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Initiative To Unionize India Service Sector Rejected

Jit Mukherjii - 11/13/2005

Recent decades have seen profound changes in the political and economic environment, which have had a negative effect on the position and influence of trade unions. The interrelated factors, which contributed to this situation, may be listed as follows. First, globalization has led to intense competitive pressure in product markets, accelerated the mobility of capital, and added to the vulnerability of labor. Second, technological changes have made it possible to reshape production through new forms of industrial organization, including sub-contracting and the spatial reorganization of production systems. Third, there are changes in the skill composition of the workforce along with large-scale entry of women into labor markets.

As the service sector is generating more and more employment in the developing economies like India, the future of the trade union movement in these countries is being questioned. For the last fifty years, these economies were dominated by manufacturing sector and trade union movement was a major source of livelihood to many politicians and political parties.

But for the past one decade, service sector is contributing to a major portion of the nation's GDP and also maximum employment is being generated in these sectors. The sectors include insurance, software solutions, call centers or business process outsourcing or BPO, banking, media, home based computer jobs.

Of late, there was an attempt by the Leftist Unions (Communists) in India to penetrate the IT based services sector. Mr. Kali Ghosh, general secretary of India's largest trade union party, CITU, said, " Our memberships are going down with every passing year. Now we have to seriously think of some alternate strategies for our future existence. We are planning to enter the software services solutions sector."

There was an instant reaction to this statement by the industry. Most of these software solution jobs come from USA and are very much target oriented. Mr. Roopen Roy, CEO of Pricewaterhouse Coopers, India reacted very strongly, 'India has developed a global goodwill in the service sector. We cannot ignore that just to please our trade union leaders. People working in the software industry are highly paid and I don't think there is any need for trade union".

The most discouraging fact to the trade union leaders was that the move was outright rejected by the people working in the sector. People working as software professionals are highly well paid and almost all of them are white-collar people. They are generally educated, well paid, career minded, individualistic and less motivated by class interests and solidarity.

Flexible labor market policies have gained legitimacy and political support in the climate of economic liberalism. Practices such as subcontracting, outsourcing and the hiring of temporary and part-time workers, long considered as atypical employment, are becoming more common, especially at the lower end of the labor market. The net outcome is an increased segmentation of labor markets.

The build-up of competitive pressure in both domestic and external markets led to the adoption of liberal economic policies, which were reflected in a move away from inward-looking industrialization and protectionism towards export-oriented industries, and free trade policies. The State progressively withdrew from production and invited private capital to enter spheres traditionally reserved for the public sector. The earliest manifestations of this shift were among the newly industrializing countries of East and Southeast Asia.

Among those countries, notably in the Republic of Korea, Malaysia, India and Singapore, the State assumed the role of guiding the course of economic development and adopting industrialization strategies geared to export markets and foreign direct investment.

The following are the major labor groups who are posing a challenge to the trade union movement. They constituents may be grouped into several distinct, but overlapping categories: (i) new entrants at the higher end of labor markets, including professional and white-collar workers; (ii) casual workers, who are either part-time or temporary; (iii) home-based workers and those in the informal sector; and (iv) women workers.

Two major groups of casual workers are part-timers and temporary workers. By and large, part- timers fall into two groups: (a) those with higher education and skills who choose to take qualitatively better jobs on a part-time basis; and (b) those with little education and few skills who are in low-paid jobs with limited career prospects. At the lower end of the skill spectrum, both part-timers and temporary workers are often young, women or migrant workers. Casual workers, in so far as they lack any long-term attachment to a single employer, tend to be disadvantaged in their access to the non-wage benefits, which are usually linked to service in the same firm.

The informal sector has grown exponentially with an increasing share of new jobs either being created in, or outsourced to, the informal sector. Union strategies to bridge the gap between the formal and informal sectors are rapidly becoming central to the future of trade unions in these countries.

Increasingly, the typical worker is no longer a male breadwinner supporting a dependent family. Currently there are more women in the labor force belonging to either two-earner or even single-earner households. The growth of a predominantly female labor force is built on activities, which are part-time, temporary or home-based, thereby accentuating inequalities in the labor markets.

For the last fifty years, unions in India meant to oppose anything and everything the management does. They always played an anti management role, because that was the heart of their survival. But now, service sector has opened floodgates of opportunities in India, where unemployment was one of the biggest concerns of society. Workers have become more self-centered out of poverty and frustration. Who cares about the society when I cannot feed my family? So, unions will be accepted only if they play a more positive role in the economic development.

On the other hand, governments are also supporting flexible labor policies, as they also need foreign capital to flow in.