Industrial Relation

INDUSTRIAL RELATIONs &

LABOUR LEGISLATIONS

- swarnam

SRI VENKATESWARA COLLEGE OF COMPUTER APPLICATIONS AND MANAGEMENT

Approved by AICTE, New Delhi and Affiliated to AUT, Coimbatore

Industry - Meaning

“Industry” means “Group of productive organizations that produce or supply goods and services”.

Industry” refers to “any productive activity in which an individual or a group of individuals are engaged”.

“Relations” means “the relationships that exist within the industry between the employee and employer

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History Of IR

• The problem of labour management did not arise when business is small

• These developed in the early 19th century

• Industrial empires of financial tycoons came into existence followed by mass production.

• Labour management becomes important when large aggregation of people came to work together under one roof.


Stages through which the system progressed

• Agrarian Economy stage

• Handicrafts stage

• Cottage or putting out stage

• Factory or industrial capitalism stage


Agrarian Economy Stage

• Developed during middle ages

• Properties were individualized

• Arose the class of propertied individuals along with property less individuals

• Master – servant slave type

• No wages

• No support form government or political organisations


Handicrafts stage

• Development of towns and cities

• Increase trade and commerce

• Decline in power of feudal lords

• Move from rank of master-slave to employer-employee

• Craftsmen owned factors of production

• Sold directly to consumer

• No middle men


Contd.. • Specialization of work

• Involve themselves in teaching apprentice

• Master – high status (ownership & skill)

• Journey men – high status (Skill & Mobility freedom)

• Apprentice– low status (But superior than slave)

• Cottage workers started new institutions, viz., crafts guilds

• Regulated the working conditions.

• Fraternal benefits to the members


Cottage or putting out stage• Development of new industrial units due to

technological changes and expansion in trade


Finished goods

Factory or Industrial Capitalism Stage• Installation of new machineries

• Offered employment in newly

Built workshops

• Humans were replaced by machines

• This led to Industrial Revolution.

• Child labour and women were employed for long hours.

• Reduced skill requirements

• Low wages. Inadequate housing facility


Contd• Decision became more specialized task.

• Strict discipline were maintained

• Employees were economically dependent on the employer.

• The law of supply and demand determines the wages.

• The employer did not bother about employees welfare.

• So sole aim to maximize the profits

• They have different motives


British Rule• Modern type of industries set up in 19th century

• Indigo plantation - 1831

• Cotton mill, Bombay – 1853

• Majority of population were in agriculture.

• Trading community was very small.

• Isolated entrepreneurs did launch industries but could not withstand

• This forced made them to turn to the land


Contd..• The workers were mostly employed under subversive

condition

• Sometimes more than 20 hours, wages paid miserably low

• Wages were deducted for late attendance

• Work Stoppage – 1877 Empress Mills, Nagpur

• Lockouts were completely non-existent

• Workers were intimidated, dismissed

• Budge Budge Jute Mill – 1895 , Loss of 18,000

• Factories Act, 1881


Contd..• In 1890, Bombay Millhands Association

• In 1905, Printers Union was formed

• In 1907, Postal Union was formed in Bombay

• First Organised Labour Association in India

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First World War to Pre-Independence

• World War I created boom for employers

• Rise in Price, Profits went up enormously

• The wages did not pace with the tendency

• Various Strike actions

• The Workmen’s Compensation Act (1923)

• The Trade Unions Act (1926)

• The Trade Disputes Act (1917)


Contd..• During Second World War, Employers made

enormous profits

• Workers demanded share in it

• Bonus and DA were granted but wages did not increase

• The year immediately following the war were most disturbed years

• Large number of strikes took place

• In 1947, INTUC was formed

• The Industrial Disputes Act, 1947


Independence and After

• Necessary Steps to stop strikes/lockout

• The Minimum Wages Act, the Factories Act and Employee State Insurance Act were enacted in 1948

• Second Five Year Plan evolved norms for minimum wages, grievance procedure, workers participation

• The Bonus Act was passed in 1965

• In 1976, industrial relations were quite peaceful


Industrial Relations

• “Industrial Relations” commonly denotes “employee-employer relations”

• Both in organised and unorganised sector


BROAD OUTLOOK

• Originally, industrial relations was broadly defined to include the relationships and interactions between employers and employees

• Industrial relations covers all aspects of the employment relationship, including human resource management, employee relations, and union-management relations.


NARROWOUTLOOK• Now its meaning has become more specific and restricted.

• Accordingly, industrial relations pertains to the study and practice of collective bargaining, trade unionism, and grievance and dispute settlement, and the management of conflict between employers, workers and trade unions, when it arises.

• Human resource management is a separate that deals with nonunion employment relationships and the personnel practices and policies of employers.

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DEFINITION OF INDUSTRIAL RELATIONS

Industrial relations are the relations between employers and employees in the industry. In a broad sense, the term also includes the relations between the various unions, between the state and the unions, and those between the employers and government

-- Casselman’s Labour Dictionary


Importance of Industrial Relation

• Uninterrupted production

• Reduction in Industrial Disputes

• High morale

• Mental Revolution

• Reduced Wastage


OBJECTIVES To raise productivity to a higher level Safeguard the rights and interest of both labour and

management by securing understanding Avoid unhealthy atmosphere in the industry, especially work

stoppages, strikes, lockouts etc.. Minimize employee turnover and absenteeism Uplift the economic status of working by improving wages

and benefits. Socialization of industries by making the state itself a major

employer Vesting of a proprietary interest of the workers in the

industries in which they are employed.


PARTICIPANTS IN INDUSTRIAL RELATIONS

Industrial relations system is made up of certain institutions which

popularly known as “three actors” of the system.


Employees

Employers

Government

Employers’ Association

Trade Union

Courts and tribunals

Industrial Relations

Factor influence ir Institutions: It includes government, employers, trade unions,

government bodies which have direct or indirect impact on the

industrial relations system

Characters: It involves the role of workers unions, judges of labour

court, tribunal, arbitrator etc..

Methods: It focus on collective bargaining, workers’ participation in

the industrial relations schemes, disputes settlements, rules,

regulations, policies etc..

Contents: It includes matter pertaining to employment conditions like

pay, hours of work, leave with wages


Industrial Relation Affects

Economic Performance

Business Success

Employees Experience of Work


GOLDEN RULES FOR GOOD INDUSTRIAL RELATIONS

The management should have harmony as a goal

Policies and procedures should be applied uniformly

Bargaining should be done in good faith

The management should ensure transparency in its dealings

Should maintain two way flow of communication between the

management and the employees to avoid misconception.

Providing satisfactory working conditions and fair wages


• http://industrialrelations.naukrihub.com/unitary-perspective.html

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Perspectives/Approaches to IR

• 1. Psychological Approach

• 2. Sociological Approach

• 3. Human Relations Approach

• 4. Socio-Ethical Approach

• 5. Gandhian Approach

• 6. System Approach


Psychological Approach

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Psychologists are of the view that the problem of industrial relation are

rooted in perception and attitude.

The influence of individual behaviour is studied by Mason Harie. He

studied behaviour of two groups “union leaders” and “executives” through

a test

For the test photograph middle-aged person served as input, which both

groups expected to rate.

The union leaders referred the person in the photograph as “Manager”

where the group of executives referred the person as “Union leader”

This study reveals that variance in perception of parties is largely because

of their individual perception.

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Contd.,• The conflict between labour and management occurs because every group

negatively views the behaviour of others.

• i.e., Even honest intention of a party is look for suspicion

• In most of industrial conflicts, not only the interest but also the

personalities of the actors are at stake.

• The problem is further aggravated by unfulfilled needs of power, prestige,

recognition, economic motives

• Also strained inter-personal and inter-group relations breed disharmony in

the system

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Sociological Approach

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Individuals and groups with differing personality, educational background,

family breeding, emotions, likes and dislikes.

The difference in attitude and behavior create problems of conflict and

competition among the members of an industrial society

The customs, norms, attitude and perception of both labour and

management affect the industrial relations in varied ways.

The social consequences of disintegration, stress and strain, personal and

social disorganization (leading to gambling, drinking, drug abuse etc.) do

influence the efficiency and productivity

Thus in turn influence industrial relations of an industry

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Human Relations Approach The most delicate and tricky ones is managing the human resources

Their handling is radically different from that of physical, material and

financial resources

When the resources are not properly managed, the problem of industrial

relations surfaces

The HRM Policies including leadership and motivation influence work

behaviour

For Instance, Autocratic Style leads to dissatisfaction and hatred among

people, whereas in democratic style it motivates people


Contd..• Another important factor in all conflicts is dissatisfied needs

of the individual

• For maintaining good relations, the needs must be satisfied

• Four basic needs: Physiological, Safety, Social and Egoistic Needs

• It is necessary for management to design a suitable motivational strategy


Socio-Ethical Approach Good industrial relations can be maintained when both labour and

management realize their responsibilities

There should be mutual co-operation and greatest understanding of each

other’s problems

A Tripartite study group at the behest of the National Commission on

Labour studied the labour management relations

The Study group observed that “ The goal of labour-management relations

may be stated as maximum productivity, leading to economic

development, adequate understanding among employers, workers, and

government of each other role industry and willingness among parties to

co-operate as partners in the industrial system.


Contd..• V.V.Giri has laid stress on collective bargaining and mutual

negotiations between employers and employees for the settlement of disputes.

• His emphasis on voluntary arbitration rather than compulsory arbitration


Gandhian Approach It is based on the principles of truth and non-violence.

There should be no strike without a grievance.

Resolution of conflict by non-violence and non co-operation

Gandhiji accepted the workers’ right to go on strike but such right should

be exercised for just cause in peaceful and non-violent manner.

It should be resorted to only after employers fail to respond to the appeals

He believed in the concept of settling disputes through mutual negotiations

and arbitration without rancor between the parties.

He was not against strike but advocated the policy that they should be the

last weapon in the armory of industrial workers.37

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Contd..• His principle is based on trusteeship

• It implies though wealth belongs to its owners, morally it belongs to society

• It capitalists fail to pay minimum living wages, workers should appeal to the employers’ conscience

• If it does not work, they should resort to non-violent


Contd..• Resolving Disputes the following rules to be observed:

-- The workers should seek of reasonable demand through collective action

-- If they have to organise a strike, trade union should seek by ballot authority and use non-violent methods

-- Should avoid strike as far as possible

-- Strike should be resorted to only as a last resort after all measures have failed

-- Workers should take recourse to voluntary arbitration when efforts at direct settlement have not succeeded.


System Approach John Dunlop developed System approach in 1950s

Industrial relations systems comprised of certain actors, contexts,

an ideology

Actors: Three parties – Employers, Labour unions and the

Government

Environmental contexts: Technology, Market constraints,

Distribution of power

Ideologies: Set of ideas and belief commonly held by the actors

Rules: A body of rules are framed to govern the actors at the

workplace. For example: agreements, custom, statutes, regulations


Contd..

• IR = f (a, t, m, p, i) Environmental forces Participants

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MarketTechnology

Distribution of Power

UnionManagementGovernment

Rules

THEORETICAL PERSPECTIVES OF IR

• Unitary

• Pluralist

• Radical

• Trusteeship


Unitary

• There is only one source of authority – Management

• They own, therefore they control

• For Unitarist, employers are a law unto themselves

• Group of People under a single structure

• All members of the organization share the same objectives, interests

and purposes

• Thus working together, hand-in-hand, towards the shared mutual

goals

• Trade unions are deemed as unnecessary

• Conflict is perceived as disruptive.

• It is clearly outmoded SVCCAM, Coimbatore 43

Pluralist• It is based on assumption organization is composed of individuals of

different groups, own interests, objectives and leadership

• Contrary to unitary perspective

• Conflicts of interest and disagreements between managers and workers over

the distribution of profits as normal and inescapable

• Trade unions are deemed as legitimate representatives of employees.

• Conflict is dealt by collective bargaining

• The belief among pluralist is that “conflict is necessary, but it can be and

needs to managed and controlled”

• There is a greater propensity for conflict rather than harmony.


Radical/Marxist

• It is based on notion that the production system is privately owned and motivated by profit

• Control over production is exercised by managers, who are agents of owners

• It argues that Social change is necessary to settle disparity between those who own capital and those who supply labour

• “Conflict is inevitable in a capitalist system”• Conflict cannot be controlled as long as capitalism prevails• It maintain itself by lowering the standard of living of people• Propertied class can only flourish at the expense of

propertyless class


Contd..

• Marx sees trade union in protesting against exploitation• Transformation of trade union into revolutionary

organizations rather than their becoming lieutenants of capital


Trusteeship Mahatma Gandhi proposed trusteeship approach.

It is based on the principles of truth and non-violence.

There should be no strike without a grievance.

Resolution of conflict by non-violence and non co-operation

Gandhiji accepted the workers’ right to go on strike but such right should be

exercised for just cause in peaceful and non-violent manner.

It should be resorted to only after employers fail to respond to the appeals

He believed in the concept of settling disputes through mutual negotiations

and arbitration without rancor between the parties. He was not against strike but advocated the policy that they should be the last

weapon in the armory of industrial workers.


Contd..

• His principle is based on trusteeship

• It implies though wealth belongs to its owners, morally it belongs to society

• It capitalists fail to pay minimum living wages, workers should appeal to the employers’ conscience

• If it does not work, they should resort to non-violent


Discussion Questions• Describe the concept of labour-management relations. List its objectives

• Discuss briefly the significances of industrial relations theories

• Discuss the different approaches to IR.

• What are the actors in IR? Discuss the ten golden rules for good IR.

• Definition of IR

• History of IR

• What is capitalism?

• Who is shop steward?

• Who is an arbitrator?

• Explain Dunlop’s System Theory.



Industrial Relation

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