Industrial relations may be defined as the relations and interactions in the industry particularly between the labour and management as a result of their composite attitudes and approaches in regard to the management of the affairs of the industry, for the betterment of not only the management and the workers but also of the industry and the economy as a whole.
The term industrial relations explains the relationship between employees and management which stem directly or indirectly from union-employer relationship.
Industrial relation is the relation in the industry created by the diverse and complex attitudes and approaches of both management and workers in connection with the management of the industry.
1. Definitions of Industrial Relations 2. Scope of Industrial Relations 3. Objectives 4. Types 5. Characteristics 6. Importance 7. Conditions for Healthy Industrial Relations 8. Models 9. Aspects.
10. Participants 11. Policies 12. Labour Management Relation 13. Prerequisite for Successful Programme 14. Impact 15. Essential Conditions 16. Causes 17. Approaches 18. Role 19. Future 20. Recent Trends.
Industrial Relation: Definitions, Scope, Objectives, Types, Characteristics, Importance, Aspects and Other Details
Industrial Relations – Meaning and Definition
The term ‘Industrial Relations’ comprises ‘Industry’ and ‘relations’. Industry means any productive activity in which an individual is engaged. It includes- (a) primary activities like agriculture, fisheries, plantation, forestry, horticulture, mining etc. etc. and (b) Secondary activities like manufacturing, construction, trade, transport, commerce, banking, communication etc.
Economically speaking, industry means the secondary sector where factors of production (land, labour, capital and enterprise or four M’s – men, materials, money and machines) are gainfully employed for the purpose of production, and where a business organisation exists.
‘Relations’ means ‘the relations that exist in the industry between the employer and his work-force. Different authors have defined the term industrial relations in somewhat different way.
Some of the very oft-quoted definitions are given below:
According to Bethel and Others, “Industrial relation is that part of management which is concerned with the manpower of the enterprise whether machine operator, skilled worker or manager.”
Manpower of the enterprise can, thus, be classified as management and workers or employers and employees and industrial relations can, thus, be treated as relations between the employer and the workmen.
According to V. Agnihotri, “The term industrial relations explains the relationship between employees and management which stem directly or indirectly from union-employer relationship.”
According to V.B. Singh, “Industrial relations are an integral aspect of social relations arising out of employer- employee interaction in modern industries, which are regulated by the State in varying degrees, in conjunction with organised social forces and influenced by prevailing, institutions. This involves a study of the State, the legal system, workers’ and employers’ organisations on the institutional level; and that of patterns of industrial organisation (including management), capital structure (including technology), compensation of labour force and the forces of market on the economic level.”
Thus, it covers all types of relations arising out of employer-employee interaction in the industry which are influenced by the power of the State and other social and economic institutions.
According to Ordway, Tead and Metcalf, “Industrial relation is the composite result of the attitudes and approaches of employers and employees towards each other with regard to planning, supervision, direction and coordination of the activities of an organisation with a minimum of human efforts and frictions with an animating spirit of cooperation and with proper regard for the genuine well-being of all members of that organisation.”
According to T.N. Kapoor, “The term ‘Industrial Relations’ should be understood in the sense of labour- management relations as it percolates into a wider set of relationship touching extensively all aspects of labour such as union-policies, personnel policies and practices including wages, welfare and social security, service conditions, supervision and communication, collective bargaining etc., attitudes of parties and governmental action on labour matter.”
The following points emerge from the analysis of the above definitions:
(1) Industrial relations are the relations which are the outcome of the ’employment relationship’ in an industrial enterprise. It is, thus, employer-employee relationship in an industry. Two parties—employer and workmen are necessary without which such relationship cannot exist and it is the industry which provides the setting for industrial relations.
(2) Industrial relation is the relation in the industry created by the diverse and complex attitudes and approaches of both management and workers in connection with the management of the industry. Attitude refers to the mental state of a person, approach can be the external expression of such an attitude. Attitudes are always not obvious and the individual himself may not always be fully conscious of the attitudes.
Attitudes must be inferred from tone of verbal expressions or perhaps from the individual’s overt behaviour. Attitude is the mental state of the individual which prepares him to take a particular, (external) approach or make him behave in a particular manner. Attitudes of both—employer and employees influence each other and determine natural relationship.
(3) This relationship emphasises on the process of accommodation whereby both the parties develop skills and methods of adjusting to and cooperating with each other.
(4) Industrial relation is not a simple relationship between the two parties but is a set of functional interdependence involving a number of factors, say, historical, economic social, psychological, demographic, technological, occupational, legal and others etc. It, therefore, requires an interdisciplinary approach for its study. In this context, industrial relations are the relations and interactions between management and workers and as a result of their composite attitudes and approaches.
(5) Every industrial relation creates a complex of rules and regulations to govern the work-place, the work- community with the main purpose of maintaining harmonious relations between the management and the workmen by solving their problems through the process of collective bargaining.
(6) The Government/State also regulates the industrial relations in the country. It evolves, influences and shape industrial relations through laws, rules, agreements, awards of the courts, and emphasises on the usages, customs, traditions, implementation of its policies and interference through executive and judicial machinery.
Industrial relations may, thus, be defined as the relations and interactions in the industry particularly between the labour and management as a result of their composite attitudes and approaches in regard to the management of the affairs of the industry, for the betterment of not only the management and the workers but also of the industry and the economy as a whole.
Industrial Relations – Scope
Industrial relations are relation between employee and employer in their day-to-day work. Hence, it is continuous relationship.
The scope of industrial relations includes:
(a) Relationship among employees, between employees and their superiors or managers.
(b) Collective relations between trade unions and management. It is called union-management relations.
(c) Collective relations among trade unions, employers’ associations and government.
Scott, Clothier and Spiegel remarked that industrial relations has to attain the maximum individual development, desirable working relationships between management and employees and effective moulding of human resources. They have also asserted that either industrial relations or personnel administration is primarily concerned with all functions relating man effectively to his environment.
Thus, the scope of industrial relations seems to be very wide. It includes the establishment and maintenance of good personnel relations in the industry, ensuring manpower development, establishing a closer contact between persons connected with the industry and that between the management and the workers, creating a sense of belonging in the minds of management, creating a mutual affection, responsibility and regard for each other, stimulating production as well as industrial and economic development, establishing a good industrial climate and peace and ultimately maximising social welfare.
Industrial Relations – 4 Main Objectives
Two-fold objectives of good industrial relations are to preserve industrial peace and to secure industrial co-operation.
If we have to establish industrial peace, the workers must be assured of fair wages, good conditions of work, reasonable working hours, holidays and minimum amenities of life.
Industry can be defined as a venture of co-operation under the direction of the management to secure the effective co-ordination of men, materials, and machinery and money.
The objectives of good industrial relations should be development and progress of industry; through democratic methods, stability, total wellbeing and happiness of the workers; and industrial peace.
Industrial peace is the fruit of good industrial relations. It is the harmonious atmosphere where there is no “inquilabs”, no strikes and no industrial disputes.
Regional prejudices, provincialism and clannishness have no place where good industrial relations prevail.
The primary objective of industrial relations is to bring about good and healthy relations between the two partners in the industry i.e., the management and the labour.
All other objectives revolve around it. Mr. Kirkaldy, has listed the following four objectives of industrial relations:
(a) Improving the economic condition of the labour in the existing state of industrial management and political government;
(b) Controlling industries by the State to regulate production and industrial relations;
(c) Socialization or nationalization of industries by making the state itself the employer; and
(d) Vesting the proprietorship of the industries in the worker.
He stated “The state of industrial relations in a country is intimately connected with the form of its political government and the objectives of an industrial organisation may change from economic to political ends.”
The Labour Management Committee of the Asian Regional Conference of the ILO has recognized certain fundamental principles as objectives of social policy in governing industrial relations with a view to establishing harmonious labour management relations.
(i) Good labour management relations in an industry depend upon employers and trade unions being able to resolve their problems mutually, freely, independently and responsibly.
(ii) The trade unions and employers and their organisation must be desirous of resolving their problems mutually through the process of collective bargaining. However, the assistance of appropriate government agencies may be sought in resolving the problem, whenever necessary in the public interest. Collective bargaining, therefore, is the corner-stone of good relations and appropriate legislative measures must be adopted to aid the maximum use of this process of accommodation.
(iii) The workers’ and employers’ organisations should be desirous of associating with government agencies keeping in view the social public, economic and general measures affecting the relations between the two parties.
The committee, therefore, emphasized the need for the management to acquire the fuller understanding of human factor in production and must use the appropriate methods of employees’ selection, promotion and training, wage administration work rules and labour discipline, lay-off and dismissal procedures etc. and other policies and procedures and practices to improve labour and personnel relations.
In short, the objectives of industrial relations are given below:
(i) To safeguard the interest of labour and management by securing high level of mutual understanding and goodwill between all sections in the industry which are associated with the process of production.
(ii) To raise productivity to a higher level by arresting the tendency of higher labour turnover and frequent absenteeism.
(iii) To avoid industrial conflicts and develop harmonious relations between labour and management for the industrial progress in a country.
(iv) To establish and maintain Industrial Democracy, based on labour partnership, not only by sharing the gains of the organisation, but also by associating the labour in the process of decision making so that individual personality is fully recognized and developed into a civilized citizen of the country.
(v) To bridge about government control over such units which are running at losses or where production has to be regulated in the public interest.
(vi) To bring down strikes, lockouts, gheraos and other pressure tactics by providing better wages and improved working conditions and fringe benefits to the workers.
(vii) To bring the gap, by the state, between the imbalanced, disordered and maladjusted social order (which has been the result of industrial development) and the need for reshaping the complex social relationships adaptable to the technological advances by controlling and disciplining its members, and adjusting their conflicting interests.
The main theme behind the concept of industrial relation is to recognise the fact that labour is a human being and not a commodity and, therefore, it should be treated as living being. Every individual differs in mental and emotional abilities, sentiments and traditions. Human like treatment only can improve the relations between the management and the labour. In its absence, the whole edifice of organisational structure may crumble down.
Thus, the employees constitute the most valuable assets of any organisation. Neglecting this important source may result in high cost of production in terms of wages and salaries, benefits and services, working conditions, increased labour turnover and absenteeism, growing indiscipline, strike and walkouts and the like besides deterioration of quality of goods and strained labour- management relations.
Industrial Relations – Types
The industrial relations is chiefly concerned with the management and the workers relations or employer-employees relations. But its scope is not limited only to this aspect. It also includes labour relations i.e., relations between workers themselves or between various groups of workers and public or community relations i.e., relations between the community or society and the industry.
There are so many groups of workers in an industry like workmen, supervisory staff, management and employer and harmonious relationship between various groups that affects the social, economic and political life of the whole community. Thus, industrial life creates a series of social relationships which regulate the relations and working together of not only workmen and management but also of community and industry.
Good industrial relations not only indicate the cordial atmosphere in the industry but also facilitate higher and quality production and industrial growth.
Thus, industrial relations include four types of relations:
(i) Labour relations i.e., relations between union- management (also known as labour management relations);
(ii) Group relations i.e., relations between various groups of workmen i.e., workmen, supervisors, technical persons, etc.
(iii) Employer-employee relations i.e., relations between the management and employees. It denotes all management employer relations except the union- management relations;
(iv) Community or Public relations i.e., relations between the industry and the society.
The last two are generally, not regarded the subject matter of study under industrial relations. They form part of the larger discipline—sociology. The first two are studied under industrial relations but these two i.e., labour management relations and employer-employee relations are synonymously used.
Industrial Relations – Salient Characteristics
The salient characteristics of industrial relations are discussed herein below:
1. Parties in the Industrial Relations Activities:
Basically, two parties-workers and management are involved in the process of establishing relations. However, the government agencies regulate /maintain industrial relations.
2. Interactive Process:
Industrial relations arise out interactions between different persons/parties. They are supervisors, workers trade unions, employers’ associations.
So, interactive process takes place between –
i. Supervisors and industrial workers
ii. Supervisors and group/team members
iii. Management and trade union leaders
iv. Employers’ federations and workers’ unions.
3. Two-Way Communication:
IRs is a two-way communication process. One party gives stimuli, other party responds to the stimuli. So, the transaction occurring through such mechanism is either complementary or cross. More the complementary transactions, better will be the industrial relations situations.
4. HRM Practices:
Effective human resource planning system, identification and stimulating prospective employees, designing the most suitable selection technique to choose the right kind of people help to organization to get a committed and willing workforce that want to grow, develop and achieve. Such employees in the process like to develop better relations with their bosses. So, HRM practices influence IRs pattern in the industry.
5. Approaches to IRs:
Various approaches contribute to shape IRs pattern in industrial organizations. These approaches include sociological, psychological, socio-ethical, human relations, Gandhian, system approaches etc.
6. State Intervention:
State plays a vital role to influence industrial relations situations through its activities as facilitator, guide, counsellor for both the parties in the industry.
7. Role of Trade Union:
Behavioural manifestations of workers are mostly governed by the trade unions to which they belong. Hence, trade union’s perception, attitudes towards management influence workers to form their mind set that regulates/promotes interaction with the management.
8. Organizational Climate:
If, congenial and conducive organizational climate prevails, workers feel homely, interact spontaneously, communicate boss about their problems, difficulties directly and come close to him to exchange/share the views each other in respect of work, change of job design, introduction of any operative system, process etc. Under such situation, possibility of establishing healthy human relations develops and these relations influence industrial relations pattern of organization.
9. Dispute Settlement Process:
If, the management personnel believe on the philosophy of settling workers’ grievances/ disputes through bi-lateral negotiation process, they give much more emphasis on mutual talk, sharing responsibility, collaboration, partnership dealing and mutual trust. In the process changes in workers’ attitudes, behaviour and thought pattern are likely to occur which effect industrial relations.
10. Outcomes of IRs:
Outcomes of IRs are reflected in production both in quantity and quality, services, man days lost, wastes, accident rate, productivity, labour turnover rate, absenteeism rate, number of bipartite negotiations, company’s image, growth, development etc.
11. Competency Development:
Healthy industrial relations help to develop workers’ skill, knowledge, ability, aptitude and change their attitudes, perception to enable them to participate in collaborative activities / collective bargaining process effectively.
12. Issues in IRs:
Industrial relations climate / situation is greatly influenced by the issues-economic, non-economic governed by service contract / terms and conditions of employment. Besides, the issues not covered under service rules viz., behavioural, and attitudinal issues influence IRs pattern.
Industrial Relations – Importance of IR
1. The labours today are more educated and they are aware of their responsibilities and rights. Management has to deal with them not merely as factors of production, but as individuals having human dignity and self-respect. The objective is to change the traditional views of management and labour towards each other and develop mutual understanding and co-operation and work towards achievement of common goal. Good industrial relations lead to industrial peace and increase in production.
2. Joint consultation between employees and management paves the way for industrial democracy and they contribute to the growth of the organisation.
3. Conducive industrial relations motivate the workers to give increased output. Problems are solved through mutual discussions, workers’ participation, suggestion schemes, joint meeting, etc. Good industrial relations, increase labour efficiency and productivity.
4. With increased productivity, the management is in a position to offer financial and non- financial incentives to workers.
Industrial Relations – Conditions for Healthy IR
Every organization strives to induce good industrial relations. To ensure industrial peace and avoid laobur unrest like strikes, gheraos, demonstrations, slogan shouting, work stoppages etc.; healthy work relationships must exist for the development and promotion of harmonious labour-management relations which has become very important in the modern industrial society.
Importance of good industrial relations and concern for the welfare of the labour is best expressed in the words of Dorabji Tata as follows –
“The welfare of the labouring classes must be one of the first cares of every employer. Any betterment of their conditions must proceed more from the employers downward rather than be forced up by demands from below, since labour, contented, well-housed, well-fed and generally well-looked after, is not only an asset and advantageous to the employer but serves to raise the standard of industry and labour in the country.”
Good industrial relations depend upon a large number of factors/conditions.
1. History of Industrial Relations in an Enterprise:
Every industry moves ahead with its good or bad history of industrial relations. Harmonious relationship between the workers and management marks the good history of the enterprise. While strikes and lockout characterise the bad history of the business. History, good or bad, established once will take time to change.
Once militancy (strikes, lockouts etc.,) is established as a conduct of operations, there is a tendency to continue. If harmonious relationships are established, it will perpetuate. This, however, does not mean that militancy situation cannot be converted into a harmonious relationships or vice-versa. Rather what it means is that probability of peaceful relations is greater where mutual understanding exists – and the probability of conflict is greater when industrial conflict has been accepted as a normal conduct of business.
2. Strong Trade Unions:
Strong and enlightened trade unions help to promote the status of labour without jeopardising the interest of management. Trade unions maintain good relations with management and avoid militancy and strikes situation. Enlightened trade unions induce the workers to produce more and persuade the management to pay more.
They mobilize public opinion on vital labour issues and help the government in enacting progressive labour laws. They develop right kind of leadership, avoid multiplicity of unionism and union rivalry. Hence, a strong, responsible and enlightened trade union promote healthy industrial relations.
3. Negotiating Skills of Management and Workers:
Well experienced and skillful negotiations create a bargaining environment conducive to the equitable collective agreements. The representatives of management and workers must recognize the human element involved in collective bargaining process.
Both parties must have trust and confidence in each other. They should be able to perceive a problem form the opposite angle with an open mind. A constructive and positive approach from both the parties must be present to honour the agreements in the right spirit.
4. Economic Factors:
Economic satisfaction of workers is one of the important condition for good industrial relations. Reasonable wages and benefits in commensurate with other industries must be paid by the employer. Economic need is the basic survival need of the workers.
5. Social Factors:
Social factors such as – social values, social groups and social status also influence the industrial relations. The employment relationship is not just an economic contract. It is a joint venture involving a climate of human and social relationships wherein each party (workers and management) fulfills his needs and contributes to the needs of others. The supportive climate is essentially built around social factors. The influence of social factors gets changed with the progress of industrialisation.
6. Psychological Factors:
The psychological factors such as motivation, alienation and morale are significant determinants of industrial relations. The relationship between workers and management would be more stable and sure if the needs and expectations of the workers are integrated with the goals of the enterprise.
Workers should understand that their interests get furthered when organisational goals are achieved. Cordial and collective relations create an environment of power relationships, where everyone will be motivated to offer their best towards the attainment of goals.
7. Public Policy and Legislation:
The regulation of employer- employee relationship by the government is another important factor for the smooth industrial relations. Government intervenes the relationships by enacting and enforcing labour laws. Government intervention checks and balances upon the arbitrary management action.
It also provides a formal measure to the workers and employers to give emotional release to their dissatisfaction. Timely intervention by the government can catch and solve problems before they become amounting serious.
8. Off the Job Conditions:
Living conditions of workers are also important. The industry appoints the ‘whole person’. His personal and home life is inseparable from his work life. His personal optional conditions do affect on his efficiency and productivity. So off-the-job conditions of workers must be taken care of and improved to develop good industrial relations at the work place.
9. Better Education:
Industrial workers in Indian are generally illiterate. They can be easily misled by the trade union leaders who have their self-interest. Workers must be properly educated to understand the prevailing industrial environment. They must have a problem solving approach and a capability to analyse the things in the right perspective. They must be aware of their responsibility towards the organisation and the community at large.
10. Business Cycles:
Industrial relations are good when there is boom and prosperity all round. Levels of employment go up, wages rise and workers are more happy in prosperity period. But during recession, there is decline in wages and fall in employment level. Such recessionary conditions mars the good industrial relations. Thus business cycles also influence the existence of healthy industrial relations.
To sum up, the establishment of good industrial relations depends upon the constructive approach of both the management and the trade union. Mutual respect, understanding, goodwill and recognition of dignity are the essential conditions for healthy industrial relations. Promotion of collective bargaining and establishment of a fair and independent machinery for the peaceful settlement of industrial disputes are the pre-requisites for good industrial relations in the modern industrialised world.
Industrial Relations – Models of IR
1. Dunlop’s Industrial Relations System Model- Four Interrelated Elements:
a. Specialized government agencies.
b. Management, non-managerial employees and their representatives.
ii. Shared Ideology:
a. Beliefs within the system which not only define the role of each actor or groups of actors but also define the view that they have of the role of other actors in the system. If the view is compatible-stable IR system and other wise.
b. Set of ideas and beliefs held by the actors.
c. Helps to bind or integrate the system together.
Influence and constraints on the decisions of the actors which emanate from other parts of society, such as technology, market, budgetary and the locus of power in the society.
(iv) The regulatory framework developed by a range of process and presented in variety of forms which expresses the terms and nature of the employment relationship.
Criticisms of the Dunlop Model:
(ii) Lacks ability to predict outcomes/ relationships
(iii) Underestimates importance of power and conflict in employment relationship
(v) Cannot explain rapid decrease in unionization especially in the U.S.
2. Craig’s Industrial Relations System Model:
(i) Adds an actor- end user
(ii) Elements from the external environment converted into outputs
(iii) Series of conversion mechanisms
(iv) Outputs flow back into the environment through a feedback loop
(i) Legal Subsystem
(ii) Economics Subsystem
(iii) Ecological Subsystem
(iv) Political Subsystem
(v) Socio-cultural Subsystem
(i) Goals- Sought by actors
(ii) Strategies- Processes developed and implemented to achieve goals
(iii) Power- The ability to make another actor agree to your terms
(i) Processes actors use to convert internal and external inputs into outputs
(ii) Collective bargaining
(iii) Produces a collective agreement
(v) Written complaint by employees
(vi) Alleges collective agreement not been followed
(vii) Day to day relations-communication
(i) Interest arbitration
(iii) Grievance arbitration
(viii) Joint committees
(i) Management outcomes
(ii) Productivity, profitability
(iii) Labour outcomes
(iv) Equity issues, ways to achieve fairness in the workplace
(v) Worker perceptions
(vi) Work climate
(vii) Employee morale
(viii) Organizational commitment
(ix) Union satisfaction/commitment
(x) Conflict or conflict resolution
Industrial Relations – Main Aspects of IR
The main aspects of industrial relations are:
(1) Promotion and development of healthy labour management relations;
(2) Maintenance of industrial peace and avoidance of industrial strife; and
(3) Development of industrial democracy.
(1) Promotion and Development or Healthy Labour-Management Relations:
One of the aspects of industrial relations is to promote and develop healthy relations between the employer and employees and pre-supposes.
(a) Spirit or collective bargaining and willingness to take recourse to voluntary arbitration. The very feeling of collective bargaining makes them assume equal status in the industry. This feeling may further industrial peace.
(b) The existence or strong, well organised, democratic and responsible trade unions and also associations or the employers in the industry which may ensure job security to workers and their participation in the decision-making and give labour a dignified role in the society. These associations, tend to create grounds for negotiations, consultations and discussions on mutual basis leading to good labour- management relations.
(c) Welfare Work. Whether voluntary or statutory provided by the state, trade unions and the employers do create, maintain and improve good and healthy labour-management relations.
(2) Maintenance of Industrial Peace:
Industrial peace presupposes the absence of industrial strife. Such peace can be established only when the following rights and privileges are enjoyed by the State and facilities for bipartite or tripartite consultation machinery for resolving disputes if any, are provided –
(a) Machinery for the prevention and settlement of industrial disputes should be established through legislative and administrative enactment.
(b) The provision of the bipartite and tripartite forums for the settlement of disputes must be made. Various codes, model standing orders and procedures to resolve disputes are necessary.
(c) Appropriate Government must have sufficient power to refer the disputes to adjudication or arbitration when it feels it necessary in the interest of the industry, or of the country. The Government must not allow any group in the industry to stop production due to strikes or lock-outs.
(d) Implementation Cells and Evaluation committees must be established, having power to look into the implementation of various agreements, settlements and awards and also to violation of statutory provisions under various labour laws.
(3) Development of Industrial Democracy:
The idea of ‘industrial democracy’ is that the labour must have the right to associate with the management in running the industry.
In this connection, following techniques are usually adopted:
(a) Establishment of the Shop Councils and Joint Management Councils at the floor and plant level to improve the working and living conditions through mutual consultation and understanding. It will create necessary climate for the development of industrial democracy;
(b) Increase in labour productivity through various means;
(c) Recognizing the labour not as a commodity but as a human being in the industry, allowing them a feeling of self-respect and better understanding of their role in the organisation;
(d) The material and social environment to which the worker adjusts and adapts himself while at work, must be available.
According to Lester, “Industrial relations involve attempts to arrive at solutions between the conflicting objectives and values; between profit motive and social gain; between discipline and freedom; between authority and industrial democracy; between bargaining and cooperation; and conflicting interests of the individual, the group and the community.”
Industrial Relations – 3 Main Participants in Industrial Unit
Basically there are two parties in the employment relationship, i.e., the labour and the management. Over the years, the Government has come to play a major role in industrial relations and they have established legal and non-legal measures for cordial industrial relations in the country.
These three parties of industrial relations interact with the environment that prevails in the industry at any time. Good industrial relations are the outcome of- (a) Healthy labour management relations, (b) Existence of industrial peace and settlement of all disputes in such a manner that there are no strikes or lockouts and (c) Labour participation in industry which is referred as Industrial democracy.
In an industrial unit, different people are performing the different tasks.
We can have three parties or participants or actors in an industrial unit:
1. The workers and their unions,
2. Employees and their associations, and
1. Workers and their Unions:
The total work plays an important role in industrial relations. The total work includes working age, educational background, family background, Psychological factors, social background, culture, skills, attitude towards other work, etc. Workers organisation prominently in trade union activities.
The main purpose of trade unions is to protect the workers economic interest through collective bargaining and by bringing pressure on management through economic and political practices. Trade union factors include leadership, financial, activities, etc.
2. Managers and their Associations:
The prominent role is of work group, the differences in their sizes, constitutions and the degree of specialization they press upon. Of course, there is the necessary provision for mutual communications for the structure of status and authority and for such other organisation as trade unions and employer’s associations.
Government plays a balancing role as a custodian of the nation; government exerts its influence on industrial relations through its labour policy, industrial relations policy, implementing labour laws, the process of conciliation and adjudication by playing the role of a mediator, etc. It tries to regulate the activities and behaviour of both employee’s organisations and employer organisations.
Thus the three groups of employees, employers and the government work within the social and economic environment that prevails at a particular time. Whatever industrial relations system may be in vogue, it has in its framework the intricate rules and regulations which enforce the workplace and the working community.
The various systems might comprise of different forms of such rules and regulations. There might be laws and awards of different courts, committees or tribunals. There might be agreements written or sanctioned by custom, usage, practice or tradition or there might be the outcome of government policies or intervention.
Industrial Relations – Policies
i. Monitoring of industrial relations (Man-days lost in strikes and lockouts/ workers affected by closure/retrenchment, reasons for labour unrest and industrial sickness etc.)
ii. Convening of meetings of Industrial Tripartite Committees and Special Tripartite Committee.
iii. Decisions on closure, retrenchment and lay-off applications submitted by Central Public Sector Undertakings (CPSUs).
iv. Policy matters relating to employees in Central Public Sector Undertakings on payment of statutory dues of workers, impact of disinvestments and restructuring of PSUs on employees, improvements in Voluntary Retirement Scheme / Separation Scheme, etc.)
Seven industrial tripartite committees have been constituted with the view to promote the spirit of tripartism. These tripartite bodies aim at solving the industry specific problems related to workers in the Sugar industry, Cotton, Textile industry, Electricity Generation and Distribution, Jute industry, Road transport, engineering industry and Chemical industry. In addition a Special Tripartite Committee has been constituted to discuss general matters pertaining to Government reforms policies and their impact on workers.
i. Recognition of unions under the Code of Discipline in respect of industries / undertakings in the Central Sphere.
ii. Rendering assistance in securing recognition to unions in multi-state establishments which are in the State sphere, as and when such requests are received.
iii. Verification of membership of unions in Major Ports and Docks for the purpose of allocation of seats in the Port Trusts and Dock Labour Boards.
iv. Verification of membership of unions operating in nationalized Banks and SBI for the purpose of identifying the representative union for appointment of workmen, Directors on the Boards of Nationalized Banks.
v. Rendering advice/clarification in matters of withdrawal/derecognition of unions, criteria for recognition of unions, verification procedure rights and privileges of recognized and unrecognized unions etc.
vi. General verification of membership of trade unions.
vii. Implementation of the Code of Discipline.
viii. Implementation of awards under the Industrial Disputes Act.
ix. Screening of proposals for appeal against industrial awards under the Industrial Dispute Act by Public Sector Undertakings.
According to the screening procedure as approved by the Committee of Economic Secretaries in its meeting held on August 1, 1964, the Public Sector Undertakings are required to consult the Administrative Ministry concerned whenever they have to file an appeal challenging the award of the Tribunal etc.
The Administrative Ministries are invariably required to consult the Ministry of Law and Justice and Ministry of Labour before filing a Writ Petition in the High Court. If the Labour and the concerned Administrative Ministries do not agree with the decision, the matter is to be taken to the Committee of Economic Secretaries.
Industrial Relations – Strategic Issues in Labour Management Relation
With the changing business environment, industrial relations have undergone a sea change. Developing and maintaining good labour relations has become a part of organisational strategy.
In this section, we shall discuss some of the strategic issues involved in labour-management relations which are:
The following conditions facilitate healthy labour-management relations:
i. A well-organised and democratic employee union that can protect employee interests by providing job security and ensuring proper wages and benefits.
ii. A well-organised employers union that can promote and maintain uniform personnel policies. They should protect the interests of the weaker employers.
iii. Mutual negotiations and consultations between the employees and the employers. It is important to develop the collective bargaining approach, a process through which employee issues are settled through mutual discussions.
Industrial peace is essential to increase production and ensure healthy relations between the workers and employers.
The following measures help attain industrial peace:
i. Industrial disputes can be settled with the help of legislative enactment such as The Trade Unions Act, The Industrial Disputes Act and Work Committees and by Joint Management Councils.
ii. The Government should be empowered to refer disputes to adjudication, specially when the situation gets out of hand. Government intervention is required during frequent stoppage of production due to long strikes or lockouts.
iii. Forums based on the code of discipline in industry, the code of conduct, the code of efficiency, etc. can be set up to settle disputes.
Industrial democracy can be established when labour is given the right to be associated with various activities of the industry.
Industrial democracy can be attained by:
i. Establishing shop councils and joint management councils at the floor and plant level to improve the working and living conditions of the workers, enhance productivity, and encourage feedback from them. These councils serve as channels of communication between the management and the workers.
ii. Recognising human rights in the industry by viewing employees as human resources, not as commodities.
iii. Increasing labour productivity by motivating employees to perform better and help them improve their efforts and skills.
iv. Providing proper work environment to help workers adapt to work.
Before industrialisation, one couldn’t even dream of cordial labour-management relations. However, organisations realised that employee participation was needed for their survival. From exploiting workers, organisations sought the participation of workers in every activity.
In the initial years of industrialisation, most organisations adopted the authoritative style of management. There were no formal communication channels between the management and labour. Labour was considered a commodity. Workers were provided with poor, unsafe working conditions and meager incomes. Workers were not aware of their rights and their activities were strictly monitored.
The enactment of protective legislation, changes in the economic environment, and the growing awareness of human rights led to a change in the management style. Organisations realised the importance of human resources. Many organisations encouraged worker participation to counter the challenges posed by the rapidly changing business environment. The concept of industrial relations began to gain in importance.
Most organisations supported workers’ participation in management to serve certain specific purposes such as:
i. Managing resistance to change among employees
ii. Encouraging communication between the management and workers who are a part of the decision-making process
iii. Establishing democratic values in the organisation right from the shop-floor level.
Economic liberalisation and globalisation have had a tremendous impact on labour-management relations.
The Indian economy, which was liberalised in the year 1991, shifted its focus from import substitution to export promotion and domestic competition. Thus, domestic firms had to compete with multinational firms. Firms discovered that to maintain high quality and maximise productivity, it was important to have a committed workforce. To have a committed workforce, it was essential to create a sense of belongingness towards the organisation. This made organisations work towards labour-management relations.
Before liberalisation, trade unions in India played a major role in protecting the interests of the workers by using political tactics such as strikes and gheraos. Some trade unions even threatened the management of dire consequences if their demands were not met. However, with most organisations adopting a participative management style, trade unions began to co-operate with the management. This is because the trade unions realised that market forces and not the strength of the trade union determined workers’ interests.
Globalisation is defined as the growing liberalisation of international trade and investment, due to the integration of national economies. Most workers associate globalisation with loss of jobs. They strongly feel that globalisation has always had a negative impact on labour relations.
The reasons are:
a. Multinational companies are successful in exporting jobs from the developed countries to developing countries with the help of foreign investments.
b. Trade liberalisation has boosted the marketing of foreign goods rather than domestic goods.
c. Multinational companies extensively use technology and are less dependent on labour.
We shall now discuss the priority issues in labour-management relations.
The roles and responsibilities of unions and management have undergone a significant change in the past few years. Earlier, unions used political pressure to force the management to accept their demands. The management looked at unions as negative forces that did more harm than good.
i. To provide job security to workers
ii. To safeguard the interests and protect the rights of workers
iii. To encourage and enable worker participation in management
iv. To help employees develop their skills
v. To co-operate with management at times of crises
vi. To negotiate with management on industrial conflicts
i. To get things done on time
ii. To co-operate with the unions and satisfy their needs
iii. To maximise productivity by enabling participation
iv. To guarantee rights to workers
v. To treat unions as a strength, not as a liability
vi. To help workers adapt to changes
vii. To involve workers in decision-making
Unions and management can build consensus by listening to each other and getting involved in each other’s activities.
i. Establishing goals
ii. Developing strategies and tactics to achieve goals
iii. Measuring the results
iv. Identifying the problem
Conflicts at the workplace affect the physical and mental health of the people. This has a bearing on organisational performance. Therefore, it is important to recognise, understand, and resolve conflicts in labour relations.
Some methods to manage conflicts are:
i. Find solutions that are acceptable to conflicting parties with the help of bargaining- a negotiation technique used to ensure that the conflicting parties reach an agreement and settle the issue. Involve a neutral third party to resolve the conflict.
ii. Use the problem-solving approach helps to identify problems and devise ways and means to solve the problem.
Negotiation is a peaceful way of resolving disputes. Management and unions can develop strategies to ensure that the negotiations are effective.
a. Determining the compensation package that the company intends to offer the union
b. Collecting statistical data that is likely to be used during negotiations
c. Collecting and compiling information on issues that are likely to be discussed during negotiations
d. Strategic Issues in Employee Safety, Health and Labour Relations
e. Analysing various trade union acts and their use in other companies
Collecting information regarding:
a. The financial health of the company and its ability to pay employees
b. Negotiations handled by the company in the past
c. Negotiation strategies adopted by similar companies
d. The desires, preferences and interests of employees regarding their work
e. Preparing a questionnaire to finalise the demands to be discussed during the negotiation
f. Persuading members of the union not to resort to violence during the process of negotiation
Communication is essential for unions to convey their grievances to the management, and for the management to convey its opinions to the union. Effective communication helps remove misunderstandings between the conflicting parties.
The different forms of interpersonal communication used in labour relations are:
i. Oral Communication
ii. Written communication
The management uses oral communication during negotiations, discussions, and interactions with the union. Management and unions use written communication in the form of memos, letters, and reports.
Trust and co-operation are essential in labour relations. They help build a partnership between workers and employers and both groups to work together. Lack of trust and co-operation between the two groups can result in conflicts, disputes and strikes. That slows down the productivity of the organisation.
The Steel Authority of India Limited (SAIL), is well- known for its culture of mutual trust and co-operation between the workers and the management. SAIL has not had a strike after the 1969 negotiations between the management and the trade union. The 1994 collective agreement made by The National Joint Committee for Steel Industry (NJCS) and SAIL identified areas to improve organisational performance.
Some of them are:
i. Reducing wastage by handling raw materials efficiently
ii. Reducing operational costs and procuring material at economic prices
iii. Improving quality in all operations
iv. Making necessary improvements in the working conditions
v. Reducing unauthorised absenteeism
vi. Optimising capacity utilisation in each steel plant
vii. Improving house-keeping, customer service, and delivery
viii. Making effective use of all resources, including human resources.
South west Airlines is known for its labour-management relations. There was only one strike in the company’s history. At South west, unions are considered a positive force that contributed to the growth of the company. About 85-90% of the employees are members of the unions. The company does not have a formal labour relations department.
Labour representatives work under the departmental Vice-Presidents. According to union representatives, company managers listen to the problems faced by the employees.
South-West has cultural committees that consist of managers and workers. These committees organise various cultural activities. The company also offers flex-time work arrangements and job sharing programmes, by way of which workers who are under union contract can trade shifts with one another.
The airlines has a Committee which looks after the safety of the employees. This co-operation between labour and management has contributed significantly to the growth of the company.
Labour-management co-operation is essential to:
i. Reduce conflict
ii. Develop ownership and commitment
iii. Boost employee morale
iv. Encourage contributions from the employees
v. Reduce costs
vi. Respond to competition
vii. Benefits of Labour-management co-operation
Labour-management co-operation benefits both the management as well as the workers.
The benefits for the organisation are:
i. Increased productivity
ii. Better working relationships
iii. Improved quality
iv. Better employee safety
Benefits for workers are:
i. Improved safety
ii. Participation in the decision-making process
iii. Better working conditions
iv. Scope and opportunities for skill improvement
v. Strategies for Successful Labour-Management Co-operation
The different strategies for successful labour relations are as follows:
i. The labour-management co-operation efforts should involve all employees.
ii. Union members must be given benefits such as increased membership and additional jobs.
iii. Authoritative leaders should be replaced by supportive leaders.
iv. Efforts should be made to involve management and employees in various organisational activities such as goal-setting, planning, problem-solving and decision-making.
Industrial Relations – Prerequisite for Successful Industrial Relations Programme
The system of industrial relations is a multivariate and multidimensional that covers may interrelated issues pertaining to myriad organisational, interpersonal and personal aspects. So at a given point of time, the system of industrial relations is shaped by a blend of these factors.
Further, these factors at larger levels interact with various environmental facets that are highly dynamic; hence, the industrial relations in an enterprise at different times exhibit varying patterns. The development of happy industrial relations is not an easy task. Therefore, no cookbook guidelines can be suggested for boosting the effectiveness of the programme.
However, a few ones discussed below need consideration while designing the industrial relations programme:
1. Top Management Support:
The Industrial Relations, i.e., the management of people at shop-floor, is basically a “staff function”, so for the said work industrial relations director / officer should derive authority from the line executive, i.e., President / Chairman or Vice- Chairman, as the case may be. To make the industrial relations programme effective, it is the moral duty of the top management to provide the necessary support to the industrial relations staff.
2. Developing Sound HRM and IR Policies:
It goes without saying that the pragmatic policies on various aspects of HRM, including industrial relations, are the cornerstone of happy labour- management relations. As they constitute a definite corporate philosophy which furnishes a base for decision-making on many routine and strategic aspects of man-management relations.
Hence, such policies need to be designed or timely revised for maintaining good industrial relations in an organisation.
3. Development of Effective HRM and IR Practices:
The implementation of various policies pertaining to man-management selection calls for developing effective practices so that various policies could be translated into action.
4. Provision of Adequate Supervisory Training:
To deal with the complex task of putting various policies and programmes into action, the first line management / supervisors need to be imparted training in this context. Besides this, these personnel should be entrusted with the task of communicating the programmes to the desired audience.
5. Follow-Up of Results:
A constant review of the industrial relations programme is essential not only to evaluate the existing practices but also to identify the problems of the system. Besides a regular follow-up of various industrial relations policies, special emphasis need to be placed on gathering information relating to labour turnover, absenteeism, morals, job satisfaction, employee suggestions, accident rate, grievances, disputes, etc.
To make the industrial relations programme effective, a continuous research had to be carried out on its various aspects. This can be brought about by conduct of ‘Exit interview’, studying union demands, consultation with different organisations, labour consultants and also through empirical or exploratory investigation.
Industrial Relations – Impact of Good Industrial Relations on Production
An economy organised for planned production and distribution, aiming at the realization of social justice and welfare of the masses can function effectively only in an atmosphere of industrial peace. If the twin objectives of rapid national development and increased social justice are to be achieved, there must be harmonious relationship between management and labour.
The impact of good industrial relations on production may be seen from the following facts:
(1) Reduces Industrial Disputes:
Good industrial relations reduce the industrial disputes. Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations. Strikes, lockouts, go-slow tactics, gheraos and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere or industrial peace. It helps promoting co-operation and increasing production.
(2) High Morale:
Good industrial relations improve the morale of the employees. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same, i.e., to increase production. Every worker feels that he is a co-owner of the industry. The employer in his turn must realize that the gains of industry are not for him alone but they should be shared equally and generously with his workers.
In other words, complete unity of thought and action is the main achievement of industrial peace. It increases the place of workers in the society and their ego is satisfied. It naturally affects production because a mighty co-operative efforts alone can produce great results.
(3) New Programme:
New programme for workers development are introduced in an atmosphere of peace such as training facilities, labour welfare facilities etc. It increases the efficiency of workers resulting in higher and better production at lower costs.
(4) Mental Revolution:
The main object of industrial relation is a complete mental revolution of workers and employers. The industrial peace lies ultimately in a transformed outlook on the part of both. It is the business of leadership in the ranks of workers, employees and Government to work out a new relationship in consonance with a spirit of democracy.
Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognised. On the other hand, workers must recognise employer’s authority. It will naturally have impact on production because they recognise the interest of each other.
(5) Reduced Wastage:
Good industrial relations are maintained on the basis of cooperation and recognition of each other. It will help increase production. Wastage of man, material and machines are reduced to the minimum and thus national interest is protected.
Thus from the above discussion it is evident that good industrial relation is the basis of higher production with minimum cost and higher profits. It also results in increased efficiency of workers. New and new projects are introduced for the welfare of the workers and to promote the morale of the people at work.
Industrial Relations – Essential Conditions for Sound Industrial Relations
The establishment of good industrial relations depends on the constructive attitude on the part of both management and union. The constructive attitude in its turn depends, on all the basic policies and procedures laid down in any organisation for the promotion of healthy industrial relations. It depends on the ability of the employers and trade unions, to deal with their mutual problems freely and independently with responsibility.
They should put their faith in collective bargaining rather than in collective action. The existence of strong / independent / responsible / democratic trade unions, the promotion of collective bargaining- a fair and independent machinery, for the peaceful settlement of industrial disputes, the existence of good human relations, and lack of any kind of discrimination, are certainly the essentials for healthy industrial relations situation
For maintaining sound industrial relations, certain conditions should exist for the maintenance of harmonious industrial relations.
(a) Existence of Democratic Employee is Unions:
Industrial, relations are sound only when the bargaining power of the employees’ unions, is equal to that of management
(b) Existence of Organised Employers Unions:
These associations are helpful for the promotion and maintenance of uniform personnel policies, among various organisations and to protect the interest of weak-employers.
(c) Mutual and Voluntary Negotiations:
The relationship between an employee and the employer will be congenial only, where the difference between them are settled through mutual negotiations and consultations. Collective beginning is a process, through which employee issues are settled, through mutual discussions and negotiations, through a give and take approach.
(d) Maintenance of Industrial Peace:
It is possible through:
i. Establish machinery for presentation and settlement of industrial disputes. This includes legislative and non-legislative measures. Preventive measures include works committee, standing orders, welfare officers, shop councils, joint management councils. Settlement methods include voluntary arbitration conciliation and adjudication
ii. Government with requisite authority of settlement of industrial disputes
iii. Provision for the bipartite and tripartite committee, in order to evolve personnel policies, code of conduct, code of discipline etc.
iv. Provision for committees to implement and evaluate the collective bargaining agreements court orders and judgement, awards and voluntary arbitration etc.
Industrial Relations – Major Causes
In an organisation there is always the possibilities of conflicts between management and workers on various matters which destroy industrial relation. If industrial relation is not maintained perfectly, it may lead to low production and productivity, creation of tense situation, lower industrial development, loss of industrial peace and harmony etc.
Major causes of industrial disputes are:
(a) Economic causes- Related to more wages, D.A. bonus, better service conditions etc.
(b) Non-economic causes
These are further classified as-
(i) Physical causes- Like better working conditions, supply of essential materials.
(ii) Psychological causes- Like unlawful lay-off and retrenchment, misbehaviour of managers to workers, defective transfer and promotions.
(iii) Organisational causes- Like non-recognition of unions.
Industrial Relations – Theoretical Approaches to Industrial Relations by Different Scholars
Industrial relation is an inter-disciplinary field which includes inputs from sociology, psychology, labour economics, and law and personnel management. Any problem in industrial relations has to be approached on a multi-disciplinary basis, by considering the contributions made by various social scientists. Approaches to industrial relations should thus be based on a systematic and comprehensive theories.
Different theoretical models/approaches to industrial relations given by different scholars are:
1. The System Approach:
Industrial relations system is a sub-system of the wider society or the total social system. It is a mixture of traditions, customs, actions, reactions and interactions between the parties. An industrial relations system is an integral and non-separable part of the organization structure. It may be conceived at different levels- workplace, industrial, regional or national. It basically consists of totality of power interactions of participant’s management and trade union at a workplace.
There has been comprehensive research made by different sociologists to study industrial relations as a system.
Their contribution is being discussed below:
Robert Cox developed an interesting framework to relate different industrial relations system to their specific environments. He has developed 9 systems in his book, “Robert W. Cox’s Approaches to a Futurology of Industrial Relations (1971).”
(i) The Primitive Market System.
(ii) The Peasant-Lord System.
(iii) The Small Manufactury System.
(iv) The Life-Time Commitment System.
(v) The Bipartite System.
(vi) The Tripartite System.
(vii) The Corporatist-Bureaucratic System.
(viii) The Mobilising System.
(ix) The Socialist System.
Robert Dubin is regarded as the harbinger of the system approach to industrial relations. He observed that collective bargaining is the greatest social invention that has institutionalized industrial conflict. He used inter-group (union and management) power interaction concept of industrial relations. He found inverse relationship between union militancy and the range of bargaining issues.
Kenneth Walker developed a multi-dimensional model of industrial relations system. He found inadequacy of psychological models of human behaviour at work situation as the biggest barrier in smooth industrial relations system. He suggested a more adequate model to consider human being as –
(i) Calculating and emotional.
(ii) Co-operative and conflicting.
(iii) Expressive and instrumental.
Richard Peterson presented industrial relations model from managerial point of view. He explicitly relied on the system approach for building a system model for industrial relation as a function of the organisation.
Among the various models developed by a number of writers, to study industrial relations as a system, the most outstanding has been the contribution made by Prof. John T. Dunlop of Harvard University. He presented and analytical framework of industrial relations in his book titled ‘Industrial Relations System’ (1958). He broadened the concept of industrial relations from collective bargaining to the full spectrum of present day industrial relations. He attempted to develop a pioneering model of industrial relations with a set of analytical tools.
According to Prof. Dunlop, “An industrial relations framework is designed to be applicable at once to three broad areas of industrial relations experience, namely-(i) industrial relations within an enterprise, industry or other segment of a country and a comparison among such sectors; (ii) industrial relations within a country as whole and a comparison among countries, and (iii) industrial relations as a totality in the course of economic development.”
2. Oxford Approach:
Flanders, the exponent of this approach, considered industrial relations system as a study of the institutions of job regulations. The institution of job regulation was categorised by him as internal and external. Internal regulation being code of work rules, internal procedure of joint consultations, wage structure, grievance handling etc. Trade unions were considered as external regulation.
The rules of the industrial relations system were determined through the rule making process of collective bargaining. Collective bargaining was considered as apex to the industrial relations system. Collective bargaining as per this approach is considered as a political institution involving power relationships between the employer and the employees.
3. The Industrial Sociology Approach:
Industrial sociologists, G. Margerison, holds the view that the core of industrial relations is the nature and development of the conflict itself. Margerison developed two conceptual levels of industrial relation-one at intra-plant level and the other outside the firm.
At Intra-plant level, there could be three types of conflicts- distributive, structural and human relations. The major causes of such conflicts are related to job contentment, work task and technology. To resolve the conflicts, Margerison suggested collective bargaining, human-relations management analysis and structural analysis of socio-technical systems. At the second level i.e., outside the firm, the main concern is with the conflicts not resolved at intra-organisational level.
Beside this in an industry consists of a group of employees coming from different caste, colour, culture and family backgrounds having different attributes, such as – personality, educational background, emotions, sentiments, likes dislikes, ideologies, attitudes and behaviour. These all traits of a human personality creates problems of conflicts and competition among members of the industrial society. The concept of inter-personal and inter-group relations posing a problems of industrial relations.
The impact of industrial relations by these social factors cannot be ignored. Social factors like workers attitude, perceptions of the society, value system, customs, traditions, status symbols, acceptance or resistance to change and one’s degree of tolerance have got a direct impact on industrial relations.
Industrial Relations are being affected by social factors or consequences like:
(ii) Social mobility.
(iii) Housing and Transport Problems.
(iv) Disintegration of family structure.
(v) Stress and strain.
(vi) Gambling, drinking, prostitutions and other social evils. Industrial relations have changed with the change in society.
The industrial worker which had migratory character has now stabilized in industrial centres and has got an urban taste.
4. The Social Action Model:
The social action model has its origin in Weberian sociology. The social approach stresses the way in which an individual influences the social structure and makes the society. This approach attempts to study the behavioural influences. Behaviour at work gets influenced by the quality of human relations management and the nature of technology. As industries develop, a new industrial cum social pattern emerge which provides new behavioural pattern and new techniques of handling human resources.
Industrial peace, itself, may not ensure healthy industrial relations. There may not be strikes for a long time in an industrial unit, but there may be internal tensions that affects the social actions of the employees and may corrode the essence of industrial relations. New values have been added about the role of industry and unions in modern society. The role of the State and political parties have also been redefined in the light of these changes. These social actions changes the inter-relationship between the interest groups. These actions are the basis for conflicts or consensus.
5. The Psychological Approach:
“Mason Haire” has given the psychological approach to industrial relations. According to him, the problems in industrial relations arise due to perceptions of the management, unions and the workers. These perceptions may be about the person, the situation or the issues involved in the conflict. The perceptions of management and the trade union may differ because the same position may appear entirely different to the other party. Some aspects of the situation may be magnified or suppressed or distorted by either party. Hence conflicts and clashes may arise.
The amount of satisfaction the workers get from this job depends upon many factors like the nature of his work, his attitude towards work, working conditions, wages, job security relationship with the union and the co-workers and the behaviour of the boss etc.
If the worker is not satisfied with the prevailing conditions, he may be dragged to dissatisfaction and frustrations. Frustrations get expressed in aggressive actions like strikes, arson, looting, destruction of property etc. Hence as per the psychological approach, industrial peace is the result of correct perceptions and attitudes of both the parties i.e., the management and the workers.
The quality of Industrial Relations as per psychologists, depends upon the perceptions, attitudes and philosophy of the management and trade unions. The reasons of strained industrial relations may be due to inhuman approach of management and the rigid stand of the Trade Unions. The National Planning Association of U.S.A. conducted a survey of several industrial concerns to find out factors affecting industrial relations.
Their findings are:
(i) The management must accept the concept of collective bargaining in the organisation.
(ii) The management must ensure that there is mutual trust and confidence between management and the trade union.
(iii) Even the unions must fully accept the organisations as their private ownership and should do all possible things to enhance the goodwill and prosperity of the organisation.
(iv) Neither the management nor the trade unions should adopt legalistic and highly rigid approach while doing collective bargaining.
(v) There must be constant consultation and information sharing between the management and the worker’s union.
(vi) It must be ensured that the grievances are promptly settled at the level of plant/workshop.
(vii) It would be highly beneficial if the grievances handling procedure could be flexible, simple and informal.
(viii) Management should not interfere in the internal matters of the union.
(ix) The environmental factors do not by themselves bring peace but they create conditions to develop it, so it must never be ignored.
(x) It must be understood that Industrial peace is the result mainly of attitudes of the two parties rather than any other external factors/forces. So all attempts should be made to keep the attitude highly positive and accommodative.
6. Human Relation Approach:
The most important part of any organization is human being. Machine, material and money are secondary. “Take care of your employees. They automatically take care of your organisations”. Every human being wants freedom of speech, self-respect, and to enjoy all those facilities for which he is entitled for.
But when an employee is not provided a handsome package of financial and non-financial incentives and is not properly treated during his stay at the organisation it leads to tension, conflicts and ill-will. The problem of industrial relation in an industry arises out of tension which is created because of employer’s pressure and worker’s reactions and protests.
Tension among the employees affects their work culture and output which gradually affects the entire industry and ultimately it may lead to spoilage of work culture at national level. Therefore management should avoid these situations and expert services of other behavioural scientists should be taken if necessary to deal with such situations.
To avoid disputes, it is very essential to understand human behaviour which is pre-requisite for industrial peace. Management must learn and know the basic needs of the man and should always try to win the people. Because these are the employees who can run or ruin the business, They Can Make You Or Can Break You.
There are broadly two types of human needs:
(i) Economic Needs – Which include basic needs for food, shelter and clothing for oneself and his dependent. These needs can be satisfied by increasing his wages.
(ii) Psychological Needs – Needs for security from life hazards and uncertainties created by new challenges and new relationships. These are deep rooted and psychological in nature which disturb an employee’s peace of mind.
The human relations approach highlights certain policies and techniques to improve the morale, efficiency and job satisfaction of employees. The key to industrial peace lies with the quality of human relations in the industry. Human relations approach has its origin in the Hawthorne experiments and the research of ELTON Mayo. According to him, industrial conflicts are due to inadequate communications and lack of understanding of inter-personal factors like personality differences and irrational behaviour.
An informal social climate should be created to provide workers with outlets for their emotions and sentiments. Further, effective communication can help both the parties to develop accurate perceptions and understand each other’s social, safety and psychological needs.
In the words of Keith Davies, human relations are, “The integration of people into a work situation that motivates them to work together productivity, co-operatively and with economic, psychological and social satisfactions.”
7. Giri’s Approach:
Mr. V.V. Girl who was Labour Minister and later became the President of India was strong supporter of collective bargaining and mutual negotiations for the settlement of industrial disputes. He was of this opinion that” Voluntary efforts on the part of management and the trade union for winding up their differences is a tonic to the industry and any compulsion from outside is bitter medicine. He was of this firm opinion that “there should be bipartite machinery in every industry and every unit of the industry to settle differences from time to time with active encouragement of government but outside interference should not encroach the industrial peace.”
Giri Approach gave emphasis that industrial peace might be secured through machinery of collective bargaining. The trade unions should grow strong and self-reliant without the assistance of any outsider. There must be mutual settlement of disputes through collective bargaining and voluntary arbitration and not the compulsory adjudication.
This approach gave emphasis that internal settlement should be preferred and compulsory adjudication should be taken up as the last resort and only in exceptional circumstances. In fact Giri’s approach was appreciated by some employers but trade unions and State Ministries opposed it due to different reasons like weak trade unions, irrational industrial strikes and unnecessary stoppage of work.
8. The Gandhian Approach:
Gandhiji has been one of the greatest labour leader of modern India. He approached labour in completely new and refreshing manner. Gandhiji advocated peaceful co-existence of capital and labour. He believed in trust, non-violence and non-possession. He had immense faith in the goodness of man and believed that many of the evils of the modern world have been brought about by wrong systems and not by wrong individuals.
He insisted on recognising each individual worker as human being. Further, he realised that labour-management relations can be either a powerful stimulus to economic and social progress or an important factor in economic and social stagnation. The industrial peace is an essential condition not only for the growth and development of the industry itself, but also for the improvement in the conditions of work and wages.
Gandhian Rules to Resolve Industrial Disputes:
Gandhiji advocated following rules to resolve industrial disputes:
(i) Workers should seek redressal of reasonable demands only through collective bargaining.
(ii) Workers should avoid strikes, as far as possible, in industries of essential services.
(iii) Strikes to be avoided and only resorted to as last measure, only non-violent methods should be used.
(iv) Workers should take recourse to voluntary arbitration where direct settlement fails.
(v) Trade unions should seek authority from all workers before organising a strike and remain peaceful and nonviolent during strikes.
(vi) Formation of trade unions should be avoided in philanthropical organisations
(vii) He pleaded mutual respect, recognition of equality and strong labour unions as the pre-requisites for healthy industrial relations.
Industrial Relations – Changing Role of the Three Participants in Establishing Industrial Relation
In an industry, industrial relationship is the designation of a whole field of relationship that exists because of the necessary collaboration of men and women in the employment process. Industrial relations are inter-relations among workers, employers and the government.
Consequently there are three actors (participants or agents) of industrial relations viz. the workers and their organisations, the management and the government. Their roles have changed from time to time depending upon the economic systems of the country and their philosophies. In the following lines, we shall discuss their changing roles in the industrial society in establishing industrial relations.
1. The Workers and their Organisations:
In an industry, workers work in the organisation according to the policies laid down and decisions taken by the management. The interests of the workers are represented by their organisations trade unions.
These unions have assumed different roles in different socio-economic and political systems as follows:
(a) Sectional Bargainers:
This is most widely accepted role of the trade unions. Under this role, trade unions represent the interests of their fellow workers before the management and bargain on their behalf with the management at all levels—particularly at the plant level, industry-wise or in some small countries (such as Sweden, Norway, Austria etc.) at the national level. They also represent their members in public or private sector. As sectional bargainers, the unions may combine into larger national federations like the Trade Union Congress in the UK or the AFL-C.I.O. in the U.SA or the L.O. in Norway and Sweden.
In India, there are more than ten Federations of trade unions or Central Organisations of trade unions representing a large number of workers affiliated to them. Besides, there are number of unions representing a small group of workers on the basis of their job such as officers’ union, clerks’ union or union for technical personnel (generally known as associations).
The behaviour of such associations is to represent and protect the interest of their members through collective bargaining on all important issues, by the use of pressure tactics such as threat of strikes and gheraos. Sometimes, they turn violent. The unions believe that right to strike i.e., the flexing of muscles, is essential, not always as a last resort for effective collective bargaining.
(b) Class Bargainers:
In some countries like France, Norway, Sweden etc. The central made unions or Federations bargain for their members on national level in determining the share in the gross national product. The Federations enter into collective agreements usually for 2-3 years. The wages in individual plant are adjusted accordingly. In India, the trade unions in some industries like steel and coal, (mainly in public sector) have assumed this role in bargaining.
(c) Agents of the State:
The trade unions particularly in Socialist Countries like the U.S.S.R., play the role of state agents. They propagate the State policy in raising the productivity and act as State apparatus. Sometimes, the trade unions act as a kind of controlling group, working together with the management to raise productivity.
They play their more important role outside the workplace, assuming the responsibility for social welfare work, social insurance schemes and administration of all other labour social security schemes. One will not get any benefit unless he is member of a union, this type of role is not played in any other country.
(d) Partners in Social Control:
The unions in some countries like West Germany, France, Italy, Yugoslavia etc. play the role of a partner in social control of industries, where the representatives of workers sit on the Board of Management and participate in all kinds of decision-making. In India too, the beginning has been made in this regard Indian industries in public and private sectors, Works Committees, Joint Management Councils, have been formed at plant level. In some cases, the representatives has been put on the Board of Directors (in banking industry).
(e) Enemy of the System:
In most democratic countries, trade unions hold certain well defined political views. Some even go to the extent of anarchist view of overthrowing the whole economic system with a. view to bringing about a wholesale change in the system. Sometimes, they resort even to violence or disruption of industrial production. Such unions aspire much more than what they deserve.
They demand higher and higher wages, higher and higher bonus, without any justification and even when the industry’s capacity to pay is not commensurate with their demands. It leads to labour unrest, disintegration of the social order. In this sense, the unions act as the enemies of the economic system.
2. The Management:
The different styles of management which have been in vogue in different countries from time to time to meet different situations in the field of industrial relations, are found.
Rensis Likert has discussed ‘Four Systems of Management’ in the field of industrial relations, namely:
(i) The Exploitative Authoritative System:
This system was in vogue in the initial years of industrialization. Under this system, the labour was ruthlessly exploited and was treated as ‘commodity’ and not as human being. Labour was paid very low with long working hours under strict supervision. Any indiscipline was severely penalized.
Working conditions were quite unhealthy and unhygienic and welfare amenities were extremely poor. Security of job was unknown to the workers and they work only on the whims of the employer. The management was authoritarian even to the genuine demand of the workers. This style of management was survived under the Laissez Faire policy.
(ii) Benevolent Authoritative System:
Under this system, the concept of labour in the minds of employers has changed a little, because of the pressure of social workers and the enactment of certain protective legislations: Certain elite employers the small number of family concerns were prone to this style of management. They look after the workers’ interest if production and profits were to be maintained at a high level.
The workers were considered as mere ‘child’ who needed careful guidance and protection against all odds. The welfare amenities were provided for their well-being. Employers hardly conceded to labour the adult privileges of having been consulted in matters concerning them. They usually believed in paternalistic attitude towards labour needs. This style has survived up till today. In Indian industries, firms of managing agent’s private limited companies, partnerships etc. followed this style of management in the initial years.
(iii) The Participative Style:
The style recognises the workers’ participation in decision making process. The labour, under this style, is treated as an ally and a friend even a partner in the joint endeavour to improve the efficiency and productivity of the enterprise. In India, this style is rare exception. Even in countries where labour participation has been adopted successfully, the acceptance of this style is not very wide.
(iv) The Consultative Management Style:
This style of management began to take root due to the growth of trade unions and labour legislations. Under this style of management, workers are consulted on matters relating to them and which are of their interest. However, decisions on matters not directly related to them are taken by the management without having any consultation with them. The worker is regarded as an ‘adult’ employee (and not as a child) with rights and view of his own. This style of management also tries to conform to the requirements of various labour laws for the benefit of labour.
This style of management is presently prevailing in the public limited companies, foreign concerns and multinationals in India and also in public sector enterprises. Generally, the management does not believe in the good intentions of the trade unions and they also set up their company unions yet they believe in having a well-developed communication channel between the workers and the management, in a system of feedback from the floor upward, in collective bargaining and in sharing information, whenever necessary with the workers and middle management.
3. The Government:
The government has also been an active agent in maintaining and establishing industrial relations. Its role has been changing from time to time.
(i) Laissez Faire Philosophy:
The Laissez Faire Philosophy i.e., a philosophy sans intervention was followed by the governments almost everywhere and in India, too, by the British Government in the 19th century. The Government was not willing to intervene between the labour and management in settling a dispute unless it led to a serious law and order problem. Both parties’ management and labour were left to settle their disputes as they liked. The Government remained silent spectator. The unconcerned attitude of The Government and the high handedness of the employers towards labour compelled labour to combine for a common cause may be for protest against inhuman conditions of work, meagre wages or harsh treatment of the foreman.
Towards the end of 19th century, the attitude of the Government showed a change towards labour because of the agitation by social philanthropists like Robert Owen, Ruskin and others to U.K. and Lokhandey, Bengali and Nadia in India. So, gradually the Government assumed a protective or paternalistic attitude towards labour.
A series of labour laws were passed regulating payment of wages, working conditions to factories, mines and plantations, compensation in case of injury on work and also enabling them to form unions of their own. Before Independence, the British Government had initiated quite a few progressive pieces of legislation and set up a Royal Commission on Labour (1929-31) to make a detailed study of working conditions of labour in India. After Independence, a large number of protective laws have been passed. The approach of the Government is still that labour is a weaker party and needs support.
The Gandhian influence on the thinking of a number of eminent trade union leaders, some of whom were Ministers of Central or State Government, led to the adoption of a series of codes to regulate labour management relations on a voluntary basis. Certain Codes like the Codes of Discipline, the Codes of Conduct and the abortive Code of Efficiency and Welfare were evolved. Voluntary arbitration was encouraged to resolve the dispute as a part of the Code of Discipline, as advocated by Mahatma Gandhi.
In the 40s and later period, the Government also emphasized on the system of consultation between representatives of labour, management and the Central or State Government on tripartite and bipartite forums, following the models of I.L.O. recommendations. With Independence gradually, such institutions as the Indian Labour Conference (ILC), the Standing Labour Committee (SLC), the Industrial Committees for particular industries etc. were set up. The Government encourages all interested groups before taking any policy decision in the field of labour or taking up any legislation.
Along with this, the Government has adopted a policy of intervention in labour disputes, through process of conciliation and adjudication. This role of the Government has not found favor with the labour unions and the management everywhere.
(vi) The Model Employer:
Today, the Central Government is the largest employer in India because of the growth of public sector in India. It influences the Government’s labour policy in a significant way. The Government is now in the role of model employer which is much talked about but cannot always be practiced. Industrial relations even in government sector cannot be said to be satisfactory.
Thus, the Government tries to regulate the labour management relations and keeps an eye on both groups. This relationship is maintained through the appointment of labour courts, industrial tribunals, wage boards, investigation and enquiry committees, etc. which lay down principles, norms, rules, regulations, awards. Which are placed in the statute books and are to be observed by both groups.
Industrial Relations – Future
Good industrial relations increase the morale of the workers and motivate the workers to work more. When both parties think of mutual interests, it gives more chances of development. Any problem is solved by mutual consent which develops many incentive schemes, such as – worker participation in management, profit sharing, suggestion schemes and so on.
These all bring job satisfaction to the workers and they all put positive effects on the production. From all this we can conclude that good industrial relation, certainly boost up the production and improves the quality and quantity both. They increase labour efficiency also. An increase in the morale of workers reduces per unit cost of production too. Thus we can say that industrial relations have a far-reaching impact on production.
The future of industrial relation in can be reviewed from reports of the commissions constituted by the government for this purpose. From these certain issues are emerging which are posing challenges to the three actors in the system.
The first is the issue of strengthening collective bargaining by trying to determine a sole bargaining agent for negotiations. The state of Maharashtra has already passed a law for the creation of a sole bargaining agency in every unit and industry. Collective bargaining is advocated where the parties involves have a fuller understanding. This will help to arrive at a speedier settlement of dispute, between them.
The second issue relates to the gaps that are occurring as a result of the various that occur in central and state legislations as far as labour matters are concerned. In India, labour fall under the concerned. In India, labour fall under the concurrent list though NCL has made a recommendation for forming a common labour code which is yet to be adopted. Adoption of this recommendation will go a long way in solving some of the problems that Indians legislation process is facing.
Another issue is that of workers participation in management. India has already experienced the working of many forms of workers-participation schemes but none of them seems to have made any headway. The reasons for the failure of these schemes need to be probed into.
The three actors in the system need to take into account the effect of their actions on the consumer s and society in general, owing to the growing inter-linkages between industry and its environment. They have to evaluate and decide on the appropriate alternatives in terms of the strategy they are going to adopt in managing the personnel and industrial relations functions.
The environment is fast changing and the pressure from various groups involves are starting to get more vocal and intense. The strategy chosen for the attainment of the goals will have to depend on the objectives, values structures available and the environment in which they have to operate.
Industrial Relations – Recent Trends in Industrial Relations System
The demands of the employers have necessitated a grand shift from the ‘State Intervention’ to ‘Liberalization’ in the IRS. There have been many emerging trends in industrial relations ranging from labour reform to judicial trends and managerial strategies. Let us have a look on all these varying trends in today’s industrial relations system.
1. Labour Reforms:
The State Intervention policy of the government has mostly worked in favour of the labour to give them protection and collective bargaining. The industrial policies were designed to regulate the actions of the labour and capital and providing judicial solutions to industrial disputes. Now with the product market and capital market reforms, which has increased the beginning power of the capital vis-a-vis labour, capital has become more mobile and less regulated.
While the product market and capital market reforms may go unnoticed by majority of the people, the labour reforms come under the political and economic consideration of the nation. Labour reforms exert more political pressures as the government has to ensure the welfare of the millions of workers employed in the organized sector. The economic pressures do restrain certain welfare schemes of the industrial enterprises.
The government of India has resorted to ‘soft’ labour reforms in the form of:
i. Disinvesting instead of privatization.
ii. Liberalizing labour inspection systems.
iii. Amending trade union laws.
iv. Reducing interest rates on provident fund.
v. Special concessions to units in Special Economic Zones (SEZs).
vi. Different inspection authorities for units in SEZs.
vii. Simplify procedures with respect to annual returns, maintenance of registers and so on.
viii. Declaring units in SEZs as ‘public utility services’ to make strikes more difficult.
2. Judicial Trends:
From the era of ‘social justice’, ‘distributive justice’ and ‘discriminative justice’, where the judiciary was busy in giving many landmark, judgments for protecting the interest of workers. The trend has been reversed with the advent of liberalization and globalization, where our industries have to compete with the multinationals.
Judiciary has realized that our labour and trade unions have been over protected. They have started taking more realistic stand on the issues relating to industries, keeping in view the existing social norms and international practices. For example- closure and shifting of factories in Agra to prevent pollution to Taj and closure of polluting industries and prohibition of moving activities in forest areas have been strongly opposed by the workers and trade unions. The courts have upheld the privatization of public sectors (BALCO case), despite the protests by public sector workers. There are number of examples of judicial judgments in which employers and workers have been happy or unhappy.
Examples of Judgments which Make Employers Happy:
i. Strike is not a fundamental right.
ii. Ruling that a strike has not only to be legal, but also justified; application of the norm of no work on pay in the case of strikes and for those who do union work as against company work.
iii. Imposition of fine on trade union leaders for indulging in arson, loss of company property etc.
iv. Restrictions on protest demonstration, political bandhs, etc.
v. Decision that in the case of accidents by a bus or lorry, the compensation payable to the victims should be recovered from the earning of drivers.
Examples of Judgments which Make Workers Happy:
i. Striking off of the contents of service conditions and standing orders in matters like treating unauthorized absence for over a week as abandonment of employment.
ii. Requirement of a notice of change when the Voluntary Retirement Scheme is introduced because work done by more people will now be required to be done by fewer people.
iii. Regularisation of casual/contract labour. Absorption organisation labour as regular when the system of contract labour is abolished.
iv. Ruling of the Supreme Court that the service of employees in an organisation cannot be terminated arbitrarily and abruptly by giving notice of one or three months or pay in lieu of notice.
v. Abolition of child labour in hazardous industries.
3. Trade Unions Nexus:
The bargaining power of trade unions has been weakened earlier. IRS was mainly concerned with trade unions, management and the government. But now the consumers and community are also a part of dynamic Industrial Relations System (IRS). When the rights of consumers and community are affected, the rights of workers and trade unions and even managers/employers get a back seat. This is evidenced by ban on bandh and restriction on protests and dharnas. Now-a-days, trade unions can see their future by aligning themselves with the interests of the wider society. Unions have to make alliances with the society, consumers and community, otherwise they will find themselves dwindling.
In government and public sectors, workforce is shrinking due to non-filling of regular posts and introduction of Voluntary Retirement Scheme (VRS). New employment opportunities are declining in organized public sector industries. In the private sector, particularly in service and software sector, the new, young and female workers do not generally align to any trade unions.
Further, trade unions have become quite defensive also. This is evident from the fact that there is radical shift from strikes to law suits. Instead of demanding higher wages and improved working conditions, trade unions are now-a-days pressing for maintenance of existing benefits and claims for non-payment of agreed wages and amenities.
4. Collective Bargaining:
In IRS, collective bargaining constitute one of the most important mechanism of rule-making acceptable to both the employers as well as the workers.
Few emerging trends in the collective bargaining process are:
i. Level of collective bargaining is shrinking day by day.
ii. In public enterprises, the government has withdrawn the budgetary support for expenditure arising out of collective bargaining. Further, the government prefers long-term settlement and brings to link pay with performance of both the workers as well as the public enterprises.
iii. In private enterprises, there has been decentralizing tendencies. The enterprise-level bargaining has become the dominant even in industries like cotton, silk, plantations in the regions of Mumbai, Coimbatore etc.
iv. The managerial objectives expected to be achieved through collective bargaining have also shown dominance in terms of reduction in labour costs, increased productivity, increase in work time, reduction of regular staff strength through VRS, stress on high quality and so on.
v. Trade unions have also shown cooperation especially in crisis situations caused by external environment. They do agree on introduction of new work measurement systems, flexi working, changes in work practices, introduction of technological changes etc. Trade unions have cooperated in finding solutions to even financial problems of the industries in various ways.
5. Labour-Management Conflicts:
The globalization has brought significant changes in the labour market and the industrial relations system. Both the actors (management and workers) have exerted respective pressures on the government to introduce concrete actions favouring their interests. The government has responded to protect the dominant political interests while announcing labour reforms.
The government adopted the strategies that sought to placate capital without hurting the fundamental interests of the labour like employment security etc. Thus the role of the government has been complex while solving labour management conflicts, and cannot be fitted clearly as favouring either the capital or labour.
However, the conducive and peaceful industrial environment supported the employers to introductive both ‘hard’ (like lockouts, closure, antiunion measures) and ‘soft’ (like idleness pay, VRS) measures to achieve dynamism and weaken union power. The trade unions have also re-directed their attention to the hitherto neglected workers in the unorganized sector to create a ‘more inclusive’ union movement.
Few more emerging trends in this issue are:
i. There have been less strikes, lockouts and less man days lost due to strikes.
ii. Workers are more educated and do not believe in violent activities.
iii. Workers have shown responsibilities in cut-throat competition and are aware of their rights, thus leading to decline in strikes.
iv. Employees also avoid lockouts because decline in production even for hours lead to heavy losses to them.
6. Managerial Strategies:
The economic reforms have toned down industrial conflicts, due to shift in the relative bargaining power in favour of capital. The employers devised various managerial strategies to achieve labour flexibility, weaken labour power, more control over production process, reduction in regular workers via VRS, transfers, multi-tasking, freeze in employment, increased use of contract labour, subcontracting etc., on both public as well as private enterprises.
As a result of such deliberate strategies, the employment of contract workers have shown manifold increase in the organized manufacturing sector of Indian industry. The management look upon such strategies as a weapon to gain control over production process and weaken their collective bargaining.
7. Government Strategies:
In the positive direction, to boost the industrial harmony and economic activity, the government has adopted two strategies namely disinvestment and deregulation, which are expected to be mutually beneficial for the workers as well as the management.
It refers to the action of an organisation (or the government) selling or liquidating an asset or subsidy.
It affects IRS in the following ways:
i. It changes ownership, which bring changes in the work organization and employment and also in the trade union dynamics.
ii. It changes the work organization by necessitating retaining and redeployment.
iii. It affects the rights of workers and trade unions by providing job security, income security and social security.
iv. Disinvestment makes workers the owners by issue of shares.
v. It safeguards existing benefits and negotiate higher compensation for voluntary separations.
vi. It also set up further employment generation programmers.
It is the process of removing or reducing state regulations. The reduction or elimination of state regulation in a particular industry, is usually enacted to create more competition in the industry. Deregulation is resorted to ensure similar protection to public/government employees.
Here the worst affected are the pension provisions, which imply usually reduction in pension benefits, absence of government guarantees, falling interest rates and investment of pension funds in stock markets etc.