Industrial Management Dr. Aravind Banakar –

Industrial Management CASE 3 (20 Marks) Changing role of trade unions The curtain has at last come down on one of the most famous marquees in the motorcar industry, with MG Rover finally shutting down production earlier this month. A company that once employed 40,000 people in the British Midlands, with an equal number employed in the factories of suppliers, had been forced to scale down its operations over the years. But even skeletal operations with 4,000 people has now ceased. It is an example of what destructive trade unionism can do to an industry. Arthur Scargil in the 1980s set out to destroy industry in the Midlands with his brand of militant and destructive trade unionism.

Finally Mrs Thatcher stood up to him and showed him the limits to which trade unions could push industry. She privatised industries and Scargil lost his power base, which was mainly in public sector heavy industries. Successive governments in Britain after Mrs Thatcher have refused to bail out public sector undertakings with subsidies and grants. This has resulted in Britain transforming itself from being the sick man of Europe to one of the more dynamic economies in the West. In India too we have had examples of the Arthur Scargil brand of trade unionism. What Datta Samant did to the cotton textile and engineering industries in Mumbai was equally devastating. Almost all the textile mills in the city closed because of the unreasonable demands made by trade unions under Datta Samant. India has the advantages of (a) growing both long staple and short staple cotton and (b) a huge domestic market.

So it declined and became terminally ill. Trade unions are a legitimate system for organizing workers and to voice their rights and grievances. Without them companies would become either too paternalistic or too dictatorial. Responsible unions help to create a middle path in the relationship between management and labour while maintaining the responsibilities of the former and the dignity of the latter. Where things go wrong is when the management becomes authoritarian, especially in owner/family managed companies, or when a trade union leader allows emotion and ego to overcome reason. Fortunately today, workers have become better informed and aware of the economic forces that impact their industry. The media has helped to create much greater economic awareness. So it is not so easy to mislead them. Managements too have become more sensitive and skilled in handling relationships with employees.

This is true of even family-owned and managed businesses. TVS [Get Quote] in the South is a prime example of how a large family-managed industrial group has successfully managed its relationship with employees through enlightened management. There are more such examples in other parts of the country. Perhaps the labour departments of governments at the state and the Centre should sponsor the institutes of management to do case studies of companies that have built up such successful relationships. Instead of merely administering rules and labour laws, these government departments could also act as apostles of good practices in the field. As the skill levels and educational qualifications of employees advance, the role and significance of trade unions tend to diminish. This is because (a) employees are able to represent their own case and (b) managements are more sensitive to the needs of individual employees, whose intellectual skills become almost uniquely valuable. This is already happening in the sunrise industries based on brainpower such as IT and telecommunications.

Questions:- 1.What do you know about changing role of Trade Union activities? 2. What is the role of responsible Trade Unionism? 3. Is Privatisation a challenge for Union activities? 4. What is the lesson learnt from the IT sector?

Global Study Solutions Dr. Aravind Banakar –