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Future of Industrial Relations in India
Human Resources » Industrial Law & Discipline

Chrm Message From: Total Posts: 34 Join Date: 27/10/2006
Rank: Executive Post Date: 12/01/2007 03:36:37 Points: 170 Location: United States

Dear friends,

There are few topics that I wanted to know about Industrial relations management.

I would be glad if u help me out in the clarification of the following :- 

- Future of Industrial relations
- Importance of it in an organisation

Waiting for the reply at the earliest..

Thanks in advance


Chrm Message From: proftandon Total Posts: 101 Join Date: 27/10/2006  
Rank: Leader Post Date: 12/01/2007 03:42:22 Points: 505 Location: United States

Future role of trade unions in India: Organizing the unorganized

The future role of the trade union movement is linked with a broader concern for ensuring the social cohesion of working people in a large and diverse country. In this final section, we examine union strategies in the private corporate sector, in public sector enterprises, and in the informal sector. It is imperative for the trade union movement to concentrate on organizing the unorganized, so as to create secure incomes and safe working conditions for those with irregular and precarious jobs.

4.1 The private corporate sector

On average, private enterprises employ around 30 per cent of all formal sector workers in India; in manufacturing and trade, this proportion is around 70 per cent, whereas in transport, electricity and construction the figure is less than 5 per cent (Datta Chaudhuri, 1996).

In successful private companies enterprise-based trade unions (that may or may not be politically affiliated) will have to accept that their pay is partly (if not largely) determined by productivity. Rather than blind resistance to this kind of pay structure, a cooperative strategy may pay greater dividends in terms of gainsharing at enterprise level. Unions will have to use their "collective voice" effectively in collective bargaining when incentive structures are proposed and negotiated. While the independent unions will find this strategy quite natural, those which are affiliated to the centralized federations may find it difficult. In either case, the extent to which a union is willing to take a risk will partly determine the composition of pay (performance-based "risk" pay and "steady" pay).

While the majority of contracts in this sector are (and probably always will be) negotiated at enterprise- or plant-level, unions in some organizations, possibly in the multinationals, could concentrate on attaining firm-wide agreements in the face of considerable management opposition. Firm-wide agreements will strengthen union power at the corporate-level, and to achieve this, unions may have to trade off some plant-level gains. An example of this situation is being played out at Bata India. Management recognizes the enterprise unions in its various plants across the country, but the loosely united All India Bata Employees Federation is not recognized. It appears that management is willing to talk to the federation if it agrees to restructuring plans at the plant in Faridabad. If the federation agrees to these plans in exchange for management recognition, this would clearly reduce union influence at the plant.

In the older industries in the private sector, where industry-wide bargaining is the dominant structure and where inter-firm differentiation has grown considerably since liberalization, unions and employers are finding it difficult to reach industry-level agreements. Unions will continue to face obstacles to industry-wide solidarity in this sector.

What have been the effects of economic liberalization on the connections between unions and political parties, and what has this meant for the private corporate sector? To the extent that most of the centralized trade unions continue to oppose the basic implications of economic liberalization, there has been a surprising reconciliation of unions affiliated to opposing political parties on a range of issues at both regional and national level. There has been a gap between the preoccupations of political parties and the macro-objectives of trade unions since the reforms. This has created a dilemma for most of the unions in this sector: while the loosening of ties with the parent body inevitably leads to greater autonomy in decentralized decision-making, it also means a lessening of centralized lobbying power. Market forces will increasingly dominate union strategies in this sector.

4.2 Public sector enterprises

On average, the public sector employs around 70 per cent of all formal sector workers in India; in transport, mining, construction, electricity and services this proportion is high (>80 per cent), but it is considerably lower in agriculture (40 per cent), manufacturing (<40 per cent), and trade (<35 per cent) (Datta Chaudhuri, 1996).

In non-viable public sector enterprises that are ready for closure, most of which are in the East, the situation continues to be very grim. Workers have not been paid for several months and the endless talk of revival now sounds hollow. The closure of these firms seems to be the only solution and unions can do no more than see that lay-offs are implemented fairly and as generously as possible. In several state-owned enterprises and organizations unions have accepted that privatization is the only way of saving the unit, and that informed negotiation is required.

As a result of increased competition from both domestic and international producers, the output of public enterprises and services has improved substantially. Nowhere is this more true than in the state-run airlines. But unions in the public sector, especially those in services such as medicine, education, the police and municipal workers, can substantially increase their credibility by agreeing to enforceable accountability procedures. This would mean internal monitoring, which the unions are reluctant to accept.

Although the government has indicated a preference for decentralization, the centralized bargaining structures have not yet been dismantled. Unions could campaign for a restructured central system that allows for greater local autonomy and minimizes bureaucratic inflexibilities. For the public sector to deliver long-run productivity improvements in the post-liberalization period, unions will have to partly align their objectives with those of the end-user - the average voter/consumer - who has become an important voice in the labour relations system.

4.3 The informal sector

In terms of union density, India fares rather badly compared to other large developing countries. According to the ILO World Labour Report 1997-98, union membership as a percentage of non-agricultural labour dropped from 6.6 per cent in 1985 to 5.5 per cent in 1995 (the corresponding figure in 1995 for Argentina was 23.4 per cent, Brazil 32.1 per cent and Mexico 31 per cent). Union membership as a percentage of formal sector workers in India declined from 26.5 per cent to 22.8 per cent between 1985 and 1995 (the corresponding figures in 1995 were Argentina 65.6 per cent, Brazil 66 per cent, Mexico 72.9 per cent). If the figures are derived only from registered unions that submit returns, it is possible that they may somewhat underestimate union density in India. According to the above source, less than 2 per cent of workers in the formal and informal sectors in India are covered by collective bargaining agreements. Clearly, a large proportion of workers (certainly those in the formal sector) fall within the ambit of labour legislation, even though they are not covered by a collective agreement. Nevertheless, it is apparent that considerable organization of workers remains to be undertaken in the Indian economy.

If one were to assume that the formal sector corresponds with the unionized sector (in reality, the unionized sector is a subset of the formal sector), then the following figures give an idea of the extent to which unions in future can organize workers in the various sectors. In total, less than 10 per cent of all workers are in the formal sector. The proportion of workers in this sector by industry groups is: mining and quarrying (56.9 per cent), manufacturing (19 per cent), construction (17.5 per cent), trade (2.1 per cent), transport (38.7 per cent), and services (38.7 per cent). Clearly, there is enormous potential for organizing workers in construction, manufacturing and trade. In addition, detailed surveys in several industries have found that the existing unions do not sufficiently represent the interests of casual and temporary workers (see the studies in Davala, 1992). Finally, according to National Sample Survey Organization data, there is a "high incidence of women's involvement in unorganized sector activities, ranging anywhere between 20 to 25 per cent of total employment in urban areas and anywhere between 30 to 40 per cent of total employment in rural areas - figures which far outweigh women's recorded involvement in productive activities from Census sources" (Mukhopadhyay, 1997, p. 485).

In sharp contrast to the formal sector, "the unorganized sector has little by way of protective legislation or union representation" (Anant and Sundaram, 1998, p. 833). In this site, the "not so invisible" forces of demand and supply determine wages and working conditions. There are no automatic cost-of-living adjustments and substantial improvements are required in designing need-based minimum wages for unorganized workers (Jhabvala, 1998) and providing them with assured employment for a minimum number of days (Unni, 1998). In this regard, the government's recent signal about labour law reform consisting of "umbrella legislation for welfare of unorganized sector workers" as part of the agenda should be critically examined. The government proposes to relax contract labour laws so as to generate more jobs, arguing that this would ensure better overall security and welfare provisions for unorganized workers. Unions, however, feel that any such move will only undermine permanent jobs. In any case, there are strong economic reasons why the wages and working conditions of informal sector workers should be improved through welfare legislation. Such measures improve the capabilities of the disadvantaged and vulnerable sections of working people. In the absence of enhanced capabilities the economy suffers a net loss.

It is clear that unions have a whole range of workers to organize in the coming years, since the majority of labour market entrants will probably work as self-employed or casual/temporary/ contract workers. Visaria and Minhas (1991) estimate that nearly 80 million people will join the labour force between 1990 and 2000. A whole range of non-governmental organizations have successfully organized (not necessarily unionized) several informal sector occupations and sites in India during the last decade, but it seems that these interventions are resented by the established trade union federations as an intrusion into their terrain (often, it is claimed, with financial backing from abroad). These fears are probably unwarranted, and cooperation between trade unions and NGOs is required to level up working conditions in these relatively neglected labour markets.

One way of organizing workers could be through union mergers and a joint trade union front. However, the latter presupposes a certain number of shared objectives among the large centralized trade union federations, and this unity is not yet on the agenda. The All India Trade Union Congress, the Hind Mazdoor Sabha, and the Indian National Trade Union Congress have talked of mergers and unity, but the Centre of Indian Trade Unions has taken a different approach; they have proposed a confederation of central trade unions which will preserve the individual identities (Muralidhar, 1994).The large unions have considerable differences on the efficacy of a secret ballot system to generate the legitimate bargaining agent. However, one good sign is the increasing willingness of trade union federations to work together in spite of the differences between their political parties on reform. In many states acute differences are surfacing between political parties and their affiliated unions and these issues are now being openly debated.

It is well-known that the informal sector in India contributes significantly to employment generation and to value added in industry. It is also true that there are considerable links between the formal and informal sectors and that there is a crucial regional dimension to informal sector manufacturing (Shaw, 1990; 1994). The attempt to unionize the unorganized in India has been difficult, although some progress has been made in certain regions with sympathetic state governments. But in other states, the situation of informal sector workers remains grim, and will probably get worse unless there is a concerted effort by trade unions and NGOs, hopefully with the assistance of local and state governments, to level up the labour market institutions of the informal sector. In these endeavours, the organized labour movement should not view NGOs as competitors.

To what extent will alliances between trade unions break the links with their respective political parties? Or, will such alliances lead to the emergence of national unions without explicit political affiliation? It is too early to answer these questions but the tensions between some political parties and their trade union affiliates have come onto the regional and national stage since economic liberalization began in the early 1990s. In the private sector, these tensions emerged during the third phase of unionism and resulted in the proliferation of independent unions. It may be premature to suggest that independent unions, if they can be organized at industry/regional level, will lead to far greater "collective voice" effects and less "monopoly" effects than the existing industrial relations system. With economic liberalization and its effects on regional variations in economic activity, it seems that battles over working conditions will increasingly be fought at local and regional levels. Trade unions will have to forge deep links with neighbourhoods and communities, urban movements, environmental groups and regional NGOs to enhance their effective power. Ultimately, it all depends on "public action", participation in the process of social change. Public action refers not to what the state does for the public, but to action taken by the public (Dreze and Sen, 1989). The trade union movement could trigger this much needed "public action" through broad-based alliances.

Excerpted from the research paper by By Debashish Bhattacherjee


Prof Tandon

Chrm Message From: komal23 Total Posts: 2 Join Date: 27/10/2006  
Rank: Beginner Post Date: 02/01/2010 15:35:31 Points: 10 Location: United States

Thank You for your valuable inputs. This article has helped me in deciding my Dessertation project.








Thanks & Regards,


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