INDUSTRIAL RELATIONS

August 19, 2009

Introduction

Industrial relations constitute one of the most delicate and complex problems of the modern industrial society that is characterized by rapid change, industrial unrest and conflicting ideologies in the national and international spheres. It is a dynamic concept that depends upon the pattern of the society, economic system and political set-up of a country and changes with the changing economic and social order. It is an art of living together for the purposes of production, productive efficiency, human wellbeing and industrial progress.

Concept
There is no unanimity on the meaning and scope of industrial relations since different terms, such as labour-management relations, union management relations, personnel relations etc are all in use and are used synonymously.

The term Industrial Relations comprises of two terms: Industry and Relations.

Industry refers to any productive activity in which an individual (or a group of individuals) is (are) engaged. By relations we mean the relationships that exist within the industry between the employer and his workmen.

What it Means
In its stricter sense, the term industrial relations means relationship between management and workmen in a unit or an industry. In its wider connotation, it means the organization and practice of multi-pronged relationships between workers and management, unions and workers, and the unions and managements in an industry.

What it Means
Industrial relations is the relation created at different levels of the organization by the diverse, complex and composite needs and aspirations and attitudes and approaches among the participants. It involves not only employees and managements, but also their collective forums and the State. In an organization, these relationships may be personal and informal at one end, and may be highly institutional with legally prescribed structures and procedures, at the other end. Industrial relations includes the processes through which these relationships are expressed (such as, collective bargaining, workers participation in decision-making, and grievance and dispute settlement), and the management of conflict between employers, workers and trade unions, when it arises.

What is Industry?
Industrial Disputes Act 1947 defines an industry as any systematic activity carried on by cooperation between an employer and his workmen for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes whether or not any capital has been invested for the purpose of carrying on such activity; or such activity is carried on with a motive to make any gain or profit. An industry is a whole gamut of activities that are carried on by an employer with the help of his employees and labors for production and distribution of goods to earn profits.

Who is an Employer?
An employer is defined from different perspectives as a person or business that pays a wage or fixed payment to other person(s) in exchange for the services of such persons or a person who directly engages a worker/employee in employment or any person who employs, whether directly or through another person or agency, one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed As per Industrial Disputes Act 1947 an employer means: In relation to an industry carried on by or under the authority of any department of [the Central Government or a State Government], the authority prescribed in this behalf, or where no authority is prescribed, the head of the department; in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority

Who is an Employee?

Employee is a person who is hired by another person or business for a wage or fixed payment in exchange for personal services and who does not provide the services as part of an independent business or An employee is any individual employed by an employer or A person who works for a public or private employer and receives remuneration in wages or salary by his employer for his work or Employee, as per Employee State Insurance Act 1948, is any person employed for wages in or in connection with work of a factory or establishment to which the act applies

Who can be an Employee?

In order to qualify to be an employee, under ESI Act, a person should belong to any of the categories: those who are directly employed for wages by the principal employer within the premises or outside in connection with work of the factory or establishment or

those employed for wages by or through immediate employer in connection with the factory establishment outside the premises of such factory establishment under the supervision and control the principal employer or his agent or

an or or of

employees whose services are temporarily lent or let on hire to the principal employer by an immediate employer under a contract of service (employees of security contractors, labor contractors, house keeping contractors etc. come under this category).

Primary Objectives of IR

Improving the economic conditions of workers Increasing productivity Achieving industrial democracy

Objectives of IR
1. 2.

3.

4. 5. 6. 7.

Good labor management relations depend on employers and trade unions being able to deal with their mutual problems freely, independently and responsibly. The trade unions, employers, and their organizations are desirous of resolving their problems through collective bargaining, though in resolving such problems the assistance of appropriate government agencies might be necessary in public interest. The workers and employers organization should be desirous of associating with government agencies in consideration of general, public, social and economic measures affecting employers and workers relations. To check industrial conflict and minimize the occurrence of strikes, lockouts and gheraos. To minimize labour turnover and absenteeism by providing job satisfaction to the workers and increasing their morale. To establish and develop industrial democracy based on workers partnership in management of industry. To facilitate government control over industries in regulating production and industrial relations.

Importance of IR

Industrial Peace Higher Productivity Industrial Democracy Collective Bargaining Fair benefits to Workers Higher Morale Facilitation of Change

Scope of Industrial Relations

In the narrow sense, IR means that the employer, employee relationship confines itself to the relationship that emerges out of the day to day association of the management and the labor. In its wider sense, IR includes the relationship between an employee and an employer in the course of the running of an industry and may project it to spheres, which may transgress to the areas of quality control, marketing, price fixation and disposition of profits among others.

Aspects of Industrial Relations

1.

2.

Promotion of healthy labor management relations a) Existence of strong, well organized, democratic and responsible trade unions and associations of the employers in the industry b) Spirit of collective bargaining c) labor welfare Maintenance of industrial peace/avoidance of industrial strife a) Machinery for the prevention and settlement of industrial disputes in the form of
i) legislative and administrative enactment-trade union act, industrial dispute act, industrial employment act ii) works committees and joint management councils iii) conciliation officers and board of conciliation iv) labor courts, industrial tribunals, national tribunals, courts of enquiry v) provision of voluntary arbitration

b) Provisions of bipartite and tripartite forums for the settlement of disputes

Aspects of Industrial Relations

3.

Promotion of industrial democracy a) establishment of the shop councils and joint management councils at the shop floor and the plant levels. b) recognition of human rights in the industry c) increase in productivity

Approach
The problems posed in the field of industrial relations cannot be solved within the limits of a single discipline, and hence it is bound to be inter-disciplinary in approach. It is an interdisciplinary field that includes inputs from Sociology, Psychology, Law, History, Politics, Economics, Accounting and other elements of management studies Any problem in industrial relations has to be approached on a multidisciplinary basis, drawing from the contributions of the above disciplines.

Approach
The causes of an industrial dispute may be, by nature, economic, social, psychological or political or a combination of any of them: Labour economics provides an economic interpretation of the problems growing out of employer-employee relationship. Industrial sociology explains the social background of the workers, which is essential for the understanding of industrial relations. Industrial psychology clarifies certain concepts and provides empirical tools in areas such as recruitment, placement, training, fatigue and morale. For instance, attitudes and morale surveys are powerful tools to discover causes of industrial strife and to evolve methods for their prevention. Labour laws and their interpretation by tribunals and courts contributes to the growth of industrial jurisprudence. Application of quantitative analysis and labour statistics throws light on the exact state of industrial relations during a particular period. Political aspects also assume importance in industrial relations, particularly in a developing economy dominated by centralized planning.

IR System

An industrial relations system may be defined as comprising the totality of power interactions of participants in a workplace, when these interactions involve industrial relations issues. It is viewed as an integral and non-separable part of the organizational structure and its dynamics. An industrial relations system includes all the individuals and institutions that interact at the workplace. Regardless of the level at which the system exists, an industrial relations system can be viewed as having three components:
a set of individuals and institutions that interact; a context within which the interaction takes place; and an output that serves to govern the future relationship of the parties

(1) (2) (3)

Components of IR System

Participants: The participants in the industrial relations sphere are composed of duly recognized representatives of the parties interacting in several roles within the system. Issues: The power interactions of the participants in a workplace create industrial relations issues. These issues and the consequences of power interactions find their expression in a web of rules governing the behaviour of the parties at a workplace. Structure: The structure consists of all forms of institutionalized behaviour in a system. The structure may include collective procedures, grievances, and settlement practices. Legal enactments relevant to power interactions may also be considered to be a part of the structure. Boundaries: In systems analysis, it is possible to find an issue which one participant is totally indifferent to resolving while, at the same time, the other participant is highly concerned about resolution of the same. These issues may serve to delimit systems boundaries.

Dunlops Approach
Among the contributions, the most outstanding has been that of Prof. John T. Dunlop of Harvard University. He presented systems approach to Industrial Relations in his book Industrial Relations Systems (1958) Systems thinking is a framework that is based on the belief that the component parts of a system can best be understood in the context of relationships with each other and with other systems, rather than in isolation. The only way to fully understand why a problem or element occurs and persists is to understand the part in relation to the whole

Dunlops Approach
Dunlop defines an Industrial Relations system as An Industrial Relations system at any one time in its development is regarded as comprised of certain actors, certain contexts, an ideology, which binds the industrial relations system together, and a body of rules created to govern the actors at the workplace and work community. There are three sets of independent variables: the actors, the contexts and the ideology of the system.

The Actors in a System

The actors are: (a)hierarchy of managers and their representatives in supervision, (b)a hierarchy of workers (non-managerial) and any spokesmen, (c)specialized governmental agencies (and specialized private agencies created by the first two actors) concerned with workers, enterprises, and their relationships.

The Actors in a System

These first two hierarchies are directly related to each other in that the managers have responsibilities at varying levels to issue instructions (manage), and the workers at each corresponding level have the duty to follow such instructions. The hierarchy of managers need have no relationship to the ownership of the capital assets of the workplace, the managers may be public or private or a mixture in varying proportions. The formal hierarchy of workers may be organized into several competing or complementary organizations, such as, works councils, unions, and parties.

The Actors in a System

The specialized government agencies as actors may have functions in some industrial relations systems so broad and decisive as to override the hierarchies of managers and workers on almost all matters. In other industrial relations systems, the role of the specialized governmental agencies, at least for many purposes, may be minor or constricted.

Actors in the IR System

Three main parties are directly involved in industrial relations: Employers: Employers possess certain rights vis--vis labors. They have the right to hire and fire them. Management can also affect workers interests by exercising their right to relocate, close or merge the factory or to introduce technological changes.

Employees: Workers seek to improve the terms and conditions of their employment. They exchange views with management and voice their grievances. They also want to share decision making powers of management. Workers generally unite to form unions against the management and get support from these unions. Government: The central and state government influences and regulates industrial relations through laws, rules, agreements, awards of court ad the like. It also includes third parties and labor and tribunal courts.

Actors in the IR System

Example of Employers Association

The Employers Federation of India (EFI) was established in 1933, as an association of autonomous organizations of industry and was set up with the purpose of protecting, promoting and championing the interests of employers mainly in the area of human resources, industrial relations, labour problems and cognate matters. Employers Federation of India plays a special role as an apex body of employers organizations and industries on matters concerning labour, human resource management, industrial relations and other related issues.

Example of Trade Unions

(Marxist-Leninist) Liberation)

(recognized)

All India Central Council of Trade Unions (Communist Party of India

All India Trade Union Congress (Communist Party of India) All India United Trade Union Centre (Socialist Unity Centre of India) Bharatiya Mazdoor Sangh (Rashtriya Swayamsevak Sangh) Centre for Indian Trade Unions (Communist Party of India (Marxist)) Hind Mazdoor Sabha (socialists) Indian National Trade Union Congress (Indian National Congress) Labour Progressive Federation (Dravida Munnetra Kazhagam) SEWA Trade Union Coordination Committee (All India Forward Bloc) United Trade Union Congress (Revolutionary Socialist Party)

Some other Terms

Employment: The state of being employed or having a job. Labor market: The market in which workers compete for jobs and employers compete for workers. It acts as the external source from which organizations attract employees. These markets occur because different conditions characterize different geographical areas, industries, occupations, and professions at any given time. Industrial Relation System: The whole gamut of relationships between employees and employees and employers which are managed by the means of conflict and cooperation. A sound industrial relations system is one in which relationships between management and employees (and their representatives) on the one hand, and between them and the State on the other, are more harmonious and cooperative than conflicting and creates an environment conducive to economic efficiency and the motivation, productivity and development of the employee and generates employee loyalty and mutual trust.

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