Trade Unions, Wages & Wage Differential

Presentation by:Aman AroraStudent (PhD - HRM)University Business Schoolaman22jan@rediffmail.com

August 20, 2008: 24-hour industrial strike brought the West Bengal and Kerala to a standstill.

Eight major trade unions, including All India Trade Union Congress (AITUC) and Centre for Industrial Trade Union (CITU) is observing the strike across the country to protest against the government's "anti-labour" policies.

According to sources several employees from bank federations, insurance, State and Central government employees' unions, railways, defence, telecom, airlines and airports unions are participating in the agitation. Four private airlines cancelled their flights from Chennai to Kolkata

Trade bandh: 80 strikes in 6 months

Issues • Raise allotted to them in the 6th pay commission report• Curbing inflation• Provide social security to unorganised sector workers• Proper implementation of labour laws.

Times Of India, 21 Aug’ 08

The Economic Times, 27 Aug’ 08

Trade unions to march to Parliament over labour issues

To protest against price rise, speculative trading, FDI in retail sector, non implementation of social security laws and other labour laws effectively and globalisation in several sectors, the Trade Union Centre of India (TUCI) will organise a march to Parliament on August 29.

Workers from Kerala, Tamil Nadu, Karnataka, Orissa, Mahrashtra, Gujarat, Bengal and other states will participate in the march, which will start from 10 am on August 29 after the they assemble at Jantar Mantar before heading for Parliament.

The march will culminate into a public meeting at Parliament gates. Memorandum of their demands will be submitted to the President, the Prime Minister and the Labour Minister by a delegation.

A communique from the trade union informed that it will also organise a seminar at the hall of the Gandhi Peace Foundation on August 28 where CPI(ML), TUCI, Mill Mazdoor Union, New Socialist Movement, Gujarat Trade Union Federation and other trade union leaders will hold a discourse on the issues.

Tim

es O

f In

dia,

28

Au

g’

08

The Economic Times, 29 Aug’ 08

28th Aug’08 : Industrial unit blaze kills ten labours

• 10 women workers were killed and nine injured by a powerful explosion in a container manufacturing unit in Bosari Estate, Pune.

• Bodies of 4 victims were recovered in completely charred condition from the accident site, other 6 died of suffocation who rushed inside a bathroom to avoid the blaze.

Kolkata, May 7, 2008: Activists from All India Trade Union Congress (AITUC) burn effigy of U.S. President George W. Bush during protest against remarks where Bush cited growing prosperity in India as a cause for rising global food prices

Trade Unions - Introduction

• The trade union movement emerged in India between 1850s – 1870s.

• Established in Oct 1920, the All India Trade Union Congress (AITUC) was the first national federation of trade unions.

• Official number of registered trade unions is around 50,000 – the actual number may well exceed 100, 000 unions.

• In India trade unions have a combined membership of more than 2 Crores.

Trade Unions are voluntary organizations of workers formed to promote and protect their interests through collective action.

Trade Unions - Politics

• Strong nexus between trade unions and politics in India

Politicians need the support of the masses. Working people being strong vote banks, political parties depend on trade unions.

Trade unions feel that if they are aligned to some political party (particularly the ruling party), they will be better able to defend their interests.

Trade Union Political Affiliation

Indian National Trade Union Congress (INTUC) Congress

All India Trade Union Congress (AITUC) CPI

Centre of Indian Trade Union (CITU) CPI (M)

Bharatiya Mazdoor Sangh (BMS) BJP

Problem: Trade unions become fragmented whenever there is fragmentation in political parties

Trade unions suffer from poor public image. Positive contributions of trade unions go unnoticed and unrecognized.

Q) Can we associate trade unions with more efficient production?

Q) Do we have some evidence on trade union’s role in economic development?

Q) Can trade unions enhance competitiveness of nations?

A few industry studies indicate that “YES” *

* C S Venkata Ratnam, “Industrial Relations”, p 88, Oxford University Press

Positive Trends in Trade Unions Movement

• Unions are becoming substantially matured, responsive and realistic in their thinking and action.

• Discussions among trade union circles are on issues like – productivity, TQM, technology, MNCs, competitions, exports and alike.

• In many leading companies (Telco, Philips, Voltas, Siemens, Hindustan Lever, Blue Star etc.) there are unions, but are not affected by political parties – ‘Depoliticisation of Unions’.

Payment for labor or services to workers, especially remuneration on an hourly, daily, or weekly basis.

Wages

• The demand for wages has never been fully met.

• Wage raise in one company will inspire unions in other company to pitch tents demanding similar rise in wages.

SalarySalary is a fixed periodical payment paid to a person for regular work or services.

WageWage is usually paid by the day or week for work or services which are of a more irregular nature.

Wage Policy

Wage policy refers to systematic efforts of the government in relation to national wage and salary system.

Purpose: To regulate the structure of wages and salaries with view to achieve economic and social objectives of the government.

• To give to workers a share in fruits of economic development.

• To set minimum wages for workers whose bargaining power is weak.

• To bring about more efficient allocation and utilization of human resources through wage and salary differential.

• To abolish malpractices and abuses in wage and salary payments.

Payment of Wages Act, 1937

Industrial Disputes Act, 1947

Minimum Wages Act, 1948

Equal Remuneration Act, 1976

To prohibit any delay or withholding of wages

Authorizing all state governments to set up industrial tribunals which would look into disputes relating to remuneration

Fixation of minimum rates of wages to workers

Prohibits discrimination in matters relating to remuneration on the basis of religion, sex etc.

With all these Acts in place, are there no disparities in wages?

Wage differential refers to differences in wage rates due to the location of company, hours of work, working conditions, type of product manufactured, or other factors.

It may be the difference in wages between workers with different skills working in the same industry or workers with similar skills working in different industries or regions.

Wages Differential

• Employees in MNCs are paid higher.

• Different industries have different wage structures resulting in disparities in remuneration for identical works.

• Wide gaps exist between wages of employees of organised sector vs. unorganised sector.

Occupational Differentials

Different occupations require different qualifications, skills and different degree of responsibility

1. To induce workers to undertake “more demanding”, “more risky” jobs.

2. Encourage workers to develop skills in anticipation of higher earnings in future.

3. To perform social function by way of determining the social status of workers.

Regional (Inter-Area) Differentials

Workers in same industry and the same occupational group, but living in different geographical areas, are paid different wages.

• Irritating climate• Isolation• Disparities in cost of living

Inter-Industry Differentials

1. Extent of unionization2. Employers ability to pay/ product demand in market3. Provides opportunity for workers to switch to higher wage

industries.

Arise when the workers in the same occupation and in the same area but in different industries are paid different wages.

Story about a foundry ‘Shakti Industries’ in Haora, West Bengal that makes New York City’s manhole covers.

, November 26, 2007

Personal Wage Differentials

Arise because of differences in personal characteristics (age or sex) of workers who work in the same plant and the same occupation.

In occupations which involve muscular work, women workers are employed but paid less than men workers

“Equal pay for equal work”

I.L.O. convention (No. 100)Industrial courtsLabour TribunalsMinimum Wages CommitteeFare Wage Committee

Why all the labor is not done by hardened hands?

Sector Differentials

Depends upon nature of workers group (organized/ unorganized) and level of economic development of the sector.

Agricultural workers are not able to better their living conditions, whereas workers in industrial sectors have their own unions to fight for them.

Summary

• The concepts of trade unions, wages and wage differentials are over a century old in India.

• India’s economic development still needs a big push and the factors – unions, wages and wage differentials can play a vital role.

• Let’s try to see the issues from labour’s viewpoint