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Labour and Society Programme
DP/112/1999
ISBN 92-9014-620-6
First published 2000
The future of the labour movement: Some observations on developing countries
By
A.V. Jose,
International Institute for Labour Studies.
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| The future of the labour movement: Some observations on developing countries |
 1. Introduction
2. The role of trade unions
 2.1 Bargaining and representation
2.2 Social cohesion
3. The strength and influence of trade unions
3.1 Union density
3.2 Mobilizing capacity
3.3 Labour institutions
3.4 Union structures
4. The changing environment
4.1 Unions in industrialized countries
4.2 Unions in less developed countries
5. Unions: Challenge and response
5.1 Membership campaigns
5.1.1 Strategies towards traditional constituents
5.1.2 Non-traditional constituents
5.2 Trade union structures
5.2.1 Decentralized bargaining
5.2.2 Union structures at the lower end
5.3 Collective action and institutional benefits
5.4 Correcting inequalities
5.5 Building democratic institutions
Bibliography
1. Introduction
Trade unions have been important institutions of industrial society; they have helped deliver
significant outcomes in terms of improved living standards, equity and justice to workers all over
the world. However, at the end of the twentieth century, unions face a situation marked by the
universal trend towards greater liberalization of economic and political regimes. The changing
environment requires new approaches and strategies on the part of unions if they are to remain major
social actors contributing to dynamic and equitable growth. It is argued in this note that
liberalization/globalization, which brings formidable challenges to unions, also provides them with
opportunities to play a far more effective and politically important role in society.
This note reviews three sets of issues which should figure in a discussion of the changing role of
trade unions. These are: (i) the traditional role of unions; (ii) the changing environment in the world
of work and its impact on unions; and (iii) union responses in terms of new approaches and
strategies. The different economic, political and geographic settings of unions around the world are
given special attention.
The issues raised have been assembled with the following objectives: (i) to identify the gaps in
knowledge concerning the responses of unions in different environments; (ii) to define an agenda for
further research highlighting the contribution of labour and unions to society; and (iii) to set the
terms for policy debates involving unions and researchers on promising approaches for the future.
The above objectives have been incorporated into a programme on "Organized labour in the 21st
century", undertaken by the International Institute for Labour Studies of the International Labour
Organization. The issues listed above are being investigated within the framework of studies
organized by the Institute in different countries. Based on the findings of these studies, which are at
various stages of completion, this paper discusses some questions relevant to the future of labour
movements, with special reference to developing countries.(Endnote 1)
2. The role of trade unions
Trade unions have traditionally performed three principal roles in their relations with individual
employers, business associations, the State, and the public at large.
(ii) The economic role of facilitating production and ensuring an equitable distribution of the value-added. This has been achieved mainly through collective bargaining and negotiations at enterprise
level, industry/sector level or national level.
(ii) The democratic and representative role of providing voice and identity to labour at the
workplace, and in society at large. This includes: (a) representing workers in individual grievance
procedures; (b) giving voice to labour's views on economic and social policies at all levels including
enterprises; and (c) promoting cooperation between capital and labour with a view to securing
employment, improved working conditions and living standards consistent with sustainable growth.
(iii) The social role of minimizing the risk of exclusion in an industrial society by: (a) promoting
solidarity among workers in different sectors and occupational groups; (b) providing special services
to members of unions; and (c) serving as an anchor for broad-based social movements sharing
similar values and goals.
2.1 Bargaining and representation
The first and second functions roughly correspond to the two familiar roles of unions - negotiating
on wages and working conditions, and representing workers' interests in various fora (Freeman and
Medoff,1984). The balance of these two functions has been influenced by the pace and spread of
industrialization over the past decades.
The experience of a number of industrialized countries suggests that, over a period of time, unions
have grown from a predominantly bargaining role to a specialized role, representing the voice and
interests of labour. This transition came with economic growth and a sustained increase in capital
intensity both in product and labour markets. Unions served as a conduit for turning economic
growth and prosperity into improved living standards for workers. The benefits of collective
bargaining were transmitted to a broad spectrum of society in terms of wage and non-wage benefits,
particularly through a reduction of working time. More importantly, unions helped maintain a wage
structure which minimized income disparities between workers; in the process they managed to
correct an imbalance in distribution which markets tended to create.
The post-war decades conditioned unions to function in a corporate environment, combining their
traditional bargaining activities with the newly acquired voice and representation functions.
Corporatism, which was originally a state-sponsored arrangement for cooperation between labour
and capital, was transformed into societal corporatism from which social policies have been derived
through democratic decision making (Crouch and Dore, 1990). Workers identified common ground
and interests with employers and exercised a moderating influence on business strategies. Together
they developed labour policies which fitted in with the fluctuating fortunes of business. The new
approach was particularly successful in countries like Japan where institutions governing industrial
relations were modelled on those in industrialized Western countries.(Endnote 2)
2.2 Social cohesion
Unions nurtured social cohesion by involving themselves in the design of institutions which
guaranteed a secure income and decent living standards in society as a whole. As industrialization
and economic growth led to major changes affecting the age, gender and skill composition of the
workforce, a new range of issues emerged for consideration by the unions. Over the years, they
embraced a broader agenda including health care, leisure, recreation, retirement and non-wage
benefits from employment. They appeared on new representative bodies and platforms for dialogue,
and decisively influenced the content of social policy.
The ILO studies, particularly those on Israel, Japan and Sweden, show that at an intermediate
stage, unions rose to the challenge of meeting the changing requirements of an industrial society;
established themselves as credible partners and provided a variety of services to members, including
mutual aid, credit, insurance, housing and consumer services mostly through cooperatives linked
to union membership (Nathanson et al 1999; Inoue, 1999; and Fahlbeck, 1999). The Swedish study
suggests that in Scandinavia the preeminent position which unions enjoyed in terms of membership
and influence over public policies was anchored in the services which unions provided to their
members. One of the oldest trade unions in the Middle East, the Histadrut of Israel, grew in strength
until the early 1990s with an impressive membership tally based on the provision of services,
notably health care which covered practically the entire population.
3. The strength and influence of trade unions
The preceding discussion points to some tangible indicators of the strength and impact of unions
which may be listed as follows: (a) union density - whether unions have built a solid base through
membership of the workers they represent; (b) the capacity to mobilize - whether unions, irrespective
of numerical strength, have the capacity to mobilize labour successfully; (c) labour institutions -
whether the results of union action have been institutionalized through labour legislation, collective
agreements, and union participation in the administration of benefits; and (d) union structures -
whether unions have developed appropriate structures to deal with labour issues arising at local,
regional and global level.
3.1 Union density
The proportion of workers who belong to a union has been the most visible symbol of union strength.
Right through the period of industrialization in the developed countries, unions grew in strength,
bringing nearly two-thirds of the labour force into their fold. This trend was reversed in the mid-1970s when union density dropped steeply in many industrialized countries. It has continued to
increase in a number of developing countries, but at an extremely slow rate. There is considerable
scope for growth in union membership among the developing nations, especially in the newly
industrializing countries (ILO, 1997).
The growth of trade unions from the collective bargaining function towards a role dominated by
voice and representation of workers, seems to have taken place against the background of high
density unionism(Endnote 3) which gained ground mainly in continental Europe and in Japan. The broad
membership base which unions commanded and the equitable distribution which they promoted in
major sectors and enterprises strengthened the position of unions, giving them more power to bargain
or collaborate and to derive successful outcomes.
3.2 Mobilizing capacity
Apart from numerical strength the capacity to mobilize, which brings significant results for workers,
is a direct measure of the degree of political support which unions enjoy. The experience of
developed countries suggests that union capacity for mobilization has a synergistic effect on the
development of democracy. Unions have consolidated their political space and in the process they
have strengthened the democratic institutions of such societies. As industrialization spread, unions
emerged as major partners influencing the allocation, stabilization and redistribution functions of
modern governments. As a result the post-war decades in Europe have been marked by the ascent
of an activist State which supervises the distribution of benefits to workers and their dependents.
Certain governments have mobilized resources in excess of 50 per cent of GDP in order to finance
the welfare society (Esping-Anderson, 1996; Tanzi and Schuknecht, 1995).
3.3 Labour institutions
Union capacity to deliver successful outcomes for labour means that the benefits they have won have
to be incorporated in statutes governing the labour market. In industrialized countries, unions
influenced the design and development of the post-war system of industrial relations which was
based on a strong political commitment to full employment and workers' welfare. Some salient
features of the system were: (a) participation in full-time employment, governed by an open-ended
contract; (b) collectively negotiated wage structure with minimal dispersion across skill categories;
(c) social benefits to workers and their dependents distributed through the main income earner; (d)
control over working time and safety standards; and (e) job security for individual workers. As it
happened, the industrial society with an egalitarian base, fostered by unions, became a powerful
engine of growth and prosperity.
The institution of industrial relations was not unique to the developed countries. Some variants
emerged in developing countries too, albeit involving a smaller proportion of the total industrial
workforce. In the aftermath of decolonization, many States initiated development programmes and
embarked on industrialization based on import substitution strategies. The unions became major
players, occupying a vantage position supported by State patronage. Regulated industries and
public-sector enterprises, such as transport, communications and utilities, became a fertile ground
for the growth of unions. In a few countries, such as India, where political pluralism and procedural
democracy gained ground (Dahl, 1998), independent unions occupied a prominent place
(Bhattacherjee, 1999).
Contractual laws and legal safeguards - mostly adapted from the industrialized countries - were
established to fortify an incipient industrial society and to ensure the presence of a stable and
committed labour force for the new urban industrial enclaves. Secure jobs, guaranteed higher wages
and better working conditions were viewed as preconditions for the development of an industrial
society. These provisions often became the critical elements of a "social compact" which set the
terms of compromise between capital, labour and the State in sharing the national product (Webster
and Adler, 1998). The compact worked in the early stages of industrialization, but eventually it
failed to take on board the concerns of a broad spectrum of workers in developing countries, where
the labour institutions came to be viewed as problems rather than as solutions.
It is important to view the institutional safeguards for labour in a historical perspective, to assess
their past contribution and evaluate their relevance to contemporary labour markets. The need arises
because there are strident demands for the removal of these safeguards; it is argued that they protect
the interests of workers, sometimes derisively referred to in developing countries as the labour
aristocracy.(Endnote 4)
3.4 Union structures
Trade unions have adapted to the changing environment by creating new structures for organization
and interest representation. Some functions have been centralized and taken over by apex bodies
while others have been decentralized to plant or enterprise level. Collective bargaining has been
centralized at national or sectoral level with a view to deriving framework agreements for the entire
economy or sector. The post-war decades witnessed the establishment of new institutions for labour/
management cooperation. Enterprise unionism provided a platform to build on the macro-level
framework agreements and to share the fruits of growth in an environment of cooperation.
The new structures for labour/management cooperation have been influenced by the economic
and social environment of the countries or regions they belong to. In Japan, for example, such
cooperation was built on the presence of "quasi-communities of labour" which adopted a problem-solving approach within enterprises. The quasi-communities helped develop a pattern of enterprise
restructuring with flexible employment practices based on retraining and relocation of workers and
with minimal use of lay-offs (Inoue , 1999). The Works Councils, which started in countries like
Germany, where labour and business practise mutually beneficial consultation (Rogers and Streeck,
1993), are now being adopted all over Europe.
4. The changing environment
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 labour. 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 labour markets.
There is a discernible trend towards enterprise downsizing and a shift in industrial employment
away from large enterprises. This trend is connected with technological changes. The new units of
production, each employing a smaller number of workers albeit with uniform skill endowments, tend
to be geographically dispersed even outside the boundaries of urban labour markets (Sherlock,
1996).
The skill composition of workers is changing and they are increasingly differentiated by their
competence. At the higher end of the scale, workers tend to be better educated, career minded,
individualistic and less motivated by class interests and solidarity. On the other hand, there is a
discernible concentration of workers at the lower end in service industries or occupations. Such
workers tend to be either women or migrants.
Flexible labour 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 labour market. The net outcome is an increased segmentation of labour
markets.
In addition, the political environment which conditioned the early phase of industrial relations
is undergoing change. The historical alliance between the labour movement and the social democratic
regime of industrial countries has weakened over time. The pervasive presence of an activist State,
committed to full employment and pursuing expansionary economic policies in both public and
private sectors, did not continue beyond the 1970s. In contrast the State has been withdrawing from
the domain of employment and income policies, and governments have been moving away from any
direct involvement in the creation of jobs. The new policy emphasis is on the governance of
institutions to ensure the functioning of markets.
The sections below briefly review the consequences for labour of the above changes in different
national settings.
4.1 Unions in industrialized countries
There are indications of a qualitative transformation of labour relations in the industrialized
countries, which may be listed as follows:
(a) A new regime of decentralized production. New enterprises are decentralized, small or medium-sized units of production where unions tend to enjoy greater autonomy in workplace negotiations.
At macro-level, unions increasingly take responsibility for harmonizing the interests of workers, and
strive to achieve multi-employer agreements on minimum standards.
(b) Changing labour-management relations. Enterprise managers are turning to the development
of human resources in preference to the conventional workplace management regimes preferred by
unions. Human resource management policies are primarily addressed to skilled professionals and
technicians at the higher end of the spectrum. Unions are adapting to the new structures, while
maintaining their presence as a balancing force in the entire economy.
(c) Regionalization and trade unions. The transnational mobility of capital and production has led
to a consolidation of markets at regional level, as in the European Union and NAFTA. Other
regional trading arrangements may evolve in future. The implications for income distribution within
and across regions remain to be explored.
(d) The rise of wage disparities. The differentiation of workers based on widening skill gaps has
weakened the solidarity platform of trade unions. Unions are under pressure to develop wage policies
which accommodate productivity differentials for greater efficiency in resource allocation.
(e) Unions as service providers. Worker perceptions of union effectiveness were traditionally
enhanced by the unions' role in administering active labour market policies and channelling benefits,
such as skill upgrading, employment services, unemployment insurance, health care and pensions.
Intense competition and the emphasis on privatization seem to have undermined the status of unions
as providers of vital services.(Endnote 5)
(f) Changing attitudes towards unions. Worker commitment to unions appears tobeweakening
due to the rise of individualism. At the higher end of the skill spectrum, workers seem indifferent to
a collective identity and are less dependent on unions. Their personal identity is defined less in terms
of class and more in terms of social functions, autonomy and mobility.
4.2 Unions in less developed countries
Globalization has impacted on workers and their organizations in developing countries. Recent
decades have witnessed a shift away from inward-looking industrialization strategies, a break from
paternalistic industrial relations, and a significant rise in labour militancy.
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 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 (Chang, 1994). Policy measures
were designed to insulate these strategies from wage pressures and strikes. Legislation and executive
action were preferred to collective bargaining. Official guidelines restrained the movement of wages,
while transfers, promotions, lay-offs, retrenchment and job assignments were deemed to lie outside
the scope of collective bargaining (Kuruvilla, 1996). Enterprise unionism, a role model from the
developed countries, was encouraged as an appropriate forum for representing the interests of
workers (Song, 1999).
Elsewhere in the developing world, liberal economic policies came to the fore in the mid-1980s.
A mirror image of changes in the labour markets of industrialized countries associated with the
adoption of liberal economic policies could be observed in the developing countries. Four elements
have been pervasive in these countries: (a) the disintegration of large workplaces and the rise of
smaller geographically dispersed units of production; (b) an outward expansion of the labour market
beyond the boundaries of the urban sector; (c) a skill-based differentiation of the workforce and (d)
a rise in significant wage disparities. These developments have implications for the strategies of
workers and their unions.
An ominous outcome of the retreat of the State was the breakdown of the social pact which trade
unions had taken for granted. In many developing countries unions organized huge protests which
were not simply a response to the decline in material conditions, but a reaction against the breach
of trust implicit in the collapse of the pact.(Endnote 6) On the other hand, business leaders in the private sector
made strident calls for the removal of protectionist legislation, which they believed was anachronistic
and an impediment to industrial development.
The following paragraphs review the main challenges facing unions and their responses, mainly
based on the evidence from case studies in developing countries. We then discuss some issues which
are likely to figure on the union agenda in the coming decades.
5. Unions: Challenge and response
In general, trade unions adapt their strategies to meet the requirements of constituents in a changing
environment. Such adaptation means going beyond traditional demands centred on wages, working
conditions, and non-wage benefits met mainly through organization and collective representation.
The relevant issues for consideration here are: whether unions have maintained their position with
respect to traditional constituent demands; how they are adapting to the new environment by
organizing new constituents, addressing new concerns, developing new perspectives on their role in
society, and enhancing their image as major social actors. The discussion is restricted to three sets
of issues: (a) building the membership base; (b) changing the union structures; and (c) collective
action for institutional benefits. The purpose is to highlight some strategic choices before unions in
the newly industrializing and developing countries.
5.1 Membership campaigns
Webster and Adler (1998) observe that unions all over the world are surrounded by greater
liberalization of economic and political regimes and that these two developments together hold out
prospects for creating new rules of the game compelling key social actors - governments, organized
labour, business and (in some cases) community organizations - to negotiate and conclude
agreements on major economic and social policies. When social interests are mediated by democratic
regimes there is an opportunity to resolve the tensions likely to arise in the course of economic
liberalization and to negotiate a compromise solution. The capacity of unions to influence the course
of events, however, depends on their strength and support among the unionized and non-unionized
sections of society.
Membership campaigns organized by unions may be viewed in relation to two target groups: the
traditional and the non-traditional constituents. Traditional constituents are those in established union
strongholds such as the public sector and labour-intensive industries, while non-traditional
constituents are the new entrants to labour markets such as highly skilled professionals, white-collar
workers, and casual workers in private-sector enterprises.
5.1.1 Strategies towards traditional constituents
The position of unions among traditional members has been affected because the changing
environment has eroded their position as key allies of the State. The global flight of capital and the
decline or migration of specific industries have added to the growing vulnerability of labour.
Privatization, the downsizing of enterprises and the adoption of flexible employment practices have
all affected the strength of unions in their traditional bastions.
Public employment policies are reaching a turning point. The capacity of the State for resource
mobilization and implicitly for job creation is being circumscribed and it is highly unlikely that
public expenditure reaching 50 per cent of GDP will ever materialize in developing countries.
Increasingly the State is moving away from any fiscal responsibility to manage the labour market
from the demand side.
If unions are to build up their membership base in such an adverse environment they need to
consider the special requirements of their traditional constituents, which are: (a) protection of
employment, working conditions and social security; (b) training, human resource development and
career mobility; and (c) provision of benefits, credit support, legal assistance and advisory services.
Unions have had some success in retaining members by promoting job security and upward
mobility, and through channelling special benefits. This has been ensured through their participation
in the administration of labour market policies and social security schemes (Nathanson et al., 1999;
Wong, 1999). The role of unions in providing services such as skill improvement, unemployment
insurance, social security and employment exchanges, have helped enhance workers' perception of
union effectiveness and ensured their continued loyalty. It should be emphasized here that unions,
in light of their experience in this field, have the potential to emerge as major development partners
in society.
As the largest organized groups in developing societies, unions can make a unique contribution
to the development community. They are directly involved with economic systems of production and
distribution; they can influence the course and content of employment, social and economic policies;
they are representative and accountable; they have considerable experience in organizing the more
vulnerable sections of society; and they have the experience and standing required to access national
legal systems and public facilities. They can contribute through their long-standing relationships with
such development institutions as consumer cooperatives, housing societies, health funds, and social
security organizations. In order to make full use of this potential, however, unions need to tend their
public image.
There is an important element of taking the public on board when unions want to emerge as a
voice defending the rights and interests of their constituents. An exclusively economic platform on
which workers interests are in conflict with those of society could be counterproductive. The
convergence of members' interests which characterized industrial society no longer applies in the
newly industrializing countries, where there is conspicuous individualism and divergence of
interests.(Endnote 7)
Technological innovation and rising productivity are causing major changes in traditional union
strongholds, notably in public sector services.(Endnote 8) There are compelling reasons for the public service
industries to remain competitive, ostensibly through an increase in productivity. Unions need to work
out new strategies to respond to the changing environment. More importantly, they need to secure
a niche as efficient providers of services both to their constituents and to the public at large.
Furthermore, rising consumer sensitivities and recognition of the fact that the public are important
consumers of services provided by the State and utility industries, are beginning to bear on union
strategies. Industrial action in a public-service industry is likely to cost more in terms of popular
support since the damage will probably, spread beyond the employers. The dilemma faced by unions
in winning public support for industrial action has been highlighted in the ILO study on the Republic
of Korea (Song, 1999).
5.1.2 Non-traditional constituents
Non-traditional constituents may be grouped into several distinct, but overlapping categories: (i) new
entrants at the higher end of labour 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. The interests of workers in the two sectors are not necessarily antithetical. Several
common elements and shared concerns bring them together and offer prospects for collective action
(Sanyal, 1991). Members of low-income households in developing countries often work in both the
formal and informal sectors. Low-income workers from both sectors often live in the same
neighbourhood, and have similar civic and community needs. These commonalities provide some
basis for union-led action.
Increasingly, the typical worker is no longer a male breadwinner supporting a dependent family.
Currently there are more women in the labour force belonging to either two-earner or even single-earner households. The growth of a predominantly female labour force is built on activities which
are part-time, temporary or home-based, thereby accentuating inequalities in the labour markets. In
developing countries, the influx of women workers has mostly been towards insecure and poorly paid
types of work.(Endnote 9)
The concentration of workers at the lower end of the labour market, especially in service
industries and occupations, provides unions with a unique opportunity to build a new constituency.
There have recently been encouraging union initiatives to organize new members and create suitable
structures to represent their interests (Sanyal, 1991; Bhattacherjee, 1999). However, no major
breakthrough or conspicuous gains have been reported in this field. In light of the available evidence
one can only surmise that organizing non-traditional members will be the main concern of trade
unions in developing countries.(Endnote 10)
5.2 Trade union structures
The new economic environment requires a reorganization of trade union structures, which may be
assessed by the following indicators: (i) decentralization and adaptation of unions to new forms of
industrial organization; (ii) creation of new union structures to ensure representation of workers in
the spatially decentralized units of production; (iii) measures to ensure the financial viability of
unions which take on new responsibilities to provide services to the members, and (iv) centralization
and/or coordination of union functions through mergers or alliances at national or sectoral level. We
focus on the first two indicators mentioned above, since they are given more attention in the studies.
5.2.1 Decentralized bargaining
The case studies reviewed here suggest that among the newly industrialized and developing
countries, differentiation of the workforce and reorganization of production processes have led to
the rise of bargaining in the decentralized units of production. This corresponds to experience in the
industrialized countries, when unions increasingly took on a voice and representative function within
the framework of company unions and Works Councils.
As the benefits from liberalized economic regimes filtered down to employees at the higher end
of the skill spectrum, the orientation of workers shifted to economic issues. One discernible outcome
was a gradual decline in radical political unionism and a rise in economic unionism demanding
improved benefits at enterprise level. The new structures offered efficient solutions; they delivered
better wages and fringe benefits, albeit to a smaller group, compared to the previous structures
which had catered to larger numbers in an environment of greater militancy and class solidarity.
The rise of decentralized bargaining in India is associated with the rise of independent company
unions which are not necessarily affiliated to apex bodies or political parties. From the 1980s
onwards, independent unions pursuing decentralized bargaining became distinct entities in India,
whereas they were already present in the newly industrialized countries of East and Southeast Asia
(Song, 1999; Bhattacherjee, 1999). It has also been noted that the rise of decentralized bargaining
and independent unions was associated with greater regional disparities in income distribution.(Endnote 11)
A distinct feature of the situation in India, as well as in other developing countries, is the
divergence of interests between the two extremes of a vastly polarized labour force. This makes it
difficult for unions to combine traditional wage bargaining with their new role of giving voice and
representation to workers at plant level. The first is a political task. The Indian experience suggests
that the voice function is increasingly moving out of the domain of politically affiliated unions. The
prolific growth of company unions which are not affiliated to political parties is a case in point
(Bhattacherjee, 1999).
5.2.2 Union structures at the lower end
Decentralized and geographically dispersed units of production are not necessarily viable in terms
of size and location for the purpose of unionizing workers. There is an inverse relationship between
the cost of unionization and the size of enterprises which warrants a fresh look at organizational
structures that can maximize the benefits of unionization.
What is the nature of the structure which can bring spatially dispersed smaller units into the union
fold? Can workers be unionized on the basis of their enterprise identity which could be affiliated to
a sectoral or industry-based union? What should be the preferred mode of representation at
enterprise level? Should there be a single union representing the majority of workers or should there
be multiple unions representing different interest groups which might overlap with occupational
groups? Can workers be unionized on the basis of their occupational identity? These vital issues,
which impinge on the future of trade unions, are currently being discussed in the policy fora of many
developing countries.
A review of union structures in developing countries, notably India, suggests a tendency to
separate the bargaining and voice functions; this has major implications for future union strategies.
A logical outcome of any separation of the bargaining and voice functions is a further deterioration
in income distribution. That does not augur well for unions, or for developing countries. Any society
which harbours deep inequalities in income distribution tends to limit the functioning of redistributive
institutions. Trade unions in such societies might not be able to perform their role as the purveyors
of social cohesion. In terms of future union strategies, this implies a serious effort to prevent any
deterioration of income inequalities in developing countries.
In the rest of this paper we look at some union strategies which could prevent an aggravation of
income inequalities.
5.3 Collective action and institutional benefits
Union capacity to deliver successful outcomes depends on whether workers' rights and interests have
been incorporated into legislation or other regulatory instruments of the labour market. As for
building institutional capacity, the following objectives have been prominent on the agenda of unions:
(i) legislative provisions guaranteeing job security, unemployment insurance, and special benefits
on termination of employment; and social security providing for health care and pension schemes;
(ii) multi-employer agreements on employment, wages, working conditions, hours of work, and non-wage benefits of workers; (iii) ability to influence economic and social policies through consultation
and dialogue with employers and public authorities.
Labour legislation, collective agreements, social security and minimum wages already in place
are clear indicators of the strength and influence of trade unions. They reflect a capacity to influence
public opinion and mobilize action in support of the demands of their constituents. In developing
countries, notably in Asia, unions have had significant achievements in maintaining or upgrading
statutory safeguards on employment and working conditions. Nonetheless, such gains are mostly
restricted to workers in the formal sector.
A politically important task for unions is to build distributive institutions to defend the interests
of workers at the lower end of the market, particularly the vast reservoir of workers in the informal
sector. Ideally this could be attained through macro-level framework agreements encompassing
minimum standards of employment, minimum wage, portable benefits including health care and
safety nets which workers are entitled to irrespective of the location of employment. The question
is whether unions can empower themselves to guarantee a secure income and decent working
conditions for all. Such empowerment is a precondition for unions to emerge as credible partners
ensuring social cohesion.
Two significant observations emerge from the studies reviewed; they also point to the tasks ahead
and help us define the content of union strategies in the coming decades. First, unions are faced with
rising income inequalities in developing societies and therefore should focus more on strategies to
prevent any further deterioration. Second, union success in safeguarding the rights and interests of
workers has come through their participation in democratic institutions. Therefore, it is only through
strengthening these institutions that unions can consolidate their gains.
5.4 Correcting inequalities
It is time the concerns of the lower tiers of the workforce figured prominently on the agenda for
collective bargaining. In practical terms unions should aim at securing a minimum income for all in
the labour market. The means of action should be through establishing minimum standards on
employment, wages, working conditions and social security, and also ensuring universal access to
these standards.
Trade unions are ideally placed to lead an initiative for a social minimum wage, consisting of the
right to income security and other entitlements such as education, health, shelter and a safe
environment. The exact nature of such entitlements could be decided at societal level through
agreements on redistributive transfers involving the social partners. Transfers aimed at meeting the
basic needs of the population can help set the "reserve price of labour" at a politically acceptable
level, which cannot be undermined by market forces.(Endnote 12)
The above approach to setting wages through redistributive transfers is significantly different
from the conventional approach to fixing minimum wages through administered prices. Here the
emphasis is on the political process which requires political parties to enter the field and organize
the unorganized around a redistributive agenda. Only political democratization with a strong
emphasis on mobilizing low-income groups would make the social minimum wage a reality in
developing countries. This takes us to an even more important item on the union agenda i.e.
strengthening democracy and human rights in developing countries.
5.5 Building democratic institutions
One lesson emerging from the experience of unions in industrialized countries is that civil and
political liberties are essential preconditions for exercising labour rights, and that only a liberal
democracy can provide the institutional environment for fulfilling these rights. Many developing
countries correspond to the rudimentary stages in the evolution of democratic institutions. In a
number of these countries trade unions have been instrumental in accelerating the pace of
transformation through their sustained support and solidarity with the struggle for liberal
democracy. Only prolonged struggle and profound sacrifice have brought them closer to the goal of
guaranteeing civil and political liberties to a broad spectrum of society.
The Republic of Korea is a clear example of unions transforming their initial organizing space
into political space and decisively influencing the transition to democracy. Such transition was the
culmination of a series of events, most notably the struggle to revive democratic institutions against
an authoritarian regime. Democratization led to new union structures, the organization of new
groups, multiple unionism and new political affiliations. Securing legal status for unions, particularly
white-collar unions and industrial unions, was a significant achievement of the Korean labour
movement. Similarly, the rise of multiple unions associated with political parties in a pluralist
environment is a recent development (Song, 1999). The parallel development of democracy and trade
unions in the Republic of Korea only underscores the synergy and strength the two institutions can
derive from each other.
More importantly, the experience of East Asia is likely to be repeated in other countries. In this
scenario trade unions would eventually lead the way to a constitutionally liberal society in which
civil and political liberties, including the right to life, property and freedom of expression, become
accessible to all citizens. This goal also implies a long and difficult journey ahead for the unions, as
many developing societies are far from any constitutional guarantee of civil liberties. In such
situations, it is the workers , notably migrants, minorities, those in the informal sector and in rural
labour markets, who bear the brunt of human rights violations.
Trade unions, as representatives of a very organized and articulate group in society, have a
historic mandate to defend and promote human rights. To achieve this, unions need to move beyond
their customary role of defending civil and political rights as the basis of labour rights, and enter the
broader terrain of defending economic and social rights. Union priorities in this field include
appropriate human rights programmes in collaboration with other actors in society.
Here we come to the strategic importance of unions building alliances and coalitions between the
partners in civil society with a view to building support for a human rights agenda. Such coalitions
among interest groups in pursuit of common goals and shared values are absolutely essential for
unions to fulfil their historic mission of maintaining social cohesion.
The value of collective action pioneered by unions as a means of attaining common objectives is
widely recognized by a broad spectrum of interest groups. At the same time, unions themselves are
entering partnerships or strategic alliances with other actors in civil society, including gender groups,
cooperatives, community associations, human rights bodies, consumers and environmental groups.
Often they require trade unions to transcend the boundaries of the workplace and address the
concerns of communities, ethnic groups, religious organizations and neighbourhood associations.
The preceding discussion concerning the priorities of the labour movement in developing societies
may be summed up as follows. A politically important option in the coming decades will be to build
on its established role in safeguarding social cohesion. This implies a strategic orientation to the
long-term goals of security, equity and justice for all in the world of work. The above goals are
attainable through redistributive transfers, specifically aimed at correcting income inequalities and
raising the level of social consumption. The strategies for reaching the goals need to be anchored in
the mobilization of diverse interest groups in society on a political platform. An enduring niche for
the labour movement in developing societies means a relentless pursuit of the redistributive agenda.
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Endnote 1:
The ILO studies have been carried out in Brazil, Canada, Chile, Ghana, India, Israel, Japan, Republic of Korea,
Lithuania, Niger, South Africa, Spain, Sweden, Tunisia, USA, and Zimbabwe. In preparing this overview paper, I have
drawn on findings from the following studies: Japan (Inoue, 1999), Republic of Korea (Song, 1999), Israel (Nathanson
et al., 1999), India (Bhattacherjee, 1999), Sweden (Fahlbeck, 1999), Lithuania (Dovideniene, 1999) and South Africa
(Bezuidenhout, A. 1999).
Endnote 2:
This aspect is discussed in the ILO study on union responses to globalization in Japan (Inoue, 1999).
Endnote 3:
The union structures which evolved in the industrialized countries conform to two categories identified by
Rogers (1993) namely: the high density centralized case (HDCC) and the low density decentralized case (LDDC). In
both cases, unions gained ground in industries or enterprises, positioned at vantage points in the markets for products
or services, and in the process gained significant outcomes for labour.
Endnote 4:
The term "labour aristocracy" derives from the privileges conferred on skilled workers drawn into urban areas
on improved terms and conditions of employment. Their position as pioneers among the ranks of an economically
powerful middle class enabled them to claim numerous rights and privileges in urban labour markets. They were
politically important allies of the State, and in that capacity were entitled to a range of benefits which included higher
wages, better working conditions, civic amenities and social security benefits.
Endnote 5:
The Histadrut in Israel is a case in point. The enactment of the National Health Insurance Law in 1994 severed
the links between trade unions and the provision of health care. The emergence of competitive providers of heath care
led to a 60 per cent fall in union membership (Nathanson et al., 1999). It follows that the provision of services is a
necessary but not a sufficient condition for enhancing union membership. As much attention needs to be directed to the
provision of services under competitive conditions.
Endnote 6:
According to Webster and Adler (1998) the pact was already breaking up. The debt crisis of the mid-1970s and
the structural adjustment programmes of the Bretton Woods institutions had caused disenchantment among labour. The
authors argue that the moral struggle against the violation of the pact fuelled many of the pro-democracy movements
in the 1980s and the 1990s. The crisis of the development pact led to two distinct but connected projects:
democratization to replace authoritarian political regimes; and economic restructuring to replace State protectionism.
Endnote 7:
Valkenburg (1996) argues that consequent to the rise of individualism, collective frames of reference are losing
significance. These were based on an industrial class society, from which people derived part of their individual and
social identity are losing significance.
Endnote 8:
This was noted earlier in the context of Israel. See Nathanson et al., 1999.
Endnote 9:
There has been a noticeable change in union attitudes towards work traditionally performed by women within
the household. Among the industrialized countries, unions increasingly campaign for better community services for
children and dependents; parental leave for working parents; training facilities for working women; and the increased
representation of women in leadership positions within trade unions (Spalter-Roth et al., 1994). These concerns are just
beginning to surface in union strategies in the developing world.
Endnote 10:
There are interesting precedents for union efforts to organize non-traditional members in the context of
industrialized countries. For instance, in the United States the AFL-CIO has laid emphasis on organizing less skilled
workers, women and minority groups in the service industries (Bronfenbrenner et al., 1998). There have also been
innovative approaches to organizing low- skilled workers in small enterprises under the aegis of area-specific
organizations. These initiatives might provide useful lessons for similar organizing efforts in developing countries.
Endnote 11:
In India, the real wages and non-wage benefits negotiated through company union structures increased during
the 1980s. This happened mainly in capital-intensive industries which opted for technological upgrading. It also appears
that certain regions of India which are late entrants to the field of industrialization have derived special benefits from
the new bargaining structures. The new entrants have had a comparative advantage: they are better endowed with
infrastructure, are pro-business, and they are less affected by militant unionism. These regions also claim a congenial
environment for human resource management and non-antagonistic labour relations. These features in turn have
significantly influenced the pace and pattern of industrial development in different regions of India. Employment and
wages declined over the years in other parts of the country, where there were large labour intensive industries in the
past and where militant unionism fiercely resisted new technology. Such industries became virtually extinct and the
regions which harboured them became industrial wastelands. The textile mills of western India and the jute mills of
eastern India are cases in point (Sherlock, 1996).
Endnote 12:
This point has been elaborated in relation to the observed increase in real wages of agricultural labourers in
Kerala, India (Jose, 1994).
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