Mobilizing Restraint: Democracy and Industrial Conflict in Post-Reform South Asia

7. Conclusion: Theoretical and Policy Implications

CHAPTER 7 Conclusion Theoretical and Policy Implications Like most developing democracies,national and regional governments throughout South Asia have struggled to manage the social tension and conflicts inherent in periods of rapid economic transition.There has been great variation in the nature and effectiveness of these attempts. Some, like the southwestern state of Kerala,provide examples of how democratic governmentscanforgeclasscompromisewithoutsubstantiallyundermining worker interests. Others, like Sri Lanka, have only fomented greater instability through their efforts to eliminate working-class opposition to economic reforms. This book has demonstrated that the effectiveness of government strategies in managing industrial conflict is directly related to the depth of political democracy. Competitive elections promote the development of mutually beneficial union-party ties that enable parties to mobilize worker restraint.Robust freedom of association and collective bargaining (FACB) rights, also a feature of mature democracies, serve as the foundation for the institutionalized resolution of worker grievances. The analysis upends conventional wisdom regarding state-labor relations and economic development. While few would advocate the outright repression of organized labor, employers, social scientists, and policymakers have frequently argued that the political mobilization of the working class hinders economic growth. Employers express concern that union partisan ties result in undue political interference in industrial relations. Economists and international development organizations denounce union advocacy of protective labor legislation and opposition CONCLUSION 161 to neoliberal reforms. Although these concerns do not equate to union smashing, they frequently serve as a justification for the political repression and exclusion of organized labor. The results of this study suggest reasons to be more optimistic about the ability of democratic countries to balance the interests of organized labor against those of a broader constituency. After all, balancing competing interests and priorities is precisely what democracy is designed to do. Ties between unions and major political parties do not promote the undue influence of a distributional coalition so much as they contribute to the stability of the industrial relations environment. This is because major parties internalize the externalities of affiliated organizations, including unions. Moreover, this moderating tendency is only enhanced by competitive party systems and elections. Also contrary to the conventional wisdom, this study demonstrates how protective labor legislation benefits economic performance. Specifically , legislation facilitating state intervention in industrial disputes boosts investment, capital deepening, productivity, and industrial output . This is because such legislation helps to institutionalize industrial conflict and reduces the tendency of employers to rely on sweated labor. In contrast, repressive “public-utilities” legislation, designed to prevent strikes in certain industries, has exactly the opposite effect of legislation that facilitates state intervention in industrial disputes. Such legislation undermines FACB rights, thus enabling employers to exploit workers and undermining institutionalized grievance resolution. South Asia is in many ways the perfect laboratory for studying the effects of party-union ties in developing democracies. As the world’s most populous democracy and the developing world’s most stable democratic country, India is arguably the most important case for understanding the dynamics of state-labor relations in a developing democracy. South Asia is also home to less stable democracies and to countries that have been governed for long spells by authoritarian regimes. The less democratic experiences of these countries permit a comparison of the effects of India’s voluntary union-party ties with the strategy of political domination , repression, and exclusion of organized labor typically practiced by authoritarian and hybrid regimes. In this book, India’s democratic experience was contrasted with that of Sri Lanka, where state-labor relations were characterized by a high degree of repression and exclusion during the 1980s and early 1990s. 162 CHAPTER 7 The history of Sri Lankan state-labor relations shows how the forcible exclusion of the working class from politics can give rise to a union movement dominated by narrow interest unions (NIUs), which tend to be guided by the interests of one or a handful of union leaders. Such unions behave more aggressively than unions with ties to major political parties because the leadership benefits from a show of force but is not constrained by the broader interests of a political party. NIUs are therefore more likely to present larger demands and to utilize violent and extreme forms of protest in order to enhance their reputation for toughness and extract larger rents from the management. The remainder of this chapter explores some additional implications of these findings and addresses some remaining issues. I first discuss the theoretical implications for the...