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IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS

Globalization is an important driver of economic development and is concerned with all the
actors in economy. Globalization has a major effect on social partners and therefore resulting in
dynamic situations in labour relations.

The requirements of global competitiveness are of international standards in quantity, quality,


cost-effectiveness and customers' concerns. This, in turn, requires introduction of state-of-art of
technology, followed by innovation, creativity and strategic alignment of divergent resources to
create performing climate. Such climate requires dynamic and synergetic employee relations.
The traditional IR was all about “douse the fire” or “fight the fire” and was designed to serve the
needs of controlled, protected and regulated market. However, it was ineffective in the
competitive, global market.

Globalization has withered away the global boundaries and world has emerged as one global
village. Continuous mergers and acquisitions across the globe are changing the skyline of business
and global competitiveness is the only key of survival in this global business game.

To cope up with these changes, India embarked upon New Economic Policy (1991). This policy
effected the industrial and labour relations in India. Some of the features of this policy were:

 Core sectors were opened for Private Sectors.


 Multinationals are allowed to invest in India in non-strategic sectors i.e. Inflow of FDIs.
 Banking and Insurance Sectors are opened to investment by foreign FIIs
 Restrictions and regulations on Industrial licensing 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 reduced.
 Core conventions (forced labor, child labor, etc.) of ILO started influencing our trade and
business.
 Disinvestments of PSUs (both Central and State) became a reality.
The IR situation has greatly changed by the significant forces of liberalization and globalization.
In many countries, there is market liberalization that has been reflected by the governments'
tariff barrier reduction, facilitating and enabling the flow of capital and investments coupled by
the privatization of state owned enterprises. These have been made possible by the significant
growth of the world trade and foreign direct investment as well as the advancement of
information technology.

The scenario of Industrial Relations has changed a lot in India post globalization. Various changes
that took place were:

 The institution of trade union is getting weak.


 Employers are going for unitarism and non-unionism.
 In IT & ITES, there are hardly any TUs.
 The institution of collective bargaining is being decentralized and being replaced by unit
bargaining, individual bargaining and commercial bargaining.
 Disinvestment / Privatization and VRS are almost accepted facts of Industrial relations.
 Changing pattern of Compensation /Rewards Management i.e. Fixed/Assured Time Rate
Wages are replaced by variable/performance- based wages.
 Court sent clear messages to the unions that they mean business.
 Labour Law simplification/codification and changes have been initiated.
 There is a trend to make employer-friendly conciliation
 There has been ease in labour inspection
 There has been use of Section 10 (3) of IDA, declaring strikes illegal
 Strict enforcement of Unfair Labour Practices
 Use of Police for diluting labor struggle
 Re-engineering and Rationalization of work - Job mobility, Redeployment, Job Rotation,
Shedding surplus manpower
 Competencies management and skill formation - multi-skilling and career development
 Employee involvement, participation and communication.
 Trade Union participation
 Enterprise-based unions
 Responsive Trade Unionism and Diluting political ideology

IR is not static activity, it keeps on changing, referring to the persons, groups and the institutions
which it relates with in a particular country. Employment relations on the development of global
enterprises and industrialization changes require a broader perspective. Work related activities
must now be covered by IR which includes the interaction between mangers and other fellow
employees. This is due to the fact that some issues that relate to HRM like job design,
development of skills, job security and employment flexibility have been ignored on the IR front.
But now the situation is changing. What we are seeing now is a broader approach to IR issues
that is incorporating and seeking to harmonize the two; IR and HRM. This is done by expanding
on the boundaries of the two and thus IR's mandate will need to be expanded to address issues
that it does not currently address. Therefore it will have a shift from only addressing collective
relations and incorporate issues related to labour management.