Unit 1
Unit 1
1.1 INTRODUCTION
Growth of a nation is dependent upon its industrial development to a large extent. A
number of factors are important for the expansion of industrial system. Ever since the
factory system began in the world, workers have been the most important element for
ensuring production and productivity of an organization. Interface between the workers
and factors like technology, finances, materials result into production of goods and
services. Increasing competitiveness, technological advancements, customer
expectations have made the workforce of an organization a source of competitive
advantage. Employers expect them to contribute to the growth of orgnaisation by
putting in hard labour. Hence, managing workforce effectively has become a vital part
of the present-day of management. Workers have their own goals, objectives, attitudes
etc. It is essential that work goes on in the organization in a harmonious manner for
maximizing the productivity. To achieve harmony in functioning it is imperative that
interests of employer as well as employees are fulfilled and none of the parties feel
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Industrial and Employment exploited. Ignoring the human element leads to poor relations between the management
Relations An Overview
and workers. The outcomes of poor relation manifest in the form of increased labour
turnover, absenteeism, indiscipline, poor quality of output, increased cost of
production, among others. Cordial industrial relations are essential for boosting
industrial growth and productivity which is essential not only for building self-reliance
but also for increasing GDP of the nation. Industrial harmony cannot be regarded as
a matter in which only the employers and employees are concerned; it is of vital
importance to the community as a whole. That is how the concept of industrial
harmony involves the cooperation not only of the employers and the employees, but
also of the community at large. Poor relations between management and workers
may result in industrial unrest which affects the economic growth of a nation. Therefore,
maintaining cordial relations between management and workers is of paramount
importance anywhere in the world.
Several changes in recent years have been responsible for more attention being paid to
employment relations within organizations. Impact of globalization has had a significant
impact on the way enterprises are managed and work is performed. Competitiveness
has increased due to which firms need to enhance their quality of goods and services
and reduce the cost of production to be able to offer best quality product at competitive
prices. To achieve this and innovation and workers’ skills become important besides
cost cutting. The quality of the workforce and training have become critical factors.
There is a need for multiskilled easily trainable employees.
Technology has been another important factor that has shifted attention to workplace
relations. Technology management is possible only through people. Technology is also
displacing traditional jobs and creating new jobs requiring different skills. Further
information technology, the limits of which are not known in terms of its potential to
effect change, is exerting a tremendous impact on the structure of organizations, the
nature and location of work and the way it is organized.
This has resulted in management effected less by command and supervision, and
more through emphasis on cooperation, information-sharing and communication,
and with a more participative approach to managing people. Modern technology
now makes it possible for aspects of work to be performed outside the enterprise,
for example from home, and even outside national borders. Part-time work is
increasing particularly due to the influx of more females into employment and their
preference in some cases for part-time work. Developing countries are also feeling
the impact of these changes. In this unit, we shall cover the concept of industrial and
employment relations.
This approach is based on the ideology of Karl Marx. Also known as the ‘Radical
Perspective’, the Marxist approach is based on the proposition that the economic
activities of production, manufacturing, and distribution are majorly governed by the
objective of profit. Marxism questions the power relationships of society. The theory is
based on premise that industrial relations represent class conflict and is more of market-
relations. It proposes that the mode of wealth creation by capitalists determine the
social relations at work and general character of society. The Marxist approach is
primarily based on power relationship between management and labour and is
characterised by the struggle of both the classes to gain supremacy so as to exert
greater influence over the other party. it ascribes that the conflict is the product of the
capitalist society which is based on classes.
Labour and capital have essentially different interests in an organization, and these
interests are conflicting. Both the parties get affected as an outcome of confrontation
between conflicting interests. The objective of management is to enhance productivity
by gaining control over the labour. The wages of the labour are seen as a cost and,
therefore, management makes attempt to minimize it. Labour is viewed as a means of
generating profit. Workers endeavour for maximum possible wages to improve their
standard of living and resort to pressure tactics like strike to get their demand accepted.
Systems like bargaining, participation, cooperation do not offer permanent solution for
resolving the labour-management conflict. It can be solved by uprooting capitalistic
system.
Marxists view conflict as an essential feature of capitalism, a system where the society
is divided between those who own and control the means of production and those
who offer their labour to carry out production. Though plularists also consider conflict
as inevitable but they differ from Marxists as they consider conflict as a natural process
in any industry anywhere. Marxists believe that class-conflict is essential for social
change to take place and trade unions are nothing but response of labour towards
exploitation by capitalist. It acts as a weapon to bring radical a social change to improve
the position of labour in the society. While pluralists argue that state intervention is
necessary to protect the overall interest of society, Marxists believe that state intervention
is supportive of capitalist’s interest rather than that of worker.
The main drawback of Marxist approach of industrial relations is that it has a narrow
focus as it only takes into account the relations between capitalist and labour in explaining
industrial relations.
5. Social Action Approach
The social action approach is a modification of the system approach. In the system
approach, external environment plays a dominant role while the actors such as
employers, employees and their representatives play a passive role in the process.
On the contrary, in the social action approach an active role is played by the workers
and employers. The actors’ understanding of the work situation becomes more
important than the social factors and their opinion determines their attitude and
behavior towards industrial relations. The main protagonist of this approach is Max
Weber. The theory considers negotiations as an important tool for resolving conflicts.
The actors are willing to cooperate with each other and bargaining forms the basis
for such cooperation. 17
Industrial and Employment The social action approach of Weber has laid considerable importance to the question
Relations An Overview
of control in the context of increasing rationalisation and bureaucratization. As per this
approach, a trade union has both economic purposes as well as the goal of involvement
in political and power struggles. Some of the major orientations in the Weberian
approach have been to analyse the impact of techno-economic and politico-organisational
changes on trade union structure and processes, to analyse the interpretation of workers’
approaches to trade unionism, and to analyse the power of various actors of the
industrial relations environment – government, employers, trade unions and political
parties. Thus, the Weberian approach gives the importance to “control” as well as to
the power struggle to control work organisations.
6. Human Relations Approach
The human relations school founded by Elton Mayo and later propagated by
Roethlisberger, Whitehead, W. F. Whyte and Homans offers a comprehensive
view of the nature of industrial conflict and harmony. The human relations approach
focuses on ways to improve employee motivation and productivity. Keith Davis is
the main proponent of this theory. According to him, human relations aim to integrate
employees with the work-place such that they feel encouraged to cooperate with
each other to work effectively and efficiently, deriving economic, psychological
and social satisfactions. It creates an environment at work place where people’s
productivity is enhanced through mutuality of interest. The human relations approach
highlights certain policies and techniques to improve employee morale, efficiency
and job satisfaction.
Although human relations school has taken into consideration aspects like
communication, group dynamics, employee participation in management, it received
criticism on the ground that it encouraged dependence between employees, did not
focus on individual development, and discounted the significance of technology in
industry.
7. Mahatma Gandhi’s Trusteeship Approach
Mahatma Gandhi applied the principle of trusteeship to industrial relations. Employers
should not consider themselves as sole owners of enterprises, though they may be the
legal owners. They should regard themselves only as trustees, or co-owners. Workers
should regard themselves as trustees, and should consider themselves as the owners of
the resources of the enterprise, protect them and put them to the best use. It means
that only that amount of wealth should be used by capitalist as is necessary to satisfy
his needs and wants. Excess wealth belongs to society so be used for benefit of all.
This means that there should be no conflict of interest between capitalist and labour.
Though legally wealth belongs to capitalists but morally it belongs to labourers and
should be used for their welfare.
Mahatma Gandhi believed in in philosophy of Sarvodaya, i.e. the good of all - benefit
should reach even to the lowest stratum of the society. When this approach is applied
to industry it refers to peaceful co-existence of capital and labour. Any conflict that
arises is very natural in a society governed by self-interest, but it should be resolved by
means of satyagraha i.e., non-violent non-cooperation. Labourers can pressurize
capitalist for their grievances redressal through non-violent non-cooperation, is means
peaceful strikes. He believed that it is the right of workers to go on strikes to secure
18 justice. He had himself led some strikes for Textile workers of Ahmadabad. He believed
that strikes, if taking place, should before genuine reasons. He laid down certain Concept and Approaches
conditions for a successful strike:
(a) the cause of the strike must be just and and address only redressal of genuine
grievances.
(b) Workers should try all peaceful and constitutional methods of negotiations
(c) Strikes should not be resorted to unless all efforts for peaceful negotiations
are exhausted
(d) Strikes should be peaceful and non-violent.
The philosophy of trusteeship aims at achieving economic equality and the prosperity
of workers in a capitalist society by non-violent means. Gandhiji believed that industrial
peace was an essential condition not only for the growth and development of the
workers, but also employers, industry and overall society. He proposed collective
bargaining as an effective means of negotiations between workers and employers. He
advocated mutual settlement of disputes through voluntary methods of dispute settlement
which can be achieved through mutual arbitration and mutual settlement of disputes.
Constructive industrial relations can be achieved through mutual respect, equality, and
strong labour organisation.
8. Socialistic Approach
Socialistic approach considers workers’ participation in management as an important
factor in the development and perfection of socialistic democracy. This ensures fullest
decentralization and participation in management as multi-dimensional program for
socialist construction. The economic reconstruction is based upon the nationalization
of the means of production and exchange.
Under Communism, state machinery is abolished and the functions of the State are
taken away by the society through public organization based on mutual consent and
co-operation and the compulsion element in relation to members of the society is
removed. In the process of taking away powers from the state and delegating its functions
to the society, workers’ participation in management is of great importance.
Workers’ self- governing bodies may be formed which can participate effectively and
efficiently in management. Such bodies have actual experience of the activities of the
people and are much aware of the local conditions prevailing there. These bodies
initiate the taking away of powers of State. Socialist democracy is created from the
workers of lower rank and they are trained in such a way that they can promote the
professional interest of the workers in the most effective manner. The collective
management of the means of production creates integrated personality and national
integration.
Activity 2: Make a pictorial representation showing the commonalities and
differences between the above presented approaches.
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Industrial and Employment
Relations An Overview 1.7 FACTORS AFFECTING EMPLOYMENT
RELATIONS
There are various factors that affect employment relations. Some factors are internal to
the firm, while other factors may be related to external environment.
1. Internal Factors
These are the factors within the organization. These pertain to management and workers/
trade unions of workers
i) Management related factors
Attitudes of management towards workers and trade unions
Management belief in industrial democracy
Concern of management for worker welfare Style of leadership, i.e., autocratic,
participative etc.
Effectiveness and capability of managers and supervisors in resolving grievances
and handling disputes.
Management concern for worker welfare
Clarity of management policies related to work and workers
ii) Workers related factors
Union attitudes towards management
Inter union rivalries in case of more than one union
Readiness of workers to work
Union leadership
Readiness to comply with policies
Bargaining power of trade unions
2. External Factors
Influence of political parties on trade unions
Economic factors, for example, inflation, economic downturns etc.
Success of collective bargaining at national, local or plant level
State interventions
Labour laws of the nation
Regulatory framework
Effectiveness of dispute settlement machinery
Employment situation nationally or locally Legal framework within which IR
exists
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Concept and Approaches
1.8 ISSUES AND CHALLENGES FOR INDUSTRIAL
AND EMPLOYMENT RELATIONS
There are various issues and challenges for industrial and employment relations in India
that have emerged after the introduction of structural changes under economic reforms
and as a result of advancements of technology. Economic reforms have changed the
business environment in various ways. There have been a number of changes in regulatory
environment, aspirations of workers, expectations of employers. Thus, industrial
relations system needs to adapt to these changes .Firms are changing their mode of
working to meet the competition. Big firms are downsizing their operations for cost
cutting and using contracting and sub-contracting to bring down costs. As a result,
workers are being retrenched and laid off. Part-time and casual workers are employed
for cost cutting. Unorganised sector is expanding, while organized sector is getting
smaller in size. Due to casualization of labour, job insecurity is increasing.
Adoption of technology in business operations and automation of processes is another
reason for retrenchment of labour and job insecurity. Usage of technology in production
and other business processes makes training of workers essential. Technology and
modern methods of working are making jobs redundant. Management must make
efforts to educate and train workers on usage of technology driven machines and
processes so as to prevent job obsolescence. Multiskilled workers are required in the
modern day firm.
The influence voice of international community on various aspects of business, including
labour issues is increasing through international bodies like WTO, ILO, IMF.
Mangement cannot ignore the demand and concern of such forces.
The traditional industrial relations system and its institutions and practices were most
suited to the tasks of protecting and promoting the interests of workers with secure
permanent employment. The trend is towards increasing casualisation of labour, the
restructuring process, and technology changes/ upgradation have made the problems
of unemployment of labour more widespread and acute.
The growing emergence of start- ups has added a new dimension to labour issues.
The number of micro, small and medium-sized firms have increased. Most of these
firms remain beyond the purview of labour legislation and the organizations of labour in
these scattered units are weak and ineffective.
Growing globalization of economy means greater opportunities for foreign firms to
start operations in India. They need to understand and implement labour laws in India
and understand workers’ expectations to maintain harmonious employee relations.
As more and more workers are getting educated, they are becoming aware and
conscious of their rights. Also, there is a growing concern about human rights and
prevention of exploitation of labour. Thus, management must take all the measures to
ensure fair and proper working conditions.
1.9 SUMMARY
Maintaining cordial relations between management and workers is of paramount
importance anywhere in the world. Poor relations between management and workers
may result in industrial unrest which affects the economic growth of a nation. Industrial
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Industrial and Employment Relations deals with the worker- employer relation in an industry. This relationship
Relations An Overview
emerges out of work-related interactions between management and workforce. The
three actors of industrial relations are workers, employers and the state. The primary
objective of industrial relations is to bring about good and healthy relations between
the labour and the management so as to enhance productivity for economic growth of
the nation. Different theorists and professionals have viewed Industrial Relations
differently. On the basis of the orientations of different practitioner different approaches
have been developed to explain the concept of Industrial Relations. There are various
factors that affect industrial relations. Some factors are internal to the firm, while other
factors may be related to external environment. Introduction of structural changes under
economic reforms advancements in technology have posed various issues and challenges
for industrial relations in India.
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