In India, the bargaining power of trade unions has declined significantly, especially after 1991 when economic liberalisation picked up momentum. 

Trade union membership declined during the last three decades. In the era of globalisation, the industrial relation landscape is getting structured in a manner that reflects the emergence of increasing unitarism promoted by employers openly or covertly. The results are visible in the form of both falling union membership as well as their waning influence.

The Industrial Relations Code, 2020, introduced in the lower house of the Indian Parliament on 19 September and passed by the upper house on 23 September, only exacerbates this dire situation by diluting the leverage of trade unions across the country.

The context

An International Labour Organisation (ILO) report has revealed that the trade union density in India among wage workers, both casual and regular or salaried, has fallen since 1993-94, by 3 percentage points to 13.4%. The ILO cites instances of victimisation, even dismissal, of union members by companies in an effort to break union unity or dissuade workers from joining them. 

A part of the blame lies with the manner in which trade unions conducted themselves over the years. They could not keep pace with changes that have taken place in the world of work.

The nature of employment underwent significant changes as most of the jobs were created in the urban informal sector, particularly in the service sector, which accounts for almost half of India’s economy and over 40% of its workforce today. But trade unions are still predominantly stuck in factories in the manufacturing sector and Public Sector Units (PSUs) operating in service sectors. 

In India, over the last few years, employment growth has been meagre compared to GDP growth, and whatever little employment that is being created is in the informal service sector. It is in this particular sector that trade unions could not make their presence felt as much as they should have.

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A vast number of labour in the urban informal sector (including the self-employed) are still outside the purview of mainstream trade unionisation. With regard to gig and platform workers, for whom employer-employee relation is highly mystified, there is hardly any trade union penetration.

The ILO report cited earlier stresses the need for “service-based unionism”, better suited to “the new working environment shaped by changing employment patterns and industrial relations dynamics and for meeting the interests of the workers, especially in the informal economy.” 

The last census of trade unions in India was published by the government in 2012. Only 15 states (out of 28 states and 9 union territories) participated in the Census, which makes these numbers incomplete. In these 15 states, there are 16,154 trade unions with a combined membership of 9.18 million workers.

These trade unions are federated into one of at least twelve central trade union organisations. Amongst these, the Bharatiya Mazdoor Sangh (BMS) – affiliated to BJP – has the largest membership. The Centre of Indian Trade Unions (CITU) is the largest trade union among the left parties with about 5 million members. 

Code on Industrial Relation and its Probable Impact

The Industrial Relations Code, 2020 has several proposals to rationalise the range of regulations that govern formation and rights of the trade unions. The core proposal is to centralise the power of the Registrar in granting registration of trade unions.

The grounds for the cancellation of registration of trade unions by this Registrar is markedly broadened. The most glaring example is the section on ‘Strikes and Lockouts’ (Section 62). The Code effectively extends the barriers for striking by essential service employees to all employees, thereby making strikes legally non-tenable. 


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The Code has further introduced provisions that have huge repercussions on relative bargaining power of trade unions within a structure where participation in bargaining forum depends on recognition accorded by the employer.

The Code has, to a great extent, sanctified the unitary trade union regime by specifying that if a trade union has seventy-five percent or more membership, it becomes the sole bargaining agent. Smaller unions are excluded from the negotiation process in such instances. 

Section 14(2) of the proposed Code states that “where are only one Trade Union of workers registered under this Code is functioning in an industrial establishment, then, the employer of such industrial establishment shall recognise such Trade Union as sole negotiating union of the workers.”

Section 14(3) states that “if more than one Trade Union of workers registered under this Code are functioning in an industrial establishment, then, the Trade Union having 75% or more workers on the muster roll of that industrial establishment, verified in such manner as may be prescribed, supporting that Trade Union shall be recognised by the appropriate Government or any officer authorised by such Government in this behalf, as the sole negotiating union of the workers.”

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The implication of section 14(3) is that if there exists one big trade union (having 75% or more membership share), other smaller trade unions will become redundant as those would not be recognised by the employer. Collective bargaining will remain worryingly unitary as one big trade union will be the sole bargaining agent in all tripartite talks. Smaller trade unions will not get the opportunity to grow and prosper.

Trade unions usually take time to grow within an organisation. During the formation period, a trade union has fewer members. With time and through greater mobilisation, membership grows. Mobilisation happens through advocating workers’ rights in bargaining forums and pushing an agenda that enhances compensation and welfare entitlements. 

Now, under Section 14(3) of the Code, smaller trade unions will not get the opportunity to participate in bargaining process and will be denied the subsequent opportunity for expanding its base. This implies that the bigger trade union, being the sole bargaining agent, will monopolise the trade union rights and continue to exist even if it is unable to protect workers’ rights. 

Ethos in industrial relations

In labour administration, particularly in industrial relation parlance, the majority view has never been taken as the only view. Decisions are taken on the basis of consensus. There is an extensive ecosystem in the form of social dialogue and tripartite consultation that defines the industrial relations paradigm in India. It thrives on multiplicity and diversity of views.

Existing legislations on industrial relations are characterised by such multiplicity and diversity, and even minority views are adequately taken care of. Relatively smaller trade unions also get the opportunity to express their opinions in collective bargaining and influence the outcome. This will no longer be the case once the Code takes effect. 

In recent times, there have been instances where an industrial organisation has one trade union, which is not affiliated to any existing mainstream national or state trade union. These are apolitical trade unions rooted to that particular unit and formed by insider workmen. Formation of such unit-specific trade unions is facilitated by the management itself.


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Such trade unions act in close connivance with the management. Concerns of such trade unions are limited to specific issues pertaining to the respective units only.

An ideal example of such management-propelled trade unionism is that of Honda Factory in Greater Noida. It is the only trade union in that unit and with more than 90% membership. It works in close association with the management. Introduction of provisions as postulated in Section 14(3) of the Code will provide further impetus to this existing trend.    

A recent ILO report notes:

“Although trade union numbers are quite high in absolute numbers, the tendency to effectively bargain is quite low due to a lack of statutory support to promote collective bargaining in India.”

It is very difficult to form a trade union in present circumstances in India. There are hardly any in the IT sector, which has witnessed massive retrenchment during the last three years. The automobile sector has also experienced turbulences in trade union activities in recent past.

Overall, trade unions in India are finding it difficult to remain relevant in a predominantly neoliberal production regime, which gives priority to ease of doing business rather than safeguarding workers’ interests and rights. 

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Bleak days ahead

Certain provisions in the Code, like Sections 2(zf) pertaining to definition of strike, 62(1) pertaining to prohibition of strikes and lock-outs and 14(3) pertaining to criteria for recognition as sole bargaining agent have far-reaching impact on the manner of formation, growth and functions of trade unions in the years to come.

The informal sector constitutes the overwhelming part of the labour force where union penetration is already at a low level. Even within organised sectors, trade unions’ bargaining power is increasingly weakening. The Code is expected to further exacerbate this process in the coming days.  

Views expressed are that of the author and not necessarily that of the organisation he belongs to. 

Featured image (representational): A joint trade union rally at New Delhi’s Jantar Mantar, 2017 | Wikimedia Commons