Labour unions in emerging sectors

(MainsGS3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.)

Context:

In 2022, Indian start-ups including Byju’s, Ola, Unacademy, Vedantu, Chargebee, WhiteHat Jr, Udaan and CityMall and at the global level, Alphabet, Amazon, Meta, Microsoft, Twitter and Apple, among others, announced lay-offs.
Their reasons included restructuring, cost-cutting, automation, financial constraints, performance rating, adverse economic conditions and changes in the business model.

Impact on Indian professionals:

As per some industry insiders, between 30% to 40% of those laid off are Indian IT professionals, a significant number of whom are on H-1B and L1 visas.
The H-1B visa is a non-immigrant visa that allows U.S. companies to employ foreign workers in special occupations that require theoretical or technical expertise.
Technology companies depend on it to hire tens of thousands of employees each year from countries like India and China.
A sizable number of them are now scrambling for options to stay in the U.S. to find a new job in the stipulated few months that they get under these foreign work visas after losing their jobs.

The Hirschman model:

Despite announcements of massive lay-offs, such as by Tata Consultancy Services in 2015, have led to the birth of labour unions in this sector in India.
Further, the bad human resource policies and practices, too, have provoked or prompted workers to unionize.
But the rate of formation of unions and the union activities in this industry (on the supply side) do not instill confidence in the minds of employees.
Compared to conventional industries such as manufacturing, public utilities, and conventional financial sectors such as traditional banking and insurance, forming unions in modern and emerging sectors is much more difficult.
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 of IT and IT-enabled Services:

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, so they stay on and are loyal to the company and the industry.
If these conditions are violated, they switch to other organisations 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 stigmatised (voice). And many survive by simply keeping quiet (loyalty).

Fighting on multiple fronts:

Unions in the IT sector have to deal with both Indian and Western behemoths, which is a huge ask.
The state obviously needs MNCs to stay on in India but start-ups don’t have the ideal conditions for unionisation and employees would rather accept low-paying jobs than unionise.
Thus, trade unions are fighting on multiple fronts as they are struggling to retain historical labour rights, secure social security for the millions of informal workers and fight the adversities created during and after COVID-19.
Many garment and electronics industries, for instance, which have wide supply chains, violate labour rights but unions succeeded only few times in securing marginal rights.

Conclusion:

Unions need to be strengthened and encompass all workers and be the vanguard of workers’ mobilisation as they are the only historically tested collective labour institutions.