Date: 10/02/2023

Relevance: GS-2: Development processes and the development industry —the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders.

Key Phrases: Amazon Labour Union, labour unions, emerging sectors, National Labour Relations Board, Hirschman model, Exit-voice-loyalty model, Collective Bargaining Power, Job Security, multi-national corporations.

Why in News?

• There have been many reports of layoffs in the last few months, especially in emerging sectors.
• Lay-offs have been taking place not only in India but in major economies like the U.S. too. Large, medium and small enterprises as well as start-ups have let go of dozens or even thousands of workers.

Major reasons for the lay-offs:

• Impact of COVID-19 pandemic
• Decreased investment
• Decreased demand for goods and services
• Increased competition
• Changes in business strategy
• Automation and technology advancements
• Re-evaluation of company goals and priorities
• Mergers and acquisitions
• Financial difficulties
• Changes in government policies and regulations

The Amazon story:

• Labour Union in Amazon:
  • Amazon workers at the warehouse at Staten Island called JFK8 succeeded in forming the Amazon Labour Union.
  • Amazon reacted by filing numerous objections with the National Labour Relations Board, the federal body that protects the rights of private sector employees to join together.
  • On the other hand, employees at the warehouse near Albany voted overwhelmingly against unionisation in October 2022 as many of them were sceptical of the bargaining power of a union vis-à-vis a giant like Amazon.
• In India:
  • Amazon shut down Amazon Food and Amazon Academy. It retrenched workers in the Indian facility in a gradual manner.
  • The Deputy Chief Labour Commissioner in Bengaluru served a notice seeking information from the company.
  • But it is well-known how seriously employers, especially multi-national corporations (MNCs), take labour departments; they ignore conciliation meetings more often than trade unions.

The Hirschman Model:

• Difficulty in the formation of trade union:
  • Start-ups hardly have trade unions in their facilities and so retrenchments in these companies go uncontested.
  • Compared to conventional industries such as manufacturing, and public utilities, and conventional financial sectors such as traditional banking and insurance, forming unions in modern and emerging sectors is much more difficult.
• Exit-voice-loyalty model:
  • Long ago, Freeman and Medoff examined the effect of trade unionism on the exit behaviour of workers in the context of the ‘exit-voice-loyalty’ model of Albert Hirschman.
• Case study of the IT sector:
  • On the demand side, the IT and IT-enabled Services employees felt no need for trade unions as unions are typically associated with manual labour, while IT employees are associated with “elitism” and “professionalism”.
  • It is believed that IT employees do not need trade unions as they have competitive compensation pay packages, supposedly good conditions of work and a mechanism to address grievances. And so, they stay on and are loyal to the company and the industry.
  • If these conditions are violated, they switch to other organizations as they have the required skill sets (exit); hence, labour turnover in this sector has been rather high.
  • They do not collectively bargain or strike or resort to legal action as middle-class employees who go to court would be stigmatized (voice). And many survive by simply keeping quiet (loyalty).

Importance of Labour Unions in Emerging Sectors:

• Job Security and Protection against Mass Lay-offs:
  • Labour unions play an important role in advocating for job security and protecting workers against mass layoffs, particularly in emerging sectors where layoffs may be more widespread.
• Negotiation of Severance Packages:
  • Labour unions can negotiate with employers to provide adequate severance packages for workers affected by mass lay-offs, helping to mitigate the financial impact of job loss.
• Support for Re-employment and Career Development:
  • Labour unions can provide support and resources for re-employment and career development for workers who have been laid off, helping them to find new job opportunities and secure their financial future.
• Advocacy for Workers' Rights and Protections:
  • Labour unions can use their voice and influence to advocate for workers' rights and protections against mass lay-offs, working to prevent layoffs and ensure that workers are treated fairly and equitably.
• Collective Bargaining Power:
  • By pooling their resources and bargaining power, labour unions can negotiate with employers to secure better wages, benefits, and working conditions for workers, making them less vulnerable to layoffs and more able to secure their financial future.

Conclusion:

• Labour unions play a crucial role in emerging sectors by advocating for the rights and interests of workers.
• In industries such as technology and renewable energy, where working conditions and job security may be uncertain, unions provide a voice for employees and negotiate fair wages, benefits, and working conditions.
• Additionally, labour unions also work to address issues such as diversity, equity, and inclusion in the workplace.
• However, the growth of these industries has not always been met with a corresponding increase in union membership, and unions must continue to adapt to the changing landscape of work to remain relevant.
• Nevertheless, the role of labour unions in emerging sectors remains critical for ensuring that the benefits of technological and economic progress are shared equitably and sustainably among all stakeholders.

Source: The Hindu

Mains Question:

Q. Examine the role of labour unions in emerging sectors with respect to their impact on workers' rights and job security.