MGMT 568 - Comparative Management

Individual Assignment 2

Labour Relations

Research Country – India

Submitted By – Chandandeep Singh

Professors - Allan Cahoon, Dr. Gloria Miller

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Labour Relations

With Globalization the importance of Labour Relations has become crucial in the globalized industrial world.

In my understanding, Labour relations are the immediate collective relationships between management and employees or group of employees specifically represented by unions.

In my opinion the labour relations are highly dependent on the governance style of a corporation and the laws and political decisions prevailing within the country.

Objectives & Importance

1. To safeguard the interests of labour and management 2. Avoid industrial conflict 3. Raise productivity 4. Promote industrial democracy 5. Eliminate strikes, lockouts 6. Improve the working, economic and social conditions of workers and organization

In a nutshell, strong labour relations discourage the unfair practices on the part both management and labour unions and provide healthy work environment between workers and management.

International Labour Organization

The ILO is the international organization responsible for drawing up and overseeing international labour standards.1As of 2012, 185 countries in the UN are members of the ILO and ILO aims to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues.2

Indian Labour Relations – Back Ground of Issues at Glance

World Bank considers India as a highly regulated and most rigid labor law country in the world3

The labour in India consists of about 487 million workers, the second largest after China4 National Sample Survey organization’s survey of 2009-10 indicated that the organized sector

of India employed 28 million workers whereas; 437 million workers were employed in unorganized sector. It also indicated that 246 million workers were mainly employed in the agricultural sector, 44 million I construction and rest in the manufacturing sector5

Multinational and national giants like Nestle, Honda, Hyundai, Hero Honda, Toyota, Suzuki and Mahindra & Mahindra have been hit in the past by strikes6

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Actors in Indian Labour Relations System

Like every other country, there are mainly 3 classical actors in the Indian Labour Relationship System which are: 7, 8

1. The Government 2. Employees 3. Employers

Source: http://industrialrelations.naukrihub.com/industrial-relation-system.html

Employer associations, trade unions and courts acts as the working representatives of these actors. With globalizations there are new actors emerging in the Indian Labour Relations System which mainly are consumers and community. 9

The actors play the following roles in industrial relations: 10

1. Collective and interactive bargaining 2. Establishment of mechanism for settlement of industrial disputes 3. Standing orders 4. Workers participation in management 5. Elimination of unfair labor practices Labour Laws Governing the Indian Labour Management System India has various labor laws mainly formed to prohibit discrimination, child labor and to promote the humane work conditions with an aim to offer social security, minimum wage, form trade unions and enforce collective bargaining. Following image shows the framework of Indian Labour Law:

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Source: http://img545.imageshack.us/img545/3778/labourlawsinindia.png

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Main Labour Unions in India – Functions and Involvement

At present there are twelve Central Trade Union Organizations in India however, following three out of them play major role in the upbringing of Indian Labour Relations.12

Name Objective All India Trade Union Congress (AITUC)13 To establish a socialist state in India

To promote, safeguard the interests, rights and privileges of the workers in all matters relating to their employment

Indian National Trade Union Congress (INTUC)14

Unionization of unorganized sector Abolish child labour

Centre of Indian Trade Unions (CITU)15

Improvement of the unorganized sector

Current Issues

1. Man-days lost due to Strikes and Lockout: The following table shows that the large number of disputes from year 2000-2006 had caused the loss of 176.66 million lost workdays due to strikes and lockouts:16

Legal Countrywide Laws

Minimum wage (US$/month)

Standard work day

Minimum rest while at work

Maximum overtime limit

Premium pay for overtime

India

90

9 hours

30 minutes per 5 hour

200 hours per year

100%

China

182.5

8 hours

None

1 hour per day

50%

United States

1242.6

8 hours

None

None

50%

International comparison of few importance aspects of labour laws among India, China and

United States as of 201111

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Source: http://industrialrelations.naukrihub.com/analysis-of-strikes.html

2. Child Labour: Child labour in huge issue for the Indian Labour relations system as according to ILO, 60% workforce of 246 million workforce of the agriculture sector in India is child labour.17

3. Migrant Workers: Highly skilled labour normally migrates to countries in Middle East and North America as they are attracted by better salaries and working conditions there. The Washington Post reported that 4 million Indians works as migrant labourers in Middle East alone and are credited to have built the modern architecture there including buildings like Burj Khalifa.18

4. Forced Labour: The is a large number of forced labour victims in India in the form of women

and girls forced into prostitution, migrants trapped in debt bondage, and factory or farm workers forced by clearly illegal tactics and paid little or nothing.19

Source: http://www.ilo.org/sapfl/Informationresources/ILOPublications/WCMS_081967/lang--en/index.htm

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5. Political Disturbances: Many politicians like Datta Samant were also union leaders and few

analysts consider that strikes and other labour protest are called to promote the interest of political parties.20, 21

6. Rigidness in laws & high percentage of unorganized sector: India's workforce is likely to hit 502 million by 2012, with the share of informal/unorganized workers at more than 90 %.22 Rigid labor laws of the country are condemned to be the reason of low employment growth, large unorganized sector, underground economy, use of casual labor and low per capita income.23 The high percentage of casual labour is considered to the reason of slow economic growth and low GDP of the country.24

Importance of Unionization 1. Major Issue in the Indian Labour Relations System – Non-Unionization of Unions to

Unionization of Unions: There are thousands of labour unions in India with 12 major central unions however, with the existence of thousands of the unions the financial strengths and resources of the unions are scattered and these unions are weak to offer major support to the workforce. Unionization of these unions into one single strong unit is required at this stage for the uplifting and promotion of a strong labour relations system in the country that can challenge any rigidness of the national or multinational employer or government. Below table shows the number of labour unions in the country since 1990’s:

Source: http://industrialrelations.naukrihub.com/figures.html

2. Unionization of the Unorganized Sector: Unionization of the unorganized sector is very

substantial as it employs the 90% of country’s workforce. It will improve labour relations within the country and transform this informal sector to a formal licensed tax paying sector

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governed under the leadership of the unions. It will also abolish child labour, migrant labour and forced labour issues with a mass effect.

Main Blunders in Indian Labour Relations System

1. 1974 railway strike in India:25The 1974 railway strike in India was initiated by 17 million workers for 20 continuous days to demands the raise in pay scale that was stationary for many years and is known to be the largest known strike in the history of India. The strike was ferociously crushed by the government, thousands of workers lost the jobs and were sent to prison.2

2. Great Bombay Textile Strike: 26The strike was led by union leader and politician, Datta Samant for the welfare of the mill workers of Bombay. Objective of this year long strike was to obtain bonus and wage increases. Nearly 250,000 workers and more than 50 textile mills went on strike in Bombay. It demolished the textile industry from Bombay and closed over 80 mills in Central Bombay and left more than 150,000 workers unemployed.

Implications for Managers/Leaders/ Companies/ Foreign Managers 1. Halts in Production 2. Lost efficiency of Managers 3. Wastage of time and resources in Labour disputes 4. Challenge to corporate objectives and commitments of product delivery 5. Loss of FDI for domestic managers and confusion for foreign managers to whether invest in

the Indian company or not

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Notes:

1. http://www.ilo.org/global/about-the-ilo/lang--en/index.htm

2. http://www.ilo.org/global/about-the-ilo/mission-and-objectives/lang--en/index.html

3. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia

4. http://shelf3d.com/i/Labour%20in%20India

5. http://labour.nic.in/content/division/admin1.php

6. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia

7. http://www.freepatentsonline.com/article/Indian-Journal-Industrial-

Relations/228172473.html

8. http://industrialrelations.naukrihub.com/industrial-relation-system.html

9. http://www.docstoc.com/docs/14903135/Industrial-Relations-Trends - Page 4

10. http://industrialrelations.naukrihub.com/industrial-relation-system.html

11. http://www.doingbusiness.org/data/exploretopics/employing-workers

12. http://industrialrelations.naukrihub.com/trade-unionism.html

13. http://aituc.in/aim.html

14. http://www.intuc.net/index.php?articleid=5

15. http://www.citucentre.org/

16. http://industrialrelations.naukrihub.com/analysis-of-strikes.html

17. http://www.ilo.org/global/publications/WCMS_126685/lang--en/index.htm

18. http://www.washingtonpost.com/wp-

dyn/content/article/2010/02/05/AR2010020503845.html

19. http://www.ilo.org/sapfl/Informationresources/ILOPublications/WCMS_081967/lang--

en/index.htm

20. http://www.nytimes.com/1988/12/18/world/for-indian-business-a-force-to-reckon-

with.html

21. http://countrystudies.us/india/95.htm

22. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia

23. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia

24. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia

25. http://www.frontlineonnet.com/fl1819/18190750.htm

26. http://www.rediff.com/news/2007/jan/18sld2.htm