Prepared ByRezaul Huda

MBA ProgrammeUniversity of Southern Queensland

Australia 2008

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Industrial Relation in

India

Table of Contents

Introduction:....................................................................................................................................1

India and Industrial Relation:..........................................................................................................1

Analysis:..........................................................................................................................................1

Economic rationalism:.....................................................................................................................2

1. Individualism and Collectivism:......................................................................................2

2. Employee Association (trade union):..............................................................................3

3. Cross-cultural management:............................................................................................3

Civil libertarianism and equal employment opportunity:................................................................4

1. Equality Opportunity (Race and Gender):.......................................................................4

2. Child labor:......................................................................................................................5

Social justice:...................................................................................................................................6

1. Wage Levels:...................................................................................................................6

Conclusion:......................................................................................................................................7

Reference..........................................................................................................................................i

List of Appendix..............................................................................................................................ii

1. Indian Trade Union..........................................................................................................ii

2. Child labor......................................................................................................................iii

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Introduction:

The purpose of this paper is to analyze the present scenario of Indian industrial relations

equitable. The industrial relations should be consider as an essential part of management systems

and techniques, and not as a discipline or activity apart from management. It then seeks to

explain what sound industrial relations and labor relations policy formulation are, and thereafter

to underline the importance and objectives of sound industrial relations at India in the current -

and to some extent the future context. It also attempts to identify some of the issue that may

generally regarded as features of a good industrial relations system in India. Finally, the Paper

identifies current issues in industrial relations but it is not suggested that these are the only issue

existed in Indian industrial society but this are most crucial issue for Indian industrial relation.

India and Industrial Relation:

To understand the present industrial relation environment in India that influence by the great

diversity of economy and other circumstances. Industrial relation shaped by the political,

economic and cultural context in this country, and reflected in the particular policy, legal and

institutional framework and relationships between government and the social partners. However,

In India the relations between managers, workers and their representatives are still view from the

more limited perspectives of traditional industrial relation. It is a fact that labor legislation and

institutions are still influence in a greater or lesser extent, by number of Western countries.

However, the industrial relation which have developed and continue to evolve not been based on

the same circumstances and values as those which shaped these systems in the West.

Analysis:

To analyze the industrial relation in India is equitable, this report the three main approach

(economic rationalism, civil libertarianism and equal employment opportunity and social justice)

has been take. There are so many issue that relate to Indian industrial relation also have been

mention in the report. Consider the word constrain only few major issue has been focused to 1 | P a g e

identify the equity of Indian industrial relation such as child labor, cross-culture management,

trade union, wage discrimination and individualism.

Economic rationalism:

India is one of the BRIC1 country and the investment (FDI) from both Asian and Western

investors have been increase comparing last period. As a booming economy, there are many

issues like individualism, free market policy, worker apprentice, cross-cultural management

trade union and the Indian government regulation regarding employment relationship. The

individualism and collectivism, trade union and cross-cultural management are the most crucial

issue to analyze the economic rationalism2 approach to identify the industrial relation in India.

1. Individualism and Collectivism:

Individualism-collectivism is an important issue for the working environment. According to

Hofstede (1991), “Individualism pertains to societies in which ties between individuals are

loose: Everyone is expecting to look after himself or herself and his or her immediate family” .

Collectivism as its opposite pertains to societies in which people from birth onwards are

integrated into strong, cohesive in groups, which throughout people's lifetimes continue to

protect them in exchange for understanding loyalty. The Indian societies that are highly

individualistic, individuals pursue autonomy and prefer to view their identity as derived from the

self rather than the organizations. Everyone is supposed to look after himself/herself and

perhaps, pay attention only to ones immediate family. Hofstede's (1991) fined that individualism

can affect the relationship between employer and employee to the extent that the latter begin to

look at the relationship from a calculative and utilitarian perspective. Collectivist societies tend

to place an accent on family bonding and social ties. Group processes and decisions are valued as

much as membership of a network. It is not possible to generalize on the basis of Hofstede's

analysis or any such study, but working in India is still largely a matter of juggling between

immediate/extended families and the office. Surely, work-life balance issues are more urgent and

require immediate attention on the subcontinent.

1 In economics, BRIC or BRICs is an acronym that refers to the fast growing developing economies of Brazil, Russia, India, and China.2 Economic rationalism is an Australian term in discussion of microeconomic policy, applicable to the economic policy of many governments around the world, in particular during the 1980s and 1990s.

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2. Employee Association (trade union):

The trade union is a voluntary organization of workers pertaining to a particular trade, industry

or a company and it formed to promote and protect their interests and welfare by collective

action. They are the most suitable organizations for balancing and improving the relations

between the employer and the employees. They formed not only to cater to the workers demand,

but also for inculcating in them the sense of discipline and responsibility.

In India, the first trade union was form in 1918. The legislation regulating these trade unions is

the Indian Trade Unions Act, 1926. The Act deals with the registration of trade unions, their

rights, their liabilities and responsibilities as well as ensures that their funds are utilizing

properly. It gives legal and corporate status to the registered trade unions. It also seeks to protect

them from civil or criminal prosecution so that they could carry on their legitimate activities for

the benefit of the working class and establish the sound industrial relation. The Act is applicable

not only to the union of workers but also to the association of employers. The act is managed by

the “Ministry of Labor India” through it industrial relations division. The division is concerned

with improving the institutional framework for dispute settlement and amending labor laws

relating to industrial relations. It works in close coordination with the “central industrial relations

machinery (CIRM)” in an effort to ensure that the country gets a stable, dignified and efficient

workforce, free from exploitation and capable of generating higher levels of output. The CIRM is

monitor by the chief labor commissioner (Central) and it has been entrusted with the task of

maintaining industrial relations, enforcement of labor laws and verification of trade union

membership in central sphere and ensures harmonious industrial relations. Table 1 shows the

present scenario of Indian trade union illustrated by European Trade Union Institute report 2007

(appendix 1).

3. Cross-cultural management:

India is a heterogeneous country that characterized by ethnic, cultural, linguistic and religious

diversity. Due to substantial increases in investment from both Asian and Western investors,

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many employers and unions are dealing with workers and employers from backgrounds and

cultures different to their own. Many of the resulting problems and issues fall within the concept

of cross-cultural management. The problems arise due to differences in industrial relations

systems, attitudes to and of unions, work ethics, motivational systems and leadership styles,

negotiating techniques, inappropriate communication, consultation and participation procedures

and mechanisms, values, expectations of workers and interpersonal relationships.

Civil libertarianism and equal employment opportunity:

Civil libertarianism is the approach to identify the equity of industrial relationship in India. Civil

libertarianism supports the civil right, or who emphasizes the supremacy of individual rights and

personal freedoms over and against any kind of authority. There are some crucial issue to

evaluate the civil libertarianism and equal employment opportunity in India. The issues are

equality opportunity (race and gender), child labor, political believe and power.

1. Equality Opportunity (Race and Gender):

The discrimination between race, sex and wages is another crucial issue for Indian industrial

relation. In India, the disadvantaged position of women in the labor market is due to deep-rooted

social and economic factors that restrict both the supply of and demand for women workers. A

set of social, historical, biological, and religious restraints have kept women out of the labor

market. At the same time, such restraints have been used to justify discrimination against women

in allocation of job opportunities and the setting of wages. Women of a class or socioeconomic

group are also discriminate against in favor of men who are of the same class. It also found that

women working in low-status, low-paid jobs in the informal sector belong to families whose

male members work in similar jobs, primarily because they do not have the material resources

that provide access to the high status and better-paid jobs. It also seems that a woman is more

likely compare a man to be able to find job opportunities only in the informal sector, and she will

probably be paid less than he for the same work.

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2. Child labor:

The child labor is one of the major IR issue in the developing country. India is the

largest example of a nation plagued by the problem of child labor. Estimates cite

figures that between 60 and 115 million working children are in India, which is the

highest number in the world3. The Government also found that most children working in

rural areas are in agriculture and related activities such as livestock tending, forestry, and fishing

(appendix 2). Children also work in service industries such as hotels, food service, and

tourism. Working children are also found in industries such as quarrying of sandstone and other

materials, gemstone polishing, sari-production4, consisting of embroidering or sewing beads and

colored threads to fabric and in the manufacturing of matches, bricks, carpets, locks, glass

bangles, fireworks, leather goods, bidis5 (cigarettes), footwear, garments, sporting goods,

brassware, and other metal goods. The Indian government has identified many of these industries

as hazardous for children. Some reports indicate that large numbers of children work under

forced labor conditions in India.6 The commercial sexual exploitation of children is a problem in

India; girls as young as 7 years and they are exploit in brothels in major urban centers and some

child sex tourism has been reported in the state of Goa and other popular tourist destinations in

India.7

Indian law prohibits the employment of children less than 14 years in any factory or mine, or in

15 hazardous occupations and 57 hazardous processes. Children 14 to 18 years may work limited

hours in factories during the daytime if they have been granted a certificate of fitness by a

certifying surgeon. Children of any age may be employed in all other activities, if employers

adhere to restrictions including a maximum 6-hour workday with a 1-hour rest period, at least 1

day off per week, and no night work or overtime work. Penalties include fines or imprisonment

of 3 months to 1 year, or up to 2 years for repeat offenses. Bonded child labor is illegal in India,

3 Human Rights Watch 4 Women clothing in India 5 It’s kind of tobacco 6 U.S. Department of State, "Country Reports – 2007: India," section 6c7 ECPAT International and Aparna Bhat, Report on Laws and Legal Procedures Concerning the Commercial Sexual Exploitation of Children in India, Bangkok, November 2004.

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and the law provides for district-level vigilance committees, headed by district collectors (the

principal government officer of the district), to investigate allegations of bonded labor and to

release anyone found in bondage. Indian law also prohibits the commercial sexual exploitation

and trafficking of boys and girls. Thought Indian government has law and enforcement against

the child labor but the implementation on the ground level is very weak comparing to other

developed nation.

Social justice:

The social justices have been the influence India to establish the equal opportunity for sound

industrial relations. There are several issues that has to concern such as working hour, wage

Levels, industrial Injury, sickness compensation, pregnancy leave and social hierarchy. Wages

level and industrial injury are the major problem to establish the IR, though Indian government

has to concern much other issue.

1. Wage Levels:

In India “Minimum wages act, 1948” provide guidelines for wage structures in the country that

was a major landmark in the history of formulation of wage policy in India. According to the

Indian act article 39 state that “the state shall, in particular, direct its policy towards securing

(a) that the citizen, men and women equally shall have the right to an adequate livelihood and

(b) that there is equal pay for equal work for both men and women.” On the other hand the

Article 43 states that “the state shall endeavor, by suitable legislation or economic organization

or in any other way, to give all workers, agricultural, industrial or otherwise, work, a living

wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure, and

social and cultural opportunities.” In order to have a uniform wage structure and to reduce the

disparity in minimum wages across the country, the concept of minimum wage was arguable

based on the recommendations of the National Commission on Rural Labour (NCRL) in 1991. In

1996, the floor level minimum wages was fixed Rs. 35/- per day.  The central government raised

the wage to Rs. 40/- per day in 1998 and further to Rs. 45/- with effect from 01.12.1999, and Rs.

50/- per day with effect from 1.9.2002 and later which rise to Rs. 66/- per day with effect from

1.02.2004.  However, Indian government has the strong act to maintain the equality of wages but

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unfortunately, the implementation in the ground level is poor. Still employer discriminate the

gender, race.

Conclusion:

In India, there is an increasing congruence between industrial relation policies those supporting

industrialization for economic development. The impact of globalization is requiring industrial

relation systems in India to adapt to ensure improved economic competitiveness, flexibility and

overall efficiency to respond to changing international market circumstances. In addition, Indian

government should emphasize to monitor the child labor, wages discrimination and cross-

management in the ground level. However, though there are lots of act to maintain the industrial

relation but the implementation in the ground level is very poor, that is the most essential

challenge for Indian government to achieve a stable and flexible industrial system, which

balances "efficiency" with "equity.

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Reference

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Brook, K 2002 “Trade union membership: an analysis of data from the autumn 2001 LFS; labor

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Samuel Cohn, 2000 “Race and Gender Discrimination at Work” Westview Press publication

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Industrial Relations” Published by University of South Carolina Press, USA

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Industrial Relations, Geneva

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i

List of Appendix

1.

ii

Sources: European Trade Union Institute (ETUI) report 2007

2. Child labor

Sources: United States Department of Labor, August 2007

iii