Anatomy of Collective & Bargaining Process: A case study of mesh manufacturing organization in Sri Lanka.

Abstract

Collective bargaining process has become a passion in today's context between employers and employee's trade unions on resolving employee’s related issues. Both parties do not willing to lose as both are strong in power. Hence collective bargaining process tends to conclude with a win-win situation as an integrative solution. Collective bargaining process is a formal process of agreement having between two parties of employer and employee. The anatomy explored many anthropological scenarios and it unveil facts of contribution and impact to the organizational growth when having collective bargaining agreements. Employer and employee relationship makes better organizational growth which is the most significant fact expected by having collective bargaining process. Both parties were empowered by different supportive forces such as authority, synergy, financial, political etc. Proactive management practices help one way to resolve human related issues within the organization. The case study explored the inside story of the collective bargaining process associated with the experiences of steel mesh manufacturing industry in Sri Lanka. The company had a history of 50 years excellence in mesh manufacturing in Sri Lanka. The organization was started with few workers in 1965 and later expanded to 200 employees over a period of 50 years. The startup was with entrepreneurship and later incorporated with intra-preneurship. The startup was chaotic and stressful. While the organization was slightly picking the market by building a expandable product portfolio, issues related to human resources also were started booming. Organization expanded the employee base with capacity augmentation in late 90s. The increase of permanent labour force in the organization was a wave for the startup of a trade union. Hence employees of the organization were started a trade union affiliated to Sri Lanka Freedom General Workers Union in 1994 having around 80% of work force of the organization as members.The main concern on having collective bargaining agreements was to adjust the salaries par to the country inflation. Therefore two types of increases had been practiced by the organization for signing agreements during last two decades. Those increases were prepared based on lump sum and percentage of their current salaries. There were six collective bargaining agreements had been signed during the period of 1995 to 2015 by the organization with Trade unions. The first collective bargaining agreement was signed in 1996 taking into account of percentage increase proposed by a retired labour officer. Then latter collective bargaining agreements also had been considered on same increases until 2010. That had made a huge anomaly of salaries of employees recruited after years. That affected severely on retaining employees (operative category) in the organization in later stage. The government had announced a revision of minimum wages in October 2012. Again revised in 2013 due to high scarcity of skilled technical personnel. The organization had been categorized under engineering trade under wages board act 1947. The highest minimum wage was introduced for that category by Department of Labour due to high labour demand in the industry. The increase of salary proposed by the government in 2012 were paid as a separate payment for all employees by the organization. Later in year 2013 salaries of all employees were revised considering all the revisions made by the government in 2012 and 2013 in addition to the increases proposed by collective bargaining agreement. CBA negated intermediate increases imposed by government unless it exceed proposed minimum salary of all employees. The period of 2010 to 2013 branch union was weak in strength and leadership. Hence Employer Federation of Ceylon proposed to repudiate the union agreement. The repudiation of the branch union in 2013 made a jolt to reunite the branch union again in 2014. A letter informing a reformation of trade union was received in February 2014. Since Membership was more than 40% of employees, the management of was compelled to recognize the trade union. A check off agreement was signed in April 2014 and subsequently all employee related issues were discussed with participation of trade union until it was dissolved in 2015. There were plenty of demands forwarded by the trade union to the organization through their parent union. All correspondence were made by two intermediate parties of parent union and Employer Federation of Ceylon. The increase of salaries incurred considerable amount of increase in cost of production. Following table depict the additional cost increase over the period of last eight years. Amount increase in cost of production was not be bearable to the organizations, and the organization found difficult to survive under high competition in certain periods. Annual expenditure on salary increases Year 2007 2008 2009 2010 2011 2012 2013 2014 Salary Increase % 20% 7.5% 7.5% 20% 7.5% 7.5% 15% 10% Total Exp. (million) 2.683 1.207 1.298 3.721 1.674 1.800 3.871 4.510 Sourced: Annual report EFC & Authors survey 2017 The Business of mesh manufacturing was started with entrepreneurship at the inception. The entrepreneur’s tacit knowledge involved in managing human and work environment of the organization. That created an opportunity for trade union on demanding their basic requirements according to the need hierarchy. The dyadic scenario of entrepreneurial and intrapreneurial culture gives better result to have better relationship and faster growth which occurred in later years in the organization. The anatomy of collective and bargaining agreement disclose many avenues on thinking further on managing business environment effectively. There are many factors contributed on having CBAs in local industries. Both parties employer and employee has to think and understand of their accountabilities and responsibilities. Humans are considered as resources in modern management. Organizations should take proactive rapid measures solving issues especially on human related. Concern to literacy level the older crowd has a very low level of qualifications in the organization but new generation has far better level of education. That reflect on radical decision making. Organization should work proactively with employees maintaining close relationships. The organization had started Quality circle projects to address issues prevailing in the operation in 2015 which was most successful to have better relationship and maintaining dynamism throughout. Many annual events were organized to break monotonous life of working. Rewards and recognition enhanced the motivation level of employees in recent years. The study discussed advantages and disadvantages of two methods of salary increases lump sum & percentage in collective and bargaining agreement. The application of best suitable method to be selected after a proper study depending on economical and social factors. The integrative approach of collective bargaining gives a win-win solution in many occasions, however it takes a long period to have the best solution. In other side that makes a huge loss to the organization by creating various disciplinary issues while disrupting industrial harmony. The responsible government body, Department of Labour had made several legitimate framework for resolving issues by the act of collective bargaining agreement 1947 (No 98) in 1978. In 1999 the right to collective bargaining was strengthened after making it mandatory to bargain with unions which had a 40% membership. Also the amendment introduced a list of unfair labour practices by employer for industries for their negotiations however that was not strong enough to support the business organizations under various political influences. The trend of Joint consultation committees has become popular within the industry nowadays as latest trend. That has no effect of political intervention and department of labour monitored the performance and progress. Joint consultancy committees had been accepted by some of manufacturing industries instead of trade unions in Sri Lanka.