34  Trade Unions and Collective Bargaining

34.1 What is a Trade Union?

A trade union is an organisation of workers formed for the purpose of advancing and protecting their economic and social interests in their employment. Sidney and Beatrice Webb’s classic definition: a trade union is “a continuous association of wage-earners for the purpose of maintaining or improving the conditions of their working lives” (webbwebb1894?). The Indian Trade Unions Act, 1926 (now consolidated into the Industrial Relations Code, 2020) defines a trade union as “any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers, between workmen and workmen, or between employers and employers” (tuact1926?).

TipThree Working Definitions
Source Definition What it foregrounds
Sidney & Beatrice Webb “A continuous association of wage-earners for the purpose of maintaining or improving the conditions of their working lives.” Continuity
ILO “An organisation of workers established to protect and improve, through collective action, the economic and social status of its members.” Collective action
Trade Unions Act, 1926 (India) “Any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers…” Legal

34.1.1 Objectives and functions

Trade unions exist to do two broad things — pursue economic / industrial goals and play a political / social role.

TipFunctions of Trade Unions
Family What unions do
Economic / Bread-and-butter Wages, allowances, bonus, hours, leave
Welfare Education, recreation, cooperative credit, housing
Industrial democracy Worker representation, voice, joint consultation
Political Lobbying, elections, party affiliation
Social / Cultural Solidarity, identity, social cohesion

34.2 Theories of Trade Unionism

Several classical theorists explain why trade unions arise. The five most-tested:

TipFive Classical Theories of Trade Unionism
Theory Originator Core claim
Revolutionary Karl Marx Unions are instruments of class struggle, ultimately to overthrow capitalism
Webbs’ (Industrial Democracy) Sidney & Beatrice Webb Unions secure worker voice and democratise industry
Business Unionism Samuel Gompers Unions exist for material gains — “more, more, and more”
Political Revolutionary Lenin Unions advance the revolutionary cause through political action
Hoxie’s typology Robert Hoxie Five union types — business, friendly/uplift, revolutionary, predatory, dependent

34.3 Types of Trade Unions

TipCommon Classifications of Trade Unions
Basis Categories Example
Membership / Industry Craft union (one trade); Industrial union (one industry); General union (all workers) Locomotive Engineers (craft); Steel Workers (industrial)
Affiliation Affiliated to a federation; Independent All India Trade Union Congress (AITUC)
Activity White-collar; Blue-collar; Service-sector Bank Employees Union (white); IT Employees Union
Approach Reformist / Constructive; Revolutionary; Business unionism Most Indian central federations are reformist

34.3.1 Central Trade Union Organisations (CTUOs) of India

The Ministry of Labour and Employment has periodically recognised central trade union organisations on the basis of verified membership. The major CTUOs:

TipMajor Central Trade Union Organisations in India
Acronym Full name Year Political affiliation
AITUC All India Trade Union Congress 1920 Communist Party of India (CPI)
INTUC Indian National Trade Union Congress 1947 Indian National Congress
HMS Hind Mazdoor Sabha 1948 Socialist tradition
BMS Bharatiya Mazdoor Sangh 1955 RSS / BJP
CITU Centre of Indian Trade Unions 1970 Communist Party of India (Marxist)
AIUTUC All India United Trade Union Centre 1958 SUCI(C)
TUCC Trade Unions Coordination Centre 1970 All India Forward Bloc
LPF Labour Progressive Federation 1970 DMK

AITUC (1920) is the oldest central federation; BMS has been the largest by membership in recent verifications.

34.4 Problems of Indian Trade Unions

TipSix Problems of Indian Trade Unions
Problem What it means
Multiplicity Too many small unions per workplace
Outside leadership Leaders are politicians, lawyers, professionals — not workers
Inter-union rivalry Competition for membership and recognition
Politicisation Affiliation to political parties dilutes economic focus
Financial weakness Low membership dues, poor finances
Low coverage Most Indian workforce in the informal sector — outside unions

34.5 Recognition of Trade Unions

Two questions: (i) Registration — voluntary, governed by the Trade Unions Act / IR Code 2020; gives legal personality. (ii) Recognition — separate question of which union the employer must bargain with. The IR Code, 2020 introduced a Negotiating Union mechanism: a single union with at least 51 per cent of workers becomes the sole negotiating union; otherwise a Negotiating Council with proportional representation.

34.6 Collective Bargaining

Collective bargaining is the process by which terms and conditions of employment are negotiated and settled between an employer (or employers’ association) and a trade union (or workers’ representatives). The Webbs introduced the term in 1891.

TipThree Working Definitions
Source Definition What it foregrounds
Sidney & Beatrice Webb (1891) “Bargaining undertaken by combination of workers, in contrast to individual bargaining.” Combination
ILO “Negotiations about working conditions and terms of employment between an employer and one or more workers’ organisations.” Process
Indian Institute of Personnel Management “A method of settling labour problems through bilateral negotiation between management and trade unions.” Bilateral

34.6.1 Features of collective bargaining

  • Group activity — at least one trade union and at least one employer.
  • Continuous and dynamic — runs across the contract life, not just at signing.
  • Flexible — varies with technology, market, industry.
  • Bipartite, with state in the wings — government may step in if bargaining breaks down.
  • Voluntary — its strength lies in mutual recognition, not coercion.

34.6.2 Forms of collective bargaining

TipFour Forms of Collective Bargaining
Form Description Example
Distributive (Conjunctive) Win-lose; over a fixed pie — wages, hours Annual wage settlement
Integrative (Cooperative) Win-win; expand the pie — productivity-linked schemes, training Productivity-linked bonus
Productivity bargaining Wage rise tied to productivity gains Engineering industry settlements
Concession bargaining Workers accept cuts to save jobs in distress Restructuring during recession 

flowchart LR
  D[Distributive<br/>Win-lose · Fixed pie] --- I[Integrative<br/>Win-win · Expand pie]
  P[Productivity<br/>Wage ↔ Productivity] --- C[Concession<br/>Wage cuts ↔ Job security]
  style D fill:#FFEBEE,stroke:#C62828
  style I fill:#E8F5E9,stroke:#2E7D32
  style P fill:#FFF3E0,stroke:#EF6C00
  style C fill:#FCE4EC,stroke:#AD1457

34.6.3 Levels of bargaining

TipThree Levels of Collective Bargaining
Level Where it happens Indian example
Plant / Enterprise Single establishment Most Indian private-sector settlements
Industry-level Industry-wide agreements Steel, banking, port sector wage negotiations
National-level Cross-industry minimum standards Indian Labour Conference recommendations

34.6.4 Process of collective bargaining

TipSix-Step Collective Bargaining Process
# Step What happens
1 Preparation Both sides gather data, set targets, identify reservation points
2 Opening / Charter of demands Union submits its demands; employer responds
3 Discussion / negotiation Iterative offer-counter-offer; concessions
4 Tentative agreement Negotiators reach agreement, subject to ratification
5 Ratification Union members vote; management approves
6 Administration / implementation Apply, monitor, grievance procedure

34.7 ILO and Indian Statutory Anchors

ILO Conventions 87 and 98 are the core conventions on freedom of association and the right to collective bargaining. India has ratified some core conventions but has not ratified Conventions 87 and 98 — a long-standing point of policy debate.

Indian statutory anchors covered earlier — the Trade Unions Act, 1926 (now in IR Code 2020), Industrial Disputes Act 1947 / IR Code 2020, Code on Wages 2019 — together provide the legal scaffold for trade unionism and collective bargaining.

34.8 Practice Questions

Q 01 Webbs Easy

The classic definition of a trade union as a "continuous association of wage-earners for the purpose of maintaining or improving the conditions of their working lives" is from:

  • ASidney and Beatrice Webb
  • BKarl Marx
  • CSamuel Gompers
  • DJohn Dunlop
View solution
Correct Option: A
Sidney and Beatrice Webb's History of Trade Unionism (1894) is the foundational text and source of the classic definition.
Q 02 Trade Unions Act Easy

India's first statute regulating trade unions was the:

  • AIndustrial Disputes Act, 1947
  • BTrade Unions Act, 1926
  • CFactories Act, 1948
  • DTrade Unions Act, 1947
View solution
Correct Option: B
The Trade Unions Act, 1926 — now consolidated into the IR Code 2020 — was India's first statute granting legal personality to trade unions.
Q 03 CTUOs Medium

Which is India's oldest central trade union organisation?

  • AINTUC
  • BAITUC
  • CBMS
  • DCITU
View solution
Correct Option: B
AITUC — All India Trade Union Congress — was founded in 1920, the oldest central federation. INTUC dates to 1947, BMS to 1955, CITU to 1970.
Q 04 CTUO match Medium

Match the central trade union with its political affiliation:

(i) INTUC (a) RSS / BJP
(ii) AITUC (b) Indian National Congress
(iii) BMS (c) CPI(M)
(iv) CITU (d) CPI
  • A(i)-(b), (ii)-(d), (iii)-(a), (iv)-(c)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(c), (ii)-(d), (iii)-(a), (iv)-(b)
  • D(i)-(d), (ii)-(a), (iii)-(b), (iv)-(c)
View solution
Correct Option: A
INTUC → Congress; AITUC → CPI; BMS → RSS/BJP; CITU → CPI(M).
Q 05 Distributive vs Integrative Medium

A wage negotiation in which one side's gain is the other side's loss is best classified as:

  • AIntegrative bargaining
  • BDistributive bargaining
  • CProductivity bargaining
  • DConcession bargaining
View solution
Correct Option: B
Distributive (or conjunctive) — win-lose over a fixed pie. Integrative (cooperative) tries to expand the pie.
Q 06 Recognition Medium

Under the Industrial Relations Code, 2020, a single union qualifies as the "sole negotiating union" of a workplace if it has the support of at least:

  • A25 per cent of workers
  • B33 per cent of workers
  • C51 per cent of workers
  • D75 per cent of workers
View solution
Correct Option: C
Under the IR Code, 2020, a single union with at least 51 per cent of workers becomes the sole negotiating union. Below that threshold, a Negotiating Council is constituted with proportional representation.
Q 07 Hoxie Medium

Robert Hoxie's classification of trade unions includes which of the following types?

  • ABusiness · Friendly / Uplift · Revolutionary · Predatory · Dependent
  • BPublic · Private · Cooperative
  • CPolitical · Apolitical
  • DIndian · Foreign · Multinational
View solution
Correct Option: A
Hoxie's five-fold classification: business, friendly / uplift, revolutionary, predatory, dependent.
Q 08 ILO Conventions Medium

ILO Conventions 87 and 98 — among the core conventions — concern:

  • AMinimum wage and overtime
  • BFreedom of association and the right to collective bargaining
  • CMaternity protection and child labour
  • DOccupational safety
View solution
Correct Option: B
ILO C87 — Freedom of Association and Protection of the Right to Organise (1948). ILO C98 — Right to Organise and Collective Bargaining (1949). India has not ratified them.
ImportantQuick recall
  • Trade union = continuous association of workers for advancing economic and social interests (Webbs, 1894).
  • Indian statute: Trade Unions Act, 1926 (registration) → now in IR Code, 2020.
  • Theories: Marx (revolutionary), Webbs (industrial democracy), Gompers (business unionism), Lenin (political), Hoxie’s five types.
  • Major Indian CTUOs: AITUC (1920) — CPI; INTUC (1947) — Congress; HMS (1948); BMS (1955) — RSS/BJP; CITU (1970) — CPI(M). AITUC oldest; BMS largest in recent verifications.
  • Problems: multiplicity, outside leadership, inter-union rivalry, politicisation, financial weakness, low coverage.
  • IR Code 2020 — sole negotiating union if 51 per cent support; otherwise Negotiating Council.
  • Collective bargaining types: Distributive · Integrative · Productivity · Concession. Levels: plant · industry · national. Six-step process: prepare → demands → discuss → tentative → ratify → administer.
  • ILO core conventions on freedom of association and CB: C87 (1948), C98 (1949) — India unratified.