th June 1955, laid down the procedure to be followed for the grant of
bonus and the voluntary settlement of industrial disputes. The practice of industrywise bargaining continues to prevail in the cotton textile industry in Maharashtra,
Gujarat, and Tamil Nadu; in Jute Textiles and in the plantation industry in
Karnataka, Tamil Nadu, and West Bengal. In most other industries, particularly in modern industry groups, collective agreements are entered into at the plant or
enterprise level.
The agreements at the national level are generally bipartite agreements and are
finalised at conferences of labour and management convened by the Government
of India. The bonus agreement for plantation workers was concluded in January
1956 between the representatives of the Indian Tea Association and the India
Tea Planters’ Association on the one hand, and the Hind Mazdoor Sabha (HMS)
and the Indian National Trade Union Congress (INTUC) on the other. The
agreement was about the payment of bonus to about one million plantation
workers.
The Employer’s Federation of India (EFI) in a study of collective bargaining in
its member organisations in the late sixties (published in a monograph in 1970)
classified collective agreements into three categories: (i) agreements which have
been drawn up after direct negotiations between the parties and are purely
voluntary in character for the purpose of their implementation; (ii) agreements
which combine the elements of voluntarism and compulsion, i.e., those negotiated
by the parties and registered before a conciliator as settlements; and (iii)
agreements which acquire legal status because of successful discussion between
the parties when the matters in disputes were under reference to industrial tribunal/
courts and could be considered sub judice, the agreements reached being recorded
by the tribunals/courts as consent awards.
The EFI study covered 109 collective agreements, relating to 77 companies and
11 industrial associations. Results of the study show that the collective agreements
have included all levels. Industry-wide agreements were concluded in engineering,
textiles, and tea plantations, and plant-wide or company-wide agreements were
the norm in most other industries.
The EFI study found “two categories of subjects (which) appear to have figured
prominently in the collective agreements, one having a direct bearing on the pay
packet and the other relating to leisure and leave.” Wages, dearness allowance,
retirement benefits and bonus (appearing in a majority of agreements) are
illustrations of the first category, and annual leave, paid holidays, and casual
leave are (included in a smaller but substantial number of agreements) of the
second.
Out of the 109 agreements analysed, 96 dealt with wages and 50 with bonus. As
for the duration of the agreements as many as 49 (i.e. 45 percent) were for a
period of 3 years, 18 were for a period of 5 years and only a small number were
for a period of less than 2 years. There are 31 agreements, which dealt with the
whole range of topics comprising wages, conditions of employment, and fringe
benefits. The rest of them covered one or more specific subjects. The study makes
the following concluding observations:
“Another notable feature of the agreements under reference, which is of
considerable importance for the development and maintenance of harmonious
industrial relations, is the recognition of their mutual rights and responsibilities
by the representatives of management and employees. Under a number of
agreements, the unions have recognised the right of the management among
other things, to introduce new or improved methods of production, establish production schedules and standards, and make rules for maintaining discipline
and securing effective operation of the plant. The right of the management to
discharge workers for just cause, including inefficiency and lack of work, has
also been conceded. The managements on their part have recognised the unions
as bargaining agents and pledged to desist from unfair labour practices such as
interference with the right of the workman to organise and join a union and
discrimination against them because of their membership of a union. In the same
manner, the trade unions have agreed to follow the constitutional methods as
laid down in the grievance procedure to redress the grievances of their members
and to desist from indulging in or encouraging unfair labour practices.”
A significant development of the 1970s is the emergence of bipartite national
industrial committees in certain key industrial sectors such as coalmining, textile,
sugar, electrical machinery, steel and cement. These committees comprise
representatives of all major trade unions and employers in a given industry, and
operate under broad terms of reference, which include a revision of wage structure
and conditions of employment. These negotiating committees have covered both
public and private sectors. The development of joint negotiating committees is a
clear indication of the preference of the parties for collective bargaining over
other methods. Although a variety of industries have been covered under this
approach, we would confine our examination to two of the most important ones,
namely, steel and coal mine.
The new experiment, in the form of bipartite negotiating committees was first
pioneered in the iron and steel industry in 1970. Early in that year a Joint Steel
Wage Negotiating Committee [later on re-christened as National Joint Committee
for the Steel Industry (NJCS)] was formed. The NJCS is composed of
representatives of employers and employees. The employers’ side is represented
by Indian Iron and Steel Company (IISCO) and Tata Iron and Steel Company
(TISCO), and from all the public sector steel plants. On the employees’ side,
there are three members each from the central trade union organisations, namely,
the All India Trade Union Congress (AITUC), the Indian National Trade Union
Congress (INTUC), Centre of Indian Trade Unions (CITU), and the Hind Mazdoor
Sabha (HMS). Till now, the Committee has signed six agreements.
The coalmines in India were nationalised in 1973. There were agitations by the
unions prior to 1973 because wage improvements sanctioned by the Coal Wage
Board in 1967 had not been implemented by several (private) mine owners and
operators. The government was not in favour of appointing another wage board
for the industry and felt, instead, that wages and other matters in coalmining
should be settled through negotiations and collective bargaining. With this end
in view, a Joint Bipartite Committee for Coal Industry (JBCCI) was constituted
on August 14, 1973 with union representatives from INTUC, AITUC and HMS,
and management representatives from Coal Mines Authority, Tata Iron and Steel
Company, and Indian Iron and Steel Company.
Subsequently, the committee has signed six bipartite settlements regarding wage
revision, working conditions, and other issues relating to coal industry.
The National Commission on Labour (1966-69) reported the existence of
collective agreements at all levels.
Most of the collective agreements have been at the plant level, though in the
important textile centres like Bombay and Ahmedabad, industry-level agreements
have been common. Such agreements are also to be found in the plantation
industry in the South and in Assam, and in the coal industry. Apart from these, in
new industries like chemicals, petroleum, oil refining and distribution, aluminium,
manufacture of electrical and other equipment, and automobile repairing,
arrangements of settlement of disputes through voluntary agreements have been
common in recent years. In ports and docks, collective agreements have been the
rule at individual centers.
On certain matters affecting all ports, all India
agreements have been reached. In the banking industry, after a series of awards,
employers and unions are in recent years coming closer to reach collective
agreements. On the whole, the record of reaching collective agreements has not
been unsatisfactory, though its extension to a wider area is certainly desirable.
For promotion of collective bargaining, the commission recommended, among
other things, statutory recognition of representative union as the sole bargaining
agent.
The following steps may be considered for promoting collective bargaining in
our country:
1) Collective bargaining should be declared as an integral part of India’s national
industrial relations policy. In order to give it a constitutional sanctity, it
should be incorporated in the Directive Principles of State Policy.
2) The two relevant instruments setting international standards regarding
collective bargaining, namely, Convention 98 concerning the application of
principles of the right to organise and to bargain collectively adopted in
1949, and Recommendation 91 concerning collective agreements adopted
in 1951, should be ratified/implemented.
3) Collective bargaining should be adopted as a part of the corporate personnel
policy in all public sector enterprises, departmental undertakings, and in
public utility services.
4) There should be drastic trade union reforms such as:
(a) recognition of the
majority union as a bargaining agent;
(b) development of a trained and
educated cadre of worker-leaders through strong, enlightened, responsible
and democratic trade unions; and
(c) gradual delinking of trade unions from
political parties.
5) More emphasis should be given on mutual settlement of industrial disputes
through collective bargaining rather than adjudication. A beginning has to
be made in this direction by declaring that collective bargaining will acquire
primacy in the procedure for settling industrial disputes.
