Earlier studies held the militant trade unionism of the 1970s and the early 1980s responsible for the increasing importance of unorganised manufacturing activities in West Bengal. This paper argues instead that this importance of unorganised manufacturing was not so much the result of weakening trade unionism and a vulnerable workforce, but the outcome of an implicit understanding between the trade unions and the management. This understanding allowed wage growth to continue in the absence of productivity growth, alongside the gradual reduction of permanent workers in favour of contract workers, and the farming out of production to the unorganised sector by firms.