Industrial Relations: Challenges Faced in India

Industrial Relations: Challenges Faced in India
Author: Vidit Jain,
3rd Year Law Student,
School of Law, CHRIST (Deemed to be University).

India’s rate of development has increased significantly in the past few years because of the policies of the government like Make in India, Made in India and also by attracting Foreign Direct Investment. Due to which many multinational corporation have been choosing as a place of manufacturing. And in today’s dynamic business environment, every organization wants to be a successful organization, which is not possible without the Human Resource or manpower. And the success of these organization depends upon the performance of their Human Resource and that is why the organization wants quality manpower. And Human Resource at right place can help the organization develop more bigly. Employee and Employer relations or industrial relations are very important and they are the two sides of the same coin. So this paper presents an incisive account of emerging issues and challenges that pose roadblocks for labour reforms in India and imperatives for enhancing labour productivity and lowering labour cost without compromising international labour standards.

Industrial Relations is a “designation of a whole field of relationship that exists because of the necessary collaboration of men and women in the employment process of industry”.[1]So in order to understand the issues and problems pertinent to it, it is necessary for one to know about the process of evolution of the industrial relations. The problems and issues faced by India are the same problems shared globally. The stages of industrial relations has progressed from primitive stage to industrial capitalism stage. The emergence of tripartite consultative system and voluntary and statutory approach to industrial relations, immensely contributed to the growth of a particular system of industrial relations in our country. Also the dynamics of technological development, production techniques, and innovation have brought change in the industrial relations has changed the relationship employer employee. So in order to understand this economists have focused on the four factors of production which are land, manpower, organization and capital. The role of manpower as a factor of production is an important factor in the organization. Capital and natural resource endowments, no doubt, are vital elements in the production process but it is the manpower which contributes most to the company. The emergence of the concept of human relations, human resource management (HRM) and human resource development (HRD) contributed to the growing importance of labour. The issue of Industrial Relations arose mainly from the issue of breakdown of workers from the ownership and management of the production process. This is the primary cause of industrial dispute, which has brought about a sense of deprivation and loss of independence on the part of workers. Industrial work has drastically reduced the independence of workers and made them mere cogs in the machine – a kind of “second class citizens.”[2]The disciplinary rules for work have become quite harsh and arbitrary. The nature of workers, illiteracy and politicization of trade unions made it impossible for the workers to bargain collectively for their rights. All these factors have led to grow unrest among the workers at different level in the organization. The term Industrial Relations basically refers to relationship between Management and Labour or among Employees and their Organizations that would characterize their employment. In any organization, employment has relations between labour and management. Both parties need to cooperate with each other, try to adjust and accommodate each other and also understand and respect their nature of employment. And in their own mutual interest or benefit certain disciplinary guidelines and rules are formed and are to be followed.

Industrial Relation as we know is dynamic in nature. The nature of Industrial Relations can be seen as an outcome of complex set of transactions between the major players such as the employers, the employees, the trade union, and the state in a given socio-economic context. Therefore, change in the nature of Industrial Relation has become sine quo non with change i
n the socio-economic context of a country

In the developing and industrialising countries, there is a trend off- setting policies for maintaining economic growth of the country. For example, what policies (ie, industry, labour market and employment relations) should governments focus on for encouraging effective use of their technology, labour efficiency and their high productivity?; or What conditions should be set for foreign investment – should it be allowed in certain economic sectors when basic labour standards might be undermined?; or what policies or strategies should be developed for countering the industrial disputes, at the time when the development is at the boom? And more to it what strategies should be adopted of what role the employers and employees pursues for encouraging and supporting them? Also what changes are required in the workplace for job design, skill formation and work organization to realise the benefits of new technology, while maintaining employment growth; and, with the spread of education and increased emphasis on skills development being accompanied by demands for greater worker participation, what strategies should be adopted by management to ensure more equitable treatment in the workplace.
 It is not the cause but an effect of social, political and economic forces. In order to understand the issues and problems associated with industrial relations, it is desirable to study its various evolutionary phases. Practically speaking, the growth of industrial relations in India is in no way different from that of other parts of the globe.

The organization should also keep in mind structured communication as an important vehicle for carrying the employees and management which should be adopted nicely for facilitating the flow of information, ensure commitment and involvement of employees in all the critical aspects of the operation. Both management and recognized union should come forward to restore the relationship of trust. The Joint for a need to be more effective. The management also needs to be more committed to implement the plans more properly. But the same in India there is a scopes for improvement in setting up a communication network with
The field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a trade union and interactions between employers, employees and the government, and the institutions and associations. The concept of industrial relations has a very wide meaning and connotation, i.e. employer, employee relationship that confines them the relationship which is very important for the day to day association of the management and the labour. It is also very important for the organization to:
· To improve the welfare activities in the organization,
· To identify employee grievances and redress them efficiently and promptly,
· To improve the current working conditions of the employees in the organization and
· To develop and maintain employee assistance program in the organization.[4]


These days the mind set of people has changed because of the way that the market is directed by the consumer. It is on the purchase what they think best about them at a reasonable cost and so subsequently, there is a change towards business approach, since organizations and worker’s trade union have understood that the most important thing is profitability. If employees are not productive, the businesses will not be profitable and if the businesses are not profitable, the jobs will not be viable either. With regards to mechanical relations in India, there are a few issues that are supposed to be addressed. Legislation for the industrial relations is at the highest priority, since there is a considerable amount of labour legislation in force, totalling about 55 separate laws, even though practitioners mainly work with only four or five basic laws on a daily basis. This also includes a lot of the problems related to managerial styles – summary suspensions and dismissals, pay cuts, intolerance for any interference in their own production plans, insistence on written undertakings of good conduct – and a poor understanding of industrial relations in India. There have been several examples of pseudo-participative systems where committees are formed for the employee for their recognition like trade union and other committees for fulfilling their purpose and grievances or injustices caused to them, but this has been turned upside down where workers have little or no influence on decision-making in the organization even after so many legislations made by the legislators for maintaining good relations. Several Indian companies use Japanese managerial and work practices like teamwork, total employee involvement, Kaizen, 5-S, suggestion systems and rewards, among which are Ingersoll-Rand, Alstom Power, Infar India and Hindustan Unilever.  In managerial system there is a need for proper redressal and grievances where the problem of the workers and employees are resolved because workers are resorting to different methods like violence and are hitting back at management over perceived injustices. Management have also been insensitivity towards workers’ sentiments and their perceptions due to which there is an inability on the part of the multinationals to handle conflicts bilaterally and are taking recourse to the state Industrial Relations machinery or government ministers. The MNCs are also taking undue advantage of the states’ support for industrialization and suppression of trade unions. But with the involvement of the trade unions involved it can be stated that though the left unions such as AITUC and CITU are active in several cases, regional unions affiliated to ruling groups are equally active. But due to the some degree of political interference as well as influence has contributed to union muscle-flexing and the MNCs do not appear to have learn from challenges being but forth and also are not ready to adapt and understand the Indian Industrial Relations scenario. For instance, the use of contract and casual labour, the payment of significantly lower wages for some sections of labour and more over the inclination of state governments to disregard numerous parts of workers’ rights in light of a legitimate concern for speculation, are areas where multinationals have shown considerable alacrity.

Another problem is the technology gap, since a lot of companies lag behind with regard to technological advances, which makes it hard to compete with their competitors. Many organizations are related to global competition, and manpower utilization techniques consistent with high tech productivity and production. Labour flexibility is a dominant concern for management in all the cases, and has led to increasing use of non-regular workers. A third issue, other than innovation and law enforcement, is the inefficiency of the industrial dispute machinery which is an very integral part of the industrial relation to work in the manner it is supposed to be. Previously, ideologies and political views played an important part in labour disputes, but at present, the trade unions and companies usually manage to find a common factor and try to agree on issues raised by trade union by settling disputes without turning to the official dispute settlement machinery or taking the dispute to the tribunal. Fourth, there is a need of labour reform. The overall policy of the companies seems to be the strategy of creating a ‘reserve army of cheap labour’ in the area, available whenever required and vulnerable to retrenchment at will. The insistence on hiring a very young workforce, mostly women, preference for workers who are recruited from far-off towns and villages over local youth, intolerance of any attempts to form associations or unions, and keeping wages at a subsistence level, all point to this approach. But these are not the only challenges which the organization have to face while performing in day to day to operations relating to industrial relations[5].  Some of the others are:
· India figures at the bottom of the 10 newly industrialized countries in terms of the competitiveness of its human resources according to the World Competitiveness Report. The World Competitiveness Report examines the competitive advantage of human resources on the basis of skills, motivations and flexibility, age structure and health of the people. The criteria included in this factor are: population, employment, vocational training, and public expenditure on education, management quality, income levels and health factors.
·India’s rank is one of the lowest-134 out of a total of 160 countries in terms of Human Development according to the 1992 UNDP Report on Human Development. The index takes into account 3 parameters i.e. longevity (life expectancy), knowledge (adult literacy) and decent standard of living(per capital income).
· India scored 14 points and obtained medium freedom ranking(11 to 30 points) in terms of Human Freedoms Index(UNDP,1992),covering 40 indicators of freedom to exercise choices in cultural, social, economic and political affairs.(Venkatratnam,1994)
·Although there has been significant reduction in the proportion of people below poverty line, the magnitude is still very large. As compared to many developing countries, India‟s performance in terms of human resources is not satisfactory. Although the literacy has increased to 52% in 1991, the no. of illiterates has increased from 301.9millon in 1981 to 328.9million in 1991.[6]

Though legislators have recognised this but the fact that the Indian government has failed to do, so far, to find a solution. The Government has many ideas on how to improve the resolve industrial dispute and maintain industrial relation but cannot be implemented because of inadequate enforcement of policies and social protection, which is a general cause of resistance or stubbornness shown by the trade unions. At the moment, India has to maintain this momentum which requires flexibility in employment terms and conditions. And for achieving this flexibility there is a need of improving employability and skills. Continuous upgrades of skills and intelligence of workers can be achieved by teaching them through the right way to learn and also managing to motivate and keep their interest alive in learning. Despite of the fact that India has a very large population dividend, there are still very few skilled people. So only by increasing the skill land efficiency level of the employees is very important for countering the lack of productivity of the employees. In these aspects, the Indian government has undertaken initiatives, such as organizing autonomous skills, Development Corporation in partnership with the private sector, the employers’ organisations and the Chambers of Commerce and by providing funding for private initiatives to improve employees and workers’ skills.
The Legislators in India had made many labours reforms for the betterment of the industrial relations and to the great extent these legislations have been very helpful for the workers and employees. With these legislations being imposed by the government the organizations have adopted a better kind of welfare activities and have complied with all the guidelines for the safety measures, medical allowances, death relief fund, insurance, housing, transportation facilities, recreation club, etc. for better industrial relations between the employees, the trade unions and the management of the company. This helps in reducing the problems in the organization which helps in increasing the productivity. And it is implied that good industrial relations is a very important of higher production with minimum cost, higher profits and increased efficiency in workers. Industrial relations has budded one of the most fragile and complex problems of modern industrial society. For any organization to progress it is impossible to do without the cooperation of labours and harmonious relationships. So it important to create and maintain good relations between employees (labour) and employers (management).Thus industrial relation measures should be given prime emphasis which may lead to an effective relationship between management and employees for the increasing the productivity.  Though all the challenges faced by the organizations i.e. industrials disputes, therefore both management and trade union should come together and understand each other’s problems and also should resolve & negotiate to restore the relationship of trust. These challenges should not be seen as a problem but rather they are supposed to taken as opportunity to strengthen the weak point of the organization through which they should be able to progress and increase the efficiency level of the employees thus increasing their productivity. And this can only be done if the industrial relations between the workers, trade union and management are good and are able to communicate,
trust and resolve the internal dispute among themselves with the legislation providing laws for the industrial dispute. Therefore, industrial relations are very important to maintain and plays significant role.

[1] Industrial Relations in India- Challenges and Opportunities, Dr.A.Vennila, S.Narendrarathnaraj ,Volume 20, Issue 4. Version .III (April. 2018), PP 29-32 

[2] Industrial Relations in India: Challenges and Opportunities, Report- EIAS Briefing Seminar, 2011

[4] Challenges and Effectiveness of Industrial Relations Environment in Indian Industries: A Study on Rourkela Steel Plant, Rourkela, Odisha, India; Nibedita Nanda & Prof. Jaya Krushna Panda; International Journal of Marketing, Financial Services & Management Research, Vol. 2, No.6 June (2013).

[5] Multinationals & Industrial Relations in India, Ratan Sen, Indian Journal of Industrial Relations, Vol. 46, No. 3 (January 2011), pp. 367-383

[6] Industrial Relations in India- Challenges and Opportunities, Dr. A. Vennila, S. Narendrarathnaraj, IOSR Journal of Business and Management, Volume 20, Issue 4. Version III (April. 2018), PP 29-32 

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