Industrial Relation in

India

Prepared By
Rezaul Huda
MBA Programme
University of Southern Queensland
Australia 2008

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 Table of Contents

1. Individualism and Collectivism: ..............................................................................................2

3. Cross-cultural management: ...................................................................................................4
1. Equality Opportunity (Race and Gender):.............................................................................4
Social justice:..................................................................................................................................6
1. Wage Levels: ..............................................................................................................................6
Conclusion:.....................................................................................................................................7
Reference ........................................................................................................................................i
List of Appendix ............................................................................................................................ii
1.......................................................................................................................................................ii
2. Child labor ...............................................................................................................................iii

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Introduction:

The purpose of this paper is to analyze the present scenario of Indian industrial relations
equitable. The industrial relations should be consider as an essential part of management systems
and techniques, and not as a discipline or activity apart from management. It then seeks to
explain what sound industrial relations and labor relations policy formulation are, and thereafter
to underline the importance and objectives of sound industrial relations at India in the current -
and to some extent the future context. It also attempts to identify some of the issue that may
generally regarded as features of a good industrial relations system in India. Finally, the Paper
identifies current issues in industrial relations but it is not suggested that these are the only issue
existed in Indian industrial society but this are most crucial issue for Indian industrial relation.

India and Industrial Relation:

To understand the present industrial relation environment in India that influence by the great
diversity of economy and other circumstances. Industrial relation shaped by the political,
economic and cultural context in this country, and reflected in the particular policy, legal and
institutional framework and relationships between government and the social partners. However,
In India the relations between managers, workers and their representatives are still view from the
more limited perspectives of traditional industrial relation. It is a fact that labor legislation and
institutions are still influence in a greater or lesser extent, by number of Western countries.
However, the industrial relation which have developed and continue to evolve not been based on
the same circumstances and values as those which shaped these systems in the West.

Analysis:

To analyze the industrial relation in India is equitable, this report the three main approach
(economic rationalism, civil libertarianism and equal employment opportunity and social justice)
has been take. There are so many issue that relate to Indian industrial relation also have been
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mention in the report. Consider the word constrain only few major issue has been focused to
identify the equity of Indian industrial relation such as child labor, cross-culture management,
trade union, wage discrimination and individualism.

Economic rationalism:

India is one of the BRIC1 country and the investment (FDI) from both Asian and Western
investors have been increase comparing last period. As a booming economy, there are many
issues like individualism, free market policy, worker apprentice, cross-cultural management
trade union and the Indian government regulation regarding employment relationship. The
individualism and collectivism, trade union and cross-cultural management are the most crucial
issue to analyze the economic rationalism2 approach to identify the industrial relation in India.

1. Individualism and Collectivism:

Individualism-collectivism is an important issue for the working environment. According to
Hofstede (1991), “Individualism pertains to societies in which ties between individuals are
loose: Everyone is expecting to look after himself or herself and his or her immediate family”.
Collectivism as its opposite pertains to societies in which people from birth onwards are
integrated into strong, cohesive in groups, which throughout people's lifetimes continue to
protect them in exchange for understanding loyalty. The Indian societies that are highly
individualistic, individuals pursue autonomy and prefer to view their identity as derived from the
self rather than the organizations. Everyone is supposed to look after himself/herself and perhaps,
pay attention only to ones immediate family. Hofstede's (1991) fined that individualism can
affect the relationship between employer and employee to the extent that the latter begin to look
at the relationship from a calculative and utilitarian perspective. Collectivist societies tend to
place an accent on family bonding and social ties. Group processes and decisions are valued as
much as membership of a network. It is not possible to generalize on the basis of Hofstede's
analysis or any such study, but working in India is still largely a matter of juggling between

1
In economics, BRIC or BRICs is an acronym that refers to the fast growing developing economies of Brazil,
Russia, India, and China.
2
Economic rationalism is an Australian term in discussion of microeconomic policy, applicable to the economic
policy of many governments around the world, in particular during the 1980s and 1990s.
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immediate/extended families and the office. Surely, work-life balance issues are more urgent and
require immediate attention on the subcontinent.

2. Employee Association (trade union):

The trade union is a voluntary organization of workers pertaining to a particular trade, industry
or a company and it formed to promote and protect their interests and welfare by collective
action. They are the most suitable organizations for balancing and improving the relations
between the employer and the employees. They formed not only to cater to the workers demand,
but also for inculcating in them the sense of discipline and responsibility.

In India, the first trade union was form in 1918. The legislation regulating these trade unions is
the Indian Trade Unions Act, 1926. The Act deals with the registration of trade unions, their
rights, their liabilities and responsibilities as well as ensures that their funds are utilizing
properly. It gives legal and corporate status to the registered trade unions. It also seeks to protect
them from civil or criminal prosecution so that they could carry on their legitimate activities for
the benefit of the working class and establish the sound industrial relation. The Act is applicable
not only to the union of workers but also to the association of employers. The act is managed by
the “Ministry of Labor India” through it industrial relations division. The division is concerned
with improving the institutional framework for dispute settlement and amending labor laws
relating to industrial relations. It works in close coordination with the “central industrial relations
machinery (CIRM)” in an effort to ensure that the country gets a stable, dignified and efficient
workforce, free from exploitation and capable of generating higher levels of output. The CIRM is
monitor by the chief labor commissioner (Central) and it has been entrusted with the task of
maintaining industrial relations, enforcement of labor laws and verification of trade union
membership in central sphere and ensures harmonious industrial relations. Table 1 shows the
present scenario of Indian trade union illustrated by European Trade Union Institute report 2007
(appendix 1).

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3. Cross-cultural management:
India is a heterogeneous country that characterized by ethnic, cultural, linguistic and religious
diversity. Due to substantial increases in investment from both Asian and Western investors,
many employers and unions are dealing with workers and employers from backgrounds and
cultures different to their own. Many of the resulting problems and issues fall within the concept
of cross-cultural management. The problems arise due to differences in industrial relations
systems, attitudes to and of unions, work ethics, motivational systems and leadership styles,
negotiating techniques, inappropriate communication, consultation and participation procedures
and mechanisms, values, expectations of workers and interpersonal relationships.

Civil libertarianism and equal employment opportunity:

Civil libertarianism is the approach to identify the equity of industrial relationship in India. Civil
libertarianism supports the civil right, or who emphasizes the supremacy of individual rights and
personal freedoms over and against any kind of authority. There are some crucial issue to
evaluate the civil libertarianism and equal employment opportunity in India. The issues are
equality opportunity (race and gender), child labor, political believe and power.

1. Equality Opportunity (Race and Gender):

The discrimination between race, sex and wages is another crucial issue for Indian industrial
relation. In India, the disadvantaged position of women in the labor market is due to deep-rooted
social and economic factors that restrict both the supply of and demand for women workers. A
set of social, historical, biological, and religious restraints have kept women out of the labor
market. At the same time, such restraints have been used to justify discrimination against women
in allocation of job opportunities and the setting of wages. Women of a class or socioeconomic
group are also discriminate against in favor of men who are of the same class. It also found that
women working in low-status, low-paid jobs in the informal sector belong to families whose
male members work in similar jobs, primarily because they do not have the material resources
that provide access to the high status and better-paid jobs. It also seems that a woman is more

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likely compare a man to be able to find job opportunities only in the informal sector, and she will
probably be paid less than he for the same work.

2. Child labor:

The child labor is one of the major IR issue in the developing country. India is the largest
example of a nation plagued by the problem of child labor. Estimates cite figures that between
60 and 115 million working children are in India, which is the highest number in the world 3.
The Government also found that most children working in rural areas are in agriculture and
related activities such as livestock tending, forestry, and fishing (appendix 2). Children also work
in service industries such as hotels, food service, and tourism. Working children are also found
in industries such as quarrying of sandstone and other materials, gemstone polishing, sari-
production4, consisting of embroidering or sewing beads and colored threads to fabric and in the
manufacturing of matches, bricks, carpets, locks, glass bangles, fireworks, leather goods, bidis5
(cigarettes), footwear, garments, sporting goods, brassware, and other metal goods. The Indian
government has identified many of these industries as hazardous for children. Some reports
indicate that large numbers of children work under forced labor conditions in India.6 The
commercial sexual exploitation of children is a problem in India; girls as young as 7 years and
they are exploit in brothels in major urban centers and some child sex tourism has been reported
in the state of Goa and other popular tourist destinations in India.7

Indian law prohibits the employment of children less than 14 years in any factory or mine, or in
15 hazardous occupations and 57 hazardous processes. Children 14 to 18 years may work limited
hours in factories during the daytime if they have been granted a certificate of fitness by a
certifying surgeon. Children of any age may be employed in all other activities, if employers
adhere to restrictions including a maximum 6-hour workday with a 1-hour rest period, at least 1

3
Human Rights Watch
4
Women clothing in India
5
It’s kind of tobacco
6
U.S. Department of State, "Country Reports – 2007: India," section 6c
7
ECPAT International and Aparna Bhat, Report on Laws and Legal Procedures Concerning the Commercial Sexual
Exploitation of Children in India, Bangkok, November 2004.
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day off per week, and no night work or overtime work. Penalties include fines or imprisonment
of 3 months to 1 year, or up to 2 years for repeat offenses. Bonded child labor is illegal in India,
and the law provides for district-level vigilance committees, headed by district collectors (the
principal government officer of the district), to investigate allegations of bonded labor and to
release anyone found in bondage. Indian law also prohibits the commercial sexual exploitation
and trafficking of boys and girls. Thought Indian government has law and enforcement against
the child labor but the implementation on the ground level is very weak comparing to other
developed nation.

Social justice:
The social justices have been the influence India to establish the equal opportunity for sound
industrial relations. There are several issues that has to concern such as working hour, wage
Levels, industrial Injury, sickness compensation, pregnancy leave and social hierarchy. Wages
level and industrial injury are the major problem to establish the IR, though Indian government
has to concern much other issue.

1. Wage Levels:
In India “Minimum wages act, 1948” provide guidelines for wage structures in the country that
was a major landmark in the history of formulation of wage policy in India. According to the
Indian act article 39 state that “the state shall, in particular, direct its policy towards securing
(a) that the citizen, men and women equally shall have the right to an adequate livelihood and
(b) that there is equal pay for equal work for both men and women.” On the other hand the
Article 43 states that “the state shall endeavor, by suitable legislation or economic organization
or in any other way, to give all workers, agricultural, industrial or otherwise, work, a living
wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure, and
social and cultural opportunities.” In order to have a uniform wage structure and to reduce the
disparity in minimum wages across the country, the concept of minimum wage was arguable
based on the recommendations of the National Commission on Rural Labour (NCRL) in 1991. In
1996, the floor level minimum wages was fixed Rs. 35/- per day. The central government raised
the wage to Rs. 40/- per day in 1998 and further to Rs. 45/- with effect from 01.12.1999, and Rs.
50/- per day with effect from 1.9.2002 and later which rise to Rs. 66/- per day with effect from
1.02.2004. However, Indian government has the strong act to maintain the equality of wages but
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unfortunately, the implementation in the ground level is poor. Still employer discriminate the
gender, race.

Conclusion:
In India, there is an increasing congruence between industrial relation policies those supporting
industrialization for economic development. The impact of globalization is requiring industrial
relation systems in India to adapt to ensure improved economic competitiveness, flexibility and
overall efficiency to respond to changing international market circumstances. In addition, Indian
government should emphasize to monitor the child labor, wages discrimination and cross-
management in the ground level. However, though there are lots of act to maintain the industrial
relation but the implementation in the ground level is very poor, that is the most essential
challenge for Indian government to achieve a stable and flexible industrial system, which
balances "efficiency" with "equity.

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i
List of Appendix

1.

Sources: European Trade Union Institute (ETUI) report 2007

ii
2. Child labor

Sources: United States Department of Labor, August 2007

iii