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Causes of Industrial Disputes | Labour | Production | Economics


In this article we will discuss about the causes of industrial disputes.

The new industrial set up has given birth to the capitalistic economy which divided the industrial society into groups of labour and capitalists. Capitalists own resources and have possession over means of production on the other hand; labour sells services which cannot be stored. The interests of the two groups are not common.

One strive for higher wages and congenial working conditions whereas the other takes advantage of workers’ poor bargaining power and deny them their due rights. Besides, the employers want higher productivity. When these two conflicting interests clash, industrial disputes arise.


Although there is multitude of cause’s blended together, result in industrial disputes, it is not easy to ascertain the particular cause or causes involved. Surface manifestation of work stoppage may cover deep-seated and more basic causes which cannot be observed at first sight.

It has been observed by the experts of industrial relations that the cause of conflict between the two parties is the same in all capitalistic economy.

There are a number of causes for industrial disputes which can be classified into four categories as follows:

(1) Economic Causes:


Really, the most common causes of industrial disputes are economic causes.

These are as follows:

(a) Wages:

The demand for wage increase is the prime-most cause of the industrial disputes. A large number of strikes are being organised to raise a voice against the rise in prices and cost of living.


The real wages of the workers decline faster with the increase in price level and they feel dissatisfied with their present emoluments and struggle for the improvement in wages. By having a cursory glance on the history of industrial disputes; it becomes clear that cause of most of the industrial disputes was wages. The Indian employer has no clear-cut and enlightened wage policy.

(b) Dearness Allowance and Bonus:

Increase in cost of living was the main cause of the demand of dearness allowance by the workers to equate their wages with the rise in prices. Bonus also plays an important role as a cause of industrial dispute. It is interesting to note that in 1966, 49 percent of the disputes were related to wages and bonus.

Both the quantum and the method of bonus payment have led to a number of disputes. There is an increasing feeling among the workers that they should have a greater share in the profits of the concern and this fact has not been recognised by the employees and non-acceptance of this fact has been a source of friction among employers and employees.

(c) Working Condition and Working Hours:

The working conditions in Indian industries are not hygienic. There is not ample provision of water, heating, lighting, safety etc. Working hours are also greater. The demand of palatable working conditions and shorter hours of work are also responsible for labour disputes.

(d) Modernisation and Automation of Plant and Machinery:

The attempt at modernisation and introduction of automatic machinery to replace labour has been the major cause of disputes in India. Workers go on strike, off and on, to resist rationalisation and automation. A strike in cotton textile industry in Kanpur in 1955 is an example of such disputes. Workers in Life Insurance.

(e) High Industrial Profits:


During and after the world wars, prices of the commodities went up and the industrialists earned huge profits. In order to get share in the prosperity of the industry, it naturally led to the resentment on their part. The increased profits also led to the demands of higher wages and bonus. Now in the changing world, concept of labour has changed considerably. They think themselves as a partner of the industry and demand their share in the profits.

(f) Demand for Other Facilities:

Demand for other facilities for meeting out their basic needs such as medical, education, housing, etc., encourage the workers to resort to direct action because such facilities were denied by the employers.

(2) Managerial Causes of Industrial Disputes:

These causes include autocratic managerial attitude and defective labour policies etc.


(a) Denial of Recognition to Trade Unions:

Failure on the part of the employer to recognise the trade unions or to recognise the rival union for representation, insult of trade union leaders by the employers are some of the examples of autocratic managerial attitude worth mentioning as the causes of industrial disputes. The attitude of employers towards the labour associations had never been sympathetic. They want to divide them and rule.

Moreover, the management is generally not willing to talk over the dispute with the workers or workers’ representatives or refer it to ‘arbitration’ even when the workers are willing to do so.


(b) Defective Recruitment Policies:

The recruitment practices in Indian industries are defective. Recruitment is generally made by the contractors who exploit the workers and suppress their individuality. The defective promotion, demotion, transfer and placement policies encourage dissatisfaction among workers.

(c) Irregular Lay-Off and Retrenchment:

Lay-off and retrenchment are reasons to be mentioned for encouraging industrial disputes. Indian employers follow the policy of ‘Hire and Fire’. As a matter of practice, workers are not made permanent for a pretty long time to deprive them of their legitimate rights.


(d) Defiance of Agreements and Codes:

The employers regularly defy the provisions of collective bargaining agreements and code of conduct and code of discipline with a view to harass or exploit the employees and just encourage strife.

(e) Defective Leadership:

Inefficient leadership is also one of the causes of disputes. Leadership from the management and from the workers is quite incompetent to induce the workers to get them worked. The employers’ representatives are not delegated sufficient authority to negotiate with the workers.

They are not in a position to commit anything to workers on behalf of the management. Defective management leadership ignored the labour problems and inefficient labour leadership could not coordinate the efforts of their fellow members, so disputes arise.

(3) Government Machinery:

Government measures to prevent and machinery to settle the disputes are not much effective.

There are two examples:

(i) Enactments are Ineffective:

Though there is a plethora of enactments for promotion of harmonious industrial relations, yet it is ineffective and unsatisfactory in most cases due to:

(a) The irrelevancy in the context of the challenges of present industrial climate/culture, as many has not been convinced of their utility satisfactorily;

(b) Improper and inadequate implementation by many employers;

(c) Incapability of understanding and answering imperatives of development.

(ii) Little Confidence over Settlement Machinery:

Both employers and employees have little confidence over the Conciliation Machinery as it could succeed in settling a very negligible number of disputes so far. Both employers and employees are litigation-minded. Moreover, the settlement machinery is quite inadequate because, it has to see whether labour laws are properly being implemented or not.

(4) Voluntary Arbitration:

Mr. V.V. Giri was the promoter and supporter of voluntary arbitration and regarded compulsory adjudication as enemy number one of collective bargaining and industrial peace.

The Code of Discipline and the Industrial Truce Resolution adopted by the central organisations of employers and employees also stress the significance of voluntary arbitration. It was agreed by the two partners of industry that any dispute would be referred to voluntary arbitration if conciliation efforts fail and settle the dispute mutually and without recourse to legal remedies.

The Government of India took note of the intention of both the parties and set up the National Arbitration Promotion Board in July 1967, to promote voluntary arbitration to settle industrial disputes. The Board comprises of the representatives of the employers’ and employees’ organisations, public undertakings, and the Central and State Governments.

(5) Wage Boards:

Wages and allowances is the main issue in industrial disputes. The Government of India set up wage boards for various industries. The main function of wage boards is to fix the fair wage in various industries. Upto now more than 25 wage boards in various industries have been set up.

(6) Standing Orders:

In order to avoid frictions between employer and his workmen over the terms of employment, the Government enacted the Industrial Employment (Standing Order) Act 1946.

The object of the Act is to require employers to diffuse with sufficient precision, the conditions of employment in the establishments- under him and to let the workers know. Such conditions include conditions of recruitment, discharge, disciplinary action, holiday, leave etc., of the workers.

This Act applies to all establishment employing 50 or more workers. In 1961, the Act was made applicable to some other establishments employing even less than 100 workers at the instance of State Governments. Under the Act, each employer is required to certify the standing orders by the certifying officer to make them effective in the establishment.

(7) Joint Management Councils:

Just to make a start labour participation in management, the Government in its Industrial Resolution 1956, decided to set up Joint Management Councils. This step also remained ineffective and not much headway is made in this direction. Currently, there are hardly 80 JMCs and even out of them a good number are not effective.

These Councils have equal representative of workers and management. The main function of these councils is to make consultation in matters relating to workers. All matters which are subject to collective bargaining have been excluded.

(8) Other Causes:

Among these may be included the following:

(i) Almost every trade union in India is affiliated to one or the other political party. Political parties or political ideologies govern these trade unions. Each party, therefore, engineers strikes, gheraos and bandhs to demonstrate its political strength. The trade union, affiliated to a party in power gets preferential treatment.

(ii) Trade Unions in India are Weak:

They, invariably, fail in safeguarding the interests of workers.

The reasons for this state of affairs are:

(a) Multiplicity of trade unions in the same industry/unit and rivalry among the workers has destroyed the solidarity of the working class.

(b) In some undertakings, there is no union at all recognised or unrecognised. They have not been allowed to form a union, and therefore, they are deprived of their right of collective bargaining.

(c) The workers generally are uncertain with the activities except wages.

(d) Trade union leaders, themselves aim at fulfilling ulterior motives leading to thwarting the attempts of trade union unity.

(iii) Political instability, Centre-State relations, general responsibility or all fronts are reflected in industry resulting in industrial conflict.

(iv) Other potential factors such as rampant corruption in industrial and public life, easy money, conspicuous consumption, permissive society, character crises and genera! Break down in the national morale have brought in their train debasement of social values and social norms— all these can and have perpetuated all kinds of unrest, including industrial unrest.

Thus, industrial disputes are the result of so many causes. Sometimes, a number of causes collectively contribute to the dispute. All the actors of industrial relations viz. employers, workers and the Government in maintaining industrial peace must try to redress any grievances before it takes form of a dispute.

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