EVOLUTION OF INDUSTRIAL RELATIONS

Evolution of IR Industrial relations has its roots in the industrial revolution which created
the modern employment relationship by spawning free labor markets and large-scale
industrial organizations with thousands of wage workers. As society wrestled with these
massive economic and social changes, labor problems arose. Low wages, long working
hours, monotonous and dangerous work, and abusive supervisory practices led to high
employee turnover, violent strikes and the threat of social instability. Intellectually,
industrial relations was formed at the end of the 19th century. Industrial relations was
formed with a strong problem-solving orientation that rejected both the classical
economists’ laissez faire solutions to labor problems and the Marxist solution of class
revolution and concentrated on legislations like National Labor Relations Act and the Fair
Labor Standards Act. In the late 19th century, the industrial relations system started
shaping up, due to new managerial techniques, work complications etc due to
industrialisation. The popularity of the laissez-faire doctrine waned when it proved
inadequate to deal with the social and economic problems caused by industrialization.

3 History In the pre-industrial society, agriculture was the major source of wealth.
Production was mainly based on crude farming tools. All the factors of production i.e.
labour and capital was tied up with land. Only those who had control over these three
factors had economic power. Transformation started in the society, with the industrial
revolution, from the latter half of the 18 th century, starting from Great Britain to India by
the end of that century. The most important change was that capital became the critical
factor of production. Industrialisation brought about drastic changes in the working
methods and manpower management relations in the workplace. The trends in the early
stages of industrialization were: – Loss of freedom – Unlike in previous domestic
industries, working in factories involved strict discipline and less freedom. The workers
didn’t have much say in matters like working conditions, rest intervals, holidays, wages etc.
– Unhygienic working conditions – Attention was not paid to the health and safety of the
workers and the working conditions were mostly unhygienic and unhealthy. – Employment
of children – There was exploitation of children due to economic necessity and they also
worked in unhygienic working conditions.

4 Laissez Faire In the early 19 th century, the doctrine of laissez faire was in vogue, In
economics, laissez-faire means allowing industry to be free from state intervention,
especially restrictions in the form of tariffs and government monopolies. It is an economic
theory from the 18th century that is strongly opposed to any government intervention in
business affairs. People who support a laissez faire system are against minimum wages,
duties, and any other trade restrictions. An economic doctrine that opposes governmental
regulation of or interference in commerce beyond the minimum necessary for a free-
enterprise system to operate according to its own economic laws.

5 Important features of laissez faire: Freedom to Contract: - The parties to a contract were
free to lay down terms and conditions of contract without any intervention from third
party. Normally the weaker party i.e. the labourers have to accept the dictate of the
stronger party. Government or workers’ unions’ intervention was rigidly opposed. The
Dynamics of Market:- This doctrine believed that dynamics of market revolves round
economic forces. The forces of demand and supply that operates in the market decides
determine the price as well as the labour market. Thus if the supply of labour exceeds
demand the wages of workers were low. Any interference regarding wages either from
government or unions was opposed. The Pursuit of Self-Interest – This doctrine believed
that pursuit of self interest served the best interest of everyone. There interference by any
other party would adversely affect their interest.

APPROACHES TO INDUSTRIAL RELATIONS

The scenario of Industrial Relations(IR) is perceived differently by different people. For

some, Industrial Relations is related to class conflict, others perceive it in terms of mutual
co-operation and still others understand it in terms of competing interests of various
groups. HR managers are expected to understand these varying approaches because they
provide the theoretical underpinnings for much of the role of HRM.

The three popular approaches to Industrial Relations are Unitary approach, pluralistic
approach, and Marxist approach.

Unitary Approach

Under unitary approach, Industrial Relations is grounded in mutual co-operation,

individual treatment, team-work and shared goals. Work place conflict is seen as a
temporary aberration, resulting from poor management, from employees who do not mix
well with the organization’s culture. Unions co-operate with the management and the
management’s right to manage is accepted because there is no ‘we-they’ feeling. The
underlying assumption is that everyone benefits when the focus is on common interest and
promotion of harmony. Conflict in the form of strikes is not only regarded as unnecessary
but destructive.

Advocates of the unitary approach emphasize on a reactive Industrial Relations strategy.

They seek direct negotiations with employees. Participation of government, tribunals and
unions are not sought or are seen as being necessary for achieving harmonious employee
relations.

The unitary approach is being criticized as a tool for seducing employees away from
unionism and socialism. It is also criticized as manipulative and exploitative.
Pluralistic Approach

The pluralistic approach totally departs from the unitary approach. The pluralistic
approach perceives:

1. Organizations as coalitions of competing interests, where the management’s role is to

mediate amongst the different interest groups.

2. Trade unions as legitimate representatives of employee interests.

3. Stability in Industrial Relations as the product of concessions and compromises between

management and unions

Legitimacy of the management’s authority is not automatically accepted. Conflict between

the management and workers is understood as inevitable and, in fact, is viewed as
conducive for innovation and growth. Employees join unions to protect their interests and
influence decision-making by the management .

Unions thus balance the power between the management and employees. In the pluralistic
approach, therefore, a strong union is not only desirable but necessary. Similarly, society’s
interests are protected by state intervention through legislation and industrial tribunals
which provide orderly process for regulation and resolution of conflict.

According to pluralists, industrial conflict is inevitable and it needs to be contained within

the social mechanism of collective bargaining, conciliation and arbitration.

Marxist Approach

Marxists, like the pluralists, regard conflict between employers and employees as
inevitable. However, pluralists believe that the conflict is inevitable in all organizations.
Marxists see it as a product of the capitalist society.

Trade unions are seen both as labour reaction to exploitation by capital, as well as a
weapon to bring about a revolutionary social change. Concerns with wage-related disputes
are secondary. Trade unions focus on improving the position of workers within the
capitalist system and not to overthrow. For the Marxists, all strikes are political.

Besides, Marxists regard state intervention via legislation and the creation of industrial
tribunals as supporting management’s interest rather than ensuring a balance between the
competing groups. This view is in contrast to the belief of the pluralists who argue that
state intervention is necessary to protect the overall interest of society.
To Marxists, the pluralist approach is supportive of capitalism, the unitary approach is
anathema. Consequently, enterprise bargaining, employee participation, co-operative work
culture, and the like which help usher in cordial Industrial Relations are not acceptable to
Marxists. Such initiatives are regarded as nothing more than sophisticated management
techniques designed to reinforce management control and the continuation of the capitalist
system.

Labour Unions

A labor union, also called a trade union, is an organization that represents the
collective interests of workers. The labor union helps workers unite to negotiate
with employers over wages, hours, benefits, and other working conditions. Labor
unions are often industry-specific and tend to be more common in manufacturing,
mining, construction, transportation, and the public sector.

Objective of Trade Unions

a. Wages and Salaries: The subject which drew the major attention of the trade unions is
wages and salaries. Of course, this item may be related to policy matters. However,
differences may arise in the process of their implementation. In the case of unorganised
sector the trade union plays a crucial role in bargaining the pay scales.

b. Working Conditions: Trade unions with a view to safeguard the health of workers
demands the management to provide all the basic facilities such as, lighting and ventilation,
sanitation, rest rooms, safety equipment while discharging hazardous duties, drinking,
refreshment, minimum working hours, leave and rest, holidays with pay, job satisfaction,
social security benefits and other welfare measures.

c. Discipline: Trade unions not only conduct negotiations in respect of the items with
which their working conditions may be improved but also protect the workers from the
clutches of management whenever workers become the victims of management’s unilateral
acts and disciplinary policies. This victimisation may take the form of penal transfers,
suspensions, dismissals, etc. In such a situation the seperated worker who is left in a
helpless condition may approach the trade union. Ultimately the problem may be brought
to the notice of management by the trade union and it explains about the injustice met out
to an individual worker and fights the management for justice. Thus, the victimised worker
may be protected by the trade union.
d. Personnel Policies: Trade unions may fight against improper implementation of
personnel policies in respect of recruitment, selection, promotions, transfers, training, etc.

e. Welfare: As stated earlier, trade unions are meant for the welfare of workers. Trade
union works as a guide, consulting authority and cooperates in overcoming the personnel
problems of workers. It may bring to the notice of management, through collective
bargaining meetings, the difficulties of workers in respect of sanitation, hospitals, quarters,
schools and colleges for their children’s cultural and social problems.

f. Employee-employer relation: Harmonious relations between the employees and

employer is a sine quo non for industrial peace. A trade union always strives for achieving
this objective. However, the bureaucratic attitude and unilateral thinking of management
may lead to conflicts in the organisation which ultimately disrupt the relations between the
workers and management. Trade union, being the representative of all the workers, may
carry out continuous negotiations with the management with a view to promote industrial
peace.

Function of Trade Unions The primary function of trade unions include to negotiate
improved wages and allowances and working conditions of workers through collective
bargaining process or pressure tactics like strikes, to regulate relationship between
employees and the employer and to represent workers in matters of protecting their
interest.

Trade unions perform a number of functions in order to achieve the objectives. These
functions can be broadly classified into three categories:

(i) Militant functions,

(ii) Fraternal functions

Militant Functions
One set of activities performed by trade unions leads to the betterment of the position of
their members in relation to their employment. The aim of such activities is to ensure
adequate wages, secure better conditions of work and employment, get better treatment
from employers, etc. When the unions fail to accomplish these aims by the method of
collective bargaining and negotiations, they adopt an approach and put up a fight with the
management in the form of go-slow tactics, strike, boycott, gherao, etc. Hence, these
functions of the trade unions are known as militant or fighting functions. Thus, the militant
functions of trade unions can be summed up as:

○ To achieve higher wages and better working conditions

○ To raise the status of workers as a part of industry
○ To protect labors against victimization and injustice
 ● Fraternal Functions
Another set of activities performed by trade unions aims at rendering help to its
members in times of need, and improving their efficiency. Trade unions try to foster
a spirit of cooperation and promote friendly industrial relations and diffuse
education and culture among their members. They take up welfare measures for
improving the morale of workers and generate self confidence among them. They
also arrange for legal assistance to its members, if necessary. Besides, these, they
undertake many welfare measures for their members, e.g., school for the education
of children, library, reading-rooms, indoor and out-door games, and other
recreational facilities. Some trade unions even undertake publication of some
magazine or journal. These activities, which may be called fraternal functions,
depend on the availability of funds, which the unions raise by subscription from
members and donations from outsiders, and also on their competent and
enlightened leadership. Thus, the fraternal functions of trade unions can be summed
up as:
○ To take up welfare measures for improving the morale of workers
○ To generate self confidence among workers
○ To encourage sincerity and discipline among workers
○ To provide opportunities for promotion and growth
○ To protect women workers against discrimination

Causes of Industrial Disputes

The causes of industrial disputes are many and varied. The major ones related to
wages, union rivalry, political interference, unfair labour practices, multiplicity of
labour laws, economic slowdown and others.

Wage Demands

By far, the most important cause for disputes is related to wages. The demand for
wages has never been fully met because of inflation and high cost of living. High
inflation results in increased cost of living resulting in never-ending demands from
unions.

Management and Unions have wage agreement generally valid for three years. Each
new agreement is preceded by a prolonged battle between managements and
unions, often resulting in strikes and lockouts. Agreement reached in one company
will inspire unions in other plants in the locality, and make them pitch tents
demanding similar rise in wages.
Closely related to wages are bonus, incentives, and other allowances. Of all these,
wages have been a major issue of contention that leads to disputes.

Union Rivalry

Multiplicity of unions leads to inter-union rivalries. If one union agrees to a wage

settlement, another union will oppose it. The consequence is never-ending disputes.

Multiplicity of unions poses peculiar problems to managers. One such problem

relates to authenticity of memberships. Unions put up respective numbers of
members in such a way that when added together the figure exceeds the total
number of workers in the organisation. Another problem relates to the selection of a
bargaining agent in the process of collective bargaining. Union rivalry leads to large-
scale violence.

Political Interference

Major trade unions are affiliated to political parties. Political affiliation is not
peculiar to our country alone. Even a cursory assessment of labour movements
around the world would show that trade unions are, by their very nature, political,
and that politicisation of labour is the rule rather than the exception.

What happens when unions get politicised? In the first place, distant ideological
issues divide and fragment unions on party lines. When unions multiply, inter-union
rivalry erupts and the consequences are too obvious. Second, inspired by their
political ideologies, certain unions refuse to sign an agreement even if it is
favourable to all the workers and thus these perpetual dissenters manage to keep
the issue alive.

Third, every political party somehow engineers strikes to demonstrate its political
strength. Invariably, the political party which is in power favours a union which is
affiliated to it, and the result is end less disputes.
Unfair Labour Practices

Majority of disputes are management inspired. The following points 2 justify the
assertion:

1. The management is generally not willing to talk over any disputes with the
employees or the representatives, or refer it to ‘arbitration’ even when trade unions
want it so, and this enrages the workers.

2. A management’s unwillingness to recognise a particular trade union and the

dilatory tactics to which it resorts while verifying the representative character of
any trade union have been a source of industrial strife.

Multiplicity of Labour Laws

Labour laws in our country, as in several other countries, have been enacted to
create conditions for the protection of labour from unfair employment practices and
to provide a legal framework within which Industrial Relations is to be regulated.

Labour legislation is regarded as the most dynamic institution. This rapid

development of labour legislation is an integral part of the modern social
organisation. Surely, the result has been endless confusion, industrial strife, loss of
production and exploitation of labour by the management and of the management
by the labour.

What is strange is that in developed countries of the Western world, labour

legislation followed the emergence of industrialisation and in response to a demand
for economic and social betterment of the workers. We neither experienced an
industrial revolution. in the true sense of the tenn, leading to the gradual emergence
of a welfare state. nor a socialist revolution which binds the public sector with a
sense of performance.
Methods of Settlement of Disputes

A dispute, therefore, needs to be settled as early as possible. Various methods are

available for resolving disputes. More important of them are :

1: Collective bargaining

2: Code of discipline

3: Grievance procedure

4: Arbitration

5: Conciliation

6: Adjudication

7: Consultative machinery

Collective Bargaining
Collective bargaining is probably the most effective method of resolving industrial
disputes. It occurs when representatives of a labour union meet management
representatives to determine employees’ wages and benefits, to create or revise
work rules, and to resolve disputes or violations of the labour contract.

The bargaining is collective in the sense that the chosen representative of the
employees (i.e. the union) acts as a bargaining agent for all the employees in
carrying out negotiations and dealings with the management.

Approaches to Collective Bargaining

Collective bargaining has been viewed from three perspectives:

1. As a process of social change,

2. As a peace treaty between the conflicting parties, and

3. As a system of industrial jurisprudence

Collective bargaining benefits both employees as well as employers. This means that
the basic interests of the management are protected and also the rights of the
employees. The two sides have a responsibility towards each other.

Collective bargaining infuses democratic principles into the industrial world.

Workers participate in decisions that affect their work and work life. Thus,
collective bargaining may be viewed as a form of participative management.

Code Discipline
The code of discipline defines duties and responsibilities of employers and workers.
The objectives of the code are:

1. To ensure that employers and employees recognize each others rights and
obligations

2. To promote constructive co-operation between the parties concerned at all levels;

3. To secure settlement of disputes and grievances by negotiation, conciliation and

voluntary arbitration

4. To eliminate all forms of coercion, intimidation, and violence in industrial

relations;

5. To avoid work stoppages;

6. To facilitate the free growth of trade unions; and

7. To maintain discipline in industry

Grievance Procedure
Grievance procedure is another method of resolving disputes. All labour agreements
contain some form of grievance procedure. And if the procedure is followed strictly,
any dispute can easily be resolved.
In the meanwhile, a grievance may be understood as an employee’s dissatisfaction
or feeling of personal injustice relating to his or her employment relationship. A
grievance is generally well-defined in a collective-bargaining agreement. It is usually
restricted to violations of the terms and conditions of employment. Other conditions
which may give rise to a grievance are:

l. A violation of law,

2. A violation of the intent of the parties as stipulated during contract negotiations,

3. A violation of company rules,

4. A change in working conditions or past company practices, and

5. A violation of health and/or safety standards.

When an employee believes that the labour agreement has been violated, he or she
files a grievance. The grievance needs to be ‘resolved according to a set procedure.

There may be variations in the procedures followed for resolving employee

grievances. Variations may result from such factors as organizational or decision-
making structures or size of the plant or the company. Larger organizations do tend
to have more formal procedures involving a succession of steps. Some general
principles which should guide any procedure are:

l. Grievance must be addressed promptly.

2. Procedures and forms airing grievances must be easy to utilize and well-
understood by employees and their supervisors.

3. Ego clashes should not be allowed to impede the resolution of disputes.

4. Occurrence of similar grievances must be avoided.

Arbitration
Arbitration is a procedure in which a neutral third party studies the bargaining
situation, listens to both the parties and gathers information, an then makes
recommendations that are binding on the parties. Arbitration is effective as a means
of resolving disputes because it is:

I. Established by the parties themselves and the decision is acceptable to them, and

2. Relatively expeditious when compared to courts or tribunals. Delays are cut down
and settlements are speed up.

Conciliation
Conciliation is a process by which representatives of workers and employers are
brought together before a third party with a view to persuade them to arrive at an
agreement by mutual discussion between them. The third party may be one
individual or a group of people. The alternative name for third party is mediators.

It may be stated that the conciliator has no power to force a settlement, but can
work with the parties separately to determine their respective positions, explains a
position more fully to the opposition, points out bases for agreement that may not
have been apparent previously, helps in the search for solutions, and generally
facilitates the reach of an agreement.

In effect, mediators act as communications catalyst, and their effectiveness depends

on their impartiality and on their capacity to win the trust of both parties

Adjudication
Adjudication means a mandatory settlement of an industrial dispute by a labour
court or a tribunal. Generally, the government refers a dispute or adjudication
depending on the failure of conciliation proceedings.

Disputes are generally referred to adjudication on the recommendation of the

conciliation officer who had dealt with them earlier. However, the government has
discretionary powers to accept or reject recommendations of the conciliation
officer. It is obvious that once a dispute is referred for adjudication, the verdict of a
labour court or tribunal is binding on both the parties.
The system of adjudication is the most significant instrument of resolving disputes.
But, it has been criticized because of the delay involved in resolving conflicts.
Continued dependence on adjudication deprives the trade unions of their right to
recognize and consolidate their strength.

Consultative Machinery
Towards the end it is essential to refer to the consultative machinery
set by the government to resolve conflicts. The main function of
consultative machinery is to bring the parties together for mutual
settlement of differences in a spirit of cooperation and goodwill.
Consultative machinery operates at the plant, industry, state and the
national levels. At the plant level, there are works committees and joint
management councils.

Labour Management Cooperation

Labour Welfare and Social Security