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3– 1 Industrial Relations and Labour Laws B D Singh EXCEL BOOKS

Changing Profiles of Major Stakeholders of Industrial Relations in India

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Copyright © 2008, B D Singh

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CHAPTER

3Changing Profiles

of Major Stakeholders

of Industrial Relations in India



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Trade UnionsBackground Trade Unionism grew as one of the most powerful socio-economic political

institutions of our time - to fill in vacuum created by industrial revolution in industrial society. It came as a countervailing force to reconcile social and economic aberrations created by Industrial Revolution.

Individual dispensability and collective indispensability was the basic principle for its formation.

'United we stand and divided we fall' is the philosophy. The government policy of Laissez-faire left the working class at the mercy

of mighty employers. Liberal democratic and revolutionary ideas (set in motion by the American

war of Independence, the French Revolution, Russian-Revolution and thinkers like Rousseau and Marx etc.) of the time, fanned by discontent which was a smouldering since long gave birth to an institution known as "trade union."



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FORMATIVE STAGES

Trade Union had to pass through a very difficult and hostile period in the initial years. The employers wanted to crush them with iron hands.

Then came the period of agitation and occasional acceptance.

When the union gained strength they started confronting the employer. This is the period of struggle which continued for long.

Employers were forced to accommodate, tolerate and hesitatingly accept them.

Then came the period of understanding in the industry in collective bargaining.

This was followed by a fraternal stage where union became matured and employers started consulting them.

The desired state is the "Fusion Stage" in which joint efforts were required to be made for union-management cooperation and partnership.



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DEFINITION

Trade union is an association either of employees or employers or of

independent workers.

It is a relatively permanent formation of workers. It is not a temporary or

casual combination of workers.

It is formed for securing certain economic (like better wages, better working

and living conditions), and social (such as educational, recreational,

medical, respect for individual) benefits to members.

A more recent and non-legislative definition of a union is:

"An organisation of workers acting collectively who seek to protect and promote

their mutual interests through collective bargaining".

– De Cenzo & Robbins (1993)



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FORMS OF TRADE UNIONS

There are three forms of trade unions:-

1. Classical

2. Neo-classical

3. Revolutionary change in the system

Functions of Trade Unions

a) Militant or protective or intra-mutual functions

b) Fraternal or extramural functions

c) Political functions

d) Social functions



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Objectives of Trade Unions

Unions concentrate their attention to achieve the following objectives:-

a) Wages and Salaries

b) Working conditions

c) Discipline

d) Personnel policies

e) Welfare

f) Employee-employer relations

g) Negotiating machinery

h) Safeguarding organisational health and the interest of the industry



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ROLE OF TRADE UNIONS

Adopting the model of Prof Clark Kerr, Unions assume the following role:-

a) Sectional Bargainer

b) Class Bargainer

c) Agents of State

d) Partners in Social Control

e) Business Oriented Role

f) Unions as Change

CLASSIFICATION OF TRADE UNIONS

Classification based on ideology –

Revolutionary Unions

Reformist or Welfare Unions

Uplift Unions



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CLASSIFICATION BASED ON TRADE Many unions have memberships and jurisdictions based on the trades they

represent. At the other extreme, in terms of the range of workers represented in the

general union, which has members drawn from all trades. Another common delineation of unions, based on trades or crafts, is that

between so-called blue-collar workers and white-collar workers.

CLASSIFICATION BASED ON AGREEMENT Another basis on which labour agreements are sometimes distinguished is

on basis of the type of agreement involved. Closed Shop Union Shop Preferential Shop Maintenance Shop Agency Shop Open Shop



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THEORIES OF TRADE UNIONISM

There is no one theory of Trade Unionism, but many contributors to these theories are revolutionaries like Marx and Engels, civil servants like Sydney Webb, academics like Common and Hoxie and labour leaders like Mitchell. Important theories of trade unionism are as follows:-

a) Political Revolutionary Theory of Labour Movement of Marx and Engels

b) Webb's Theory of Industrial Democracy

c) Cole's Theory of Union Control of Industry

d) Common's Environment Theory

e) Mitchell's Economic Protection Theory of Trade Unionism

f) Simon's Theory of Monopolistic, anti-Democratic Trade Unionism

g) Perlman's Theory of the "Scarcity Consciousness" of Manual Workers

h) Hoxie’s Functional Classification of Unionism

i) Tannenaum's Theory of Man vs. Machine (1951)



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GROWTH OF TRADE UNION MOVEMENT AND MEMBERSHIP Early Period

Efforts towards organising the workers for their welfare were made during the early period of industrial development by social workers, philanthropists and other religious leaders mostly on humanitarian grounds.

Modest Beginning

The beginning of the Labour movement in the modern sense started after the outbreak of World War I in the country. Economic, political and social conditions of the day influenced the growth of trade union movement in India.

All India Trade Union Congress

The most important year in the history of Indian Trade Union movement is 1920 when the All India Trade Union Congress (AITUC) was formed consequent upon the necessity of electing delegates for the International Labour Organisation (ILO).



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There are as many as 10 central trade union organisations in the country (as

against one or two in UK, Japan and USA). The criteria for recognition as

Central Trade Union have been that the combined strength should be 5 lacs in

numbers with a spread over to at least 4 states and 4 industries as on 31.12.89.

Ten such Trade Unions are; (1) BMS (2) INTUC (3) HMS, (4) U.T.U.C. - LS (5)

AITUC (6) CITU (7) NLO (8) UTUC (9) TUCC (10) NFITU. As per the latest

survey (Economic Times, 24.9.97) the five leading Trade Unions' strength are as

follows:-

BMS - 33l Lakhs

INTUC - 27l Lakhs

AITUC - 18 Lakhs

HMS - 15 Lakhs

CITU - 3.4 Lakhs



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TRADE UNION ACT 1926The Trade Union Act 1926 legalises the formation of trade unions by allowing employees to form trade union. It allows trade union to get registered under the Act. Registration provides legal status to the trade union and it becomes body corporate.RECOGNITION OF TRADE UNION The underlying idea of forming a trade union is to negotiate and bargain with employers to improve the service and employment conditions of workers on their behalf.The Trade Union Act 1926, the only Central Law, which regulates the working of the unions, does not have any provision for recognition of trade unions. Some attempts were made to include compulsory recognition in the Trade Union Act in 1947, 1950, 1978 and 1988, but these did not get materialised. The usual methods used to determine union strength, which is the basis for recognition are the following:1. Election by Secret Ballot2. Check-Off method

3. Verification4. Rule of Thumb



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RIGHTS OF RECOGNISED UNIONS

a) The right to raise issues with the management,

b) Right to collect membership fees within the premises of the organisation,

c) Ability to demand check-off facility

d) Ability to put up a notice board on the premises for union announcements,

e) Ability to hold discussions with employees at a suitable place within the

premises

f) Right to discuss members' grievances with employer,

g) Ability to inspect beforehand a place of employment or work of its

members, and

h) Nomination of its representatives on committees formed by the

management for industrial relations purposes as well as in statutory bipartite

committees.



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Problems Confronting Unions and Measures to

Strengthen Trade Union Movement in India

Over the years, trade unions in India have been taken for a ride by outside

political leaders. In the process, the interests of workers and their aspirations

have been totally neglected. The Trade Union Act, 1926, did not go for

recognising a representative union. As a result, multiple unions have cropped

up, often with blessings from management and outsiders. The union finances

have not been very sound in the beginning. The average membership figures for

each union remain poor and have not improved. The forces of liberalisation

unleashed in the early '90s have strengthened the hands of employers in closing

down unviable units. The new corporate 'mantras' - productivity, performance,

efficiency, survival of the fittest-have virtually pushed them to the wall, where

their very survival looks uncertain.



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Trade Union leadershipThe nature of leadership significantly influences the union-management relations as the leadership is the lynchpin of the management of trade unions. The leadership of most of the trade unions in India has been outside leadership mainly drawn from political parties. Reasons for emergence of outside leadership The evil effects of outside leadership Measures to minimise the evil effects of outside leadership Other ProblemsThe other factors responsible for the unsound functioning of trade unions in India are:1. Illiteracy2. Uneven growth3. Low membership4. Heterogeneous nature of labor5. Lack of interest6. Absence of paid office bearers



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Measures to Strengthen Trade Union Movement in IndiaUnited Labour Front

Unions must present a joint front. Splinter groups/multiple unions dissipate their energies, dilute their power and reduce their effectiveness. Trade unions should form a sort of labour party and all the trade unions in the country should be affiliated to it. It gives adequate strength to the trade unions both in industry and Parliament.

Internal Leadership

Outside political leadership has developed due to the absence of internal leadership. Outside leadership is the main cause for the multiple problems of the trade unions.

Membership Fees

The membership fees should be raised as the amount of wages of the workers increased significantly. Even the amended Rs.12/- per annum is not sufficient. Some other source of finance may also explored to make trade union financially healthy.



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Other MeasuresTrade unions should extend welfare measures to the members and actively pursue social responsibilities. Trade Unions should make efforts to raise their declining membership. This is a worldwide phenomenon:

- Japan 50% (1950) - 25% (in 1991)- U.S.A 30% (1959) - 16% (in 1989)- India - 2% (in 1989)

BUILDING RESPONSIVE TRADE UNIONISMT.Us have been responding in the following ways:i. Inactive – Indifference, none of their business' postureii. Reactive – Violent reaction, blocking, rejecting, coercing, striking.iii. Responsive – Addressing, supporting, adoptingiv. Proactive – Agent/catalyst of change.v. Partnering – Responsible, taking risks along with employers



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STRATEGY FOR BUILDING RESPONSIBLE TRADE UNIONISM

Micro to Macro Focus

Bargaining to Sharing

Grooming Trade Union Leadership

Conflict to Collaboration

Developmental Role

Enhancing Union Influence

Protective Regulation to Self-sustenance

Openness & Transparency

Effective Utilisation of Alternative Forums

Accept, Share & Grow



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White-Collar Trade Unions

There was a time when unions and strikes were known only to blue-collar

workers in factories, mines, railways docks, etc. White-collar employees and

professional people like doctors, engineers, lawyers, professors and senior

executives and managerial staff thought it below their dignity to band

themselves in unions, march the high streets and yell slogans. Today, it is

different. Trade unions exist among most professionals, white-collar employees,

officers, senior executives and managers, and so do strikes and gheraos.



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WHITE-COLLAR WORKERS AND BLUE-COLLAR WORKERS

Differences between Blue and White Collar Workers

S.NO. BLUE-COLLAR WORKER WHITE COLLAR WORKER

1. All shop-floor workers (Part of production system who operate machines and related systems) are termed as blue-collar workers, as their work is not generally clean.

All clerical or office staff who do not work on the shop floor, are termed as white-collar workers as their work and working places are clean. They are generally involved in a desk job or providing service over the counter.

2. They are manual workers with lower literacy and education and have their own social and economic background.

They are non-manual workers forming a distinct social ground, characterised by divergent socio-economic backgrounds, level of education, manner of speech, social custom and ideology. They are better educated and have jobs requiring mental capabilities to a greater extent.

3. They may be paid by time, or by piece, or results, either on daily, or weekly, or fortnightly, or monthly basis. They are generally wage earners, and may have lesser holidays, and leave facilities and other privileges than white-collar workers.

They are time-workers paid on monthly basis. They enjoy longer holidays and leave facilities and better privileges.

4. They are not so inclined towards management. On the other hand, they may be caring for their unions than for the management.

They hold such jobs that they are regarded as part of the management, and so they are more inclined towards it than the blue-collar workers.



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5. Excepting highly skilled categories who are in greater demand and can manage to have higher wages in income, the blue-collar workers are not so well paid.Their fringe benefits and perquisites are lower than those of white-collar workers.

Because of their professional and social standing they are generally better paid and have better terms and conditions of employment, including better perquisites and fringe benefits.

6. They have better union protection and job security by labour legislation, such as Industrial Disputes Act.

They have no union protection if they are not unionised, and also job security if they are not covered by the Industrial Disputes Act, 1947 as may be the case with not a few of them.

7. They are mostly engaged in production processes. They are concentrated in the fields of commerce, transport, storage and communication. They are engaged in different occupations that fall under the category of professional, administrative, executive and managerial workers, clerical and related workers, sales staff, technical and supervisory and other workers, engaged in transport and communication services, or in sports and recreational facilities, artists and musicians.

8. They have no authority, and nor are they associated with decision–taking

They are linked with their employers by being associated with that part of the productive process where authority is exercised and decisions are taken.

Source: Industrial Relations, Arun Monappa, Tata Mcgraw Hill, New Delhi, 1985, Pp.33-34.



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WHY WHITE-COLLAR WORKERS' UNIONS?

Seeing how unions of blue-collar workers had improved their service,

employment and working conditions by bargaining collectively with their

employers for better and regular payment of wages, bonus and other fringe

benefits, and job and social security, white-collar workers also started uniting

and organising themselves and forming their unions for fighting for better pay

scales, more fringe benefits, internal promotion by collective bargaining,

agitation and litigation.

LEGAL FRAMEWORK OF WHITE-COLLAR WORKERS' UNIONS

Like the blue-collar workers, white-collar workers can organise and form and join

unions. This right is granted by the Constitution of India. Any seven or more

white-collar employees can form a union and get it registered under the Trade

Unions Act, 1926 in the prescribed manner.



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Employers' AssociationsEmployers' Organisations (EOs) are "formal groups of employers set up to defend, represent or advise affiliated employers and to strengthen their position in society at large with respect to labour matters as distinct from economic matters. They may conclude collective agreements but this is not a formal rule and cannot be an element of their definition.

Employers' Associations came into existence as a result of the formation of ILO and the growing presence of Trade Unions, especially after the First World War. The Royal Commission on Labour, 1929, recommended that the Indian employers need an organisation "to deal with labour problems from the employer's point of view ". As rightly pointed out by Mr. Naval Tata, employers' organisations are required to: Develop healthy and stable industrial relations; Promote collective bargaining at different levels; Bring a unified employers' viewpoint on the issues of industrial relations to

the government in a concerted manner;



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ObjectivesPrimarya) Promote and protect the interests of employers engaged in industry, trade

and commerce in India.b) Study, analyse and disseminate information relating to labour policy,

labour-management relations, collective bargaining, etc.c) Offer advice concerning various aspects of labour policy.d) Liaise with Union Government and initiate steps that are representative and

legislative in nature.Secondarya) Train and develop staff and members.b) Obtain data on wages and conditions of work in industries attached to

them.c) Come out with surveys, research-based reports on issues of importance to

both labour and management.d) Take up projects for social and family welfare.



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ORIGIN AND GROWTHThe origin, growth and development of EOs in India have three distinct phases: (i) the period up to 1933 (ii) the period between 1933 and 1946; and, the post-independence period. Each phase reveals its own structural and functional characteristics.LEGAL STATUSEOs could be registered in any of the following legal forms: The Trade Unions Act, 1926; the Indian Companies Act, 1956; or the Societies Act, 1860. The AIOE remained a registered body till 1969 when it was registered under the Indian Trade Union Act. The main reason for the AIOE opting for registration under the Trade Union Act was to allow it to take up test cases before the courts and industrial tribunals.COUNCIL OF INDIAN EMPLOYERS (CIE)The main object in setting up the CIE was to ensure closer cooperation and coordination between the two bodies which together represent particularly the interests of large-scale industry in India. In the year 1973, the SCOPE joined the CIE.



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INTERNATIONAL ORGANISATION OF EMPLOYERS (IOE)

Founded in 1920, the International Organisation of Employers with headquarters

in Geneva is the only world organisation authoritatively representing the

interests of employers of the free world in all social and labour matters at the

international level. As of June 1992, it has a membership of EOs in 104

countries.



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ORGANISATION AND MANAGEMENT OF EOs IN INDIA

Membership: As in most countries, in India, too, membership in EOs is voluntary. AIOE has two categories of members: individual (enterprise) and association (group of enterprises).

Organisation Structure: The AIOE has a unitary type of organisation. It has no sub-organisation on an industrial or geographical basis.

Finances: EOs are referred to as rich men's poor clubs. The EFI's balance sheet for 1985-86 shows an income of Rs.20 lakhs and that of AIOE Rs. 5 lakhs, approximately.

Representation: EOs in India play two types of roles in representing the interests of their members: One, they are called to nominate

representatives of employers in voluntary. Secondly, they seek to redress the grievances arising from legislative or other measures by making submissions to concerned authorities.



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EOs Representatives on Various Bodies Advisory Committee under Equal Remuneration Act All India Board of Technical Studies (Textile technology) Central Advisory Board for Child Welfare Central Apprenticeship Council Central Board of Trustees of Employees' Provident Fund Central Board for Workers' Education (Central and Several Regional Committees) Central Committee on Employment Central Council on Employment Central Council of Health & Central Welfare Planning Council Central Standing Committee on Bonded, Migrant and Casual Labour Committee on Conventions Indian Institute of Science, Bangalore Employee's State Insurance Corporation ESIC's Medical Council & Regional Board



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Government Policies and Industrial RelationsIn initial years of Industrial Revolution, government followed the policy of laissez faire (non-interference) in settling Employers' and Workers' problems. Parties were left free to settle scores the way they liked. Towards the end of 19th century, the change was witnessed in the attitude of Govt. Govt. was constrained to intervene and bring protective legislations because of the following reasons:

Pressure from ILO/ILC/SLC

Pressure from T.U. Movements

Gandhian philosophy of trusteeship, Govt. felt the need to develop instruments of voluntarism

Pressure from Constitutional Obligations to fulfil "pledges" and Promises" as enshrined in Preamble, Fundamental Rights and Directive Principles of State Policies

Government has emerged as biggest employer



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ROLE OF STATE IN INDUSTRIAL RELATIONS

As the National Commission on Labour (1969) observed, "The concern of the State in labour matters emanates as much from its obligations to safeguard the interests of workers and employers as to ensure to the community the availability of their joint product/service at a reasonable price. The extent of its involvement in the process is determined by the level of social and economic advancement, while the mode of intervention gets patterned in conformity with the political system obtaining in the country and the social and cultural traditions of its people."

The role of the State in regulating union-management relations in a democratic country will be different from that with a different philosophy for the governance of the people. In a democratic set-up the emphasis will be on human freedom and human rights, and policies reflect, broadly, the choices and will of the people. Industrial relations policies are also influenced by the stages of development of an economy's industrialisation strategies.



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CONSTITUTION AND LABOUR POLICIES

The preamble of the organisation to the Constitution of India provides the

framework within which the labour policies can be formulated in India:

“We, the people of India, having solemnly resolved to constitute into a sovereign

socialist secular democratic republic and to secure to all its citizens;

JUSTICE, social, economic and political;

LIBERTY of thought, expression, belief, faith and worship;

EQUALITY of status and of opportunity; and to promote them among all,

FRATERNITY assuring the dignity of the individual and the unity and integrity of

the Nation".



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INTERNATIONAL LABOUR ORGANISATION (ILO) & ITS INFLUENCE ON IR

The International Labour Organisation (ILO) sets international labour standards

by adopting International Labour conventions and Recommendations at its

Conference, held every year, after consultation with its member-States. When a

member-State ratifies a Convention, it becomes a legally binding International

obligation. Recommendations lay down general or technical guidelines and often

supplement the corresponding convention. A country that has ratified a

Convention must report regularly on its application in law and practice. The ILO

uses moral persuasion as it does not have machinery to legally enforce the

conventions and recommendations.

The International Labour Conference has adopted 172 conventions on a variety

of subjects (mentioned later) till 1st June 1992. India, which is a member of the

ILO since its inception (1919) adopted 36 of the 172 conventions as of 1st June

1992.



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EVOLUTION OF LABOUR POLICY DURING THE FIVE YEAR PLANS

A major landmark event influencing post-independence era labour policies was the report of the Labour Investigation Committee, 1946. The national government in 1946 drew up a four-year phased programme to:

a) revise the existing labour legislations to meet the changing needs of the time;

b) eliminate completely and/or control contract labour;

c) extend employment opportunities/exchanges to cover all classes of workers;

d) evolve fair terms of service and deal for workers;

e) fix wages in sweated industries, rationalise rate of dearness allowance to promote fair wage agreement and

f) lay down nucleus for an industrial health insurance programme.



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TRIPARTITE CONSULTATIONSRecognising the need for tripartite consultation on labour matters on the pattern of the International Labour Organisation and in line with the recommendations of the Royal Commission on Labour, the government has constituted in 1942, the Indian Labour Conference (ILC) and the Standing conference (SLC) with a view to:a) promote uniformity in labour legislation;b) lay down a procedure for the settlement of industrial disputes; andc) discuss all matters of all-India importance as between employers and

employees.Both the ILC and the SLC were constituted on the lines of the composition of the ILO:a) equality of representation between the government and non-Government

representatives;b) parity between employers and workers;c) nomination of representatives of organised employer and labour being left

to the concerned organisations;



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PARADIGM SHIFT IN INDUSTRIAL RELATIONS POLICY OF GOVERNMENT OF INDIA

Keeping in view emerging economic scenario, government policies should make a paradigm shift from regulation, protection and control to enabling, facilitating and protecting - from dispute resolution to social and economic development.

There should be a gradual decline in role of state-not too much and too frequent interventions.

There should be shift in industrial relation-information sharing, consultation, communication, transparency and consensus development at all levels.

The state should broad-base their labour policies and labour legislations to cover unorganised sectors in a big way.

The state should address the problems of diverse labour force-female worker, bonded labour, child labour, unorganised labour and migrant labour from India and abroad.



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There has been a definite shift in Government stand after declaration of new

economic policy.

The emphasis from socialist society is that workers were assured earnings,

safety and security. The emphasise has now shifted to;

a) Rationalisation of labour laws - "Umbrella Legislations" - Minimum level

of protection

b) To take care of emerging economic technological changes and

globalisation

c) Labour flexibility and labour adjustment

d) Measures for women workers and handicapped persons



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Table gives a comparative picture of Government strength during first National

Commission of Labour, 1966 and second National Commission of Labour 1999.

The First and the Second NCL

Terms of Reference of the first Terms of Reference of the SecondNational Commission on Labour (1966) National Commission on Labour (1999)

1. To review the changes in conditions (a) To suggest rationalisation of existingof labour since Independence and to laws relating to labour in the organi-report on existing conditions of la- sed sector.

bour.2. To review the existing legislative and (b) To suggest an "umbrella" legislation other provisions intended to protect for ensuring a minimum level of pro-

the interests of labour, to assess their tection to the workers in the unorga- working and to advise how far these nised sector. provisions serve to implement the Di- While drafting the framework of the rective Principles of State Policy in above, the Commission may take into the Constitution on labour matters account the following: and the national objective of estab- (i) Follow-up implications of the rec- lishing a socialist society and achiev- ommendations made by the Com-

ing planned economic development. mission set up in May, 1998 for



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3. To study and report in particular on: review of various administrative

(i) The levels of worker' earnings, laws governing the industry.

the provisions relating to wages, (ii) The emerging economic environ-

the need for fixation of minimum ment involving rapid technological

wage, the means of increasing pro- changes, requiring response in

ductivity, including the provision terms of change in methods,

of incentives to workers. timings and conditions of work in

(ii) The standard of living and the industry, trade and services, global-

health, efficiency, safety, welfare, isation of economy, liberalisation of

housing, training and education trade and industry and emphasis on

of workers and the existing arrange- international competitiveness and the

ments for administration of labour need for bringing the existing laws

welfare, both at the centre and in the in tune with the future labour market

states. needs and demands.



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(iii) The existing arrangements for social (iii) The minimum level of labour security protection and welfare measures and(iv) The state of relations between emplo- the basic institutional framework for yers and workers and the role of for ensuring the same, in the manner trade unions and employers' organi- which is conducive to a flexible

sations in promoting healthy industrial labour market and adjustments nece-relations and the interest of the nation ssary for furthering technological

(v) The labour laws and voluntary arran- change and economic growth.gements like the code of discipline, (iv) Improving the effectiveness of joint management councils, voluntary measures relating to social security,arbitration and wage boards and the occupational health and safety,machinery at the centre and in the minimum wages and linkages ofstates for their enforcement wages with productivity and, in

(vi) Measures for improving conditions particular, with safeguards and of rural labour and other categories and facilities required for women of unorganised labour. and handicapped persons in (vii) Existing arrangements for labour employment.

Intelligence and research; and tomake recommendations on the abovematters.

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