Government Policy and Industrial Relations
Industrial Relations Notes B.Com 5th Sem CBCS Pattern
Role of State in Industrial relations
In
the system of industrial relations, State (Government) acts as a regulator and
judge. Further, not only Central Government but the governments at the state
and regional level do influence the system of industrial relations, also the
other functionaries of the states like the executives and judiciary has a
definite impact on the system.
The
traditional role of state: Historically the Government has played at
least six roles in industrial relations in India. These are:
(i) Laissez Faire: During the
nineteenth century, the government played a laissez faire role in industrial
relations. It was reluctant to intervene to settle any dispute or indicate
any interest in the welfare of the workers. The workers and employers
were left alone to manage their affairs.
(ii) Paternalism: By the end
of nineteenth century, the laissez faire role of the government was replaced by
paternalism. Thinkers like Robert Oven, Ruskin and others attracted the
attention of the public and the government towards the inhuman working
conditions in factories, mines and plantations. The government tended to
make several enactments to govern working conditions, wages &
benefits and formation of trade unions.
(iii) Tripartism: Even prior
to independence, there existed tripartite form of consultation on the model of
the ILO conferences. After independence several such forums were formed.
The major tripartite bodies formed included Indian Labour Conference,
Standing Labour Committee, Industrial Committees for specific
Industries, Short lived National Apex body (1975) etc. The government
promotes consultation with concerned parties prior to taking any policy decision
in industrial relations to bring out any legislation.
(iv) Encouragement on Voluntarism: The
government also promotes voluntarism involving a series of codes to regular
labour management relations. These codes include codes of discipline,
code of conduct and code of efficiency and welfare. Specifically the
code of discipline encourages voluntary arbitration and helps in
maintaining discipline at workplace.
(v) Interventionism: The
government also plays an interventionist role. The intervention is in the form
of conciliation and adjudication. The Industrial Dispute Act, 1947
provides such measures to intervene in industrial disputes.
(vi) Employer: The government also plays the role of
the largest employer. The performance of this role influences labour
policy also. Obviously the government takes into consideration the interest
of public sector while framing its policy.
In
recent years, the state has played an important role in regulating industrial
relations in various countries. But the extent of its involvement in the
process is determined by the level of social and economic development in the
country. The mode of State intervention is greatly influenced by the prevailing
political system in the country and also economic development. For ex. In a developing
country like India, work stoppage to settle claims have more serious
consequences than in a developed economy and similarly, a free market economy
leave the parties free to settle their relations through strikes and lockouts
but in other system it may vary. State intervention is required for building up
Sound Industrial Relations. The powers assumed by the state to regulate labour
relations differ from country to country. In some countries, it has taken the
form of laying down bare-rules for observance by management and workers, while
in others the rules cover a wide area of relationship and there is equally
greater supervision over the enforcement of these rules. For ex: In UK, the
industrial relation system has been marked by the primary of free collective
bargaining between the parties. Disputes relating to jurisdiction are mainly on
internal matter for the British Trade Union Congress.
In
USA, the State has confined itself to enacting legislation for ensuring the
workers right to organize and bargain collectively. It constituted on
independent authority to administer and interpret legal provisions and decide
on complaints regarding unfair labour practices.
Australia
has had a long tradition of state regulation in the field of Industrial
Relation. The Government intervenes through the Common Wealth Conciliation and
arbitration commission for settlement of disputes and also through Industrial
Court. There is a fair scope for collective bargaining also.
In
India, the role played by the State in the field of INRL has assumed a more
direct form. The State has enacted procedural as well as substansive laws to
regulate INRL in the country. In a developing country like India state
intervention is necessary because of the following reasons:
1)
The labour organizations however numerous are
relatively weak. There has been a profound distrust of the employer as a profit
seeking exploiter. Therefore, the Government has to play a major role in INRL
because it cannot depend long on bipartite negotiations and confrontations
between labour and management over the years.
2)
When the labour situation worsens or the law
and order situation gets out of hand the state intervenes. As the guardian of
the people and of the economy of the country, it has to intervene and adopt
INRL policies which will ensure social justice and industrial peace.
3)
The federal nature of the constitution has
made it imperative for the state to intervene in labour matters to ensure
smooth and continuing production.
4)
The Directive Principles of the Constitution
enjoys upon the state to establish a welfare state & to look after the
weaker section of the society.
5)
In may therefore be seen that, state
intervention in the field of INRL varies according to a nation’s political
doctrine, traditions, and economic as well as social conditions. However, state
intervention in any form helped in preventing severe exploitation of the
classes and has helped in promoting industrial peace.
👉👉Industrial Relations Notes
Constitution of India and Evolution of Labour Policy
The
labour policy has been influenced by changing situations of course its core
factors have remained unchanged. In India, labour organisations have been
relatively weak and lacking trust in employers considering them profit making
exploiters. The government visualised that rapid industrial growth and
productivity demanded its major role in evolving a suitable framework to
prevent industrial disputes. The major source documents of Indian Labour Policy
of the government include the following:
(i)
The Directives Principles of State Policy
The
article 39, 41, 42, 43, and 43A relate to the government’s policy pertaining to
the labour.
The
Article 39 asserts as follows: “The state shall in particular direct its policy
towards securing:
a)
That there is equal pay for equal work for both men and women.
b)
That the health and strength of workers, men and women, and the tender age of
children are not forced by economic necessity to enter avocations, unsuited to
their age or strength……..”
The
Article 42 specifies as follows: “The state shall make provision for securing
just and human conditions of work and maternity relief.”
The
Article 43 asserts as follows: “The state shall endeavour to secure by suitable
legislation or economic organisation or in any other way, to 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 and in particular, the state shall endeavour to promote cottage
industries on an individual and cooperative basis or rural areas.”
The
Article 43A reads as follows: “The state shall take steps, by suitable
legislation or in any other way, to secure the participation of workers in the
management of undertakings, establishments or other organisations engaged in
any industry.”
Thus,
workers participation in management has become a part of the Directive
Principles.
(ii)
The Plan Documents
First
Five Year Plan (1951-56): The first plan recognised the importance of the
industrial labour in the fulfilment of planned targets and in creating an
economic organisation in the country which would best serve the needs of social
justice. The plan envisaged:
a.
adequate provision for the basic needs of the workers;
b.
securing improved health facilities and wider provision of social securities;
c.
providing access to better educational opportunities;
d.
improving conditions of work to safeguard the health of labour;
e.
the right to recognise and to take lawful action in furtherance of the rights
and interests of labour;
f.
the right to be treated with consideration by the management and access to
impartial machinery if he fails to get a fair deal.
The
plan called for the steps to improve productivity, emphasised the need for the
bilateral settlement of disputes, provide for state intervention in the event
of failure of bilateral processes. The plan document also made a commitment for
full and effective implementation of social security measures as also minimum
wage legislation. The Industrial Dispute Act was amended, in 1950 itself,
providing for a three-tier system of Labour Court, Industrial Tribunals and
National Tribunal
Second
Five Year Plan (1956-61): The second plan recognised that “creation of
industrial democracy is a pre- requisite for the establishment of a socialist
society”. It also emphasised the importance of industrial peace. A series of
voluntary arrangements were provided through tripartite consultation; code of
conduct, code of discipline, workers’ committees, joint management councils,
voluntary arbitration, etc. It is a different thing that because these are
purely voluntary they were not taken seriously by the parties.
Apart
from emphasising workers’ participation in management, a programme of workers’
education was also started in 1958. The need to strengthen the trade union
movement and living and fair wage, by linking the wage increase with increases
in production were also stressed.
Third
Five Year Plan (1961-66): The third plan emphasised the economic and social
aspects of industrial peace and elaborated the concept that workers and
management were partners in a joint venture to achieve common ends. Adherence
to Codes, not going to courts, was emphasised to regulate union-management
relations. However this was of little avail.
Fourth
Five Year Plan (1969-74): The fourth plan stressed the need to improve
legislation concerning safety and welfare of workers, review of workers’ participation
in management, workers’ education programmes, arrangements for skills training,
labour research, etc. Several new legislation and improvements to existing
legislation were made during the period. The Payment of Bonus Act, 1965, Shops
and Commercial Establishments Act, and Labour Welfare Fund Act were among the
important legislative initiatives during the period. The National Safety
Council was set up in 1966.
Fifth
Five Year Plan (1974-79): The fifth plan called for strengthening professional
management particularly in the public enterprises and also underlined the need
to raise labour productivity. For this, the plan envisaged “better food
nutrition and health standards, higher standards of education and training,
improvement in discipline and moral and more productive technology and
management practices”. The period also saw the declaration of emergency during
which certain labour rights were curtailed.
Sixth
(1980-85) and Seventh (1985-90) Five Year Plans: The sixth and seventh plans
reiterated the earlier programmes, expressed concerns over the shortcomings in
realising the important goals of improving the conditions of working class,
workers’ participation, productivity improvement, etc. During the period,
important legislative amendments were made to enhance the protection to
workers, besides the introduction of a 20-point programme, new schemes of
workers’ participation in management and attempted radical overhaul of labour
legislation.
Eighth
Five Year Plan (1992-97): The eighth plan echoed concerns raised in the earlier
plans with particular reference to workers’ participation in management, skills
training, productivity, equitable wage policy, informal sector, etc. It also,
for the first time, expressed concern about the need to rationalize the
regulatory framework with a view to ‘providing reasonable flexibility for
workforce adjustment for effecting technological up gradation and improvement
in efficiency”. At the same time, the plan document emphasised the need to
“ensure that the quality of employment in the unorganized sector units improves
in terms of earnings, conditions of work and social security”.
The
major problem with our five year plan is that the intentions are pious and
noble. But, only little guidance or clue are provided as to how these shall be
achieved and measured. The goals being abstract, the inspection and database
being weak the daunting tasks in each of the successive plans left more to be
achieved.
Industrial Relations Policies of Government of India in the post-globalization era
Indian economy had experience a major policy change in early
1990s. The new economic reforms, popularly known as Liberalization,
Privatization and globalization (LPG) aimed at making the Indian economy as
fast growing economy and globally competitive. A series of reforms undertaken
with respect to industrial sector, trade as well as financial sector aimed at
making the economy more efficient.
With the onset of reforms, to liberalize the Indian economy in
July of 1991, a new chapter has draw for Indian and her billion plus
population. This period of economic transition has had a tremendous impact on
the overall economic development of almost all major sectors of the economy and
its effects over the last decade can hardly be overlooked. Besides, it also
marks the advent of the real integration of the Indian economy with the global
economy which is called globalization.
With the advent of globalization, the policies of production
proved impractical and rigid. They posed a serious threat for the industry to
face the global competition and survive in the global markets. Apart from the
global needs of the organization there was a technological revolution across
the world. The business rules were changing with worldwide margin and
acquisitions. Disinvestment, privatization, retrenchment and introduction of
VRS, contract labour, outsourcing and the need for flexibility in workforce
changed the industrial relations outlook.
The various types of policies and factors that emerged in India
after globalization are:
1)
The HR policies which were rigid before
globalization have become flexible after globalization.
2)
The style of management was generating
negative feelings towards the employees which turned into positive due to the
advent of globalization.
3)
The type of negotiation was win-lose type
before globalization which changed into win-win mode after globalization
starts.
4)
The strategic orientation became linked with
the goals of the organisation with the advent of globalization which was not
before.
5)
Previously, the union management relations
were adversarial, now its cooperative.
6)
The workforce was production oriented, which
has become service oriented now.
7)
Collective bargaining was strongly criticizes
which has now been decentralized.
8)
Mergers and acquisitions were very few and
that too within India, which had changed to large scale across the globe with
the advent of globalization.
9)
Guaranteed payment system, is changed into
variable and incentive payment system due to globalization.
10)
Profit sharing was negligible, but after the
LPG policy there was profit sharing in the form of bonus, allowances, etc.
11)
The type of labour which were permanent and
regular, is casualized after globalization.
In
the globalization era, with the increase in competition there have been fewer
strikes, lockouts and man days lost due to strike. In this era of knowledge
economy, employees are educated and do not indulge in violent activities as
during pre-globalization era. Today, they are more responsible and are aware of
their duties as well as their rights.
The
effects of globalization on Indian industry have proved to be positive as well
as negative. The positive effects of globalization in Indian industry are that
it brought in huge amounts of foreign investments into the industry especially,
in the BPO, Pharmaceutical, petroleum and manufacturing industries. Foreign
companies brought in advanced technology with them and this helped to make the
Indian industry more technologically advanced.
The
negative impact of globalization on Indian Industry is that it increased
competition in the Indian market between the foreign companies and domestic
companies. With the foreign goods being between than the Indian goods, the
consumer prefers to buy the foreign goods, thereby reducing profit of the
Indian Industrial Companies. Also, due to globalization technology has improved
and the number of labours required decreased and resulted in job cuts.
Therefore, the government must try to make such economic policies with regard
to Indian Industry’s globalization that are beneficial and not harmful.