Factors Affecting Industrial Relations

Introduction:
The term ‘industrial relations’ means the relationship between labour and management which
arises through interactive processes.
Both labour and management interact with each other on different issues-may be the issues
relating to employment terms and conditions as specified in the standing orders/bipartite
settlement, HR practices or the issues concerning court judgement, legal implications,
government orders, instructions.
Factors are as follows:
1. Institutional factors
2. Economic factors
3. Social factors
4. Technological factors
5. Psychological factors
6. Political factors
7. Enterprise-related factors
8. Global factors
9. Organizational Factor
1. Institutional Factors:
Under institutional factors are included items like state policy, labour laws, voluntary codes,
collective bargaining agreements, labour unions, employers’ organizations / federations etc.
2. Economic Factors:
Under economic factors are included economic organisations, (socialist, communist, capitalist)
type of ownership, individual, company — whether domestic or MNC, Government, co-
operative ownership) nature and composition of the workforce, the source of labour supply,
labour market relative status, disparity of wages between groups, level of unemployment,
economic cycle. These variables influence industrial relations in myriad ways.
3. Social Factors:
Under social factors items like social group (like caste or joint family) creed, social values,
norms, social status (high or low) — influenced industrial relations in the early stages of
industrialisation. They gave rise to relationship as master and servant, haves and have-nots,
high caste and low caste, etc. But with the acceleration of industrialisation, these factors
gradually lost their force but one cannot overlook their importance.
4. Technological Factors:
Under technological factors fall items like work methods, type of technology used, rate of
technological change, R&D activities, ability to cope with emerging trends, etc. These factors
considerably influence the patterns of industrial relations, as they are known to have direct
influence on employment status, wage level, collective bargaining process in an organisation.
5. Psychological Factors:
Under psychological factors fall items pertaining to industrial relations like owners’ attitude,
perception of workforce, workers’ attitude towards work, their motivation, morale, interest,
alienation; dissatisfaction and boredom resulting from man-machine interface. The various
psychological problems resulting from work have a far-reaching impact on workers’ job and
personal life, that directly or indirectly influences industrial relation system of an enterprise.
6. Political Factors:
The political factors are political institutions, system of government, political philosophy,
attitude of government, ruling elite and opposition towards labour problems. For instance, the
various communist countries prior to the adoption of new political philosophy, the industrial
relations environment was very much controlled by the Government ever since change has
altered considerably like other capitalist economics.
There too, unions are now at the helm of labour activities, the industrial relations and is marked
by labour unrest. Most of the trade unions are controlled by political parties, so here the
industrial relations are largely shaped by the gravity of involvement of political parties in trade
union activities.
7. Enterprise-Related Factors:
Under enterprise-related factors, fall issues like style of management prevailing in the
enterprise, its philosophy and value system, organisational climate, organisational health,
extent of competition, adaptability to change and the various human resources management
policies.

8. Global Factors:
Under global factors, the various issues included are international relations, global conflicts,
dominant economic-political ideologies, global cultural milieu, economic and trading policies of
power blocks, international trade agreements and relations, international labour agreements
(role of ILO) etc.
Thus, the industrial relations can be viewed as a “Complex System” formed by the interaction of
the industry, the government and the labour which are monitored by the existing and emerging
social economic, institutional and technological factors. In this context, the observations of
Singh are noteworthy.
10. Organizational Factor:
These include issues like style of management prevailing in the enterprise, its philosophy and
value system, Organizational Climate, Organizational health, extent of competition, adaptability
to change and the various human resource management policies.
 Essentials of Successful Collective Bargaining

 Favourable Political Climate

 Strong and Stable Unions
 Recognition
 Willingness to Give and Take
 Negotiator’s Authority
 Fair Practices
 Positive Attitude
 Continuous Dialogue
 Availability of Data.

1. Favorable Political Climate:

If collective bargaining has to be fully effective a favourable political climate must exist.
The government and the public opinion must be convinced that collective bargaining is
the best method of regulating employment conditions. The government should remove
all legislative restrictions which hamper collective bargaining.

It can also confer a right to bargain collectively, lay down the form and content of
collective agreement, register these agreements and assist in their enforcement.
However, the role of government has to be minimum because collective bargaining is a
two way process more concerned with micro aspects.

2. Strong and Stable Unions:

Collective bargaining is not possible if employees are not free to form trade unions as
they please. A strong and representative trade union is required to bargain with the
employer on equal basis. The employers can easily ignore a weak union on the plea that
it hardly represents the workers.
Trade unions must be stable and strong enough to honour the collective bargaining
agreement. It should have sufficient number of members to justify entering into
collective bargaining agreements.

3. Recognition:
A trade union may be stable and strong, but until it is given recognition by the
management, it will hardly have any impact. Collective bargaining cannot exist or begin
until union is recognised and regarded as an integral part of industrial relations. It is in
the interest of an employer to recognise a strong union to avoid strikes and to safeguard
against undercutting labour standards.

4. Willingness to Give and Take:

Both employers and union leaders should negotiate in a spirit of compromise and
reciprocity. If either of the party adopts an adamant attitude, bargaining will not be
possible. Willingness to give and take does not mean that concessions made by one side
must be marked by equal concession by the other side. Exaggerated demands must be
toned down to reach an agreement.

5. Negotiator’s Authority:
The procedures must be developed to ensure that negotiators have full authority to
bind their constituents. If bargaining representatives have to refer constantly back to
their respective organisations, it makes bargaining process ridiculous and ineffective,
because parties know by experience that bargaining team is only a show piece and not
the real authority.

6. Fair Practices:
Both the employers and trade unions should avoid unfair labour practices. Collective
bargaining is possible only in an atmosphere of mutual trust and recognition.

Management must recognise and accept the workers’ right to organise and fight for
justice. Similarly, workers and their union must recognise and accept the employers’
right to manage. In the absence of such recognition, collective bargaining is a mere trial
of strength.

7. Positive Attitude:
The negotiating teams should have a problem solving and positive attitude rather than a
fighting approach. There has to be greater emphasis on mutual accommodation rather
than on conflict or uncompromising attitude. Conflicting attitudes do not lead to
amicable labour relations rather it may foster union militancy as the union reacts by
engaging in pressure tactics.

8. Continuous Dialogue:
A dead end must be avoided in negotiations and the talks should continue. As long as
talks continue, agreement can be possible. At times, it may be necessary to leave highly
controversial issues for the time being and narrow down the field of disagreement on
other matters.

9. Availability of Data:
The employer must ensure that all the required records are available. Facts and figures
relating to employees and their working conditions provide a rational basis for
negotiations. But unless, the trade union believes in the data and accepts the same,
collective bargaining process may be hampered.
Describe the scheme of workers participation in management.

The Worker’s Participation in Management (WPM) is a mechanism aiming to create a

harmonious industrial environment by increased worker participation in the decision-
making process of an enterprise. The scope and degree of worker’s participation
depends on three constituents of industrial relations system employees employers and
Government. Some of the prequisites for successful implantation of WPM scheme are:

Strong worker participation via better understanding.

Effective management.
Lack of promotion, follow-up and amendment measures on part of government.
Strong trade union.
Lack of Understanding of scheme on part of workers
There are three major schemes of worker participation in India.

Works Committees:
The works committees have equal number of representatives from employer and
employee group. However, there are no bindings on the members of the committees.
The committee work on matters of common interest between employees and
employers. These aim to maintain peaceful and healthy relationships between
employees and employers.

Joint Management Councils (JMC):

Joint Management Councils are entrusted with administrative responsibilities and have
wider scope than work committee. The primary objective of JMC is to promote healthy
relations between management and workers by building trust and understanding
between management and workers. These committees have responsibility for safety,
vocational training and welfare of workers.

The committee.can be consulted by management on certain specified matters. The

council also considers subjects under collective bargaining, such as wages, bonus and
allowances have been excluded from the scope of JMC. The management is expected to
share information with members of council on certain matter.

Shop Councils:
A shop council is set-up only in enterprises employing 500 or more employees. It has an
equal number of employee and employer representatives. Whereas the employer
representatives are nominated by management, the worker representatives belong to
shop or concerned department. A council formed will function for a period of 2 years,
and must meet at least once in a month. The council arrives at a decision by consensus
and not by voting.
The decision must be implemented within a month by the concerned parties. The
number of shop councils in an enterprise is decided by the employees of the company in
consultation with the recognized union, however an enterprise must have at least one
(or more) Shop Councils.

Shop Councils aim at improving worker productivity, production and efficiency by

analyzing problem of absenteeism from work and recommend measure to reduce the
aforesaid problem. The Council looks into Shop discipline and also analyze safety and
health aspects of working conditions, and take corrective measures.

Joint Councils:
A Joint Council is set-up for tenure of two years. The Council is chaired by the chief
executive and members of the council must meet once in every four months. The
Secretary of the Council is responsible for the functions. The decisions of the Council are
taken by consensus and implemented in one month duration.

The main functions of Joint Council is to determine productivity norms, settle matters
which are unresolved by the Shop Council Body and ensure maximum production using
optimal utilization of resources. The Council also works to ensure general health and
safety of industry workers.

The WPM has not been successful to large extend in India. Some of the reasons behind
this are:
Management lacks faith and commitment in working of these schemes.
Scheme objectives, scope and functions are not clearly stated.
Inter-council and intra-council disputes.
Delayed or non-implementation of the council decisions.
Differences between management and employers over working of the councils.
Management and employees lacked proper understanding the scheme and were rather
indifferent towards it.