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2-1 Excel BooksINDUSTRIAL RELATIONS Emerging Paradigms (2nd Edition) B D Singh

Copyright © 2008, B D Singh

Evolution of Industrial Relations in India

2Chapter





Industrial Relations in India Prior to British Raj

India was predominantly a pastoral and agrarian economy during ancient and

medieval times. Trade and business were few and far between. Manual services

formed the third rung of organisational occupation. A large number of occupations

were carried out by small manufacturers in their cottages, mostly on hereditary

basis. Slavery and serfdom were common. The Employer-Employee relations were

those of master and slave and, later on, of those of master and servant. Ancient

scriptures and laws of our country laid emphasis on the promotion and maintenance

of peaceful relations between capital and labour. From very early times, craftsmen

and workers felt the necessity of being united. The utility of unions has been stated

in Sukla Yajurveda Samhita, "If men are united, nothing can deter them."




Industrial Relations During Colonial Period The success of Russian Revolution in 1917 Establishment of ILO (1919) and the influence of its conventions and recommendations Constitutional development in India and formation of Central and Provincial Legislatures in 1919 Establishment of AITUC in 1920 Emergence of Left wing on the Indian political horizon in 1924 Formation of the Labour Party Govt. in the U.K. in 1924 Influence of British Liberal Thought The Indian Trade Union Act of 1926 The Trade Dispute Act, 1929 Formation of Royal Commission on Labour, 1929-31, which made a comprehensive study of Indian labour problem regarding health, safety and welfare of workers and made recommendations of far-reaching consequences.




Industrial Relations in Post-Independence EraThe following forces were operating at the time of independence.

We inherited industrial relations legacies from our colonial masters with colonial mindset, colonial habits and colonial culture.

Coincidentally, our freedom struggle coincided with the struggle by the working class for better industrial relations. In course of these struggles, our top leaders made promises and pledges to workers. Therefore, after independence, our

leaders had to fulfil those "promises" and the "pledges" made to the workers during freedom struggle:

Most of our leaders were influenced by Marxist/Communist philosophies and after independence they were put to practice.

Our industrial relations were deeply influenced by all the above forces. These philosophies got reflected in our Constitution - (1) Preamble of the Constitution (2) Fundamental Rights (3) Directive Principles of State Policies.




Industrial Relations in Post-Globalisation Period from 1991 to till dateThe requirements and imperatives of global competitiveness are of international standards in quantity, quality, cost-effectiveness and customers' concerns. This, in turn, requires introduction of state-of-art technology, followed by innovation, creativity and strategic alignment of divergent resources to create performing climate. Such a performing climate requires a dynamic and synergetic employee relationship.

The traditional IR was made to "fight the fire" or "douse the fire". It was reactive, negative, passive, ad hoc and legalistic. It was selfish by being confined to its own members, without having any concern for business organisations or society at large. It was inflexible, rigid and ideologies-bound, which have lost their relevance.

The result is that the tradition of industrial relations is under tremendous pressure, because it was made to cater to the requirements of controlled, protected and regulated market and it is unable to address to the imperatives of competitive global market.




Cont….

Emerging Business ScenarioIn this situation, it was not possible for India to remain isolated and insulated from the global charges. Hence, India embarked on a New Economic Policy (1991). Some of the features of this Policy were as under:- Multinationals are allowed to invest in India in non-strategic sectors - Inflow of

FDIs. Banking and Insurance Sectors are opened to investment by foreign FIIs. Restrictions and regulations on Industrial licencing and inspections were relaxed. India, being member of W.T.O. - declared as its policy to follow their guidelines. Quantitative restrictions on imports/exports are being reduced. Core conventions (forced labour, child labour, etc.) of ILO started influencing

our trade and business. Disinvestments of PSUs (both Central and State) have become a reality.




The profiles and requirements of emerging "sunrise industries" are entirely different

from the requirements of the sunset industries, mentioned above;

The required Organisational Structure is not a monolithic and pyramidal one. It

is flat, lean and smart, almost leading to virtual organisation.

The offices are intelligent, paperless and fitted with all modern electronic

gadgets which require very few manpower.

Employers are global with multi-locational working dispensations.

The manpower is diverse with multi- cultural/lingual employees and a sizeable

number of female employees. Their problems and perspectives are different

from those of old blue-collar employees.




Cont….

Changing Dimensions of Industrial Relations in India The institution of trade union is getting weak. Employers are going for unitarism

and non-unionism

The institution of collective bargaining is being decentralised

Disinvestment/Privatization and VRS are almost accepted facts of Industrial Relations.

Changing Pattern of Compensation /Rewards Management - Fixed/Assured time rate wages are replaced by Variable/Performance-based wages.

Well paying, secure, low-productive jobs in organised sector are replaced by low-paying more insecure productive jobs in unorganised/self-employed sectors.

Pro-labour stance of the Government is getting reduced.




The attitude of judiciary is also changing. There is a proposal for Labour Law simplification/codification. There is a trend to make employer-friendly conciliation. There has been ease in labour inspection. Strict enforcement of Unfair Labour Practices Use of Police for diluting labour struggle Re-engineering and Rationalisation of work - Job mobility, Redeployment, Job

Rotation, Shedding surplus manpower Employee involvement, participation and communication Trade Union participation Enterprise-based unions Responsive Trade Unionism Diluting political ideology




Cont….

The Changing Profile of Indian Economy

The Indian economy and its labour force in the post-independence period can be

divided into two parts:

i. The import substitution era of post-independence (1947 to 1991), and

ii. The era of economic liberalization (1991).




Changing Profile of Labour Force and its New Trends

Labour Force Profile 2001

2001

Population > 1 billion

Labour force/workforce < 400 million

Organized sector/formal sector 7%

Unorganized sector/informal sector 93%

Self employed 55%

Regular workforce 13%

Casual workforce 32%

Employment in government and public sector >18 million

Employment in private sector >9 million

Unionized workforce/union density 4%

Workforce covered by collective bargaining 2%




Cont….

Strategic Issues Confronting IR

Six challenges have been identified and discussed here:

1. technology and job creation

2. skills development

3. labour mobility

4. labour commitment

5. work culture

6. productivity and competitiveness




Cont….

Paradigm Shift in the Labour Policy Environment

1. The content and the purpose of labour policy and labour law should focus on facilitation rather than regulation; pro-action and on the creation of harmonious relation conducive to social and economic development rather than dispute

resolution.

2. Labour policy should focus more broadly on the entire labour force.

3. Globalization is leading to decentralized industrial relations.

4. The labour market is characterized by dualism: an illiterate, unskilled, unorganized, protected, and vocal minority of the workforce and a literate, skilled, organized, protected, vocal minority of the workforce existing side by side.

5. Hitherto, public sector enterprises have stressed the need for them to be model employers.

6. Sustaining growth and fostering competitive labour markets are critical in ensuring job and income security.

7. There is a growing concern that globalization benefits few but affects many in negative ways.




Evolving Work Organisation and Employment Relations

Stages in Work Organisations and Employment Relations

Stage of Production

Skill Base Output Employment Relations

Bargaining

Craft Production Highly Skilled Custom Made, Expensive hand -crafted products to suit individual tastes

Craft Unions Individual Bargaining

Mass Production Semi -Skilled Mass undifferent iated products for Mass Markets

Industrial Unions Collective Bargaining

Mass -Customization or

Lean Production

Multi skilled and Semi skilled

Mass differentiated products to suit individual tastes

Enterprise Unions Cooperative Collective Bargaining

Cellu lar Production Polyvalent Skills Craft style production to make individual ‘niche’ products

Industrial Democracy and Employee Empowerment

Individual Bargaining

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