WHY DO TRADE UNIONS OPPOSE PRIVATIZATION?

By Research Desk
about 8 years ago

 

By Ruma Dubey

IDBI Bank, beginning today, is on a 4-day strike.

Coal India was to go a strike from tomorrow; thankfully that has been deferred as of now.

In both the cases, the reason is the same – oppose the privatization move by the Govt.

In the Union Budget speech, the Finance Minister had stated that he will look at ceding control in IDBI Bank and bring down stake from 80.2% currently to less than 50%.

No dates, no floor price, nothing has been decided yet. But the Unions have worked themselves into a frenzy, putting in perspective their opposition and in many ways, the biggest obstacle for privatizing IDBI Bank.

Remember BSNL? It has been talked about for years and years, the divestment plan just gets passed on from one year to the other but divestment plans even never take off. The Union at BSNL has always very stiffly opposed any move by the Govt to sell stake. Surely tomorrow if Air India decides to sell stake, despite being a white elephant and draining away all the precious tax payers money, the Unions will fight tooth and nail and never allow it to happen.

Coal India sold a 10% stake on 31st Jan 2015 at a floor price of Rs.358, garnering Rs.22,557 crore. In November’15, the Govt said that it would go for another 10% stake in current fiscal but that did not happen on account of poor market conditions and Union opposition. Indian Railways cannot even think of privatizing or selling even a small 10% stake.

So the big question is – why do Unions oppose privatization? Or the other way of looking at this – why do most of feel that privatization is good? Well, the first and foremost thought that comes to mind is that efficiency will go up. We feel that better products and service will be delivered and that too within a set deadline. For banks, it could mean an increase in profits and that in turn could mean scope to expand further.

But for those employed, privatizations often means longer working hours, more responsibility and accountability. It also brings forth fears of job security and that probably is the single biggest reason – they fear the hire-and-fire policy of the private sector and feel that their jobs, which in a PSU are secure till they retire will no longer be so.

Does this mean that all trade unions then are Left-aligned or Communists? Actually most of the Unions are more Right than Left and they oppose not against the administration but as an ideology – it’s a trade union and hence it has to oppose privatization; it’s like one of the tenets of the union. Also, trade unions fear that once the organization gets privatized, their wings will be clipped as unions in private sector do not have as much freedom as those in PSUs to oppose anything and everything from recruitment to other union activities. Thus trade unions fear privatization on ideological as well as their own existential fears.

A company looks at ways to maximize its profits while the trade union looks to maximize the benefit of its employees. And it is here that opposition arises – the Union feels that the company will impinge on the objectives of the employees and trade union.

But the truth is that it is only a well-run company which can satisfy the needs of all the stakeholders – company, shareholders, customers and employees. And the Govt needs to concentrate more of its business – of running the country.

It is only if IDBI Bank stake sale goes through that the Govt’s other plan – consolidation of the 27 state run banks into six anchor banks – SBI, BoB, PNB, BoI, Canara Bank and Union Bank of India, will happen.

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