Collective Bargaining is a bipartite democratic decision-making process and a form of industrial government and management.
Though originally it emerged as a method of trade unionism in industries to determine wages and other terms and conditions of labour, today it includes within its scope the non-industrial sector, including government, and covers a wide range of subjects.
Development of Collective Bargaining in Indian industries has been quite phenomenal and is comparable with its development in other countries, but that is only from 1977 onwards.
Though India became a democratic republic in 1950, the government was unwilling to allow industry and labour to adopt this democratic process to determine either their relationships or issues of common interest.
Collective bargaining in India has been the subject matter of industrial adjudication since long and has been defined by our Law Courts.
In Karol Leather Karamchari Sangathan v. Liberty Footwear Company, the Supreme Court observed that, “Collective bargaining is a technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion.”
According to the Court, the Industrial Disputes Act, 1947 seeks to achieve social justice on the basis of collective bargaining.
1. Introduction to Collective Bargaining in India 2. Definition and Concept of Collective Bargaining in India 3. Status 4. Position
5. Factors Affecting 6. Critical Evaluation 7. Factors for Making Collective Bargaining Successful 8. Emerging Scenario 9. New Trends.
Collective Bargaining in India: Introduction, Definition, Concept, Status, Position, Factors Affecting and New Trends
Collective Bargaining in India – Introduction
Collective Bargaining is a bipartite democratic decision-making process and a form of industrial government and management. Though originally it emerged as a method of trade unionism in industries to determine wages and other terms and conditions of labour, today it includes within its scope the non-industrial sector, including government, and covers a wide range of subjects.
Over the decades, it has developed as a central institution of industrial relations in all the industrialised market economies of the world. As an institution, it has been evolving in response to the needs of the industry, workers and employers within a supportive environment or even in its absence. Collective Bargaining has proved its potential to adapt itself to the given industrial, economic, social, and legal environments, leading to the emergence of different patterns of bargaining.
Development of Collective Bargaining in Indian industries has been quite phenomenal and is comparable with its development in other countries, but that is only from 1977 onwards. Though India became a democratic republic in 1950, the government was unwilling to allow industry and labour to adopt this democratic process to determine either their relationships or issues of common interest.
Free India adopted the colonial approach to industrial relations and gave prominence to tripartitism and compulsory arbitration to settle labour-management issues. Non-governmental factors, like a politicised trade union movement, an illiterate or poorly educated mass of workers, a lack of internal leadership of unions and the conservative attitudes of the employers also contributed to the institutionalisation of compulsory arbitration in the Indian industrial relations system.
It took several years for the employers’ and workers’ organisations to realise the importance of collective bargaining. The inherent weakness of conciliation and compulsory arbitration brought about a change in the attitude. Resultantly, collective bargaining gained ground during 1956-69, but only to be relegated to the background by the emergence of militant trade unionism in 1969, followed by the repressive approach of the government during the mid-1970s. The change of government in 1977 at the national level and its desire to give a new direction and thrust to labour-management relations helped the development of collective bargaining from 1977 onwards, despite the absence of a supportive industrial relations law.
But even amidst a discouraging environment, Collective Bargaining was adopted and practised by many industries at various industrial centres, like the cotton textile industry in Ahmedabad and Coimbatore.
Collective Bargaining in India – Definition and Concept
Collective bargaining has been defined by different experts in different ways. Nevertheless, it is treated as a method by which problem of wages and conditions of employment are resolved peacefully and voluntarily between labour and management. However, the term collective bargaining is opposed to individual bargaining.
Sometimes, it is described as a process of accommodation between two conflicting interests. Here, power stands against power. The I.L.O. defines collective bargaining – “As negotiations about working conditions and terms of employment between an employer, or a group of employers, or one or more employers’ organisations, on the one hand, and one or more representative workers’ organisation on the other with a view to reaching agreement.”
This definition confines the term collective bargaining as a means of improving conditions of employment. But in fact, collective bargaining serves something more. Perlman aptly stated, “Collective bargaining is not just a means of raising wages and improving conditions of employment. Nor is it merely democratic government in industry.
It is above all technique, collective bargaining as a technique of the rise of a new class is quite different… from the desire to displace or abolish” the “old ruling class” to gain equal rights as a class… to acquire an excessive jurisdiction in that sphere where the most immediate interests, both material and spiritual, are determined, and a shared jurisdiction with the older class or classes in all other spheres.”
Collective bargaining in India has been the subject matter of industrial adjudication since long and has been defined by our Law Courts. In Karol Leather Karamchari Sangathan v. Liberty Footwear Company, the Supreme Court observed that, “Collective bargaining is a technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion.” According to the Court, the Industrial Disputes Act, 1947 seeks to achieve social justice on the basis of collective bargaining.
“It is well known how before the days of ‘collective bargaining’, labour was at a great disadvantage in obtaining reasonable terms for contracts of service from its employer. As trade unions developed in the country and collective bargaining became the rule, the employers found it necessary and convenient to deal with the representatives of workmen, instead of individual workmen, not only for the making or modification of contracts but in the matter of taking disciplinary action against one or more workmen and as regards of other disputes.”
Collective Bargaining in India – Status
The process of collective bargaining has been applied in India for a long time in various situations. However, voluntary collective bargaining has developed in India only after Independence. Among the voluntary measures, tripartite settlements, conferences, joint consultative boards, industrial committee etc., have played a vital role in the development of collective bargaining in our country.
Even though some instances of voluntary arbitration can be traced back to “Ancient and Puranic periods,” the voluntary collective bargaining of textile workers in Ahmedabad and Tata Iron and Steel Co. workers, Jamshedpur took place in the first quarter of 20th century.
The process of collective bargaining received an impetus only after Independence. One of the most ardent supporters of collective bargaining in India was Mr. V.V. Giri Ex-President of India, who always pleaded to constitute collective bargaining for compulsory adjudication. Speaking at the 12th session of the Indian Labour Conference in 1952 as the Union Labour Minister, he observed –
“When one party has lost and the other won, the victor and the vanquished get back to their work in a sullen and resentful mood towards each other; and neither can forget or forgive. The loser awaits the next opportunity to make good the loss; while the winner is carried away by a sense of victory which is not conducive to co-operation. Such an attitude of suppressed hostility in one party and satisfaction and triumph in the other may lead to transient truce but not lasting peace.”
However, his approach did not receive much attention both from the employers and the labour unions. Due to the fear of strikes and lockouts, lack of confidence in the bargaining strength of the unions, and apprehensions of inflation, the government showed little interest in the collective bargaining process.
But since 1955, a number of plant level agreements have been reached. These include the Bata Shoe Company Agreement 1955, 1958 and 1962; The Modi Spinning and Weaving Mills Agreement 1956; The Tata Iron and Steel Company Agreement 1956 and 1959; The Metal Corporation of India Agreement 1960 and 1961 etc. At industry level, the agreement between the Ahmedabad Mill Owners’ Association and the Ahmedabad Textile Labour Association, signed on June 27, 1955, laid down the procedure for the grant of bonus and the voluntary settlement of industrial disputes.
At the national level, generally bipartite agreements were finalised at conferences of labour and managements convened by the Government of India. The Delhi Agreement of 1951 and the Bonus Agreements for plantation workers of 1956 are the national level bipartite agreements.
The First Five-Year Plan stated that, “Although collective bargaining, as it is known and practised, is virtually unknown in India. As a matter of principle, the workers’ right of association, organisation and collective bargaining is to be accepted without reservation as the fundamental basis of mutually satisfactory relationship.”
Over the period of time, collective bargaining has become more important due to the growing strength of the trade unions, the changing attitude of employers, the awakened and professional management and better educated and better informed workers.
In 1969, National Commission on Labour suggested following measures to strengthen the collective bargaining:
1. Trade unions should be strengthened both financially and organisationally by amending the Trade Union Act 1926; to make the registration of trade unions compulsory; to enhance the union membership fee and to reduce the presence of outsiders in the union executive.
2. Government intervention in the settlement of industrial disputes should be reduced to the minimum possible extent.
3. The idea of one union for one plant should be popularised.
4. Government should put efforts to reduce union-rivalry and de-politicise trade unions.
5. Workers should be made more knowledgeable and conscious about their rights and obligations.
All these recommendations of the National Commission on Labour are under consideration of the government. Govt., has already amended the Industrial Disputes Act 1947 in 1982 to prohibit and penalise unfair labour practices. The Trade Union Act, 1926 has also been amended in 2001.
Another interesting fact about collective bargaining in India is the existence of many unions representing a single firm. Some large firms like Bharat Heavy Electricals Limited (BHEL) and Steel Authority of India (SAIL) have more than hundred unions. The bargaining process in such firms has become quite coercive and demanding due to the counter claims of the different sections of workers having ties with different unions.
Collective Bargaining in India – Position
Collective Bargaining machinery essentially is a reflection of a particular social and political climate. The history of the trade union movement shows that unions are affiliated to one or other political parties. As a result most of the trade unions are controlled by outsiders. Critic says that the presence of outsiders, is one of the important reasons for the failure of collective bargaining in India.
Outsiders in the Process of Collective Bargaining:
The Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent of half the total number of office bearers. So, it permits one to be the leader of the union who does not actually work in the industry. Sometimes a dismissed employee working as a union leader may create difficulties in the relationship between the union and the employer.
Nevertheless, experience shows that outsiders who have little knowledge of the background of labour problems, history of labour movement, fundamentals of trade unionism and the technique of the industry and with even little general education assume the charge of labour union and become the self-appointed custodian of the welfare of workers. The employers, therefore, have been reluctant to discuss and negotiate industrial matters with outsiders, who have no personal or direct knowledge of day to day affairs of the industry.
Accordingly employees refuse recognition to the unions which are either controlled by the politicians or affiliated to a particular political party or controlled by a particular individual. Government cannot morally compel employers to accord recognition to unions without driving out the politicians from them. The State must outright ban ‘outsiders’ from the trade union body.
Further, provision for political funds by trade unions should be eliminated, since it invariably encourages the politicians to prey upon them. The National Commission on Labour has overlooked this aspect. The Commission does not favour a legal ban on non-employees for holding the union office. It says that without creating conditions for building up the internal leadership, a complete banning of outsiders would only make unions weaker.
The Commission hopes that internal leadership would develop through their education and training. Accordingly the Commission suggests proportion of the outsiders and the workers in a union executive. On realising the problems of outsiders in the Union, the Industrial Relations Bill, 1988 proposes to reduce the number of outsiders to two only.
Politicisation of Trade-Union Movement in India:
It is well known that the trade-union movement in India is divided on political lines and exists on patronage of various political parties. Most of the trade-union organisations have aligned themselves with a political party with whom they find themselves philosophically close. It is because of this that the Indian National Trade Union Congress is considered to be the labour wing of congress, whereas HMS is considered to be the labour wing of Socialist party.
Bhartiya Majdoor Sangh pledges its allegiance to BJP and CITU has the support of CPI (M). It is also the case with the AITUC which had started as a national organisation of workers but subsequently came to be controlled by the Communist Party of India and is now its official labour wing.
Political patronage of trade-unions has given a new direction to the movement whose centre of gravity is no longer the employees or workmen. The centre has shifted towards it leadership whose effectiveness is determined by the extent of political patronage and the consequent capacity to obtain the benefit.
This shifting centre of power is the necessary consequence of political parties search for workers votes, which they seek by conferring benefits on them. Since the public sector which is really the instrumentality of the State, has emerged as the biggest employer in this country, the collective bargaining between the union patronised by the party-in-power and the employer has become an important methodology.
It is because of this process that agreements conferring benefits are signed even in those units where financial losses are mounting. It is also our experience that in spite of wage increase and improved conditions of service, there has been no corresponding improvement in production or the productivity. Also, most of the losses are being passed on to the consumers by increasing prices of the products.
There are also not many collective bargaining agreements which have tried to link wages with productivity. Clearly, therefore, the basic idea of sharing the prosperity’ which developed because of our commitment to the cause of ‘social justice’ is no longer current and the expected end product of the process is no longer expected.
The process of collective bargaining is not likely to succeed unless the threat of strike/ lockout is there in the back-ground. Strike and lock out are the weapons used by both the parties during the collective bargaining process. Without having these weapons at hands, neither of the party to the dispute can defeat the claim of the other. The peculiar feature of our country while compared to the advanced nations of the world is that the economic conditions of the workers are very poor and as a result they cannot afford a long-standing strike.
Collective Bargaining in India – Factors Affecting the Progress of Collective Bargaining in India
Collective bargaining has not made much progress in India in view of the following reasons:
1. Multiplicity of Unions:
Existence of multiple unions reduces the bargaining power of each union. In such a case, employer finds it difficult to negotiate with all unions.
2. Sabotage by Union:
Unions sabotage the functioning of one another. It weakens the collective action.
3. Political Interference:
Interference of political leaders in all aspects of union matters has increased over the years. Thus, political leaders use the unions for making political capital therefrom.
4. Clout of Adjudication:
Increasing clout of adjudication is diminishing the importance of collective bargaining.
5. Lack of Will on the Part of Union Leaders:
The union leaders lack the will to address the problem in correct perspective. They force the employees to go on strike even for petty issues.
6. Mistrust of Management:
Few unions seek the help of court. They do not have faith in holding talks with the employer.
7. Negative Attitude towards Union:
In India, management has negative attitude towards the union. They feel that unions are unnecessary interference. They victimise the workers joining unions. They feel below their dignity to hold talk with worker representatives. They adopt various practices, to hoodwink the labour class and wantonly delay the implementation of awards or collective bargaining agreements.
8. Contemporary Employee’s Reluctance to Join Union:
Employees in most of the organizations do not want to join any union. They bear victimisation from the management side or join the management-sponsored unions. They do not want to assert their rights on account of fear of losing their jobs. They do not even extend moral support to their colleagues joining the unions. They accept to be exploited by the management to continue to be on payroll. Thus, unions are becoming week in countries where unemployment looms large.
9. Non-Recognising of Union by Management:
Some managements do not recognise unions at all. They use all sorts of punitive measures like intimidation, increment-cut, pay cut, suspension, demotion, termination, etc., on employees taking initiative in organizing unions.
Collective Bargaining in India – Critical Evaluation
In Indian labour arena we see, multiplicity of unions and inter-union rivalry. Statutory provisions for recognising unions as bargaining agents are absent. It is believed that the institution of collective bargaining is still in its preliminary and organisational stage. State, therefore, must play a progressive and positive role in removing the pitfalls which have stood in the way of mutual, amicable and voluntary settlement of labour disputes. The labour policy must reflect a new approach.
Hitherto the State has been playing a dominant role in controlling and guiding labour-management relation through its lopsided adjudication machinery. The role of the industrial adjudicator virtually differs from that of a judge of ordinary civil court. The judge of a civil court has to apply the law to the case before him and decide rights and liabilities according to its established laws, whereas industrial adjudicator has to adjust and reconcile the conflicting claims of disputants and evolve “socially desirable” rights and obligations of the disputants. In deciding industrial disputes the adjudicator is free to apply the principle of equity and good conscience.
Moreover, advocates of adjudication contend that as the collective bargaining procedure might end in a strike or lockout, which implies a great loss to the parties concerned and the country, so for the sake of industrial peace, the adjudication becomes necessary. Industrial peace can be established by the adjudication for the time being. But the conflicts are driven deeper and it will retard industrial production. In the absence of effective collective bargaining the anti-productivity tendencies are bound to appear.
Collective Bargaining in India – Top 9 Factors for Making Collective Bargaining Successful in India
The following points have emerged for making collective bargaining in India more successful and effective:
(i) Criteria for recognition of union.
(ii) Commitment and determination to reach an agreement.
(iii) Unfair practices must be declared illegal.
(iv) Full implementation of agreement.
(v) Based on factual data.
(vi) Well laid down grievance procedure.
(vii) Mutual recognition of rights and responsibilities.
(viii) Existence of an efficient bargaining machinery.
(ix) Presence of a supportive legislative frame work.
(i) Criteria for Recognition of Union:
A union is the agent which uses the tool of collective bargaining for determining the terms and conditions of employment. A responsible, strong and recognized trade union is vital for the successful conduct of collective bargaining. Trade unions must have recognition of the employer as truly representative of workers. The criteria for the recognition of sole bargaining agent should be fair and simple.
(ii) Commitment and Determination to Reach an Agreement:
Both the parties (representatives of employers-managers and representatives of employees-unions) should be committed and determined to resolve their differences directly in a peaceful and cordial atmosphere without looking for a third party like voluntary arbitration, and specially adjudication. Rigidity of attitude or ‘take-it-or-leave it’ kind of approach has no place in collective bargaining. Willingness on the part of both the parties to regulate the working conditions and terms of employment directly through negotiations is the essence of collective bargaining.
(iii) Unfair Labour Practices must be Declared Illegal:
For the successful conduct of collective bargaining unfair labour practices like non-recognition of a union, or a majority union, interference in the working of unions, victimization of union leaders, refusal to negotiate, go slow, demonstration, gherao or intimidation of management should not only be avoided but must be declared illegal. In the absence of such unfair practices the negotiation should be conducted in a peaceful atmosphere so that no party takes undue advantage of another’s weaknesses.
(iv) Full Implementation of Agreement:
Once the agreement is reached, it should be put down in writing in simple language of the employees and signed by all the representatives who have participated in the negotiation. After proper and effective communication to all concerned, the agreement must be honoured and implemented. In case of any problem in interpretation or difficulty in implementation the matter must be referred to the committee of implementation consisting of representatives of management and unions. No strike or lock-out should be permitted in respect of matters covered by the contract, nor should the union be allowed to raise fresh demands.
(v) Based on Factual Data:
Negotiations can be successful only when both the parties rely on facts and figures to support their point of view. The union should take the help of specialists such as economists, productivity experts, legal experts to help them in preparing data based on charter of demands, in conducting negotiations and drafting of agreement.
The management on their part should share the financial, productivity, market and profit position of the company with the union. Such data based negotiation will be more meaningful and effective and less populist and heart burning.
(vi) Well Laid Down Grievance Procedure:
For the success of collective bargaining process, every collective agreement must provide for an effective grievance handling machinery. Such a machinery is vital because unredressed and unresolved complaints, whether real or imaginary, spread the germs of discontent which grow, reproduce and multiply like any other germ.
The grievance procedure serves as a safety valve and provides an outlet for dissatisfaction and discontent before they bent up and result in hypertension and sudden outburst of labour problems. The grievance procedure should be well communicated to all employees so that everybody knows ‘to whom one should approach in case of any complaint or grievance.
(vii) Mutual Recognition of Rights and Responsibilities:
For successful collective bargaining management and the workers and their union must recognise their mutual rights and responsibilities towards each other. There must be a fundamental change in the attitude of management, recognising of workers in the joint determination of the terms of employment and in the governance of industry. Similarly, the workers must also recognise the rights of management in the management of industry and the constraints under which the latter has to function and run the industry.
Such a positive change in the altitudes of both the parties will create mutual trust, confidence and respect for each other and willingness to settle matters through negotiations. During a negotiation there is greater emphasis on accommodation than on conflict as regard is shown for rights and responsibilities of one another. Rights of employees to strike and lockout must be recognised, subject to national interest, as this alone can ensure freedom of collective bargaining. Parties should have freedom to decide how to regulate employment relations.
(vii) Existence of an Efficient Bargaining Machinery:
For making collective bargaining effective and successful, there should be an efficient bargaining team, consisting of the representatives of both the sides with diverse backgrounds, work experience and knowledge. Union representatives should be truly representative of all workers, mature and good in negotiation skill.
Both parties should select such representatives who are duly authorised to give and take, and could observe proper rules of bargaining and avoid a breakdown of dialogue as far as possible. Secondly, effective implementation committee should be constituted consisting of management and union representative to oversee the implementation of the agreement. Such a committee must meet both formally and informally on a regular basis, so that all problems relating to interpretation of agreement and implementation can be sorted out before it unnecessarily gets flared up.
(ix) Presence of a Supportive Legislative Frame-Work:
The government should actively encourage collective bargaining as a method of settling not only industrial disputes but also overall employer and employee relations. The government should announce a policy supported by legal framework at the central and state levels with sufficient clarity in favour of bipartite settlement of disputes at plant, industry, regional and national levels with a view to minimise the interventionist approach.
Such a policy also encourages collective agreements by conferring on their legitimacy and validity, provides the help of a conciliation machinery to parties to resolve their differences when necessary, frames suitable rules for recognition of bargaining agent and prohibits unfair labour practices by making them illegal.
(x) Stability and Future Prospects of the Company:
Stability, sound financial position and profitability, the magnitude of their production, growing development and future prospectus of an industrial undertaking affect the nature of relationship between management and union. If the production is steady and market is expanding, the management is in a very comfortable position to concede to the various demands without much stiff opposition. But, where the business is not so bright and the undertaking is not so prosperous, such pattern of negotiation may be difficult to be adopted.
Collective Bargaining in India – Emerging Scenario in General
According to studies, employees covered by collective bargaining often have better working conditions, higher wages, and better benefit packages than employees who are not members of a labour union. For example, union workers are more than 18 percent more likely to have affordable health insurance, and 22 percent more likely to have pension coverage. Wage advantages offered by collective bargaining mostly benefit earners of middle and lower wages, reducing wage gaps. Membership in labour unions and collective bargaining also benefits employees by decreasing the wage gap that exists between male and female employees.
(i) Collective Bargaining in Education:
Collective bargaining in education consists of a process in which faculty and the board of trustees at a school interact and negotiate terms of employment. The collective bargaining process in education, similar to other forms of collective bargaining, results in legally binding agreements that cannot be changed by only one side. If changes are needed, both parties must participate in negotiations to reach a new agreement.
Some reasons educational employees are encouraged to engage in the collective bargaining process include:
a. It creates a feeling of shared control over employment issues and the decision making process.
b. Clearly defined employment policies reduce uncertainty.
c. A fair and effective grievance procedure increases faculty confidence that problem issues will be handled in a fair and timely manner.
d. A negotiated agreement that addresses faculty concerns provides a sense of security.
e. The policy of collective bargaining puts pressure on both sides to act in good faith in regard to employment practices.
(ii) Employer Duty to Supply Information:
While the employer has an obligation to supply pertinent information to the union during the collective bargaining process, only certain information is required to be supplied. For example, if an employer claims it cannot grant a wage increase request due to financial problems, the union has the right to request documents supporting the employer’s claims. The employer must also provide the employees’ current salary rates and benefit information upon request.
(iii) Union Duty of Fair Representation:
When an employee is a member of a union, the union has a duty to provide fair representation to the employee. While the union is not required to act on every request that an employee makes, it must treat each and every request fairly regardless of the employee’s race, age, sex, or education. If an employee feels that the union has breached its duty of fair representation, he may follow certain procedures to file a grievance. If there are not grievance procedures available, the employee may hire an attorney to help ensure his rights are protected. Because employment law can be complex, an attorney experienced with employment issues is best suited in this situation.
(iv) When a Deal is not Reached:
When a collective bargaining dispute cannot be resolved through ordinary means, the issue falls into the hands of the NLRB. The board investigates the claims over which a deal was not reached, and looks at information from both sides in determining whether future proceedings are necessary. The NLRB may make a decision siding with either party, as long as fair labor laws are not violated.
(v) Paying for Representation:
In many states, employee union members are required to pay for a portion of the cost of representation during the collective bargaining process. Employees may also be required to pay monthly dues, which may be equal to 1% or 2% of their pay. In some jurisdictions, the dues may not be used for representation during collective bargaining, while in other jurisdictions the dues are specifically for such representation.
(vi) International Collective Bargaining:
Collective bargaining is an international human right recognized in Article 23 of the Universal Declaration of Human Rights. The rights to international collective bargaining is promoted through international labor standards, and though not all countries recognize the National Labor Relations Act or National Labor Relations Board, many countries have their own associations or agencies that oversee labor rights.
1. Decentralized and Individualized Bargaining:
The Collective Bargaining in India remained mostly decentralized i.e., company or unit level bargaining rather than industry level bargaining.
But in Public Sector industries, industry level bargaining was prominent which again got shifted to company level after privatization.
On the other hand, the strength and power of the trade unions have been heavily reduced due to severe informalisation of workforce and downsizing in the industries.
The Trade unions mainly represented the interests of the formal workers. Increasing number of informal workers in the companies soon changed the structures of the workforce and as a result formal workers became a minority. Gradually, informal workers could not form their own trade unions. On the other hand, they are not represented by the trade unions of the informal workers. These situations resulted in spurt of individualized bargaining.
2. Declining Wage Share:
Declining strength of collective bargaining since 2001-02 is also reflected in the increasing share of profit which considerably declines the wage share. As a result, purchasing power goes down.
3. New Wave of Labour Movement for Unionization:
A new wave of workers struggle for unionization especially, in the formal sector is emerging. The workers are realizing that, they cannot do anything without organizing themselves in a trade union. In many cases, they do not even get the legal benefits like minimum wages, premium rate of overtime, casual leaves and holidays when they are not headed by union leaders.
Once the union is formed, at least they are assured of these bare benefits. Forming of formal workers group like trade union has become important because the industrialists are not at all ready to accept trade unions in their factories at any cost. Even if somehow trade unions are created, managements are not ready to recognize them and therefore, deny them space for collective bargaining.