INDUSTRIAL RELATIONS: EVOLUTION AND GROWTH IN

INDIA

Submitted to: Submitted By: Prof. Manoj Patwardhan

Sushant Malhotra 2012 MBA

044

Department of Management SciencesABV-Indian Institute of Information Technology and

Management,Gwalior {Madhya Pradesh}

What is Industrial Relations? The concept of industrial relations means

the relationship between the employees and management in the day to day working of an industry.

According to ILO international labor organization industrial relations deal with either relationship between the state and employers’ and workers organizations or the relations between the occupational organizations themselves.

Nature of Industrial Relations

Concerned with relationship of management

and workers.

To protect the interests of employees

Concerned with systems, rules and

procedures used by unions & employees

Role of regulatory mechanism in resolving

any industrial disputes.

Objectives of Industrial Relations

To maintain industrial democracy based on participation of labour in the management and gains of industry.

To raise productivity by reducing tendency of high labour turnover and absenteeism.

To ensure workers’ participation in management of the company by giving them a fair say in decision-making and framing policies.

To establish a proper channel of communication. To increase the morale and discipline of the

employees.

To safeguard the interests of the labour as well as management by securing the highest level of mutual understanding and goodwill between all sections in an industry.

To avoid all forms of industrial conflicts so as to ensure industrial peace by providing better living and working standards for the workers.

To bring about government control over such industrial units which are running at a loss for protecting the livelihood of the employees.

Parties to IR

Employer-

Employee

Relations

Employees

Employee

Associations

Government

Courts &

Tribunals

Employer

Associations

Employers

The Actors in a System:

The actors are: (a) hierarchy of managers and their representatives in supervision(b) a hierarchy of workers (non-managerial) and any spokesmen(c) specialised governmental agencies (and specialised private agencies created by the first two actors) concerned with workers, enterprises, and their relationships.

Evolution of Industrial Relations

Industrial relations has its roots in the industrial revolution which created the modern employment relationship by spawning free labour markets and large-scale industrial organizations with thousands of wage workers. As society wrestled with these massive economic and social changes, labour problems arose. Low wages, long working hours, monotonous and dangerous work, and abusive supervisory practices led to high employee turnover, violent strikes, and the threat of social instability.

Intellectually, industrial relations was formed at the end of the 19th century as a middle ground between classical economics and Marxism, with Sidney Webb and Beatrice Webb’s Industrial Democracy (1897) being the key intellectual work. Industrial relations thus rejected the classical icon.

Evolution of Industrial Relations in india The evolution of industrial relations in India

began a long time ago. The caste system greatly influenced the ancient

industries and their development. Due to successive foreign invasions in India, the living conditions of slave and artesian couldn't be differentiated. Furthermore, under the autocratic regime of Muslim rulers, the conditions of employees worsened. Wages were not guaranteed, the living conditions of workers were harsh, and there was no proper management. The coming of the British didn't improve the working conditions. After some time, however, most Indian industries were modelled after the British system of business, and this led to growth in various sectors.  

Evolution of Industrial Relations in india

The protective phase

(1947-1956)

Conflict Ridden Interventionist phase

(1967-1980)

The productivity-, Efficiency-. Quality-orientation phase

(1981-1991)

The consolidation

Phase(1956-1965)

The post reform decade

(1992-till now)

Evolution of Indian Industrial Relations

The protective phase (1947-66; 1st & 2nd five-year plans):

Import-Substitution Industrialization. National capitalism Economy grows @ 2%-3%/year. Formation of large employment- intensive public

enterprises. Largely centralized bargaining with static real

wages. Relative industrial peace.

Evolution of Indian Industrial Relations

The Consolidation Phase(1956-1965) There should be no lockout or strike without

notice. No unilateral action should be taken in

connection with any industrial matter. There should be no recourse to go slow

tactics. No deliberate damage should be caused to

plant or property. Awards and agreements should be speedily

implemented.

Evolution of Indian Industrial Relations

Conflict Ridden Interventionist phase (1967-80; 4th & 5th five -year plans):

Economic stagnation. Economy grows at @ 2%/year ; two oil price

shocks Considerable slowdown in employment growth

&declining real wages. Crisis in IR system: massive strikes & industrial

conflict, multiple unionism & decline in strength. Conflict, multiple unionism & decline in strength.

Government loosing control over the IR system.

Evolution of Indian Industrial Relations

The productivity- Efficiency- Quality- orientation phase (1981-91; 6th & 7th five-year plans):

Initial domestic economic liberalization; economy grows @ 5.7%/year.

Regional variation in economic development increases.

Variation in wage growth: skilled versus unskilled, labour productivity increases, period of ‘jobless 'growth.

Rise of ‘independent 'enterprise unionism.

Evolution of Indian Industrial Relations

The Post-Reform Decade, 1992-2009 Stabilization & Structural Adjustment

Reforms: Economy grows @ 6.2%-6.5% In the five years (2004-09) growing @ 7%-

8%/year. Regional variation increases massively. Max growth in services: IT, IT-enabled

services, ‘hotels, trade & restaurants’’, but also in autos & ancillaries; more recently in overall manufacturing.

Industrial Relations in First World War

The First World War was an opportunity in disguise for local factories in India. Prices of virtually all products went up and profits soared, however, wages of lower employees were still the same. There were various strikes and disputes between management and employees.

During this time, the Workmen's Compensation Act (1923), the Trade Union Act (1926), and the Trade Disputes Act (1917) were established.

While the wages of employees remained the same, they were given a certain share of profits made by their hiring industry. Strikes, however, were sometimes prohibited under the Emergency Rules.

The years following World War II involved the most workers' upheaval, and saw the establishment of Industrial Employment Act (1946) and Industrial Disputes Act (1947).  

Post-Independence Industrial Relations

The post-independence era saw a developing relation between industry and labour.

A conference called the Industrial Truce Resolution took place in 1947, and foresaw the establishment of the Minimum Wages Act, Factories Act, and Employees State Insurance Act in 1948.

This ensured peace between labour and industry. While industrial relations in India have evolved a long way, some features of the early system still exist today.

Importance of Industrial Relations

Uninterrupted Production: The most important benefit of industrial benefits is that it ensures continuity of production. This means continuous employment for all involved right from managers to workers. There is uninterrupted flow of income for all. Smooth running of industries is important for manufacturers, if their products are perishable goods and to consumers if the goods are for mass consumption (essential commodities, food grains etc.). Good industrial relations bring industrial peace which in turn tends to increase production.

Contributes to economic growth and development.

Causes of poor Industrial Relations

Economic causes: Often poor wages and poor working conditions are the main causes for unhealthy relations between management and labour.Unauthorised deductions from wages, lack of fringe benefits, absence of promotion opportunities, faulty incentive schemes are other economic causes. Other causes for Industrial conflicts are inadequate infrastructure, worn-out plant and machinery, poor layout, unsatisfactory maintenance etc.

Organisational causes: Faulty communications system, unfair practices, non-recognition of trade unions and labour laws are also some other causes of poor relations in industry.

Example:-Industrial Disputes

The peace of the last twenty years in Industrial Relations (IR) has been ruffled by the current, bitterly fought Maruti Suzuki strike . The Maruti Suzuki strike has brought to the several issues that have been silently plaguing IR over the years, of which four are of particular interest

Contract Labour is just indicative of larger issues

Maruti Suzuki, like many other companies, engages over 50 per cent of its workforce as contract labour and temporary workers. The s is a common practice used by employers to save on costs The problem is that in a country with Great unemployment, the desire for permanent employment, particularly in a blue chip company like Maruti Suzuki, is understandably High Post 1990, the flaws of the economy forced some industrial organisations to reduce their permanent workforce, which they found extremely difficult given the legal implications and business obligations. Consequently employers have realized that the archaic labour laws of the country are out of sync with the times and changing business environment. Another factor that predisposes organisations to use contract labour is that although the reduction of workforce or closure is allowed by law, it is only after permission is granted by the Government which often is based on political considerations not germane to the issue. Discouraging use of contract labour indiscreetly and preventing their exploitation is necessary. It is also Essential to allow employers to resize their organisations. It is becoming obvious that there is an urgent need to find out why undesirable practices Are Being adopted and Make corrections accordingly

Some Major Industrial Disputes Tata Motors has decided to move its Nano factory

out of Singur after violent protests by farmers. The honb’le Supreme Court gave South Korean

steel firm POSCO {pohang iron and steel company} the use of large swathes of forestland in Orissa for a $12-billion plant that protesting farmers said would displace thousands of people. The protests delayed the start of construction on the plant, which could be India's biggest foreign investment.

The honb’le Supreme Court allowed Vedanta Resources to mine bauxite in hills considered sacred by tribal people in Orissa. The mining would feed an alumina refinery, part of an $800-million project that has been widely opposed. Environmentalists say the open-cast mine will wreck the rich biodiversity of the remote hills and disrupt key water sources vital for farming.

Goa, famous for its beaches and tourist industry, in January dropped plans to build special economic zones for industry after protests from political and environmental groups.

West Bengal last year aborted a plan for a special economic zone for a chemicals complex in Nandigram after fierce protests. At least 35 villagers were killed in clashes between locals and communist party workers and the state government put all SEZs on hold in the state.

Various Approaches proposed by the industrial relations

scholars as per their research

Unitarist perspective

In unitarism, the organization is perceived as an integrated and harmonious whole with the ideal of "one happy family", where management and other members of the staff all share a common purpose, emphasizing mutual cooperation. Furthermore, unitarism has a paternalistic approach where it demands loyalty of all employees, being predominantly managerial in its emphasis and application.

Consequently, trade unions are deemed as unnecessary since the loyalty between employees and organizations are considered mutually exclusive, where there can't be two sides of industry.

Pluralist perspective

In pluralism, the organization is perceived as being made up of powerful and divergent sub-groups, each with its own legitimate loyalties and with their own set of objectives and leaders. In particular, the two predominant sub-groups in the pluralist perspective are the management and trade unions.

Consequently, the role of management would lean less towards enforcing and controlling and more toward persuasion and co-ordination. Trade unions are deemed as legitimate representatives of employees, conflict is dealt by collective bargaining and is viewed not necessarily as a bad thing and, if managed, could in fact be channelled towards evolution and positive change.

DUNLOP’S APPROACH Dunlop defines an industrial relations system in

the following way:An industrial relations system at any one time in its development is regarded as comprised of certain actors, certain contexts, an ideology, which binds the industrial

relations system together, and a body of rules created to govern the actors at the workplace and work community.

THE INDUSTRIAL SOCIOLOGY APPROACH

G. Margerison, an industrial sociologist, holds the view that the core of industrial relations is the nature and development of the conflict itself.

the ACTION THEORY APPROACH

The action theory approach takes the collective regulation of industrial labour as its focal point. The actors operate within a framework, which can at best be described as a coalition relationship.

THE HUMAN RELATIONS APPROACH

In the words of Keith Davies, human relations are “the integration of people into a work situation that motivates them to work together productively, cooperatively and with economic, psychological and social satisfactions.” According to him, the goals of human relations are:

(a) to get people to produce (b) to cooperate through mutuality of

interest (c) to gain satisfaction from their

relationships.

THE GANDHIAN APPROACH

Workers should seek rebred of just and reasonable demands through collective actions.

Trade unions should decide to go on strike taking ballot authority from all workers, and remain peaceful using non violent methods.

Workers should avoid strikes to the extent possible.

Strikes are to be the last resort Workers should take recourse to voluntary

arbitration where direct settlement fails.

THANK you