The role of labor unions in emerging sectors

Context: 

There have been many reports of lay-offs in the last few months, especially in emerging sectors.

Issues?

• • Lay-offs have been taking place on a large scale in the World.
  • Large, medium and small enterprises as well as start-ups have let go of dozens or even thousands of workers. 
  • In 2022, start-ups including Byju’s, Ola, Unacademy, Vedantu, Chargebee, WhiteHat Jr, Udaan and CityMall announced lay-offs.
  • Their reasons included restructuring, cost-cutting, automation, financial constraints, performance rating, adverse economic conditions and changes in the business model. 
  • At the global level, Alphabet, Amazon, Meta, Microsoft, Twitter and Apple, among others, have let go of employees. 

• • Amazon cited an uncertain economy and rapid hires in the past as reasons for retrenchment.

The Amazon story:

• Amazon workers at the warehouse at Staten Island called JFK8 succeeded in forming the Amazon Labour Union under the leadership of Chris Smalls, who had been fired from the company. 
• 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. 
• In India, Amazon shut down Amazon Food and Amazon Academy. It retrenched workers in the Indian facility in a gradual manner. 
• The Nascent Information Technology Employees Senate, which works for the welfare, rights, justice and empowerment of IT (Information Technology), BPO (business process outsourcing) and KPO (knowledge process outsourcing) professionals in India, has alleged that Amazon violated labor laws. 

The Hirschman model:

• Long ago, Freeman and Medoff examined the effect of trade unionism on the exit behavior of workers in the context of the ‘exit-voice-loyalty’ model of Albert Hirschman. 
• 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. 
• 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. 
• Bad human resource policies and practices 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.

A huge ask:

• Unions in the IT sector have to deal with both Indian and Western behemoths, which is a huge ask. 
• Start-ups don’t have the ideal conditions for unionisation.
• Employees would rather accept low-paying jobs than unionise.
• 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. 
• Industrial accidents, too, are frequent. 
• Many garment and electronics industries, for instance, which have wide supply chains, violate labour rights. 
• Unions have sometimes succeeded in securing marginal rights. But there is only so much that they can do. The Amazon story is going viral in the 500 million labour market in India where hardly 10% of the total workforce is unionized.

Conclusion:

• This is not to brush aside the fact that unions need to be encompassing of all workers and be the vanguard of workers’ mobilization. After all, they are the only historically tested collective labor institutions.

                                                                                                           News Source: The Hindu