Unions must rethink their role in industry

The unanimously accepted view is that trade unions’ core duty is to look out for the economic welfare of members, an objective they have aspired to meet by negotiating for increased wages above competitive market rates.

Unions have contributed significantly to improved the welfare of workers — especially during the Industrial Revolution era, when they fought against unsafe working conditions, unreasonable working hours and then-prevalent child labour.

They are also credited for advocating health benefits and aid to workers who have been injured while on duty or even retired.

However, times have changed.

Although at the base of their core function are well-intended principalities of socio-economic progress, the ground beneath has shifted and unions will have to adapt.

In the 21st Century, there are more job-seekers than those offering jobs and the free market principle of supply and demand, if applied, clearly gift-wraps the leverage to the employers.

Therefore, unions’ insistence on increased wages regardless of other significant factors could mean some will get better terms as a larger majority have no jobs.

Union leaders are battle-hardened, aggressive hardline negotiators but this perceived strength is sometimes their greatest undoing.

They have vividly displayed a lack of understanding in business dynamics, macroeconomic trends and general financial basics, all of which directly affect their members’ welfare.

For instance, since tea was introduced in Kenya more than a century ago, it has been a top foreign exchange earner.

Last year, the sector contributed an estimated Sh120 billion, up from Sh100 billion in 2014.

Farmers received record bonuses and unprecedented compensation rates; hence the overall message that the sector couldn’t be better.

Which is far from the truth as the reports failed to acknowledge that the bonus was based on higher crop quantities, not unit earnings.

OPERATIONAL COSTS
Furthermore, the sector experienced some turbulence.

Most notable was a strike by 26,000 employees under the Kenya Tea Growers Association member estates in June whose devastating outcome was massive loss of revenue estimated at Sh570 million after 10.4 million kilogrammes of tea went unpicked.

Moreover, a recent ruling by the Employment and Labour Relations Court awarding workers accumulated contested pay rise by 60 per cent would have brought unprecedented increase to the already high labour and production costs.

Smallholder farmers would have been forced to raise their plucking rates to sustain workers, leading to a decrease in business.

Tea growing would become very costly, pushing out many players.

The country would not only lose its standing in the global market but also significant earnings.

Then, there wouldn’t be calls for increased pay because multitudes would be out of a job by default, thrusting thousands of households into abject poverty.

Attributable to the high production costs, three fifths of tea sector revenue goes to operational expenses, a major setback as tea prices at the Mombasa auction have plummeted, and should production costs surpass revenue, then it would signal the beginning of the end of the robust industry.

SAFE
Besides paying taxes, the direct benefits of tea firms to the surrounding communities are immense.

And given the abundance of regulation on specific matters, some of which were hitherto under the unions’ mandate, it is clear that the modern-day worker is even better protected by the State.

In this era of increased automation and technology, where jobs are mainly short-term or contractual all the way to freelance, these are, indeed, trying times for trade unions that build a reputation as defenders of the oppressed working class.

It is also in question how they accommodate the New Age demographic, the millennials.

Mr Kiarii, the CEO of Kenya Tea Growers Association (KTGA), has over 26 years of experience in the agricultural sector