6. Size and Finance of Indian Trade Unions – Industrial Relations, Trade Unions, and Labour Legislation, 2nd Edition

Chapter 6

Size and Finance of Indian Trade Unions

Chapter Objectives

This chapter will enable students to explain:

  1. The size of Indian trade unions and the frequency of membership distribution
  2. The factors responsible for the small size of Indian trade unions and suggest measures for its enlargement
  3. The main consequences of the small size of trade unions in India
  4. The financial position of Indian trade unions along with the various sources of their income
  5. The pattern of expenditure of Indian trade unions
  6. Ways for improving the finances of Indian trade unions
  7. The ‘check-off ’ system and the implications of the recommendations of the second National Commission on Labour in this regard

Why is the Average Size of Indian Trade Unions Small and Their Financial Position Poor?

In the industrial town of Kanpur, a cluster of industrial establishments continued to grow from the beginning of the twentieth century. The more notable of them have been: cotton textiles, leather and footwear, canvas, wood and electrical equipments. Along with these, a number of other industrial and commercial establishments, shops and transport services also flourished at a more or less rapid pace. Since Independence, the city and its vicinity also witnessed the establishment of quite a few of large-scale public sector undertakings having a concentration of an appreciable number of workers.

In each of the textile mills, which employed on an average 3,000 workers each, a number of trade unions came to be formed on the initiative of the leaders of the national centres of trade unions and the political parties to which they were affiliated, and also of the worker-leaders and local enthusiasts. Their task of setting up unions was not difficult as, under the Trade Unions Act, 1926, any seven persons (of whom three could be outsiders) could form a trade union and get it registered under the Act. In the big-sized public sector undertakings a similar process continued.

The liberal legal provisions of the Trade Union Act, 1926, also prompted workers of medium- and small-sized establishments to form their own unions and got them registered under the Act. As new and new establishments came into existence, many more small-sized unions came to be formed. The ultimate result has been the preponderance of small-sized unions in the city and multiplicity of unions in the relatively large-scale undertakings.

With the dwindling size of the unions, the financial conditions of most of the unions, especially of the smaller ones continued to be precarious. Most of them were unable to take up the cause of their members with the employers or the governmental authorities effectively, nor were they in a position to provide welfare facilities to them. Even the day-to-day activities of most of them remained crippled. Eventually, a large number of workers became distrustful of their local union-leaders and looked to the governmental authorities or higher echelon of union leadership for the solution of the problems facing them.

SIZE

Under the Trade Unions Act, 1926, any seven or more members in an industrial organization could form a trade union and get it registered under the Act. Half of the office-bearers of the union could be outsiders (see Chapter 20). This liberal provision of the Act has encouraged the formation of small-sized unions in the country. The figures of average membership per union in the country has been given in Table 6.1.

 

Table 6.1 Average Membership per Trade Union Submitting Returns In India (1927–2002)

 

Source: Government of India, Ministry of Labour. Various issues of Indian Labour Year Book and Pocket Book of Labour Statistics. Also see Table 5.2.

 

CHART 6.A: Average Membership per Trade Union Submitting Returns (1927–2001), (See Table 6.1)

 

The figures in Table 6.1 show that the average membership per union has generally been going down from year-to-year since 1927. The average membership per union remained more than 1,000 in all the years during 1927–48, but subsequently, it never reached the 1,000 mark. Compared to the figures of 1927, the average membership per union was less than one-sixth in 1965, less than one-fourth in 1981 and about one-fifth in 2002. During 1950–94, the average remained less than 700 in most of the years. However, it slightly improved from 1995 onwards, when it varied between 747 and 979. The small size has serious repercussions on the finances, functioning and effectiveness of Indian trade unions.

FREQUENCY DISTRIBUTION

An idea of the frequency distribution of trade union membership in the country can be had from Table 6.2, the figures of which relate to the years 1956 and 1964. The figures in the table also show an overwhelming preponderance of small-sized unions. In both 1956 and 1964, unions having a membership of less than 500 constituted more than 80 per cent of the total unions, whereas those with a membership of 2,000 and above accounted for about 4 per cent only. The rest having a membership of 500 and above but less than 2,000 constituted 14.3 and 13.5 per cent of the total number of unions in 1956 and 1964, respectively. Comparable figures for subsequent years are not available.

 

Table 6.2 Frequency Distribution of Indian Trade Unions Submitting Returns According to Membership (1956 and 1964)

 

Source: Government of India, Ministry of Labour. Trade Unions 1956–57, p.16 for figures of 1956 and Report of the National Commission on Labour, 1969, p. 279 for figures of 1964.

* Though 7,543 unions submitted returns, membership figures were available for 7,519 unions only.

 

CHART 6.B: Frequency Distribution of Indian Trade Unions According to Membership (1964) (see Table 6.2)

 

Frequency Distribution

Refers to the concentration of membership amongst different groups of trade unions based on their size and expressed in percentage to the total number of trade unions and total membership.

The picture of frequency distribution of trade union membership in India has been in sharp contrast to that obtaining in Great Britain. This will be evident from a perusal of Table 3.1. Table 3.1 shows that between 1991 and 2009, the average membership per union in Great Britain was higher than 30,000 in most of the years under study, the highest of about 41,000 recorded in 2009. This is surprising, especially in view of the fact that legislative provisions relating to registration of trade unions including the requirement of a minimum of seven members in both the countries has been similar.

Though in both 1956 and 1964 the unions having less than 500 members constituting more than 80 per cent of the total number of trade unions, their contribution to total membership was only 19.7 per cent in 1956 and 18.2 per cent in 1964. The unions with a membership of 2,000 and above, in spite of the fact that they constituted about only 4 per cent of the total number of trade unions in both 1956 and 1964, accounted for over 54 and 61 per cent of the total membership in the respective years. Thus, it is evident that the vast bulk of the trade unions in India are small sized, but the vast bulk of total membership is concentrated in the large-sized unions whose number is comparatively small. Here, one point to be borne in mind is that what has been called large-sized in the Indian context will look tiny and small when compared to the giant unions of the United States and Great Britain, where membership in particular cases runs into a million or even more. Some of the pertinent factors responsible for the average size of the Indian unions being small and its further decreasing size are discussed below.

FACTORS RESPONSIBLE FOR THE SMALL SIZE

The first and the primary factor responsible for the decline in the average size of the Indian trade unions is the structure of the trade union organization in the country. The primary unit of union organization in the overwhelming number of cases is the factory or the unit of employment. This has been the historical foundation of the structure of the Indian trade unions. Industrial unions covering employees in the industry as a whole are rare phenomenon. Consequently, whenever employees in a particular factory, mine, or as a matter of fact, any business establishment are organized, a new union is formed. It is well known that unionization in India, as everywhere else, started with the big employers and gradually spread to smaller employers and the process continues till today. It is this process of unionizing the smaller and smaller units of employment that has pulled down the average membership.

The second factor explaining the decline in the average membership is that the size of the factories in proportion to the number of employees is very small. Though the frequency distribution of the Indian factories on the basis of the number of workers employed is not available, an idea of the average size of the factories can be had by dividing the total number of average daily employment by the number of factories. In 1982, the total number of factories submitting returns was 1.6 lakh and the total average daily employment was 73.5 lakh. The average number of workers employed per factory comes approximately to 47. In 1997, the total number of factories submitting returns was 2.2 lakh and average daily employment 80.2 lakh, which gives an average of only 36 employees per factory. In 2003–04, the number of reporting factories stood at 1.26 lakh and the total number of employees was 78.7 lakh which shows an average of about 63 per factory.1

With this average size, it is not surprising that the average membership of trade unions has been going down as more and more factories are unionized and rival unions are formed even in one factory (for details see Chapter 9). What is true of factories is true of most other industrial establishments. Thus, the average size of the union would continue to become smaller and smaller in future as the extent of unionization increases, unless the primary unit of unionization is changed. The average size of the Indian trade unions, together with the average of the Indian factories, clearly indicates that unionization in the country is still confined to the workers of the bigger employers only. The average size of many other establishments or employments is still much lower. This also reveals the ground that the trade unions in the country have still to cover.

Finally, the multiplicity of rival unions is also a contributing factor. On one side, the average size of industrial establishments is small, and, on the other, rival unions start operating in these very small establishments. The increasing number of unions may mean that fresh areas are being organized, but it may also mean that the already organized are being split into new unions. The number of unions increase but the total membership does not increase proportionately.

CONSEQUENCES OF THE SMALL SIZE OF TRADE UNIONS

The most important consequences of the average size of the Indian trade unions being small are: (i) their inability to engage in effective collective bargaining and (ii) their extremely poor financial position.

An important consequence of the small size of the large bulk of trade unions in India is their helplessness in engaging in effective collective bargaining. Most of the unions are incapable of undertaking any independent individual action against their employers. Even small unions could have been able to take effective action against their predominantly small employers, had they been able to unionize an overwhelmingly large percentage of workers under such employers. But the small degree of unionization further aggravates their helplessness in collective bargaining and makes them thoroughly dependent either on the political parties or on such important personalities who happen to command political influence on the employers and the government machinery.

The other important consequence of the size of the Indian trade unions being small is the pitiably poor financial position of the average union.

FINANCE

Income and Expenditure

An idea of the income and expenditure of workers’ trade unions from 1951 to 2002 can be had from Table 6.3. A study of Table 6.3 shows that the average annual income of a trade union in the country has been less than 3,000 during 1951–63, between 3,000 and 8,000 during 1964–79 (except in 1978), between 10,000 and 20,000 during 1980–83, and between 20,000 and 40,000 during 1984–98 (except in 1990 and 1995).There has been a substantial increase in the average income per union from 1999 onwards during which it varied between 62,000 and 82,000. The moderate rise in income during successive years may be considered insignificant in view of the mounting price-rise, inflationary pressures and substantial erosion of the value of money. The average of the income also hides the reality of the situation wherein the income of an overwhelmingly large percentage of trade unions has been much below the average. If the figures of the average income per member worked out from Tables 6.4 and 5.1 are studied along with the frequency distribution of trade unions as shown in Table 6.2, it will be evident that the majority of Indian trade unions have an average income much below 3,000 per annum. In 1956, more than 80 per cent and in 1964 nearly 75 per cent of the Indian trade unions had an annual income less than 2,000. However, the situation improved since 1983 after which the annual average income varied between 1,94,000 and 82,19,000. This appears to be the result of the amendment of the Trade Unions Act in 1982 which permitted deductions, on written authorization of the employee, for payment of fees payable by him for the membership of a trade union registered under the Act. An idea of the expenditure pattern of the Indian trade unions can be had from Table 6.4.

 

Table 6.3 Income and Expenditure of Workers’ Trade Union in India (1951–2002)

 

Source: Government of India, Ministry of Labour. Various issues of Indian Labour Year Book and Indian Labour Statistics for figures of the years 1951–93, and Labour Bureau, Trade Unions in India 2002, Statement 5.1 for the years 1994–2002.

 

CHART 6.C: Average Income per Trade Union Submitting Returns in India (1951–2001), (See Table 6.3)

 

Trade Union Finance

Refers to the income and expenditure of trade unions including the amount and sources of income and the total expenditure and items of expenditure.

Table 6.4 clearly shows that between 1956 and 1974 salaries, allowances and establishments, that is, cost of running the office alone accounted for more than 40 per cent of the expenditure of trade unions in India. Similarly, during the same period the miscellaneous expenditure fluctuated around 40 per cent. In contrast, the expenditure on trade disputes rarely went above 6 per cent, and on publications of periodicals, hardly more than 1 per cent. The expenditure on welfare activities, such as funeral, old age, sickness and unemployment benefits, and educational and social items rarely formed 5 per cent of the total expenditure. In 2002, salaries, allowances and establishment cost slightly decreased to about 22 per cent in case of central unions and about 35 per cent in case of state unions. The same year, expenditure on miscellaneous items recorded an increase constituting 65.5 per cent in the case of central unions and 47.4 per cent in case of state unions. Expenses on social security and other benefits and compensation to members for loss arising out of trade disputes taken together constituted less than 8 per cent of the total expenses.

 

Table 6.4 Percentage Distribution of Expenditure of Worker’s Unions in India (1956–74)

 

Source: Government of India, Ministry of Labour. Various issues of Trade Unions in India for the figures of 1956–74; and Labour Bureau, Trade Unions in India 2002 for figures of 2002.

 

The analysis of the income and expenditure pattern of the Indian trade unions reveals their poverty. The poor financial position adversely affects their entire functioning, whether it be in the field of welfare activities for their members or their bargaining power, the conduct of strikes, and industrial disputes. Publishing of journals, organizing publicity materials and developing research activities are also affected. They can neither undertake any bold organizational drives nor are they able to withstand any serious strains caused on account of industrial disputes. Nobody can expect such unions to have full-time competent and adequate salaried staff. Under these conditions, the availability of an outside leadership, which is not wholly dependent on any particular trade union for its livelihood and is still wholeheartedly devoted to the trade union movement, becomes not only desirable but is a boon for the movement.

SOURCES OF INCOME

An idea of the sources of income of Indian trade unions can be had from Table 6.5. Table 6.5 clearly reveals that the primary source of income of Indian trade unions has been the membership fee which constituted about 70 per cent of the total income during 1956–62, but it decreased to about 62 per cent in 1972 and 1974 and then recorded a further decrease of about 43 per cent in the case of central unions and 58 per cent in the case of state unions in 2002. In spite of a gradual decrease in the percentage of contribution from members and donations, these two have continued to be the most significant sources of income of Indian trade unions. Income derived from other sources, that is, sale of periodicals and interest on investment, and so on, has been more or less negligible.

 

Table 6.5 Percentage Distribution of Sources of Income of Workers’ Unions in India (1956–74, 2002)

 

Source: Government of India, Ministry of Labour. Various issues of Trade Unions in India for the years 1956–74 and Labour Bureau, Trade Unions in India 2002 for the figures of 2002.

 

A perusal of Tables 5.1 (Chapter 5) and 6.3 will show that the average annual contribution of a member to his union fund varies between 3 and 5. If one studies these figures along with the average annual earnings of workers in the manufacturing industries, one will find that, on the average, an Indian worker contributes around 0.33 per cent of his annual earnings to the financing of his trade union. If donations to trade unions fund be excluded, the contribution by members through their membership fees would hardly be 0.25 per cent of their annual earnings. The average weekly contribution by a member of British trade union in 1960 was between 1 and 1.5 per cent of the average weekly wage.2 A union of poor workers can rarely be expected to be rich. Therefore, it is obvious that, living as they do in exceedingly poor conditions, it is extremely difficult for the Indian workers to spare more for trade union funds. Still, unless the workers are prepared to make further sacrifices, the trade union funds can never be strengthened.

So far as the poverty of the union is attributable to the overall poverty of the workers, there is no hope for any immediate improvement in the financial condition of the trade unions. The prescription under the Trade Unions Act, 1926, of a minimum membership fee which every member must pay and which the trade union must impose has not resulted in any material improvement. In this connection, the first National Commission on Labour says that ‘the minimum prescribed under law becomes the rule; union organizers generally do not claim anything higher nor do workers feel like contributing more, because the services rendered by the unions do not deserve a higher fee’.3 However, it has also to be remembered that the quality of services rendered by the unions and the quantity of the contribution of the members to their unions are mutually interdependent. The quality of the services is poor because the contribution is poor and vice versa. If the unions do not deserve a high fee, do the members deserve better services for the price that they pay in the form of membership fees and other contributions?

WAYS OF IMPROVING FINANCE

All well-wishers of the Indian trade union movement have been seriously concerned about the poverty of the unions. The ways by which their finances can be improved are: (i) large enrolment of members, (ii) strict and regular collection of union dues, (iii) increase in the rates of membership fee, (iv) adoption of the check-off system and (v) legal approval of union security provisions.

  1. Large Enrolment of Members: As explained earlier in the chapter, the average size of trade unions in the country has been very small, which has generally varied between 500 and 900 in almost all the years between 1951 and 2002 (see Table 6.1). With such a meagre membership, it is futile to expect a high level of income for them. Enrolment of members on a large scale is further handicapped by the prevalence of union rivalry and multiplicity of unions at all levels of union organization. Besides, a gradual reduction of the size of the workforce of particular plants, increasing closure of establishments, adoption of voluntary retirement schemes, and scattered nature of hitherto union-free establishments and employments have also proved serious handicaps.
  2. Strict and Regular Collection of Membership Fee: In India, the trade union law does not authorize even the recognized unions, not to speak of others, to compel their members to pay membership fees, whether regularly or intermittently. When a union having the largest membership in an establishment becomes strict in collecting union fees, many workers resent it and threaten to join a rival union. Existence of widespread union rivalry and multiplicity of unions and absence of legal recognition of representative union have made the task difficult. An amendment of the Payment of Wages Act, 1936, authorizes deduction of union fees from wages of employees, but only on their written authorization. No union can compel them to give such a written authorization (See Chapter 17).
  3. Increase in the Membership Fee: Under the situations explained above, even the powerful and big unions find it very difficult to suitably increase membership fee. They fear that such a move will result in loss of membership and weaken their organizational strength. In view of the poor financial position of trade unions, the Trade Unions Act, 1926, prescribed the minimum subscription fee, which was not to be less than 25 paise per annum prior to the amendment of the Act in 2001. It was increasingly realized that the amount was too meagre. The unions started demanding its enhancement. Ultimately, an amendment of the Act in 2001 enhanced the minimum union subscription fee to 1 per annum for rural workers, 3 per annum for workers in other unorganized sectors and 12 per annum for workers in any other case (for details see Chapter 20). The impact of the amendment is still not known. In practice, the minimum prescribed under the Act has remained the maximum in most cases.
  4. The ‘Check-off’ System: Under the check-off system, an employer undertakes, on the basis of a collective agreement or under provisions of law to deduct union dues from the workers’ pay and transfer the same to the union account. This system saves the union organizers from the trouble of approaching individual members for collecting union dues and assures the union a regular collection of its dues. A difficulty that stood in the way of the introduction of the system in India on the basis of voluntary agreements between the unions and managements was the Payment of Wages Act, 1936. The Act provides a list of authorized deductions which the employers could lawfully make from the wages of their employees. The list did not earlier include union dues. Therefore, if the union dues were deducted by the employers from the wages of the employees and made over to the unions, the provisions of the Act would be violated. Thus, even where the unions and the employers wished to do so, they could not introduce the check-off system (see Box 6.1).

Box 6.1

INTRODUCTION OF ‘CHECK-OFF’ SYSTEM IN TISCO

The historic agreement of 1956 between TISCO and Tata Workers’ Union provided for the introduction of the ‘check-off’ system. The agreement inter alia stated that the company would continue to recognize the Tata Workers’ Union as the sole bargaining agent of employees at Jamshedpur in the union sphere. The company agreed in principle to a union security system and to the collection of union subscriptions through the payroll in respect of employees other than supervisory staff. The company would be prepared to join the union in approaching the central or the state government for any alteration that might be required in law in order to permit the bringing into effect the maintenance of membership and ‘check-off’ provisions referred to above.

 

Source: Section II. 5 of the Agreement Between the Tata Steel Company Limited and the Tata Workers’ Union, Jamshedpur, dated 8 January 1956

 

‘Check-off’ System

Under the ‘check-off’ system, the employer undertakes on the basis of collective agreement or other device, to deduct union fees from the workers’ pay and transfer the same to the union account.

The practical difficulties of operating the system are more important in the prevailing Indian context. When there are rival unions, all collecting dues from their members, which of the unions is to be given the right to collect the union due? Are union dues deducted by the employers to be distributed amongst all the competing unions on the basis of their membership? If so, what about the dues collected on behalf of the workmen whose membership is claimed by all the competing unions? Further, should check-off be confined to the union members or should it cover all employees? If it covers all employees, will it then mean the introduction of compulsory unionism? The introduction of the system of check-off bristles with these practical difficulties which cannot be removed easily. Besides, it is also contended that the check-off system will free the trade union leaders from any obligation to maintain constant touch with the rank-and-file. Freed from the pressure of collecting union dues by approaching individual members, leadership may tend to become autocratic.

The unions are generally of the view that ‘if ‘check-off’ is to be introduced, the facility should be restricted to recognized unions only’.4 While pointing this out, the first National Commission on Labour held, ‘An enabling legal provision should be adequate. The right to demand check-off facilities should vest with the unions, and if such a demand is made by a recognized union, it should be made incumbent on the management to accept it’.5 However, an amendment of the Payment of Wages Act in 1982 permitted deductions, with the written authorization of the employed person, for payment of fee payable by him for the membership of any trade union registered under the Trade Union Act, 1926. Subsequent to this amendment, membership fees of registered trade unions in a number of establishments have come to be deducted from the wages of their employees, but the practice is not yet widely in operation.

The Second National Commission on Labour on ‘Check-off’

The second National Commission on Labour considered the question of check-off along with the determination of the negotiating agent for the purpose of collective bargaining and its advantages vis-à-vis those of secret ballot. The advocates of the check-off system, while making submissions before the commission, referred to the following merits of the system:

  1. It represents the relative strength of unions.
  2. It shows continued support of the union over a long period of time.
  3. Since the negotiating agent has to represent workers over a period of time till the next negotiations fall, due membership of the union is a far better and more reliable index than a secret ballot (which is more like a referendum).
  4. The system promotes unionization.
  5. It does not involve any special expenditure for verification. The administrative cost of a secret ballot is very high.

 

Negotiating Agent

The representative trade union which negotiates or is authorized to negotiate or bargain collectively with the employer on terms and conditions of employment of its members or workers of the unit.

After considering the views of the supporters of the check-off system and those of the advocates of secret ballot, the commission made the following observations and recommendations:

  1. A check-off system has the advantage of ascertaining the relative strengths of trade unions based on continuing loyalty reflected by the regular payment of union subscription, even if such subscriptions are deducted from the wages as permitted under the Payment of Wages Act, 1936.
  2. The system, by and large, avoids the incidence of dual membership under which, for a variety of reasons, a worker may become a member of more than one union.
  3. With regard to the fear of possible victimization by the management or persecution by members of other unions as a result of the introduction of the system, the commission held the view that legal rights of workers to join or not to join a union have been accepted by all concerned.
  4. The check-off system should be the general pattern, and wherever there is legitimate apprehension that the system may not achieve the purpose of verification or may create the possibility of victimization, it should be open to unions to petition the Labour Relations Commission to determine the method that should be adopted in a particular case.
  5. The check-off system in an establishment employing 300 or more workers must be made compulsory for members of all registered trade unions. Deductions of membership fees from wages can be done only on written authorization of workers.
  6. Though the check-off system will be preferred in the case of establishments employing less than 300 persons too, the mode of identifying the negotiating agent in these establishments may be determined by the Labour Relations Commissions.6

These recommendations of the commission are still under study and examination of the government. Under the industrial, economic and political climate operating in the country since the submission of the report of the commission, introduction of the system has continued to be uncertain.

SUMMARY
  1. From their very inception, the average size of Indian trade unions has been very small and has continued to decline during the course of years. The average membership of trade unions in the country varied between 3,500 and 1,000 during 1927–48, but since then it has always been below 1,000 mark in almost all subsequent years, the lowest of 460 recorded in 1993.
  2. In sharp contrast to the position in the United Kingdom, where over 70 per cent of union membership is concentrated in unions having 2.5 lakh and above, in India bulk of union membership has been concentrated in unions having membership of less than 10,000.
  3. The main factors responsible for the small size of Indian trade unions have been: (i) factory or establishment being the unit of union formation in an overwhelmingly large number of cases, (ii) ease of registration under the Trade Unions Act, 1926, (iii) preponderance of small-sized factories and establishments, (iv) widespread union rivalry and multiplicity of unions and (v) availability of union leaders in abundance.
  4. Along with the small average size of unions, their income has also been low. The average annual income per union in the country was below 3,000 between 1951 and 1963, and it stood at between 3,000 and 10,000 between 1964 and 1980. After 1981, there has been some improvements, when it generally stood between 10,000 and 40,000 up to 1999. Only from 1999 onwards, the income crossed 50,000 mark. However, in view of a continuous increase in prices, the increase in income has been nullified by rise in prices to an appreciable extent.
  5. Contributions from members have been the major source of income of trade unions in the country followed by miscellaneous sources and donations. The membership fee itself has been traditionally very low. Although amendments to the Trade Unions Act during more recent years prescribing the minimum membership fees intended to raise unions’ income, in practice, these amendments did not have much impact on enhancing their income.
  6. A major portion of the income of trade unions in the country is spent on establishments, payment of salaries and allowances to office-bearers and miscellaneous items. Expenses on the conduct of disputes, compensation to members during contingencies, legal expenses, welfare benefits and publications taken together constitute only a small fraction of total expenditure. The pattern of expenditure of Indian trade unions reveals their inability to do much for providing benefits and services to their members.
  7. The main ways by which the finances of Indian trade unions can be improved are: (i) large enrolment of members, strict and regular collection of membership fee, (ii) increase in membership fee and (iii) introduction of the ‘check-off’ system. Large enrolment of members and regular collection of membership fee are severely handicapped by the existence of widespread union rivalry and plurality of unions in a single plant or establishment, inability of a large number of primary unions to satisfy their members, the general apathy of the members towards the activities of their unions and absence of elements of compulsion regarding payment of membership fees.
  8. In India, the introduction of the ‘check-off’ system appears to be the only practicable way to improve the finances of the unions. The system imposes an obligation on the employer under a collective agreement or other device to deduct union fees and dues from the workers’ wages and transfer the same to the union fund. Apart from ensuring a regular income for trade unions, the system has the advantage of ascertaining the relative strength of the unions based on continuing loyalty reflected by regular payment of union subscription and helping in the avoidance of dual membership. The second National Commission on Labour has generally recommended the adoption of the system but in the context of the determination of the representative negotiating agent.
QUESTIONS FOR REVIEW
  1. Describe the factors responsible for the small size of the Indian trade unions.
  2. Explain the consequences of the small size of trade unions in India.
  3. Describe the sources of income of Indian trade unions. Is their income adequate to meet their requirements?
  4. Suggest measures to improve the finances of Indian trade unions.
  5. Describe the expenditure pattern of Indian trade unions. Will you suggest any improvement in it?
  6. What is ‘check-off’ system? Explain its merits and demerits.
  7. Explain the recommendations of the second National Commission on Labour in regard to the adoption of the ‘check-off’ system in India.
KEY TERMS

 

Frequency distribution

‘Check-off’ system

Trade union finance

Negotiating agent

Case Study 1

Why are the finances of Indian trade unions poor?

In a cement factory in Madhya Pradesh, there are 4,000 workers of whom 3,000 are union members distributed amongst six registered trade unions A.1–A.6 and two unregistered trade unions B.1–B.2 operating in the factory. The Trade Unions Act, 1926, has prescribed a minimum of 12 per annum for registered trade unions. Union A.5 has kept 16 and union B.2 5 per annum as the minimum subscription fee. The membership of the unions fluctuates from year-to-year, but it never exceeded 6,000 in any year. The members of every union are reluctant to pay subscription fee as no union is able to provide services to the satisfaction of its members. Majority of workers desired to have only one union in the factory which alone could protect their interests in a more effective manner?

Questions

Why are the unions in the factory not able to provide satisfactory services to their members?

Is it lawful for Union A.5 to prescribe 16 per annum as the minimum subscription fee?

Can Union B.2 fix 5 as the minimum annual subscription fee?

For which union will you recommend the adoption of the ‘check-off’ system?

Case Study 2

What are the factors responsible for the small size of Indian trade unions?

In the city of Bhagalpur, a silk centre, there are 100 silk mills employing 50 and more workers each and an altogether 200 registered trade unions have been operating in these mills. The central federations of trade unions and local leaders have been vying with each other to have their control over as many trade unions as possible. Having been dissatisfied with the outside leadership, workers of quite a number of mills preferred to form unions exclusively of workers and got these registered under the Trade Unions Act, 1926. It was very difficult for many employers to manage their business on account of the regular pressures from different sets of unions and many of them had to incur losses and a few were forced to close their businesses.

Questions

How is it possible to establish 200 trade unions in the city when the number of silk mills is only 100?

Is it possible for outside leaders to form five trade unions in a single mill and get them registered under the Trade Unions Act, 1926?

What factors are responsible for the small size of trade unions in the city?

What are the effects of multiplicity of small-sized unions in the city?