Introduction to Industrial Relations

ASJAD USMANI Asst. Professor BCIPS

Contents
Concept Background Systems approach to IR Objectives, significance of IR Evolution Actors in Employee Relations Role of trade unions in Industrial Relations Changing profile of major stakeholders of IR in India

What is Industrial Relations ?

Industry refers to any productive activity in which an individual (or a group of individuals) is (are) engaged Relations means the relationships that exist within the industry between the employer and his workmen/ employees. Basically it is the: Relationship between union and management Conducted within a legislative framework devised by Govt., institutions Have implications for all including society All aspects of employment relationships

 Industrial relations are as old as the industry. During medieval period : direct interaction of employee & employer After industrialization in 18th Century, IR became a complex and delicate issue.

IR may be defined as the complex of interrelations among workers, managers and government.

Concept of Industrial Relations

Broadly, the term IR denotes the collective relationships between management and the workers. Industrial relations is an art, the art of living together for purposes of productions - J.H. Richardson Different parties learn this ART while working together by acquiring the skills to adjustment.

Background
IR plays a crucial role in establishing and maintaining industrial democracy. In India, it has passed through several stages. Pre-independence era : workers were hired and fired as per the demand and supply. Employer was commanding, wages were very poor. Till the end of First World War, there were hardly any laws to protect the interest of the workers except Employers and Workmen (Dispute) Act, 1860. After 1st world war, workers adopted violent approach. As a result many lockouts, strikes occurred.

 Soon govt. enacted the Trade Dispute Acts, 1929. However, neither the Central Govt. nor the state Govts. made adequate use of this law. In 1938, Bombay govt. enacted the Bombay Industrial Relations (BIR) Act. For the first time a permanent machinery, The Industrial Court was established for settling disputes. BIR was replaced by BIR Act, 1946 and got amended various times. After 2nd world war, India faced many problems like rise in cost of living, scarcity of essential commodities, high population etc.

Systems approach to IR
Given by : John Dunlop
Environmental forces Market or economic restraints Technology Distribution of power in society Participants in the system Outputs

Union Management Government

Rules of the workplace

Objectives of IR
1. To promote and develop labor management relation. 2. To regulate the production by minimizing industrial conflicts. 3. To provide opportunity to workers to involve in decision making process with management. 4. To encourage and develop trade unions in order to improve the workers' strength.

Significance of IR
> Industrial Peace > Higher Productivity > Industrial Democracy > Collective Bargaining > Fair Benefits to workers > Higher Morale > Facilitation of change

Evolution of IR
To understand the emergence of IR, it is necessary to study the process of evolution of industry. Before the evolution of industry, there were many gradual changes since the

Early stage, living on animal skin, fruits Roots of trees

Pastoral stage, domesticated animals for fixed supplies, lived near river banks for water

Agriculture stage, Started farming, Offered work to others on field

Stages in Evolution of Industry

1. 2. 3. 4. 5. 6. Primitive stage Agrarian economy stage Handicrafts stage Guild system Putting out system Industrial revolution

Primitive stage : Families were self sufficient Limited needs All the work was divided on family level Men : hunting, fishing, making weapons etc Women : cooking, raising children, agriculture, domestication of animals etc. All the products produced or procure was for family consumption Barter economy emerged

Agrarian stage : Agriculture became primary source of maintenance Tribes settled down in different places for sowing seeds and rearing cattle. All the work was divided between men and women of tribes. Gradually tribes split up into families. Due to varied human needs, exchange of goods started. Traders came into existence, stored surplus goods to sell later.

Handicrafts stage : Artisans living in villages produced the products for local consumption by exchanging them with various things from customers. No machinery was used All the products were handmade. There was no division of labour This industry was quite simple.

Guild stage : a) Merchant guild : Association of merchants engaged in trade in a particular locality. Purpose : to enforce equality of opportunity for the members of the guild, protect their interest, avoid competition among members, prohibit unfair practices. b) Crafts guild : Association of skilled artisans engaged in same occupation. Purpose : to regulate the entry to the craft, prescribed standards of workmanship etc. Soon the guild system began to decline by the end of 15th century because of narrow attitude of the guilds and increased rivalry.

Putting out system : Middle men came Played imp role between producers and consumers. Artisans produced goods, entrepreneurs came time to time to collect goods, paid them money. Due to large scale demand of the goods, problem of raw materials and tools aroused. Entrepreneurs provided tools of production to the artisans and paid them on piece wage basis. Eventually, entrepreneurs employed artisans at their places, assigned work to them, inspected the quality of products and found a market for his products.

Industrial revolution Result of the inventions of many English scientists during 1760 to 1820. There was a tremendous increase in the demand of the products because of the widening of markets in various geographical regions. Labour intensive industries were not capable of catering such wide demand. Hence, various inventions were made like Spinning Jenny by James Hargreaves, Water frame by Richard Arkwright, Power loom by Cartwright etc. The invention of steam engine sparked the idea to drive machines by power.

Actors in Employee Relations

There are 3 parties which are directly involved in the employee relations: 1. Employers 2. Employees 3. Government

Employer : Posses certain rights vis--vis labour. Have right to hire and fire as and when required. Can affect workers interests by exercising their right to relocate, close or merge the factory or to include technological changes.

Employees : Seek to improve working conditions. Exchange views with management and voice their grievances. Want to share some decision making power with management. Workers generally unite with unions against the management and get support from these unions.

Government : The central and State government regulate industrial relation through laws, rules, agreements, acts. Also includes third parties and labour and tribunal courts.

Actors in Employee Relations

EMPLOYERS

EMPLOYERS ASSOCIATIONS

EMPLOYEES

INDUSTRIAL RELATIONS

TRADE UNIONS

GOVERNMENT

COURTS AND TRIBUNALS

Role of Trade Unions in IR

1. Achieving higher wages 2. To offer responsive co-operation in improving level of production, discipline etc. 3. To promote individual and collective welfare 4. To improve working and living conditions 5. To enlarge the opportunities of promotion and training.

Changing profile of major stakeholders of IR in India

1. Management :
A ) Exploitative authoritarian system : Was introduced in India the colonial elite, who also set up industries during 19th Century. Labour was nothing more than a commodity. Was ruthlessly exploited, no job security, poor wages, no welfare amenities.
B) Benevolent authoritarianism : Believes in labour welfare. But does not grant labour privileges of having a say in their own affairs. Typical Indian business style of management. Survived uptil today.

C ) Consultative style :

D)

prevailing management style in public limited companies, foreign concerns operating in India. The employer will ask views and opinions from their staff, allowing them to feel involved but will ultimately make the final decision. Participative style : Labour is no longer a commodity or a child or an adult employee but is a friend and a partner to the enterprise. Unfortunately, not yet well developed in India.

2. A) B)

Workers : Sectional Bargainers Most widely accepted role of trade unions. Represent the interest of the workers and bargain with the management. Class Bargainers Bargaining is industry based on national level. Example : France. National bargaining takes place covering all industrial occupations, trade unions and federations. Farmers and civil servants have their own nation-wide unions. National bargaining takes place time to time to determine their share in GNP. In India, it has just started in few industries like steel, jute, engineering etc.

C) Ascent of the state

This is the role of trade unions in socialist countries like USSR. Here the trade unions have well defined role in ensuring the fulfillment of target of production at the enterprise level. In democratic countries like India, these unions represent the philosophy of the ruling parties. In India major unions have political affiliations. D) Partners in social control Under this system, the representatives of the workers sit on the Boards of management and participate in all kinds of decision making. There is a beginning of this in India. E) Enemy of the state In all democratic countries there are unions which subscribe to the Marxist theory of class war. Unions are would encourage excessive consumption, aspirations of workers, i.e., higher and higher wages. They bring about a state of labour unrest, contributing to the disintegration of the social order.

3. The Government : A) Laissez faire philosophy Laissez-faire means let it do. Government followed this attitude to labour management to settle a dispute. Allowed union and management to solve their issues all by themselves. B) Paternalism During the social reforms in UK and India, government assumed a paternalistic attitude towards labour. Series of protective laws were enacted regulating working conditions, payment of wages and gave them certain benefits in case of industrial injuries.

C) Tripartism 3 major parties are involved i.e., management, labour and government. Any issue which is raised is solved with the mutual consent of all the parties. Before independence in India, tripartite form of consultation existed before making any policy decision. D) Voluntarism Voluntary arbitration is officially encouraged but has not taken roots in India. Government involved a series of codes to regulate labour management relations on voluntary basis. As a result, Code of Discipline, The Code of Conduct and the Code of Efficiency and Welfare came.