Emerging World Trade Regime

EMERGING WORLD TRADE REGIME: Social clause and implications for employee relations management

Group 2 | Abhishek | Kunal | Nihit |Sanjay |Vaibhav S | Vaibhav K

Introduction Social realities, culture and organizations:

Global perspective (Country perspective) WTO regime and the social clause Centre- State vs State-State pulls Employment security Labor redundancy Wage Policy Social Security Contract Labor Child Labor

Agenda

Significant changes in social and corporate world due to WTO regime

Reforms impact upon all HR practices and trade unions

Intensity depended upon ownership, culture Indian context: Reforms treated with suspicion by working

class Political parties too interfering in the process

Introduction

Employee expectations: Provide education, training, and skill

development opportunities Provide education, training, and skill

development opportunities Involvement in decision making / empowerment Open communication, mentoring Challenging meaningful and interesting work Performance based compensation

New employment relationship

Employer expectations: Assume responsibility for developing and

maintaining skills Produce positive results and add

demonstrable value Understand the nature of employers/business Have customer focus Work in teams, and take initiatives Flexibility and commitment

New employment relationship

Japan: Submissive and adaptable nature because

of agri-centred society Work considered source of moral culture Work ethics weakened in post World War II

generation High educational level of workers Non-confrontational attitude and

industrial harmony

Social Realities, culture and organizations

Yugoslvia: Socialist self-management regime Workers’ Council elect top managers Success depends on efficiency of

business enterprises


Indonesia: Three cultural levels:

Ethnic regional cultural level: tribal group culture Regional-national cultural level National-international cultural level: internalized

western values Top managers prefer paternalistic style of leadership Collectivistic, short-term oriented Need vision, less communication barriers Orientation towards- God, environment, and self


Thailand Nine value orientations: Ego, grateful relationship, smooth interpersonal

relationship, Flexibility and adjustment, religio-physical

orientation Education and competence, interdependence Fun-pleasure, achievement-task Direct confrontations and criticism avoided Motivation by benevolent, paternalistic type

leader


Hong Kong: Issue of cultural adaptation an issue where

management is not indigenous

South Africa: Institutionalized racial discrimination part of

organizations Inclusion of HR planning, career pathing,

continuous learning in HR agenda Strategically linked HRD needed to overcome

labor market segregation based on race


China: Respect for age and hierarchy, face and harmony,

group orientation, personal relationships Confucian traditions and ethos applied to

integrations of labor force Tradition of thoroughness in work, strict discipline,

credibility, inclusivity of expectations Paternalism, personalism and defensiveness - a

socio-historical legacy


Taiwan Four distinct managerial patterns: The Grassroots type and Mainlander type:

typical of Chinese values Grassroots type include Japanese features The Specialist type: includes western logic

of rationalism The Transitional type: includes both

western and Japanese managers


India Three types of behavioral dispositions or

ethics: Personal ethic of helplessness Organizational ethic of personalized

relationships Idealized family-centered work ethic


India Draws from the authoritarian practices in family Reward system based on negativity and uncertainty Family and religious traditionalism emphasis on past Joint family systems – need to meet obligatory

demands from relatives, friends etc. Nurturance, universalism, peer leadership enhances

member integration Synergic and exploitative cultures in large and small

organizations


A mixed picture India being the founder member of the ILO,

contributed to the codification of international labor standards

India benefitted from framing its own labor framework on labor aspects

Indian constitution and labor laws uphold all the principles evolved in the eight core international labor standards

WTO regime in India

Social Clause Aspects Indian constitution/legislationFreedom of association and right to collective bargaining

The trade union of act, 1926

Abolition of forced labor in all its forms

Article 23 of the constitution and the bonded labour system (abolition) act, 1976.

Equal remuneration convention, 1951. The four underlying bases for determination of work of equal value are skills, efforts, responsibility and working condition

The equal remuneration act of 1926 seeks to provide equal remuneration for men and women

Discrimination convention which covers any discrimination, exclusion or preference

The constitute upholds equality, denounces discrimination and encourages preferential treatment to disadvantaged groups in the society

Minimum age for employment should ordinarily be 15 and 18 in dangerous occupations

The child labour prohibition act, 1986.

Social clause & Indian legislation

Centre – State vs State-State Pulls

Significant changes in labour laws by states i.e. trade unions act 1926 Secret ballot for trade union recognition Secret ballot through tripartite social dialogue Simplified labour inspection laws (Rajsthan) Kerala extended full rights to entrepreneurs

for hiring of labor

Implementation has been the weak link

Wage policy is main concern in the Indian context Dearness Allowance is based on the lowest basic

wage indexing which declines as the basic wage rises Bonus payment governed by the payment of bonus

act, 1965 Average real wage rate tends to decline when

inflation rate rises above certain level Revision of basic wages does not consider labor

productivity and profitability in organization Economic reforms lead to cost adjustment and wage

flexibility is an important tool

Wage policy

South Asia Multidisplinary Advisory Team (SAAT)

Reported by SAAT, government should have several objectives- Ensuring minimum level of living Creating condition for systematic growth of wages Sustaining appropriate wage productivity linkages Incorporating appropriate incentives structures Limiting income inequalities Minimum wage should be fixed at national level

SAAT, 1996

Employement Security & labour market flexibility

SAAT report indicates that, Indian employment security system is based on three premises

( Legislations : Industrial disputes Act 1947, Industrial employment Act 1946 )

Industrial workers – potential victims of exploitation Protection from exploitation – must come from government

regulations Income security follows from employment security

Retrenchment (except under certain conditions) in enterprise employing 100 or more workers requires prior permission from govt. authorities

Sizeable lot of redundant labour due to: Inapt handling of industrial sickness incidents Continuance of non-viable enterprises by the

Government for employment protection Over employment by public enterprises

Introduction of reforms aimed at: Development of institutions for efficient redeployment

of labour from organized to unorganized sectors Stimulation of growth of the unorganized sector Commitment of large resources on the part of

Government

Labour Redundancy

Measures Voluntary Retirement Schemes packaged

with programmes for counselling, retraining and redeployment

Transparency in the entire system Self employment: measures for

entrepreneurship training

Unorganised Labour Market Reforms aimed at income security and

social security

Labour Redundancy

Minimum wages set by Government for unorganised sector Variations in minimum real wage rates across states and across

occupations Minimum wage rates revised very infrequently Revised rates lower in real terms than pre-revision rates Statutory minimum wages below the poverty-line wages

Actual wages below the statutory wages Lack of proper indexation Irregular revisions and weak enforcements Setting different wages for organized and unorganized sector

Wage Policy

Recommendations for minimum wage

National minimum wage payable to all unskilled workers irrespective of age and sex

Fully indexed and above he poverty-line

States to derive minimum wages from this by using appropriate price indices

Wage Policy

Unorganized sector workers mostly covered under LIC, General Insurance Corporation of India, National Social Assistance Programmes and Annapurna

Frequent change in occupations : specific occupation based programmes rendered useless

Schemes like Annapurna failed due to administrative and operational problems

Thorough evaluation of schemes in their total structure

Social security partners need to be strengthened with respect to finance, human resource development, monitoring and evaluation

Social Security

Provisions for Abolition of contract labour in perennial and

permanent jobs Regulating the contract labour system

Suggested reforms New dispensations for the wages, safety and welfare

of contract labour Right to employees to go for contracting without any

restrictions Labourisation or workers’ financial participation as an

effective remedy

Contract Labor Act, 1970

India 11.28 million child labourers (1991 census) 40% of the world child labour force

Child Labour (Prohibition and Abolition) Act, 1986: hazardous industries and activities

Further implementation of national policy and more advanced reforms such as creation of Child Labour Cells in each state

Lack effective implementation Social initiatives and strenghtening of inspection

measures required

Child Labour

Pre WTO, employees enjoyed lifetime employment, company sponsored health programmes and retirement pensions

Post WTO, employees expected to work in multi faceted teams and update their skills continuously

Restructuring Feeling of job insecurity

Discussions

Acceleration of reforms required Role of Government important due to

legislative reforms falling under their purview Extensive controls, large Government sector

and many Government programmes bureaucracy leading to failure in implementation

Monitoring of reforms by independent regulatory bodies with greater transparency

Recommendations

Thank You

Career

Emerging World Trade Regime