Name: Vinayak Bhomkar

Roll No: E200905

Subject: Industrial Relations
Topic: Internal and external trade unions

Trade Unions

Trade Union is a group of people who joins hands in order to fulfill their goals and benefits. All the
members of the organization or union have to pay annual subscription and their interests will be
secured by the union. There is one Union leader who talks with different government departments
on the behalf of all members of the union to secure their interests. The negotiation between the
employers and trade unions is called industrial relationship. There are different types of trade
unions including General Unions, Industrial Unions, Skill Unions and even white collar unions.  They
are working in different styles like skill unions which represent rights of skilled unions. 

The industrial unions represent the rights and protection of workers related to industries or any
particular industry. So unions vary from industry to industry and organization to organization. Every
union has some mission and objectives which is different from other unions. The motive of these
unions is to bargain from the top management of any organization for wages, allowances and
bonuses and it is called collective bargaining. Modern trade unions are not limited to just
increments and pay but they are real advocates of workers' rights. So this is the working of the
trade unions. 

Advantages of Internal trades unions

 Increase wages for its members.
Industries with trade unions tend to have higher wages than nonunionised industries.
 Counterbalance Monopsonies.
In the face of Monopsony employers, Trades Unions can increase wages and increase
employment. Monopsony employers are those who have market power in setting wages
and employing workers.Traditionally, monopsonies occur when there is only 1 firm in a
town, or type of employment. However, in modern economies, many employers have a
degree of market power (monopsony).
 Represent Workers
Trades Unions can also protect workers from exploitation, and help to uphold health and
safety legislation. Trades unions can give representation to workers facing legal action.
 Productivity deals.
Trades Unions can help to negotiate productivity deals. This means they help the firm to
increase output; this enables the firm to be able to afford higher wages. Trades unions can
be important for implementing new working practices which improve productivity.
 Important for Service Sector.
Modern economies have seen a fall in trade union power. This is because of a decline in
manufacturing and rise in service sector employment. Service sector jobs tend to more likely
to be part time and temporary; unions are needed to protect workers in these kinds of jobs.
There are few disadvantages of internal trade unions from the point of view of their members.
However, the public will at times feel angered by Trade Union action if it affects their daily lives –
for example during the train drivers’ dispute.
 If labour markets are competitive, higher wages will cause unemployment. Trades unions
can cause wages to go above equilibrium through the threat of strikes etc. However, when
the wage is above the equilibrium it will cause a fall in employment. 
 Trades unions only consider the needs of its members; they often ignore the difficulty of
those excluded from the labour markets, e.g. the unemployed. 
If unions go on strike and work unproductively (work to rule) it can lead to lost sales and
output. Therefore their company may go out of business and be unable to employ workers
at all. 
 If unions become too powerful they can reduced for higher wages, above the rate of
inflation. If this occurs it may contribute to general inflation. Powerful trades unions were a
significant cause of the UK's inflation rate of 27% in 1979.

External Trade unions

All India Trade Union Congress (AITUC) was founded in 1920 with Lala Lajpat Rai as its first
president. Upto 1945 Congressmen, Socialists, Communists worked in the AITUC which was the
central trade union organisation of workers of India. Subsequently the trade union movement got
split on political lines.

Aims and Objectives

  
 To establish a socialist state in India;
 
 To socialize and nationalize the means of production, distribution and exchange as far as
possible;
 
 To ameliorate the economic and social conditions of the working class;
 
 To watch, promote, safeguard and further the interests, rights and privileges of the workers
in all matters relating to their employment.
 
 To secure and maintain for the workers :
    The freedom of speech
  The freedom of press
  The freedom of association
  The freedom of assembly
  The right of strike ; and
  The right to work or maintenance
 
 To co-ordinate the activities of the trade unions affiliated to the AITUC;
 
 To abolish political or economic advantage based on caste, creed, community, race or
religion; to fight against all forms of social oppression and injustice;
 
 To fight against all forms of atrocities against women and harassment at place of work.
 
  The AITUC shall endeavour to further the aforesaid objects by all legitimate, peaceful and
democratic methods such as legislation and, in the last resort, by strikes and similar other
methods, as the AITUC may, from time to time, decide.

THE MINIMUM WAGES ACT, 1948

Wage is nothing but the price of labour sold by labourers to employers. Its rate is determined by
the forces of demand & Supply in the market. Since supply of labour is high in the Indian market
and the rates are low, Government enacted The Minimum Wages act to fix the minimum wage
rate to be paid by the employer.
The purposes of this act are:
 To empower the government to fix or to revise minimum rates of wages in the Scheduled
Employments i.e. those employments that are listed in the Schedule Wages to be paid in
cash but where a part is paid in kind, government may allow the continuance of such
wages. Example of payment of wages in kind includes agricultural products
 Wage rates may be fixed on hourly, daily, monthly basis Minimum rates of wages may
differ from employment to employment, from location to location and also amongst
different classes of workmen (Adults, children, adolescents) It is one of the most flexible
legislations and can be very seldom challenged in the Court of Law.

There are two alternative procedures for fixing or revising minimum wage rate, out of which the
government can adopt any one.
Committee method: Under this method, Government forms a tripartite committee of employers,
employees and independent persons (mainly Government officers). This committee examines the
prevailing situation in Industry and makes recommendations based on that. On receipt of such
recommendations, government fixes the minimum wage rate with or without modifications.
Notification method: Under this method, the government itself suggests the minimum rate of
wages for an employment. It makes a proposal and gets it notified in the official gazette for
information of all concerned. After 2 months of wait for any suggestions/recommendations by
employments, government takes up the proposal in light of the comments it receives and finalizes
it with/without modifications.