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Group 2 - Evolution of Industry Relations in India
Group 2 - Evolution of Industry Relations in India
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Introduction
Industry relations describe the relationship between the employer and the employee. It outlines the interaction between the employee, employer and the government and the institutions through which such an interaction is mediated. The Industrial Relation relations also called as labor - management, employee-employers relations. Definition:i. Industrial Relation is that part of management which is concerned with the manpower of the enterprise whether machine operator, skilled worker or manager. BETHEL, SMITH & GROUP ii. Industrial Relation is a relation between employer and employees, employees and employees and employees and trade unions. - Industrial dispute Act 1947 iii. While moving from jungle of the definitions, here, Industrial Relation is viewed as the process by which people and their organizations interact at the place of work to establish the terms and conditions of employment. The various parties involved are government, employers, trade unions, union federations or associations, government bodies, labor courts, tribunals and other organizations which have direct or indirect impact on the industrial relations systems.
Pluralistic - In pluralism the organization is perceived as being made up of powerful and divergent sub-groups - management and trade unions. This approach sees the conflicts and disputes arising between the management and the workers as something very natural and cant be avoided. There is a greater propensity for conflict rather than harmony. So this leads to the need for a trade union whose main purpose is to resolve the conflicts mainly by collective bargaining. Trade Unions are encouraged and representatives are given scope to carry out their respective representative activities. Sometimes outside arbitrators are used to assist in the resolution of conflicts. Marxist Marxist theory argues that weakness and contradiction inherent in the capitalist system would result in revolution and the ascendancy of socialism over capitalism. This will be marked by fall of monopolies, more focus on the welfare of the workers, wages that may improve the economic conditions of the workers. It is concerned with the structure and nature of society and assumes that the conflict in employment relationship is reflective of the structure of the society. Conflict is therefore seen as inevitable and trade unions are a natural response of workers to their exploitation by capital.
Thus, it is evident that good industrial relations are 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. An economy organized for planned production and distribution, aiming at the realization of social justice and welfare of the massage can function effectively only in an
atmosphere of industrial peace. If the twin objectives of rapid national development and increased social justice are to be achieved, there must be harmonious relationship between management and labor.
THE EMPLOYEES STATE INSURANCE ACT, 1948 The objective of the Act is to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation there to. The act provides for these benefits through compulsory state insurance. These benefits are secured by financial contributions to the scheme both by employers and employees, central and state government grants, donations &gifts. The act is designed to provide cash benefits to the worker in distress or to his dependents in case of death. All persons employed for wages in or in connection with work of a factory or establishment are entitled to disablement benefit provided their remuneration does not exceed Rs.2, 500 per month. The dependents of workers who died as a result of any employment injury were paid compensation in the form of a pension. TRADE UNIONS ACT, 1926 Trade unions are present in almost all companies, especially manufacturing companies. These trade unions stand as the representatives of the labor force and as a medium to raise the concerns of the employee issues. The Trade Union Act provides the registration of the trade unions with a view of rendering lawful organization of labor to enable collective bargaining. The trade unions thereby will have some protection and privileges. The Act extends to the whole of India and applies to all kinds of unions of workers and associations of employers, which aim at regularizing labor management relations. Even though the act doesnt strictly talks about registered unions, it will be desirable to get the trade unions registered as it provides some rights and privileges. Also they will be able to get legal status. THE INDUSTRIAL DISPUTES ACT, 1947 There may be cases where disputes occur between the management and its employees. The main objective of the industrial disputes act is to bring peace between these two. It aims to prevent and settle industrial disputes between these two. It also tries to secure and preserve amity and good relations between employers and the workmen through internal works and committee. There will be also the involvement of external bodies such as labor courts, courts of inquiry, tribunals etc. The act also tries to prevent industrial strikes, spread harmony and ensure social justice. The ultimate objective is to achieve industrial progress and economic growth. THE FACTORIES ACT, 1948 The Act came to existence from the 1st April 1949. The act has provisions of approval, licensing and registration of factories. It also ensures the health and safety conditions of workers. The welfare of the employees is the main objective of the act. It also has the provisions regarding the wages, working hours, holidays and about annual leave with wages. The act also grants the State governments the power to grant permission for the location of the factories and if the factory is hazardous to human life.
During the British rule many mining industries and Tata iron and steel industry came into existence but their growth was very slow and the employee-management relations was also not that encouraging. By the time when First World War was about to end a new labor policy came into picture and it created definite social, economic and political situation, which brought new hopes among people for a new and improved social balance. There was great intense among the laborers because the laborers were not being paid sufficiently and reasonably with the rising prices in the economy and according to their expectations. But the establishment of International Labor Relation (ILO) in 1919 had a great influence in the labor union and Industrial relations guidelines in India. The materialization of trade unions in India and particularly the development of All India Trade Union Congress (AITUC) act and many other trade union acts in 1920 was another significant occurrence in the history of industrial relations in India. Second Phase: During the second phase of Industrial Relation after the end First World War many new policies came with the aim of improving the working conditions and stipulation of social security profits for the workers. It was a start of new era which resulted as a period of growth for employers. Due to the growth of Industrialization there was a significant rise in the economy and because of which the profits starting going up. Even though there was rise in the economy there was not much difference in the wages of the laborers as it was not matching with the growth in the economy. And because of this indifference and economic injustice, it gave rise to various revolutions by the employees in the unorganized sector of the country which resulted in many strikes or lockouts. During this phase, as a result of Industrial Labor Relation influence, various laws and acts came into action such as the Trade Disputes Act (1917), Workmens Compensation Act (1923) and the Trade Unions Act (1926). During the Second World War there was more growth due to further industrialization and the employers started gaining more profits. And because of which the employees started demanding more share in them. They were not been given any rise in their wages due to the growth and profits but were granted bonus and dearness allowance as a compensation. For many years after the end of Second World War there was lot of disturbances among the employees from the point of view of the growing Industrial relations in the country. So to put an end to all these problems, in 1946 the Industrial Employment Act (Standing orders) and the Industrial Disputes Act in 1947 was implemented. Third Phase: Soon after the Independence in 1947, there was a growing need according to the welfare of the national economy, to put a stop to strikes or lockouts that interrupted in many production and industrial sites because it resulted in huge loses. And due to this a tripartite conference was, convened in 1947, at which the Industrial Truce Resolution was adopted, giving dominant importance to the maintenance of employee rights and Industrial peace. Many more acts were then passed and practiced in 1948 such as the Factories Act, Minimum Wages Act and the Employees State Insurance Act. After the independence, Industrial scenario was subjected to lot of confusion and perplexity and Industrial conflict along with the employees management relations was widespread everywhere. Due to this the emergence of government took place which acted
as a mediator between management and workers and helped them settle their disputes in a peaceful way. And this gave rise to the most important, Industrial Disputes Act of 1947. Various other norm and schemes then came into existence during the second five year keeping in mind the employees interest to put together the much needed issues such as minimum wage, wage rules, convention on rationalization, policy of discipline, standard set of laws for conduct, and schemes for workers participation in management.
reduce costs but would also increase the speed of operations. This led to a large section of labor force being laid off. The Industrial Disputes Act, 1947 deals with lay-off or retrenchment where certain basic formalities have to be complied with for termination of services, which provides some measures of social guarantee to the laborer. But these MNCs can relieve themselves of such formalities by making an application under Section 36-B of the Industrial Disputes Act, which empowers the Government concerned to exempt them from the operation of the Industrial Disputes Act, 1947. Thus, it becomes easy for them to indirectly follow an exit policy of hire and fire, thereby resulting in displacement of labor. (Sinha, 2004). Disinvestment: The privatization of the public sector companies by an instrument called divestment has resulted in either layoff or offering Voluntary Retirement Schemes (VRS) of approximately 60% of workforce. (Dutt, 2008). This has further led to decline in employment, dilution of collective bargaining, worsening of working conditions and reduction in wages. Contracting Base of the Trade Unions: With the emergence of a new class of workers the knowledge workers the clout of the trade unions seem to be shrinking. These workers do not wish to be the part of the unions and are the priority of the employers. These individuals are given more preference over the group of the low and medium skilled workers. Closures, retrenchments, increasing proportion of casual/contract workers have further led to contraction of the union-base. The unions, in order to increase their penetration are now to organize the unorganized workers in the informal sector. Deregulation: The liberalization, privatization and globalization model has generated an anti-labor economic environment in the post-reform period as against the pro-labor environment in the pre-reform period. The collective bargaining power has decreased, thus the unemployment level has increased in the organized sector. It has also tried to ensure that the public and private laborers get similar protection but this has affected many provisions and the worst affected is the pension scheme as there are no more the guarantees of the government, interest rates have fallen and has led to investment of pension funds in the risky stock market. Labor flexibility: has either replaced regular jobs with contract jobs or have at least created bad jobs. Flexible labor laws are likely to lead to less hiring and more firing. The argument that more jobs might be created in the medium and long-term has not gone down the throat of the working class. It is considered only a mirage. (Dutt, 2008) Decentralization: in terms of consideration of the IR issues from macro to micro and from industry to enterprise level. In the absence of any centralized co-ordination the whole system gets paralyzed in case of any conflict/dispute.
References
1. Unknown, 2007, Introduction to Industrial Relations http://industrialrelations.naukrihub.com/importance.html 2. R Devarajan, September 10, 2002, The Hindu, Trends in Industrial Relations http://www.hindu.com/thehindu/br/2002/09/10/stories/2002091000070300.htm 3. Justice S B Sinha, 2004, Emerging Industrial Relations http://www.ebc-india.com/lawyer/articles/2004v6a1.htm 4. Devendra Meshram, 2005, MEANING AND DEFINITION OF INDUSTRIAL RELATION http://www.citehr.com/596-industrial-relation-india.html 5. Ruddar Dutt, May 3, 2008, MAINSTREAM, VOL XLVI, NO 20, Emerging Trends in Trade Union Movement, http://www.mainstreamweekly.net/article678.html 6. A note by Alliance Business School on Labor Laws http://www.scribd.com/doc/14639175/Indian-Industrial-Relations-Laws 7. Note by National Laws on Labor , Social Security & Related Human Rights http://www.ilo.org/dyn/natlex/docs/WEBTEXT/32063/64873/E87IND01.htm 8. Article from pblabour.gov.in http://pblabour.gov.in/pdf/acts_rules/inustrial_disputes_act_1947.pdf http://pblabour.gov.in/pdf/acts_rules/trade_unions_act_1926.pdf 9. Employees Provident Fund Organization, India http://epfindia.nic.in/legel_provision.htm 10. Unknown, 5 Nov 2009, Industrial Relations http://www.docstoc.com/docs/14904866/Industrial-Relations 11. Unknown, 12 Aug 2011, Industrial Relation in India http://www.scribd.com/doc/62176710/Evolution-of-Industrial-Relations-in-India