industrial relations final
DESCRIPTION
Indian Industrial RelationsIndian Industrial RelationsTRANSCRIPT
Korea Institute for International Economic Policy
Indian Industrial Relations
Mai Thi Nguyet Anh
Vietnam
Seoul, January 28th 2013
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Table of Contents
1 Introduction.........................................................................................................................2
1.1 Definition.....................................................................................................................2
1.2 Features........................................................................................................................2
1.3 Objectives of Industrial Relation.................................................................................3
1.4 Main aspect of Industrial Relations.............................................................................4
2 Indian industrial relation......................................................................................................4
2.1 The six phases of industrial relations in India.............................................................5
2.1.1 The first phase (Mid 19th century – 1920)................................................................5
2.1.2 The second phase (1920 – Independence 1947)......................................................5
2.1.3 The third phase (1947 to mid 1960s).......................................................................6
2.1.4 The fourth phase (1970s).........................................................................................8
2.1.5 The fifth phase (1980s)............................................................................................9
2.1.6 The sixth phase (1990-2000).................................................................................10
2.2 Importance of industrial relations..............................................................................11
2.3 The future of industrial relation in India...................................................................12
3 Recommendation...............................................................................................................13
4 Conclusion.........................................................................................................................13
5 References.........................................................................................................................14
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1 Introduction
In the modern industrial society, it is clear that industrial relation is one of the most
complicated issues which attracts the attention and concern of authorities, governments and
researcher all over the world. This phenomenon of a new complex industrial set-up directly
contributes to the emergence of ‘Industrial Revolution”. Simple manufacture process, small
scale investment, local markets and small number of employees are all the characteristics of
the pre-industrial revolution. Industrial relations system is built by the process of
industrialization with three main factors: management, labor union and the government. They
develop a number of rules, codified in the institutions, which are used to govern the
workplace. Industrial relations assume that labor markets are not perfectly competitive and
thus, employers typically have more power than employees. It is clear that that there are
apparent conflicts of interest between employers and employees (for example, higher wages
versus higher profits) under the policy environment. Therefore, the challenge for industrial
relations nowadays is to reestablish the connection among those factors with broader
academic, policy, and business worlds.
1.1 Definition
Industrial relations is the relation between the management of an industrial enterprise and its
employees or trade union. It is necessary that both parties promote a harmonious relationship
to maximize the performance of the production process in the organization. There are many
ways to sustain a good relation between employer and employee such as avoiding any dispute
or conflict and nurturing the mutual understanding. It is significantly crucial to maintain a
good industrial relation within the organization to create a favorable environment for better
performance and higher productivity.
In fact the concepts of Industrial Relations are very broad-based, drawing heavily from a
variety of discipline like social sciences, humanities, behavioral sciences, laws etc.
1.2 Features
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The existence of two parties, management and labor is an indispensable condition for the
emergence of industrial relations. Without the interaction of those two parties, this
relationship cannot exist. In another word, it is the industry, which provides the environment
for industrial relations.
It is clear that conflict and cooperation exist together within industrial relations. Therefore the
purpose of industrial relation study is analyzing attitudes, relationships, practices and
procedure developed by those two parties to diminish or find an effective solution for the
conflicts.
The coexistence of labor and management makes it clear that both parties do not work
separately but do work as parts of a big organization. It is an interactive relationship, one
parties have a noticeable influence on the other. Therefore, country’s socio-economic and
political environment, nation’s labor policy, rules regulations agreements, attitude of trade
unions workers and employers are also included in industrial relations study.
Industrial Relation also involves the issues about conditions of labor - management’s co-
operations as well as the requirement to activate and promote the desired co-operation from
both the parties.
1.3 Objectives of Industrial Relation
Encourage the mutual understanding between two parties to preserve the interest of labor and
management.
Develop the harmonious relations and minimize the industrial disputes (strike, lockouts, etc.)
to ensure the highest productivity of workers as well as the industrial progress of a country
Diminish the turnover and absenteeism to raise productivity, especially when the national
economy reaches the full employment situation.
Promote the quality and democracy among parties based on profit sharing and managerial
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decisions to guarantee the benefit of the industry and the country as well.
Utilize the efficiency of government control in term of imposing policy, regulation as well as
building the national plans.
Improve the economic conditions of workers in the context of industrial managements and
political condition.
1.4 Main aspect of Industrial Relations
- Labor Relations (between union and management).
- Employer-employees relations (between management and employees)
- Group relations (between various groups of workmen).
- Community or Public relations (between industry and society).
- Promotions and development of healthy labor-managements relations.
- Maintenance of industrial peace and avoidance of industrial strife
- Development of true industrial Democracy
2 Indian industrial relation
In the area of globalization and international economic cooperation, the industrial relations
system in India has encountered many problems for decades which make the country under
the pressure. The main pattern of the whole system which was established before
independence remains almost unchanged. It is undeniable that government which historically
has a close relationship with unions plays a vital role as the coordinator of this highly
centralized system. However, the broad influence of the government on the system has shown
a negative impact in developing experience in collective bargaining.
This research provides an overview about the evolution of industrial relations in India in the
context of economic change. Indian industrial relations nowadays has to face to a variety of
challenges including the structure of the Indian labor market, the overwhelming size of the
informal or `unorganized' workforce, and its location outside the industrial system. Women
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workers, union movement failure and how to address their needs is also one of the essential
issues in concern. It is significantly important and imperative to build a system that involves
all workers and increase the number of working age people over the next decade.
2.1 The six phases of industrial relations in India
2.1.1 The first phase (Mid-19th century – 1920)
It was the time India was under the British Government control. The British Government
released many regulation and policy such as enforcing penalties for violating or breaking
contract to limit the competitive advantages of indigenous employers against the British
employers. A variety of policies and legislation were adopted during the latter half of the
nineteenth century which became the basis of the emergence of industrial relations in India.
Many changes arose in social, economic and political conditions after the end of the First
World War. Since the workers wage was not able to cover the rising living expense, there was
intense labor unrest. The constitutional development in India led to the election of
representatives to the Central and Provincial legislatures who took a leading role in initiating
social legislation. The establishment of International Labor Organization (ILO) in 1919 as
well as the emergence of trade unions in India, especially the foundation of All India 'Trade
Union Congress (AITUC) in 1920 had a great and substantial influence on the labor
legislation and industrial relations policy in India.
2.1.2 The second phase (1920 – Independence 1947)
Improving working condition as well as providing the social security benefits was the main
focus of the government policy after the First World War which brought out the
implementation of a range of new policies. The Trade Disputes Act, 1929 aimed at providing
conciliation machinery for the industrial disputes. During that time, The Royal Commission
on Labor (1929-31) made a survey to enquire the problem of Indian worker in term of
working condition (health, safety, and welfare) and gave out some specific recommendations
to solve the shortcomings.
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The Second World War and its serious situation forced the government to maintain the
satisfied labor force to ensure the highest performance of production. The government control
therefore had a broader influence and power on industrial workers in term of regulating the
condition of work and welfare. There were two-fold action in this regard namely, (i) statutory
regulation of industrial relations through the Defense of India rules and the orders made
thereunder; and (ii) bringing all the interests together at a common forum for creating labor
policy
One of the most important developments in Indian industrial relation was the tripartite
consultative system which showed the faith of India in the ILO's philosophy and objectives.
The need of tripartite labor machinery on the pattern of ILO was emphasized by the Royal
commission of Labor in the early of 1931 but the first step to make it enforced was not taken
until 1942. 1942 was marked with the first tripartite labor conference held at New Delhi
under the Chairmanship of Dr. B.R. Ambedkar. Two organizations, namely, the Indian Labor
Conference (ILC) and the Standing Labor Committee (SLC) attended this conference to
develop a full-fledged system for labor and management.
The objectives set at the time of their inception in 1942 were: (a) promotion of uniformity
labor legislation, (;b ) laying down of a procedure the settlement of industrial disputes; and
(c) discussion of all matters of all-India importance as between employers and employees.
The ILC/SLC has immensely contributed in achieving the objectives. They facilitated to
enact central legislation as well as discussed about all labor matters in the various meetings of
ILC/SLC.
2.1.3 The third phase (1947 to mid 1960s)
After independence, an Industrial Truce Resolution was adopted in 1947 at a tripartite
conference. The conference emphasized the need for respecting the common interest of labor
and capital as well as reducing the conflicts or disputes between the parties
The relationship between the government and its affiliated union federation during this time
seemed to tighten as the result of the Industrial Disputes Act (ID Act) of 1947. The provision
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in the act prevented employers from bargaining with union as well as from determining the
representative union which made it impossible to involve either party in collective
bargaining. Additionally, there was no provision for union recognition while it allowed any
seven workers to register their union. The ID Act also made it difficult for the union to call a
legal strike. During the late 1950s, however attempts were made to introduce labor legislation
which promoted collective bargaining through various voluntary arrangements such as the
Code of Discipline and the inter-union Code of Conduct. Since government greatly
intervened in the determination of wages and working conditions the structure of bargaining
was mainly focused on the national level.
The first phase of the Indian union movement corresponds to the first three five-year plans
(1951-56, 1956-61, 1961-66), a period of “national capitalism”.
The approach to labor problem in the First Five-Year Plan (1951-56) was based on the
wellbeing of the working class and its crucial contribution to the economic stability and
progress of the country. The workers were considered an extremely important factor to
achieve the targets of the Plan and in the achievement of economic progress. The Plan stated
the worker rights of collective bargaining in organization should be fulfilled in order to have
a mutual relationship.
The Second Plan (1956-1961) stated that union movement was an indispensable factor to
ensure the interest of labor as well as to attain the production target. Multiplicities of trade
unions, political rivalries, lack of resources were the major challenges facing existing unions.
The plan also emphasized on avoiding disputes at all levels and achieving industrial peace.
The Third Five-Year Plan (1961-66) highlighted the need for increasing application of the
principle of voluntary arbitration in resolving differences between workers and employers
and recommended that the works committees should be empowered to be an active and
effective agency for the democratic administration of labor matters
The post independence period of industrial relations policy aimed at the establishment of
peace in industry, and grant of a fair deal to workers. The first phase represented the period of
a state intervention that had the government guide and control on the labor movement
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through appropriate labor legislation, labor administration, and industrial adjudication. The
interaction between capital and labor was restricted and coordinated by the government.
During this period, few strategic choices were open to either union or employers as labor
relations outcomes were over determined by the state. The institutional structures to boots
efficient collective bargaining remained underdeveloped.
2.1.4 The fourth phase (1970s)
The second phase corresponds with the 1967-69 Annual Plans, the fourth (1969-74) and the
Fifth (1974-79) Five Year Plans. This is associated with overall industrial stagnation with the
suffering from two oil price shocks, in 1973 and in 1978. As a result, the level of employment
in the economy decreased which affected union activity, collective bargaining practices and
labor market. The number of disputes, the number of workers involved in these disputes as
well as the number of mandays lost increased phenomenally from 1966 to 1974.
There was no change in term of the system of regulating labor relations in The Fourth Five-
Year Plan (1969-74). It made an attention to employment and training as well as to strengthen
labor administration for better enforcement of labor laws, research in labor laws, and
expansion of training programmes for labor officers.
The Fifth Five-Year Plan (1974-79) paid much attention on employment, both in rural and
urban sectors. The government devised a new pattern of bipartite consultative process to
create a favorable industrial relations as well as to raise the productivity by avoiding lay-offs,
retrenchments, closures, strikes and lockouts. The new machinery implemented policies at the
national, state, and industry levels to quickly solve the industrial conflicts and encourage
industrial harmony.
The failure of INTUC’s internal practices as well as its ineffectiveness in representing union
voice at the enterprise level made the workers seek more skilled politicians and negotiators to
lead their union struggles. This period showed a rise in the number of disputes involving
multiples union. The establishment of the National Apex Body, composed of twelve union
federations and eleven employer representatives and the 1976 amendment of ID Act which
force the firm employing more than 300 workers had to seek government permission before
retrenching workers, were the two interventions which had a noticeable impact on the 9
industrial relations during this time.
Overall, comparing to the other phases, this phase faced to a maximum industrial conflicts
both in term of the number of disputes and the number of worker involved.
2.1.5 The fifth phase (1980s)
This phase correspond to the sixth (1980-85) and the Seventh (1985-90) Five Year Plans as
well as the two Annual Plans (1990-92). Employment in major sectors, especially in services,
faced a considerable drop during this time since the economy suffered from severe internal
and external shocks. The economy moved away from an import-substituting inward looking
growth strategy towards strategies that encouraged both export promotion and domestic’s
competition. The changes made a significant impact on the trade unions, labor market and the
structure of industrial relations. This period was characterized by the rise of independent
unions against the traditional party-affiliated unions.
The Sixth Five-Year Plan (1980-85) emphasized on building a healthy industrial relations
basing on the cooperative attitude of the two parties employers and employees. The plan
stated that disputes (strikes and lockouts) should be considered only on the last stage and
effective arrangements should also be delivered to conciliate the conflicts and to eliminate
unfair practices and irresponsible conduct. The plan also focused on the responsibility of
labor unions in nation building activities as well as improving living standard of workers.
Additionally, it showed a need of changing the existing laws on trade unions to encourage
harmonious industrial relations
The Seventh Five-Year Plan (1986-91) stated that an effective policy to fix the shortcomings
of the industrial system has to be implemented while maintaining the interest of workers. It
was undeniable the need of strikes and lockouts in some cases which is the considerable
scope for improving the industrial relations. Since the government cannot bear the huge
burden of losses, in the proper management of industrial relations the responsibility of unions
and employees has to be identified and disputed or conflicts should be minimized.
In the late 1970s there was a phenomenal rise in the number of disputes led by unaffiliated
unions and the importance of traditional party-affiliated unions decreased. In 1989, the Labor 10
Ministry listed nine major union federations and a number of small independent unions in
their registry.
2.1.6 The sixth phase (1990-2000)
In June 1991, the government decided to adopt the World Bank – IMF’s stabilization and
structural adjustment program. The economy had to experience the devaluation of rupee. At
the same time import quotas were reduced, tariffs were lowered and the government no
longer had a monopoly power on the import and export. A statement on industrial policy with
an attempt to lower the fiscal deficit was presented. This fourth phase corresponds to the
eighth (1993-97) and the Ninth (1997-2002) Five Year Plans.
The Eighth Five-Year Plan (1992-97) emphasized the important of labor participation in
decision making and management to promote industrial democracy. The government made an
attempt in introducing workers' participation in administration. The result, however was
unsatisfied, the effort to bring out an effective legislation and implementation had been
failed. It required a more attention in activating a proper education and training as well as the
cooperation from both employers and employees to promote the participative management.
Ninth Five-Year Plan (1997-2002) showed an effort to make a favorable condition for
improving labor productivity as well as providing social security in the operations of the
labor market. A pool of resource was developed which included skill formation, information
exchange about job opportunities. The plan also highlighted on improving working condition,
delivering insurance for the workers as well as creating an industrial harmony. According to
the plan, labor surplus together with employment in unorganized segments of the economy
were the causes of social issues such as bonded labor, child labor, poor working condition.
During the time, many meetings were held raising the urgent need for tripartite consultation
to resolve all the concerning labor matters under economic reform. The unions had serious
concern about the present of a proper consultation at industrial or enterprise level. In addition,
the unions experience a drop in sectional interest group during this phase. It was necessary
that government policy should be carried out to protect consumers from sectional interests of
many unrepresentative trade unions.
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On October 1999 the government set up the second National Labor Commission. The terms
of reference made a suggestion of realization of existing labor laws in the organized sector
and also of enforcing and adding more number of legislation in order to give a minimum
protection for unorganized workers as well as for the workers under an improper
management.
In the context of continuing economic liberalization, the industrial relations will show
reforms toward greater employment flexibility, greater decentralization in bargaining,
decrease in government control over the bargaining process, reduction in the number of
disputes. Employment and efficient union voice, therefore, could be promoted both at micro
and macro level.
2.2 Importance of industrial relations
It is obvious that the healthy industrial relations are the key of success of all organization.
With healthy industrial relations, a favorable environment is created for organizations to
achieve long term goals while maintaining the interest of the parties.
Uninterrupted production: A healthy industrial relation ensures the continuity of production
and smooth running of an industry as well as the other ones. Both employees and employers
will not be out of work which utilize all the potential resource and encourage the higher
productivity to achieve organization’s goals. This positively contributes to the development
of national economy.
Reduction in Industrial disputes - The industrial disputes are diminished and decreased in the
condition of good industrial relation which fulfills all the basic needs and motivation of the
workers as well as ensure the reasonable benefit of the employers. It helps promoting co-
operation and increasing production.
High morale – Good industrial relations promote the morale of the employees with the
mindset that they and their employers are sharing the same interest and aiming at the same
goals (higher performance in production for example). This morale make the workers feel
that they are part of organization’s success and make the employers realize that the benefits
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are not for them alone but should be shared equally and generously with his workers. In short,
the high morale is an important factor to develop the cooperation and industrial peace.
New facilities – New facilities for workers development are provide in the condition of
industrial peace such as training facilities, labor welfare facilities etc. Those facilities help
worker increase the productivity and show the best result in term of production at lower costs.
Higher performance – Good industrial relations are maintained on the basis of cooperation
and recognition of each other. It will help increase production, reduce cost and activate all the
potential and resource of the organization for the best outcomes..
Thus, from the above discussion, it is evident that good industrial relation is the basis of
higher production with minimum cost and higher profits. It also results in increased
efficiency of workers. New and new projects may be introduced for the welfare of the
workers and to promote the morale of the people at work.
2.3 The future of industrial relation in India
The future of industrial relation in India has to adapt to the new environment that emerged
after the structural changes under economic reforms.
The first issue relates to promoting collective bargaining by selecting a bargaining agent for
negotiations and imposing new labor law support the foundation of bargaining agency in
every unit and industry. Collective bargaining helps the both parties develop the mutual
understanding to reach a common agreement and limit or quickly settle the conflict between
them.
The second issue lies in the weakness of state legislations concerned about labor matters.
Although a range of attempts are made to improve the efficiency of the legislation and labor
law, India still has to solve problems that the legislation process is facing.
The third issue, another challenge for the industrial relations system is the workers
participation in management. Many organizations have realized the importance of the
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workers participation and applied many forms of workers-participation schemes but the result
came out not as good as expected due to the improperness when running the scheme. It has
raised a new issue and required a change to fix the problem and utilize the benefit of worker
participation in management.
3 Recommendation
Both management and unions should develop cooperative attitudes towards each other. The
participation of workers in the management of the industrial unit should be encouraged by
making effective use of works committees, joint consultation and other methods
All basic policies and procedures relating to Industrial Relation should be widely informed to
everybody in the organization. The manager must ensure that people will understand and
agree with these policies.
Although the management doesn’t intervene in union activities, it is better that management
should implement the attitude of encouraging the judicious union leadership to improve the
industrial relation. The employers must recognize the right of collective bargaining of the
trade unions.
The manager should eliminate any suspicion and misunderstanding by encouraging the union
integrity and solidarity. Distrust, rumors and doubts should all be removed in the organization
environment.
4 Conclusion
To conclude, it is obvious that industrial relations in India are governed by certain forces-
economic, social and political. Industrial relations can improve only if there is a convincing
change in the attitudes of employers and employees and they take responsible, surrender their
sectional interests and dedicate for the mutual goals. The Government should play an active
role in encouraging and supporting healthy industrial relations through legislation reform,
adopting new policies as well as the effective control over industrial disputes. It takes great 14
effort of all the actors, management, workers and government to face and handle all the
existing issues to achieve the long term industrial harmony.
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