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Industrial Relations: An Overview

Chapter 1
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Lecture Plan

• Concept of Industrial Relations

• Industrial Relations and the Constitution of India
• History of Industrial Relations in India
• Theoretical Perspectives
• Trade Unionism
• Organization of Industrial Relations in India
• National Commissions on Labour
• Industrial Relations in Modern Era
• Industrial Relations and HRM/HRD
• Principles of Labour Legislations
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Chapter Objectives

• To describe the concept and evolution of

industrial relations

• To discuss the theoretical perspectives of

industrial relations

• To identify the impact of globalization and

technology on industrial relations
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Key Concepts

• Systems model
• Pluralist theory
• Unitary perspective
• HRM
• Directive Principles
• Labour legislations
• Tripartism
• National Commission on Labour
• Globalization
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Concept of Industrial Relations

• The means by which various interests involved in the labour

market are accommodated to regulate employment
relationships

• Emerged with the need to manage the relations between

labour and management in industry

• Characterized as collectivist and pluralist in nature

• Traditionally viewed as:
– Relationship between employers and their representatives and
workers and their representatives, emerging out of work
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Concept of Industrial Relations

• Modern approach includes

 Relationships between workers
 between workers and employers
 and between employers and employers
 Processes involved in these relationships (e.g.,
organizing of workers, workers’ participation in
decision making, dispute settlement, collective
bargaining, etc.)
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Definitions of Industrial Relations
• Relationship between management and employees, or among
employees and their organizations, that characterize or grow out
of employment. (Yoder)

• A study of the institutions of job regulation.

(Flanders)

• The study of processes of control over work relations.

(Hyman)

• The relation between an employer and employee in the course of

running of an industry that may project itself to spheres which
may transgress to the areas of quality control, marketing, price
fixation and disposition of profits among others. (Johri)
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Industrial Relations and Constitution of India

• Guidelines for creating IR system provided by the Constitution of India

• Basis for labour policies

– Fundamental Rights and Directive Principles of State Policy in the Constitution of India

• Fundamental Rights ensured through various labour legislations

 Right to equality (Article 14)
 Prohibition of discrimination (Article 15)
 Rights to freedom of speech and association (Article 19)
 Rights to life and personal liberty (Article 21)
 Prohibition of traffic in human beings and forced labour (Article 23)
 Prohibition of employment of children in factories, etc. (Article 24)

• Directive Principles of State Policy

– Act as guidelines for the State in creating such IR system in the country that would
provide equity, justice and welfare for workers
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Contd.
• Aims of State
 Secure a social order for the promotion of welfare of people (Article 38)

 Direct its policies towards securing adequate means of livelihood for all
citizens through various means including equal pay for equal work,
protection of health and strength of workers, and protection of childhood
and youth from exploitation (Article 39)

 Have a legal system to promote justice on the basis of equal opportunity and
provide free legal aid through suitable legislation (Article 39A)

 Secure right to work, to education, and to public assistance in cases of

unemployment, old age, sickness, disablement and undeserved want (Article
41)

 Secure just and humane conditions of work and maternity relief (Article 42)

 Secure work, living wage, decent standard of life, etc. to people (Article 43)

 Secure participation of workers in the management of undertakings engaged

in any industry (Article 43A)
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History of Industrial Relations In India

Evolution of IR divided into two phases

 Pre-Independence phase
 Post-Independence phase

Pre-Independence phase
 During mid-nineteenth century
 Concurrent with emergence of industries in India
 Clear divide prevalent between capitalists and labour
 Gradual tendency among workers to organize themselves
 Enactment of the Factories Act, 1881
 Trade Unions Act promulgated in 1926
 Labour unrest increased with World War I (1914-18)
 Condition of workers further worsened during the economic depression in 1929
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– Pre-Independence phase Contd.
• World War II (1939-45) resulting in poor living conditions for
labour
• A tripartite consultative machinery set up in 1942
• Legislations enacted:
– Industrial Employment (Standing Orders) Act, 1946
– Industrial Disputes Act, 1947
• Post-Independence Phase
 Industrialization and containing labour unrest as the two priorities of the
government
 A Tripartite Conference convened in 1947
 Industrial Truce Resolution adopted
 Emphasis on industrial peace during the First Five Year Plan
 Notable changes in IR scenario with the Industrial Policy of 1991
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Theoretical Perspectives of Industrial Relations
Systems Model
 Proposed by Dunlop in 1950s

 Industrial relations considered as a social sub-system

 Comprising labour, management and State
 Functioning within environmental factors

 Environment made up of technology, labour, markets and various power equations in

society

 External environmental forces act upon labour-management relationship

 Labour-management-government interactions with specific characteristics

 Rules arising out of and governing existing employment relationships

 Shared understanding of rules for stability of the system

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Contd.
Unitary Perspective
– Views work enterprise as
 A social system or
 A unitary organization of management and workers
 Considers management as the main authority in an organization
 No conflict of interest between management and trade union
 Both must work together to achieve their common objectives
 Trade unions not essential for well-being of workers or for managing
conflicts
 Conflict as a dysfunctional aspect of work that disturbs harmony

Drawback
• Failure to recognize that power is unequally distributed in organizations
and this inequality may generate conflicts
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• Pluralist Theory Contd.
 Views an organization as sub-system of a social system made up of divergent
groups
 Management and trade unions have their own interests
 Common objective of maintenance and growth of organization

 Conflict between workers and management difficult to be reconciled

 Conflict itself not wrong and can be contained by an appropriate network of
rules and regulations
– Drawback
• Over-emphasis on rules and procedures
• Radical Perspective
• Inspired by Marxist views on capitalism
• Views organizations as representing oppressive nature of general societal
structure
• Conflict is unavoidable in organizations
• Management represents the interests of capitalists who want to maximize
profit at the cost of workers
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Organization of Industrial Relations in India
• Labour as a subject in the Concurrent List under the Constitution of
India

• Both Central and State Governments empowered to enact legislations,

subject to certain matters being reserved for the Centre

• IR tripartite in nature

• IR revolves around three actors

• Employers
• Workers and their trade unions
• State
– Bipartite arrangements
• For managing relations between workers and management
• Emphasis on settling disputes through mutual dialogue
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Labour Administration Machinery
Labour related issues controlled by Ministry of Labour & Employment

 Four attached offices of the Ministry

• Office of the Directorate General of Employment and Training, New Delhi
• Office of the Chief Labour Commissioner (Central), New Delhi
• Labour Bureau, Chandigarh & Shimla
• Office of the Directorate General of Factory Advice Service and Labour Institutes, Mumbai

 Ten subordinate offices of the Ministry

• Office of the Directorate General of Mines Safety, Dhanbad
• Offices of the Welfare Commissioners in nine cities in India

 Four autonomous organizations of the Ministry

• Employees’ State Insurance Corporation
• Employees’ Provident Fund Organization
• V. V. Giri National Labour Institute
• Central Board for Workers’ Education

–Other adjudicating and arbitration bodies

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National Commissions on Labour
 Two National Commissions on Labour set up to review various labour
related issues and give recommendations

 First National Commission on Labour

• Set up in 1966 under the Chairmanship of Justice P. B. Gajendragadkar
• Recommendations instrumental in enactment of certain laws
– The Contract Labour (Regulation and Abolition) Act, 1970, the Equal Remuneration Act,
1976, and the Child Labour (Prohibition & Regulation) Act, 1986

• Second National Commission on Labour

• Set up in 1999 under the chairmanship of Ravindra Varma
• Recommendations related to:
» Review of laws
» Social security measures
» Women workers and child labour
» Wages, etc.
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Industrial Relations in Modern Era
– Impact of globalization
 Expanded boundaries of doing business across nations
 Economic interdependence between countries
 Shift in traditional system of IR
 Changing dimensions of relationship between management
and workers
 Changing skill requirements
 Increased awareness of workers regarding labour laws, rights,
work conditions, etc. due to IT
 Growth of tertiary sector creating new employment
opportunities
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Contd.
–Industrial Relations and Technological change
• Technology resulting in redundancy of workforce

• Contracting and sub-contracting of labour

 Change in traditional systems of production and
 New pattern of employer-worker relationship

• Impact on labour
 Learning new skills
 Building new capabilities
 Training to operate new machines
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Industrial Relations and HRM/HRD
• Human Resource Management (HRM)
 Concerned with creating such work conditions and systems
as can result in better employee efficiency
• Human Resource Development (HRD)
 Developmental in orientation
 Objective of improving and enhancing employee
capability and competence to gain competitive
advantage
• Industrial Relations
 Wider scope than HRM
 Objective of achieving improved relations between workers
and management at various levels
 Collectivist in nature
 Bipartite or tripartite in character, unlike HRM/HRD
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Industrial Relations and HRM/HRD

• HRM/HRD policies designed by the management and

changed from time to time

• IR issues mostly governed by labour laws

• IR and HRM/HRD may be integrated for general

development, motivation and welfare of workers and
achieving harmonious management-employee
relations.
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Principles of Labour Legislations

Labour laws in India

– Origin and guidelines derived from the Constitution of India
– Based on the principles of
• Social equity
» Equality between different social groups such as rich and poor
• Social justice
 Fair distribution of profits between owner and workers in an
industrial enterprise
 Provision of safety and healthy work conditions for workers
Objectives of Labour laws
• Protect workers
• Maintain peace, harmony and discipline in industry
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Contd.
Five categories of labour legislations in India

• Regulatory legislations
• E.g., Trade Unions Act, 1926
• Wages related legislations
• E.g., Minimum Wages Act, 1948
• Welfare legislations
• E.g., Factories Act, 1948
• Protective legislations
• E.g., Child Labour (Prohibition & Regulation) Act, 1986
• Social security legislations
• E.g., Employee Compensation Act, 1923
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Summary
• The concept of industrial relations may be said to have come into being
with the need to manage the relations between labour and management
in industry.

• The Constitution of India provides the basic guidelines for creating

industrial relations system

• The history of industrial relations can be traced back to the time of

emergence of industries in India
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Summary
• Dunlop views industrial relations as a system
consisting of three actors: management, workers and
government.

• Unitary theory views work enterprise is a social

system made up of management and workers, having
common objectives, with no conflict.

• Pluralist perspective views organization as made up

of groups of people with divergent objectives and
hence conflict is natural.
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Summary
• Radical perspective considers conditions and work in
organization as exploitative to workers.
• Industrial relations system in India is tripartite in nature.
• The First National Commission on Labour was set up in 1966
and the Second National Commission on Labour was set up in
1999.
• The concepts of HRM, HRD and Industrial Relations may be
integrated to create an efficient and motivated workforce
working in a harmonious environment
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Summary

• Globalization and liberalization have had deep

impact on labour and IR.
• Two important principles of labour legislations
in India are social equity and social justice.
• Labour legislations in India may be clubbed
under five categories.