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Chapter No. 01:

Introduction:

Introduction. Human Resource Management. The Gender Divide in the Indian Labour Market. Small Scale Industries in India. Small Scale Industries and HR Practices. Small and Medium Enterprises (SMEs). SMEs in India. Labour. Characteristics of Labour. Trade Union. Industrial Relations. Social Security and Labour Welfare in India. Labour Welfare. Concept and Scope of Labour welfare. Importance of labour Welfare. Labour Welfare Schemes. Statutory Welfare Schemes. Non Statutory Schemes. Labour Welfare Leads To Industrial Peace. Industrial Relations and Labour Welfare. Industrial Relation in Public Sector. Worker’s Safety and Health. Labour Policies in India. Industrial Disputes. Strike. Types of Strike. Changing Economic Policies. References

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Introduction:

Employees play an important role in the industrial

production of the country. Hence, organisations have to secure the

cooperation of employees in order to increase the production and

to earn higher profits.1 The cooperation of employees is possible

only when they are fully satisfied with their employer and the

working conditions on the job. In the past, industrialists and the

employers believed that their only duty towards their employees

was to pay them satisfactory wages and salaries. In course of time,

they realised that workers require something more important. In

addition to providing monetary benefits, human treatment given to

employees plays a very important role in seeking their cooperation.

Further, human resource managers realised that the provision of

welfare facilities contribute a lot towards the health and efficiency

of the workers. The productivity of labour is an essential condition

for the prosperity of enterprises and the well being of the workers

and their families. While the production facilities at workplace and

the remuneration are important, attitudes towards work, and the

value placed by the society on dignity of labour are equally

important in influencing the productivity of labour.

All the same, organisations need to provide various social

security benefits such as medical care, mortality benefits, pension

etc., as specified by law. It is a fact that the provision of social

security benefits is a kind of wise investment that offers good social

dividends in the long run. The company having realised the

importance of welfare and social security measures introduced

several welfare schemes for its workers and the families. For

instance, the company provides statutory welfare facilities like

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drinking water, conservancy, medical appliances, canteen, rest

shelters, crèches etc.2 It also provides various non-statutory

welfare facilities such as medical, education, recreation,

housing/quarters, consumer cooperative stores, consumer co-

operative credit society etc. Further, it provides social security

measures like provident fund, gratuity, pension, dependent

employment etc. In short, due to the welfare and social security

measures provided by the company, its employees have been

working with involvement and commitment. Consequently, the

performance of the company is quite commendable. Recently,

there has been a resurgence of interest in the relationship between

employees and employers. Therefore the research is an attempt to

close this gap. A study has been undertaken on the research topic -

A Study Of Labour Welfare Practices in Small-Medium Industries

in Maharashtra State.

Human Resource Management:

Human Resource Management (HRM) can be traced to the

concern for welfare of factory workers during the 1920. In 1931, the

Royal Commission on Labour recommended for the appointment

of labour officers in order to safeguard the interest of workers.3

HRM has evolved through various stages like concept of

commodity, factor of production, paternalism, humanitarian,

behavioural and emerging concepts. In today’s competitive

environment, HRM has become an important function for

organization, personal and social goals. HRM is central subsystem

of any organization. Human Resource Management is the body of

science that correlates the subsistence of able HR and the

achievement of the organization.

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Human Resource has an important bearing on the

profitability, efficiency and overall organization effectiveness.

HRM as a body of language has seen different changes over a

period of time. HR profession had started its role as labor

officer/welfare officer and is now viewed as a strategic role where

the emphasis is on employee engagement. In the rapidly changing

management scenario, HRM has an important role to play HR is a

highly productive corporate asset and the overall performance of

companies and corporations depends upon the extent to which it is

effectively developed and utilized. Human resource is certainly

important even in this age of extensive use of computer technology.

This is because machine cannot be used as a substitute for human

brain which has capacity to think, assess and react. HRM is a

management function that helps managers plan, recruit, select,

train, develop, remunerate and maintain members for an

organization. Now a days, most of the enterprises whether Small,

Medium or Large Scale practice the HR functions for the

effectiveness, continuity and stability of the organization.

HRM has been widely defined as a strategic function that

encompasses management of its critical human assets for gaining

competitive advantage in a dynamic business environment. HRM

is the function performed in organizations that facilitates the most

effective use of people to achieve organizational and individual

goals. The concept that human resource is a valued asset that can

help tide an organization over turbulent waters has been very aptly

realized in the recent times of economic turmoil by businesses

worldwide. The genesis of this concept however lies with the onset

of the behavioral movement in the early 20th century when

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eminent researchers like Mary Parker Follet, Chester Barnard,

Elton Mayo and Douglas McGregor realized the most important

component of any business – ‘its manpower or human resources’

that made the difference towards better efficiency for any

organization. Termed the ‘Human Relations Movement’,

researchers tried to understand how issues like working

conditions, workplace relations, job satisfaction, work variations

etc. could actually impact efficiency levels of an organization.4

The Gender Divide in the Indian Labour Market:

One of the biggest shifts in the Indian labour market has

been the dramatic withdrawal of women workers in the past few

years. India’s female labour force participation rate, or the

proportion of women who opt for work, fell nearly seven

percentage points to 22.5 per cent between 2004-05 and 2011-12.

Low female labour participation rates have been a structural

problem in India for long but the recent decline means the country

has among the lowest proportions of working women. India ranks

10th from the bottom among countries ranked according to their

female labour force participation rate. The greatest withdrawal of

women from the labour force occurred in rural areas, and was

largely in agriculture. The withdrawal is all the more surprising as

it has occurred during a period of sharp rise in wages that women

earn. The gender gap in wages of casual labourers declined nearly

six percentage points between 2004-05 and 2011-12 to 31 per

cent.5

There are possibly three key factors driving women out of the

rural labour force. First, there seems to be an income effect that

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has raised average rural incomes and allowed many women to quit

demanding farm jobs. Secondly, there seems to be an education

effect that is putting increasing numbers of rural women out of

farms and into schools and colleges, which is reflected in the

growing rural enrolment rates. Finally, there seems to be a dearth

of attractive non-farm work opportunities for rural women as most

non-farm jobs have been generated in the construction sector. The

underlying factor that drives women out of the labour force once

the family income crosses a certain threshold is the force of

patriarchy. It is the key reason why empirical evidence from

developing countries including India points to a curve for female

labour participation rates, which drops after the family income,

crosses a minimum income threshold. This rises later at much

higher levels of affluence. A look at the inter-state variations in

female labour force participation rates seems to confirm the role of

patriarchy as an important driver of gender gaps in labour

participation rates.

Small Scale Industries in India:

India is an emerging economy with a population of more

than one billion. Nearly 40 per cent of the population lives below

the poverty line and 70 per cent of the population is dependent on

the agriculture for sustenance.6 The economic reconstruction of

India depends on the balanced growth of economy in the fields of

agriculture and industry. There is no denying the fact that SSIs are

accepted as the engine of economic development and for

promoting equitable development. The major advantage of SSIs is

its employment generation at low capital cost. The intensity of

labour of SSIs is much higher than that of the large enterprises. In

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India, the SSIs play an important role in the overall economic

development of the country. Because capital and finance have been

scarce in India, the Government of India has encouraged

alternatives to agriculture and heavy industries like small-scale

industries, which can operate on limited resources.

A small-scale industry can be operated by an entrepreneur

without needing sophisticated machinery and modem technology.

These small-scale industrial units can be established in semi-urban

and rural areas where the infrastructure is underdeveloped. The

objective is to use local raw material for raising production with

the help of local skills. Small-scale industries provide employment

without affecting the main occupation -agriculture- of illiterate

people in rural areas in India. The other advantages of small-scale

units are that these units need short gestation period in

establishment, are less dependent on imported raw material and

machinery and help in meeting a substantial part of demand of

consumer goods.

Small Scale Industries and HR Practices:

Efficient management of human resource is a crucial factor

in determining the growth and prosperity of business enterprise.

This is particularly true in the case of small industry where owners

are forced to have a close and more personal association with their

employees. It is accepted that there exists lack of professional

approach towards HR and the managers are unaware of the

development that are taking place in management field, generally,

and HRM in particular. Small Scale Industries in general are

having somewhat apathy towards HRM practices. Lack of

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resources and more importantly lack of will leads to non-existence

of such practices. In many cases small entrepreneurs are even not

found to be aware of them.7 The HRM policy is a neglected area in

majority of the units in this sector. Whatever such a policy exist, it

was mostly related to fulfilling government statutory requirement.

Mostly leave rules, rules relating to expected behaviour within the

premises, tour and travel policy and policies concerned with PF,

gratuity, superannuation, grievance handling are found to be

existing which are mostly defined by statutes. In very few units

employee training and development policy, recruitment and

selection policy are framed and followed although not very

religiously.

Small and Medium Enterprises (SMEs):

Small and Medium Enterprises are companies whose

headcount or turnover falls below certain limits. The SME occurs

commonly in the European Union and in international

organizations, such as the World Bank, the United Nations and the

WTO. The term small and medium-sized businesses or SMBs is

predominantly used in the USA. EU Member States traditionally

have their own definition of what constitutes an SME, for example

the traditional definition in Germany had a limit of 250 employees,

while, for example, in Belgium it could have been 100. But now the

EU has started to standardize the concept. Its current definition

categorizes companies with fewer than 10 employees as ‘micro’,

those with fewer than 50 employees as ‘small’, and those with

fewer than 250 as ‘medium’ Small medium organizations need to

have between 20-500 employees. By contrast, in the United States,

when small business is defined by the number of employees, it

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often refers to those with fewer than 100 employees, while

medium-sized business often refers to those with fewer than 500

employees. Both the US and the EU generally use the same

threshold of fewer than 10 employees for small offices. In South

Africa the term SMME, for Small, Medium and Micro Enterprises,

is used. Elsewhere in Africa, MSME is used, for Micro, Small and

Medium Enterprises.8

Micro Enterprises contribute significantly to economic

growth, social stability and equity. The sector is one of the most

important vehicles through which low-income people can escape

poverty. With limited skills and education to compete for formal

sector jobs, these men and women find economic opportunities in

micro enterprise as business owners and employees. Street

venders, carpenters, machine shop operators. Seamstresses and

peasant farmers’ micro entrepreneurs come in all types, and their

businesses in many sizes. This diverse group requires a variety of

support to grow and improve. Many of these men and women and

their employees are poor and have limited access to services. But

they do not lack potential. More than 80 percent of the businesses

in Latin America and the Caribbean have 10 employees or less, and

they account for as much as half of all employment in many

countries. Numbered at some 50 million, these micro enterprises

can no longer be considered marginal. They are the heart of the

region's economy. In most economies, smaller enterprises are

much greater in number. In the EU, SMEs comprise approximately

99 per cent of all firms and employ between them about 65 million

people. In many sectors, SMEs are also responsible for driving

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innovation and competition. Globally SMEs account for 99 per

cent of business numbers and 40-50 per cent of GDP.9

SMEs in India:

With the advent of planned economy from 1951 and the

subsequent industrial policy followed by Government of India,

both planners and Government earmarked a special role for small-

scale and medium scale industries in the Indian economy. Due

protection was accorded to both sectors, and particularly for small

scale industries from 1951 to 1991, till the nation adopted a policy

of liberalization and globalization. Certain products were reserved

for small-scale units for a long time, though this list of products is

decreasing due to change in industrial policies and climate.10

SMEs always represented the model of socio-economic

policies of Government of India which emphasized judicious use of

foreign exchange for import of capital goods and inputs; labour

intensive mode of production; employment generation; non-

concentration of diffusion of economic power in the hands of few;

discouraging monopolistic practices of production and marketing;

and finally effective contribution to foreign exchange earning of the

nation with low import-intensive operations. It was also coupled

with the policy of de-concentration of industrial activities in few

geographical centers. In India, the Micro and Small Enterprises

sector plays a pivotal role in the overall industrial economy of the

country. It is estimated that in terms of value, the sector accounts

for about 39 per cent of the manufacturing output and around 33

per cent of the total export of the country.11

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Further, in recent years the SME sector has consistently

registered higher growth rate compared to the overall industrial

sector. The major advantage of the sector is its employment

potential at low capital cost. As per available statistics, this sector

employs an estimated 31 million persons spread over 12.8 million

enterprises and the labour intensity in the MSE sector is estimated

to be almost 4 times higher than the large enterprises. It can be

observed that by and large, SMEs in India met the expectations of

the Government in this respect.12 SMEs developed in a manner,

which made it possible for them to achieve the following

objectives:

High contribution to domestic production.

Significant export earnings.

Low investment requirements.

Operational flexibility.

Location wise mobility.

Low intensive imports.

Capacities to develop appropriate indigenous technology.

Import substitution.

Contribution towards defense production.

Technology – oriented industries.

Competitiveness in domestic and export markets.

At the same time one has to understand the limitations of

SMEs, which are:

Low Capital base.

Concentration of functions in one / two persons.

Inadequate exposure to international environment.

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Inability to face impact of WTO regime.

Inadequate contribution towards R & D.

Lack of professionalism.

In spite of these limitations, the SMEs have made significant

contribution towards technological development and exports. As a

result of globalization and liberalization, coupled with WTO

regime, Indian SMEs have been passing through a transitional

period. With slowing down of economy in India and abroad,

particularly USA and European Union and enhanced competition

from China and a few low cost centers of production from abroad

many units have been facing a tough time. Those SMEs who have

strong technological base, international business outlook,

competitive spirit and willingness to restructure themselves shall

withstand the present challenges and come out with shining

colours to make their own contribution to the Indian economy. The

concept of SSI has been done away with after enactment of ‘Micro,

Small And Medium Enterprises Development Act, 2006’. As per

Section 7(1) of the said act and Ministry Notification dated 29th

September 2006, the following enterprises were classified as

micro, small and medium enterprise:

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Table No. 1.01:

Classification of Micro, Small and Medium Enterprise:

Type Engaged in Manufacture

or Production

Engaged in providing

Service

Micro Up to Rs. 25 Lakhs Up to Rs. 10 Lakhs

Small Between Rs. 25 Lakhs and

Rs. 5 Crores

Between Rs. 10 Lakhs and

Rs.2 Crores

Medium Between Rs. 5 Crores and

Rs. 10 Crores

Between Rs. 2 Crores and

Rs. 10 Crores

Source: A. M. Sharma (2007) - Aspects of Labour Welfare and

Social security, Himalaya Publications, Mumbai.

Enterprise:

These SMEs and their role in nation building has also been

recognized by World Bank when very recently it has agreed to

release USD 400 million new financing loan to the SIDBI in an

endeavour to further strengthen the growth of SMEs. This is in

addition to the already disbursed project which had been fixed by

the World Bank on November 30, 2004.13 Indian SMEs face

constant challenges in the areas of finance, competition, regulatory

aspects and compliance with maze of various laws governing the

entities.

Labour:

Usually, the term 'Labour' is used for 'worker'. But,

technically, it is not correct. Labour (worker) are two different

things Labour is an ability to work. Labour is a broad concept

because it includes both physical and mental labour. Labour is a

primary or human factor of production.14 It indicates human

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resource. Labourer is a person who owns labour. So labourer

means worker. It is a person engaged in some work.

Characteristics of Labour:

1. Labour is inseparable from labourer: Labour cannot be

separated from labourer. Worker sells their service and

doesn't sell themselves.

2. Labour is a perishable factor: Labour cannot be stored.

Once the labour is lost, it cannot be made up. Unemployed

workers cannot store their labour for future employment.

3. Cost of producing a labour cannot be determined: It is easy

to calculate production cost of a commodity produced in an

industry. But cost of producing a labour is a vague concept

because it includes expenses incurred by parents on

education of their children and other expenses incurred on

them right from their birth date. It is impossible to estimate

all such casts accurately.

4. Labour is an active factor of production: Other factors like

land, capital are passive, but labour is an active factor of

production. Being a human being, this factor has its own

feelings, likes and dislikes, thinking power, etc. We can

achieve better quality and level of production, if land and

capital are employed properly in close association with

Labour. So without labour, we cannot imagine the smooth

conduct of production.

5. Labour is a heterogeneous factor: No two persons possess

the same quality of labour. Skills and efficiency differs from

person to person. So, some workers are more efficient than

others in the same job.

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6. Labour has imperfect mobility: Labour doesn't move easily

from one occupation to another because of several factors

like family and cultural background, limited educational and

technical skills, lifestyle, housing and transport problems,

language barrier, adaptability to new environments, etc.

7. Labour supply is inelastic in general: Supply of labour

depends upon many factors like size of population, age and

sex composition, desire to work, quality of education,

attitude towards work, etc. Thus, supply cannot be changed

easily according to changes in demand. Hence, in general,

labour supply is inelastic. But for a particular industry, it may

be relatively elastic.

8. Labour is a human capital: Society makes investment in

labour in the forms of education, health, training, etc. This

improves efficiency of labour. So, it is a human capital.

9. Trade unionism is a factor of Labour: Workers collectively

form their organization which is known as trade union. With

this, they bargain with their employers and there by secure

higher wages and better working conditions. Such trade

unionism is not possible in other factors of production like

land, else works only in case of labour.

10. Labour has a derived demand: Like other factors of

production, labour has a derived / indirect demand. It

contributes to production process.

11. Labour is a Mean as well as an End: Labour is a mean of

production in factory. But outside the factory premises

worker may be a consumer of that product. So, he might be

an end user of that commodity.

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Trade Union:

Trade unions are a major component of the system of

modern industrial relations in any nation, each having their own

set of objectives or goals to achieve according to their constitution

and each having its own strategy to reach those goals. A trade

union is an organisation formed by workers to protect their

interests and improve their working conditions, among other goals.

It is a continuous association of wage earners for the purpose of

maintaining and improving working conditions.15 In developing

countries, the right to form a union and bargain collectively

protects workers from exploitative and abusive conditions at work

and puts pressure on employers to share productivity gains with

their employees. Protection of basic worker and human rights in

developing nations thus necessitates unionization so that the

working population can reap the benefits of economic growth.

An association of workers united as a single, representative

entity for the purpose of improving the workers' economic status

and working conditions through collective bargaining with

employers also known as ‘unions’. A defined group of employees

formed for the purposes of representing those employees with the

employer as to the terms of a collective contract of employment.

There are two types: the horizontal union, in which all members

share a common skill, and the vertical union, composed of workers

from across the same industry. The union formation process in

most countries is regulated by a government agency, such as the

National Labor Relations Board in the United States. The group of

employees wanting to form a union usually needs a set amount of

signatures, this amount is dependent on the jurisdiction it wants to

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form in. If enough signatures are obtained there is a vote by all

employees and if passed the union will negotiate on their behalf

with the employers.

Trade unions have been developed to protect employees

against exploitation of employers and provide equitable shares to

employees in the profit occurring out of production, to raise their

status in industry and society. The basis of trade union movement

has always been the promotion and protection of employee’s

interest. According to section 2(b) of trade union act of 1926, “A

trade union is any combination of persons, whether temporary of

permanent, primarily for the purpose of regulating the relations

between workers and employers or between workers and workers

and for imposing restrictive conditions on the conduct of any

trade or business.”16 The term trade union is defined in different

ways in different countries. In India term ‘trade union’ according

to the trade union act of the country refers to both employees

organization as well as employers association.

The primary function of a trade union is to promote and

protect the interest of its members. This can be summarized as

follows:

I. To improve working and living conditions and to represent

workers' interests in various fora.

II. To offer responsive cooperation in improving levels of

production and productivity, discipline, and high standards

of quality.

III. To secure fair wages for workers.

IV. To enlarge opportunities for promotion and training.

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V. To promote identity of workers' interests with their

industries.

VI. To cooperate in and facilitate technological advancement by

broadening workers' understanding of underlying issues.

Industrial Relations:

The term ‘Industrial Relations’ comprises of two terms:

‘Industry’ and ‘Relations’. Industry refers to any productive

activity in which an individual or a group of individuals are

engaged. By relations we mean the relationships that exist within

the industry between the employer and his workmen. The term

industrial relations explain the relationship between employees

and management which stem directly or indirectly from union-

employer relationship. Industrial relations are the relationships

between employees and employers within the organizational

settings.17 The field of industrial relations looks at the relationship

between management and workers, particularly groups of workers

represented by a union. Industrial relations are basically the

interactions between employers, employees and the government,

and the institutions and associations through which such

interactions are mediated.

The term industrial relations have a broad as well as a

narrow outlook. Originally, industrial relations were broadly

defined to include the relationships and interactions between

employers and employees. From this perspective, industrial

relations cover all aspects of the employment relationship,

including human resource management, employee relations, and

union-management or labor relations. Now its meaning has

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become more specific and restricted. Accordingly, industrial

relations pertains to the study and practice of collective bargaining,

trade unionism, and labor-management relations, while human

resource management is a separate, largely distinct field that deals

with nonunion employment relationships and the personnel

practices and policies of employers.

The relationships which arise at and out of the workplace

generally include the relationships between individual workers, the

relationships between workers and their employer, the

relationships between employers, the relationships employers and

workers have with the organizations formed to promote their

respective interests, and the relations between those organizations,

at all levels. Industrial relations also includes the processes

through which these relationships are expressed (such as,

collective bargaining, workers’ participation in decision-making,

and grievance and dispute settlement), and the management of

conflict between employers, workers and trade unions, when it

arises.

Social Security and Labour Welfare in India:

Social security is one of the pillars on which the structure of a

welfare state rests, and it constitutes the hard core of social policy

in most countries. It is through social security measures that the

state attempts to maintain every citizen at a certain prescribed

level below which no one is allowed to fall. It is the security that

society furnishes through appropriate organisation, against certain

risks to which its members are exposed. Social security system

comprises health and unemployment insurance, family allowances,

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provident funds, pensions and gratuity schemes, and widows’ and

survivors’ allowances. The essential characteristics of social

insurance schemes include their compulsory and contributory

nature; the members must first subscribe to a fund from which

benefits could be drawn later. On the other hand, social assistance

is a method according to which benefits are given to the needy

persons, fulfilling the prescribed conditions, by the government

out of its own resources.

Although provisions for workmen’s compensation in case of

industrial accidents and maternity benefits for women workforce

had existed for long, a major breakthrough in the field of social

security came only after independence. The Constitution of India

(Article 41) laid down that the State shall make effective provision

for securing the right to public assistance in case of

unemployment, old age, sickness and disablement and in other

cases of undeserved want. The Government took several steps in

compliance of the constitutional requirements.

The Workmen’s Compensation Act (1926) was suitably

revised and social insurance programmes were developed for

industrial workers. Provident funds and gratuity schemes were

introduced in most industries, and maternity legislation was

overhauled. Subsequently, State governments instituted their own

social assistance programmes. The provisions for old age comprise

pension, provident fund, and gratuity schemes. All the three

provisions are different forms of retirement benefits. Gratuity is a

lump sum payment made to a worker or to his/her heirs by the

company on termination of his/her service due to retirement,

invalidity, retrenchment or death.18

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Labour Welfare:

The Concept of ‘labour welfare’ is dynamic. It bears a

different interpretation from country to country and from time to

time. Different factors like value system, social institutions, degree

of industrialization and general level at social and economic

development obtaining in a country at a particular time determine

the contents of labour-welfare. An efficient, skilled, cheerful and

contented employee will be an asset to any organisation if he is

happy, he will concentrate on his work and better results can be

achieved.19 An employee will be happy only when his needs are

fulfilled. Labour is a crucial factor, which is very difficult to

manage. The progress of a nation and in particular industrial

growth purely depends upon a contented labour force. The

Schemes of labour – welfare may be regarded as a “wise

investment” which should and usually does bring a profitable

return in the form of greater efficiency.

Labour welfare is a comprehensive term including various

services benefits and facilitates offered to employees by employer.

The labour welfare amenities are extended in addition to normal

rewards available to employees as per the legal provisions. Labour

welfare work is work for improving the health, safety and general

well-being and the efficiency of the workers beyond the minimum

standards lay down by labour legislation. Welfare measures may

also be provided by the government, trade unions and non-

government agencies in addition to the employer. The significance

of welfare measures was accepted as early as 1931, when the Royal

commission on labour stated.20 The benefits are of great

importance to the worker which he is unable to secure by himself.

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The schemes of labour welfare may be regarded as a wise

investment because these would bring a profitable return in the

form of greater efficiency. The concept of labour welfare is flexible

and elastic and differs widely with times, region to region,

industry, country social values and customs, degree of

industrialization and general socio-economic development of

people.

Concept and Scope of Labour welfare:

The concept of ‘Labour welfare’ is flexible and elastic and

differs widely with times, regions, industry, country, social values

and customs, the degree of industrialization, the general social

economic development of people and political ideologies prevailing

at particular moments. However, the Committee on Labour

Welfare (1969) defined the phrase to mean, “Such facilities and

amenities as adequate canteens, rest and recreation facilities,

sanitary and medical facilities arrangements for travel to and

from and for accommodation of workers employed at a distance

from their homes, and such other services, amenities and facilities

including social security measures as contribute to conditions

under which workers are employed.”21

The report of the ILO refers with regard to labour welfare as,

“Such services and amenities which may be established in or in

the vicinity of undertakings to enable the persons employed in

them to perform their work in healthy, congenial surroundings

and such amenities conducive to good health, and high morale.”22

On the basis of the above definitions, the chief characteristics of

labour welfare work may be summarized to include the work which

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is usually undertaken within the premises or in the vicinity of the

industrial undertakings for the benefit of the employees and the

members of their family and this generally includes those items of

welfare which are over and above what is provided by statutory

provisions and what the employees expect as a result of a contract

of employment from the employers. These facilities may either be

provided voluntarily by the progressive and enlightened employers

of their own, out of their realization of social responsibility towards

labour or the statutory laws may compel them to make provision

for these facilities or these may be taken up by the government or

the trade unions.

As far as the statutory measures to safeguard the welfare of

factory workers are concerned, the beginning of the same was

made with the passing of the Factories Act in 1881 as a result of the

joint efforts of the philanthropist and social workers and

Lancashire manufacturers in Britain. This Act applied to

manufacturing establishments using mechanical power and

employing 100 or more persons. The Act regulated the

employment of child labour below 7 years and provided for 9 hours

a day as the maximum working hours for children in the age group

of 7 to 12 years, an interval of 1 hour for rest and a weekly holiday.

The Act also contained provisions relating to safety and inspection

of factories. Later on, this Act was amended several times gradually

expanding its scope to cover more and more persons within its

ambit (by way of reducing the limit in terms of number of persons)

and welfare measures, finally culminating in the Factories Act,

1948 (Which came into force on 1st April, 1949) which is in

existence even today with some notable amendments introduced in

1954, 1976 and 1987.23

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Importance of labour Welfare:

The study of Labour welfare is an important in the following ways.

1. It enables workers to live a richer and a more satisfactory life.

2. It contributes to the productivity of labour and efficiency of

the enterprise.

3. It enhances the standard of living of workers by indirectly

reducing the burden on their purse.

4. It is tuning the harmony with similar service obtaining in the

neighbourhood community where the enterprise is situated.

5. It is administratively viable and essentially development in

outlook.

Labour Welfare Schemes:

Organizations provide welfare facilities to their employees to

keep their motivation levels high. The labour welfare schemes can

be classified into two categories viz. statutory and non-statutory

welfare schemes. The statutory schemes are those schemes that are

compulsory to provide by an organization as compliance to the

laws governing employee health and safety. These include

provisions provided in industrial acts like Factories Act 1948, Dock

Workers Act (safety, health and welfare) 1986, Mines Act 1962.

The non statutory schemes differ from organization to organization

and from industry to industry.24

Generally, welfare measures are recreational, medical, educa-

tional, housing, sanitation and so on. Every organization pro vides

the statutory welfare measures. But few organizations provide

more welfare facilities to the employees so that they retain the

employees by increasing their quality of work life. By the result of

25

improved quality of work life among the employees their

involvement in job enhances, which results in increased

productivity of the organization. Thus the organizations maintain

smooth relationship between workers and management, which

leads to better industrial relations and attain the goals of the

organization.

Statutory Welfare Schemes:

The statutory welfare schemes include the following

provisions:25

1. Drinking Water: At all the working places safe hygienic

drinking water should be provided.

2. Facilities for sitting: In every organization, especially

factories, suitable seating arrangements are to be provided.

3. First aid appliances: First aid appliances are to be provided

and should be readily assessable so that in case of any minor

accident initial medication can be provided to the needed

employee.

4. Latrines and Urinals: A sufficient number of latrines and

urinals are to be provided in the office and factory premises

and are also to be maintained in a neat and clean condition.

5. Canteen facilities: Cafeteria or canteens are to be provided by

the employer so as to provide hygienic and nutritious food to

the employees.

6. Spittoons: In every work place, such as ware houses, store

places, in the dock area and office premises spittoons are to

be provided in convenient places and some are to be

maintained in a hygienic condition.

26

7. Lighting: Proper and sufficient lights are to be provided for

employees so that they can work safely during the night

shifts.

8. Washing places: Adequate washing places such as

bathrooms, wash basins with tap and tap on the stand pipe

are provided in the port area in the vicinity of the work

places.

9. Changing rooms: Adequate changing rooms are to be

provided for workers to change their cloth in the factory area

and office premises. Adequate lockers are also provided to

the workers to keep their clothes and belongings.

10. Rest rooms: Adequate numbers of restrooms are provided to

the workers with provisions of water supply, wash basins,

toilets, bathrooms, etc.

Non Statutory Schemes:

Many non statutory welfare schemes may include the

following schemes:26

1. Personal Health Care: Some of the companies provide the

facility for extensive health check-up

2. Flexi-time: The main objective of the flextime policy is to

provide opportunity to employees to work with flexible

working schedules. Flexible work schedules are initiated by

employees and approved by management to meet business

commitments while supporting employee personal life needs

3. Employee Assistance Programs: Various assistant programs

are arranged like external counseling service so that

employees or members of their immediate family can get

counseling on various matters.

27

4. Harassment Policy: To protect an employee from

harassments of any kind, guidelines are provided for proper

action and also for protecting the aggrieved employee.

5. Maternity & Adoption Leave – Employees can avail

maternity or adoption leaves. Paternity leave policies have

also been introduced by various companies.

6. Medi-claim Insurance Scheme: This insurance scheme

provides adequate insurance coverage of employees for

expenses related to hospitalization due to illness, disease or

injury or pregnancy.

7. Employee Referral Scheme: In several companies employee

referral scheme is implemented to encourage employees to

refer friends and relatives for employment in the

organization.

Labour Welfare Leads To Industrial Peace:

With the increased industrialization the past practice of

workers from villages coming to industries only during off season

is diminishing and a large section of industrial workers today

entirely depends upon their industrial employment for its

livelihood. If care is being taken for their welfare, they will be

satisfied and their productivity will increase. Labour welfare

measures are an effort towards relieving the industrial workers of

their worries and making them happy. Anything done towards the

well being of labour force comes under the purview of labour

Welfare. As a matter of fact the whole field of welfare is one in

which much can be done to combat the sense of frustration of the

industrial worker, to bring about maximum satisfaction, to relieve

him of personal and family worries, to afford him a means of

28

sphere in which he can excel all others to keep him to wider

conception of life.27

Welfare work refers to the efforts on the part of employers to

improve within the existing industrial system the conditions of

employment in their own factories. Any arrangement of working

conditions, organization of social and sports club and

establishment of funds by firm, which contribute to workers health

and safety, comfort, efficiency, economic security, education and

recreation is labour welfare measures. It is generally agreed that

labour is an underprivileged section of our society. The working

environment of any job in a factory imposes some adverse effects

on the worker because of the heat, noise, odour, fumes etc.

involved in the manufacturing process. There are also occupational

hazards and environmental problems inherent and inevitable in

the manufacturing process itself, which cannot be removed. As a

result protective devices and compensatory benefits have to be

provided for labour welfare. Welfare activities influence the

sentiments of the workers, when they feel that both the employer

and the Government are interested in their welfare and happiness,

their tendency to grouse and grumble disappear. This leads to

industrial peace which in turn open the way for the development of

the country.

29

Industrial Relations and Labour Welfare:

Meaning The relationship between the employers and

employees and trade unions is called Industrial Relations.

Harmonious relationship is necessary for both the employers and

employees to safeguard the interests of both the parties of

production.

Definitions:

Industrial relations have been defined by some of the

thinkers a follows:28

Industrial relations and personnel management are almost

synonymous term with the only difference the former places

emphasis on the aspect of employer relationship rather than on

the executive policies and activities that are set up to foster good

relations. - E.F.L. Brec

Industrial relations are that part of management which is

concerned with the man power of the enterprise whether machine

operator, skilled worker or manager. - ethel.

'Industrial relationship is the composite result of the

attitudes and approaches the employers and employees towards

each other with regard to planning, supervision, direction and co-

ordination of the activities of an organization with a minimum of

human efforts and friction, with an animating sprite of co-

operation and with proper regard for the genuine well-being of

all the members of the organization. -Tead and Matcal

30

It is clear from the analysis of the above definitions that

employment relations are generally called industrial relations. It is

a relationship between employer and employees’ employer and

employee and trade unions and employees.

Industrial Relation in Public Sector:

The entry of public sector in the economic sphere is post-

independence development. Prior to 1947, public sector

investment was limited to the railways, posts and telegraphs

department, the ordnance factories, and a few State-managed

factories like salt manufacturing, etc. the philosophy and

programme of public sector undertakings are incorporated in the

Industrial Policy Resolutions of 1984 and 1956. The Industrial

Policy Resolution of 1984 declared that a dynamic national policy

must be directed to a continuous increase in production by all

possible means, side by side with measures to secure its equitable

distribution.29 The problem of State participation in industry and

the condition in which private enterprise should be allowed to

operate must be judged in this context. Consequently, expansion in

public sector began to be take after this period.

Worker’s Safety and Health:

Worker’s Safety and Health are critical elements in every

work setting. A safe working environment cuts absenteeism,

companies’ insurance bills and enhances productivity. The

problem of occupational health and safety presents a serious

challenge to most organizations. Both Employers and Trade

Unions must play a leading role in identifying hazards, educating

members and helping in protecting their members against work

31

hazards. Prevention of the workplace accidents and infections

should be an integral part in an effective and coherent strategy for

a number of reasons. This is in recognition of the fact that

industrial accidents can have a negative impact both on the well-

being or morale of employees and on the productivity of the

workplace. The employer has a common legal duty to assess the

work place in order to provide a safe working environment for his

employees. Where an employee is injured at work and institutes a

delictual claim against the employer, the employee will succeed if

he or she can prove intent or negligence on the part of the

employer or of a co-employee if the employer was to be found

vicariously liable. Similarly, if an employee contacts a disease and

it can be proved that the disease arose out of or in the course of his

employment due to the nature of the work, he is engaged upon, the

employer has a common legal duty to compensate the employee for

damages suffered in consequence of the disease.30

Health and safety are important factors that many

organizations should provide to all of their employees if the

management wants to be successful. Poor health and safety occurs

to different workers especially those working in unfavorable

conditions like in construction companies because these employees

usually are ignorant about their safety rights, don’t have trade

unions to represent their needs in work places.

32

Labour Policies in India:

The evils of industrial dispute have led to the labour

legislation. Now the State has a direct interest in the industrial

peace and prosperity. These acts are aimed at reduction of

production losses due to industrial disputes and to ensure timely

payment of wages and other minimum amenities for the workers.

Labour policy in India has been evolving in response to specific

needs of the situation to suit requirements of planned economic

development and social justice. When labour relations get

legalized, they are beneficial to those who can develop institutional

skills to use them to their advantage. Legalized framework

promotes bureaucratization, and thus enables the government to

prevent labour to unite and struggle for industrial equity and

democracy. Any programme of action for enhancing labour power

needs to evolve a better enforcement mechanism. Labour needs to

be given representation in carving out such an enforcement

mechanism. There is a need for constant monitoring for the

implementation mechanism by rights groups at national and

international level. In the globalization euphoria unionism and

collective bargaining is as valuable as the welfare state and welfare

economics themselves are in a deep crises. There is a need for

simplification of labour laws. Most of the labour Acts passed by the

Government for the welfare of the workers related to the workers

in organized sector while, very few Acts were beneficial to the

unorganized workforce.31

33

Industrial Disputes:

An industrial dispute may be defined as a conflict or

difference of opinion between management and workers on the

terms of employment. It is a disagreement between an employer

and employees' representative; usually a trade union, over pay and

other working conditions and can result in industrial actions.

When an industrial dispute occurs, both the parties, that is the

management and the workmen, try to pressurize each other. The

management may resort to lockouts while the workers may resort

to strikes. As per Section 2(k) of Industrial Disputes Act, 1947, an

industrial dispute in defined as any dispute or difference between

employers and employers, or between employers and workmen, or

between workmen and which is connected with the employment or

non-employment or the terms of employment or with the

conditions of labor, of any person. This definition includes all the

aspects of a dispute. It, not only includes the disagreement

between employees and employers, but also emphasizes the

difference of opinion between worker and worker.32

The disputes generally arise on account of poor

wage structure or poor working conditions. This disagreement or

difference could be on any matter concerning the workers

individually or collectively. It must be connected with employment

or non-employment or with the conditions of labor. From the point

of view of the employer, an industrial dispute resulting in stoppage

of work means a stoppage of production. This results in increase in

the average cost of production since fixed expenses continue to be

incurred. It also leads to a fall in sales and the rate of turnover,

leading to a fall in profits. The employer may also be liable to

34

compensate his customers with whom he may have contracted for

regular supply. Apart from the immediate economic effects, loss of

prestige and credit, alienation of the labor force, and other non-

economic, psychological and social consequences may also arise.

Loss due to destruction of property, personal injury and

physical intimidation or inconvenience also arises. For the

employee, an industrial dispute entails loss of income. The regular

income byway of wages and allowance ceases, and great hardship

may be caused to the worker and his family. Employees also suffer

from personal injury if they indulge into strikes n picketing; and

the psychological and physical consequences of forced idleness.

The threat of loss of employment in case of failure to settle the

dispute advantageously, or the threat of reprisal action by

employers also exists. Prolonged stoppages of work have also an

adverse effect on the national productivity, national income. They

cause wastage of national resources. Hatred may be

generated resulting in political unrest and disrupting amicable

social/industrial relations or community attitudes.

Strike:

A strike is a very powerful weapon used by trade unions and

other labor associations to get their demands accepted. It generally

involves quitting of work by a group of workers for the purpose of

bringing the pressure on their employer so that their demands get

accepted. When workers collectively cease to work in a particular

industry, they are said to be on strike. According to Industrial

Disputes Act 1947, a strike is ―a cessation of work by a body of

persons employed in an industry acting in combination; or a

35

concerted refusal of any number of persons who are or have been

so employed to continue to work or to accept employment; or a

refusal under a common understanding of any number of such

persons to continue to work or to accept employment.33

This definition throws light on a few aspects of a strike.

Firstly, a strike is a referred to as stoppage of work by a group of

workers employed in a particular industry. Secondly, it also

includes the refusal of a number of employees to continue work

under their employer. In a strike, a group of workers agree to stop

working to protest against something they think is unfair where

they work. Labors withhold their services in order to pressurize

their employment or government to meet their demands. Demands

made by strikers can range from asking for higher wages or better

benefits to seeking changes in the work place environment. Strikes

sometimes occur so that employers listen more carefully to the

workers and address their problems.

Causes of strikes:

Strikes can occur because of the following reasons:

Dissatisfaction with company policy

Salary and incentive problems

Increment not up to the mark

Wrongful discharge or dismissal of workmen

Withdrawal of any concession or privilege

Hours of work and rest intervals.

Leaves with wages and holidays

Bonus, profit sharing, Provident fund and gratuity

Retrenchment of workmen and closure of establishment

Dispute connected with minimum wages

36

Types of Strike:34

1. Economic Strike: Under this type of strike, labors stop their

work to enforce their economic demands such as wages and

bonus. In these kinds of strikes, workers ask for increase in

wages, allowances like traveling allowance, house rent

allowance, dearness allowance, bonus and other facilities such

as increase in privilege leave and casual leave.

2. Sympathetic Strike: When workers of one unit or industry

go on strike in sympathy with workers of another unit or

industry who are already on strike, it is called a sympathetic

strike. The members of other unions involve themselves in a

strike to support or express their sympathy with the members

of unions who are on strike in other undertakings. The

workers of sugar industry may go on strike in sympathy with

their fellow workers of the textile industry who may already be

on strike.

3. General Strike: It means a strike by members of all or most

of the unions in a region or an industry. It may be a strike of

all the workers in a particular region of industry to force

demands common to all the workers. These strikes are usually

intended to create political pressure on the ruling government,

rather than on any one employer. It may also be an extension

of the sympathetic strike to express generalized protest by the

workers.

4. Sit down Strike: In this case, workers do not absent

themselves from their place of work when they are on strike.

37

They keep control over production facilities. But do not work.

Such a strike is also known as 'pen down' or 'tool down' strike.

Workers show up to their place of employment, but they refuse

to work. They also refuse to leave, which makes it very difficult

for employer to defy the union and take the workers' places.

5. Slow Down Strike: Employees remain on their jobs under

this type of strike. They do not stop work, but restrict the rate

of output in an organized manner. They adopt go-slow tactics

to put pressure on the employers.

6. Sick-out or sick-in: In this strike, all or a significant

number of union members call in sick on the same day. They

don‘t break any rules, because they just use their sick leave

that was allotted to them on the same day. However, the

sudden loss of so many employees all on one day can show the

employer just what it would be like if they really went on

strike.

7. Wild cat strikes: These strikes are conducted by workers or

employees without the authority and consent of unions. They

were protesting against some remarks allegedly made against

them by an employer.

38

Changing Economic Policies:

India has opened its business market to multinational

companies through its liberalization policy. This leads India by

2020, to be the fourth largest economy in the world according to

World Bank forecasts. The liberalized economic policy of India has

given pressure to domestic company’s human resource functions.35

The economic status of the India can be achieved only if they have a

friendly human resource and industrial relations policies in the

industry. Because it is a dynamic concept which depends upon the

pattern of society, economic systems and political set-up of a

country and changes with the changing economic and social order.

It is an art of living together for the purposes of production,

productive efficiency, human wellbeing and industrial progress. It

comprises of a net work of institutions, such as, trade union,

collective bargaining, employers, the law and the state, which are

bound together by a set of common values and aspirations. In the

present competitive business environment, Indian organisations

are feeling compelled from within to reorient their employment

relationships. In addition, companies with strong employee

relations initiatives will benefit because their workforce is highly

motivated to expend their best efforts

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