Introduction of Industrial relation

Content
Historical Background
Meaning
Definition
Nature
Objectives
Scope
Importance
Parties to Industrial Relation
Approaches

History
Industrial relations has its roots in the industrial revolution which created the modern
employment relationship by spawning free labor markets and large-scale industrial
organizations with thousands of wage workers. As society wrestled with these massive
economic and social changes, labor problems arose. Low wages, long working hours,
monotonous and dangerous work, and abusive supervisory practices led to high
employee turnover, violent strikes, and the threat of social instability. Intellectually,
industrial relations was formed at the end of the 19th century as a middle ground
between classical economics and Marxism.
The relation between workers and management have undergone Himalayan changes in
our country there had been a system of king and his subjects, all should
work to improve the coffers of the king. Later Zamindars came and
workers were at their mercy some time bonded also, later with the formation of
East India company and British Rule a heart less Hire and fire system was established
Industrial workers were no mans child neither the employers or government cared
for them, there were no union also. Gradually enlightened leaders came in
like, Gokale, MK Gandhi Ro y, Tilak etc felt the need for workers union.
Their relentless efforts forced both governments and the employers to
think of workers lot small u n i o n s w e r e f o r m e d , g o v e r n m e n t e n a c t e d
r u l e s l i k e T r a d e u n i o n A c t 1 9 2 6 . I n d u s t r i a l disputes Act etc.
Various factors responsible for this are Growing prosperity
Rising wages
Worker's higher standard of living
Education
Greater mobility
Individually owned organization have became Corporate enterprises.
Progressive , status-dominated , secondary group-oriented , sophisticated class
of workers has came into being who have their own trade unions , thus gained
bargaining power which enable them to give a tough fight to their employers to
establish their rights in the growing industrial society.

 Legislation to safeguard the rights of the industrial workers in private enterprises.

Changes in the techniques and methods of production

Meaning
Industry refers to any productive activity in which an individual (or a group of
individuals) is (are) engaged.
By relations we mean the relationships that exist within the boundary wall of
the industry between the employer and his workmen.
The term Industrial relations are basically the interactions between employers,
employees and the government, and the institutions and associations.
Accordingly, industrial relations concern to the study and practice of collective
bargaining, trade unionism, and labor-management relations, while human resource
management is a separate, largely distinct field that deals with nonunion employment
relationships and the personnel practices and policies of employers.
Industrial relations has become one of the most delicate and complex problems of
modern industrial society. Industrial progress is impossible without cooperation of labors
and harmonious relationships. Therefore, it is in the interest of all to create and maintain
good relations between employees (labor) and employers (management).
The main concepts of industrial relations are
1. Preservation and promotion of economic interest of workers along with social
interest
2. Peace and productivity goes hand in hand hence. Attempt to reduce industrial
dispute and promote peace is a necessity.
3. Employer employee relation should be made healthy and growing
4. R u n n i n g o f t h e i n d u s t r y, d a y t o d a y w o r k s h o u l d b e m a d e m o r e
d e m o c r a t i c w i t h increasing workers participation
5. Producing products at a very com petitive price so that country can
promote export and our economy can improve.
6. Bringing mental revolution in management.

Definition

The term Industrial relations explains the relationship between employees and
management which stem directly or indirectly from union-employer relationship
sV. Agnihotri.

Industrial relations are broadly concerned with bargaining between employers

and trade union on wages and other terms of employment. The day-to-day relations

within a plant also constitute one of the important elements and impinge on the broader
aspects of industrial relations C.B Kumar

Industrial relation is an art of living together for the purpose of production

J.Henry

The subject of industrial relations deal with certain regulated and

institutionalized relationship in industry Allan Flanders.

The field of industrial relations include the study of workers and their trade
unions, management, employers association and state institutions concerned with the
regulation of employment H.A Clegg

Industrial relations is a developing and dynamic concept and does not limit itself
merely to the complex of relations between the unions and management, but also refers
to the general web of relationships normally obtaining between employees-a web much
more complex than the simple concept of labor-capital conflict. kapoor

ACC. to ILO definition Industrial relations deals with either the relationships
between the state and employers and workers organizations or the relations between
the occupational organizations themselves.

Nature
Three types of relations between two components .
Employer-Employer
Employer-Employee

Employee-Employee
It exists within the boundary wall of the Industry. exist in both the organized or
unorganized sectors of industry.
It is a web of rules formed by the govt., and business community and labour.
Conflict Solving- From the earliest phase of industrialization from which the
workers formerly working with their own tools entered into power driven factories,
owned by owners: to minimization of breakdown due to industrial conflicts of later
state and further to industrial peace.
Multi- Dimensional- Industrial relation do not function in a vacuum but multidimensional in nature and are conditioned with three determinants (i) Institutional
factors (ii) Economic factors (iii) Technological Factors.

Institutional factors are included items such as state policy, labour laws,
voluntary codes, collective agreements, labourers unions and employers
organisation, social institution like the community, caste, joint family, creed,
system of beliefs, etc, attitudes of work, systems of power status, relative

nearness to the centers of power; motivation and influence and industrial

relations.
Economic factors are included economic organisation (socialist, capitalist,
communist, individual ownership, company ownership, government ownership)
power of labour and employers, the nature and composition of the labour force
and the sources of supply and demand in the labour market.
Technological factors come the techniques of production, modernization and
rationalisation schemes, capital structures etc.

Dynamic and Developing concept

Complimentary process
Complex

Objectives
To safeguard the interest of labor and management- by securing the
highest level of mutual understanding and good-will among all those sections in
the industry which participate in the process of production.

To avoid industrial conflict or strife and develop harmonious relations

which are an essential factor in the productivity of workers and the industrial
progress of a country.
To raise productivity to a higher level - by lessening the tendency to high
turnover and frequency absenteeism.

To establish and promote the growth of an industrial democracy.

To eliminate or minimize the number of strikes, lockouts - by providing
reasonable wages, improved living and working conditions etc.

Vesting of interest of the workers in the industries in which they are

employed.
To bring better understanding and cooperation between employers and
workers.
To establish a proper channel of communication between workers and
management.
To ensure constructive contribution of trade unions.

 To work in the direction of establishing and maintaining industrial

democracy.
To ensure workers participation in decision-making.
To increase the morale and discipline of workers.
To ensure better working conditions, living conditions and reasonable
wages.
To develop employees to adapt themselves for technological, social and
economic changes.
To make positive contributions for the economic development of the
country.
Importance
Maintenance of harmonious industrials relations is on vital importance for the survival
and growth of the industrials enterprise. Good industrial relations result in increased
efficiency and hence prosperity, reduced turnover and other tangible benefits to the
organization. The significance of industrial relations can be summarized as below:
1. It establishes industrial democracy: Industrial relations means settling
employees problems through collective bargaining, mutual cooperation and
mutual agreement amongst the parties i.e., management and employees unions.
This helps in establishing industrial democracy in the organization which
motivates them to contribute their best to the growth and prosperity of the
organization.
2. It contributes to economic growth and development : Good industrial
relations lead to increased efficiency and hence higher productivity and income.
This will result in economic development of the economy.
3. It improves morale of the work force : Good industrial relations, built-in
mutual cooperation and common agreed approach motivate one to contribute
ones best, result in higher productivity and hence income, give more job
satisfaction and help improve the morale of the workers.
4. It ensures optimum use of scare resources: Good and harmonious industrial
relations create a sense of belongingness and group-cohesiveness among
workers, and also a congenial environment resulting in less industrial unrest,

grievances and disputes. This will ensure optimum use of resources, both human
and materials, eliminating all types of wastage.
5. It discourages unfair practices on the part of both management and

unions: Industrial relations involve setting up a machinery to solve problems

confronted by management and employees through mutual agreement to which
both these parties are bound. This results in banning of the unfair practices being
used by employers or trade unions.
6. It prompts enactment of sound labour legislation: Industrial relations
necessitate passing of certain labour laws to protect and promote the welfare of
labour and safeguard interests of all the parties against unfair means or
practices.
7. It facilitates change: Good industrial relations help in improvement of
cooperation, team work, performance and productivity and hence in taking full
advantages of modern inventions, innovations and other scientific and
technological advances. It helps the work force to adjust themselves to change
easily and quickly
8. Uninterrupted production The most important benefit of industrial relations
is that this ensures continuity of production. This means, continuous employment
for all from manager to workers. The resources are fully utilized, resulting in the
maximum possible production. There is uninterrupted flow of income for all.
Smooth running of an industry is of vital importance for several other industries;
to other industries if the products are intermediaries or inputs; to exporters if
these are export goods; to consumers and workers, if these are goods of mass
consumption.
9. Reduction in Industrial Disputes Good industrial relations reduce the
industrial disputes. Disputes are reflections of the failure of basic human urges or
motivations to secure adequate satisfaction or expression which are fully cured
by good industrial relations. Strikes, lockouts, go-slow tactics, gherao and
grievances are some of the reflections of industrial unrest which do not spring up
in an atmosphere of industrial peace. It helps promoting co-operation and
increasing production.
10. High morale Good industrial relations improve the morale of the employees.
Employees work with great zeal with the feeling in mind that the interest of
employer and employees is one and the same, i.e. to increase production. Every
worker feels that he is a co-owner of the gains of industry. The employer in his
turn must realize that the gains of industry are not for him along but they should

be shared equally and generously with his workers. In other words, complete
unity of thought and action is the main achievement of industrial peace. It
increases the place of workers in the society and their ego is satisfied. It naturally
affects production because mighty co-operative efforts alone can produce great
results.
11. Mental Revolution The main object of industrial relation is a complete
mental revolution of workers and employees. The industrial peace lies ultimately
in a transformed outlook on the part of both. It is the business of leadership in the
ranks of workers, employees and Government to work out a new relationship in
consonance with a spirit of true democracy. Both should think themselves as
partners of the industry and the role of workers in such a partnership should be
recognized. On the other hand, workers must recognize employers authority. It
will naturally have impact on production because they recognize the interest of
each other.
12. Reduced Wastage Good industrial relations are maintained on the basis of
cooperation and recognition of each other. It will help increase production.
Wastages of man, material and machines are reduced to the minimum and thus
national interest is protected.

Scope
The cordial and healthy labour management relations could be brought in

By safeguarding the interest of the workers;

By fixing reasonable wages;

By providing good working conditions;

By providing other social security measures;

By maintaining healthy trade unions;

By collective bargaining.

The industrial peace could be attained

By setting industrial disputes through mutual understanding and agreement;

By evolving various legal measure and setting up various machineries such as

Works Committee, Boards of Conciliation, Labour Courts etc.

The industrial democracy could be achieved

By allowing workers to take part in management; and

By recognition of human rights.

Parties in industrial relation

Industrial relation requires a study regarding I) conditions of work (ii)
compensation paid for t h e s w e a t t h e w o r k e r m a k e s i i i ) p e r m a n e n c y
o f t h e j o b a s s u r e d c o n t i n u a n c e o f w o r k o r otherwise.
The parties to Industrial Relations are
1) Workers and their unions, the intelligence level knowledge of workers, background of worker leaders, real or bogus their linkage with political
unions, are to be considered for the effective relations.
2) Nature of employment and employers, whether benevolent,
i n t e r e s t e d i n workers or aiming to get as much profit as possible
squeezing workers their attitude plays vital role in maintaining better relations.
Whether they want to have team, and growth of their team as a whole or just hire
and fire system.
3) Position of government, political wills whether
o p p o r t u n i t i e s f a v o r i n g employers or interested in workers, are to
be seen. Their interest in worker scan be seen through their actions in
creating Laws for labour welfare and implementing them effectively.

Approaches
Approaches to Industrial Relations
Industrial conflicts are the results of several socio-economic, psychological and political
factors. Various lines of thoughts have been expressed and approaches used to explain
his complex phenomenon. One observer has stated, An economist tries to interpret
industrial conflict in terms of impersonal markets forces and laws of supply demand. To
a politician, industrial conflict is a war of different ideologies perhaps a class-war. To a

psychologist, industrial conflict means the conflicting interests, aspirations, goals,

motives and perceptions of different groups of individuals, operating within and reacting
to a given socio-economic and political environment.

Psychological approach
According to psychologists, problems of industrial relations have their origin in the
perceptions of the management, unions and rank and file workers. These perceptions
may be the perceptions of persons, of situations or of issues involved in the conflict. The
perceptions of situations and issues differ because the same position may appear
entirely different to different parties. The perceptions of unions and of the management
of the same issues may be widely different and, hence, clashes and may arise between
the two parties. Other factors also influence perception and may bring about clashes.
The reasons of strained industrial relations between the employers and the
employees can be understood by studying differences in the perception of issues,
situations and persons between the management groups and labour groups.
The organizational behavior of inter-groups of management and workers is of crucial
importance in the pattern of industrial relations. The group-dynamics between the two
conflicting groups in industrial relations tend to shape the behavioral pattern.

Sociological approach
Industry is a social world in miniature. The management goals, workers attitudes,
perception of change in industry, are all, in turn, decided by broad social factors like the
culture of the institutions, customs, structural changes, status-symbols, rationality,
acceptance or resistance to change, tolerance etc. Industry is, thus inseparable from
the society in which it functions. Through the main function of an industry is economic,
its social consequences are also important such as urbanization, social mobility,
housing and transport problem in industrial areas, disintegration of family structure,
stress and strain, etc. As industries develop, a new industrial-cum-social pattern
emerges, which provides general new relationships, institutions and behavioural pattern
and new techniques of handling human resources. These do influence the development
of industrial relations.

Human relations approach

Human resources are made up of living human beings. They want freedom of speech,
of thought of expression, of movement, etc. When employers treat them as inanimate
objects, encroach on their expectations, throat-cuts, conflicts and tensions arise. In fact
major problems in industrial relations arise out of a tension which is created because of
the employers pressures and workers reactions, protests and resistance to these

pressures through protective mechanisms in the form of workers organization,

associations and trade unions.
Through tension is more direct in work place; gradually it extends to the whole industry
and sometimes affects the entire economy of the country. Therefore, the management
must realize that efforts are made to set right the situation. Services of specialists in
Behavioral Sciences (namely, psychologists, industrial engineers, human relations
expert and personnel managers) are used to deal with such related problems.
Assistance is also taken from economists, anthropologists, psychiatrists, pedagogists,
tec. In resolving conflicts, understanding of human behavior both individual and
groups is a pre-requisite for the employers, the union leaders and the government
more so for the management. Conflicts cannot be resolved unless the management
must learn and know what the basic what the basic needs of men are and how they can
be motivated to work effectively.

Gandhian approach
This approach is based on his fundamental principles of truth and non violence . These
principles evolved the concept of non co-operations and trustees. Where conflict exists
it should be resolved by non co-operations & non violence .
Gandhi ji advocated the followings :

Workers should seek reversal of reasonable demands only through collection

action.

If they have to organize a strike, trade unions should seek by bailout authority
from all the workers, but in remain peaceful and use non violent methods.
It has now been increasingly recognized that much can be gained by the managers and
the worker, if they understand and apply the techniques of human relations approaches
to industrial relations. The workers are likely to attain greater job satisfaction, develop
greater involvement in their work and achieve a measure of identification of their
objectives with the objectives of the organization; the manager, on their part, would
develop greater insight and effectiveness in their work.

Principle of Good Industrial Relations

The willingness and ability of management and trade unions to deal with the
problems freely, independently and with responsibility.

Recognition of collective bargaining.

Desirability of associations of workers and managements with the Government

while formulating and implementing policies relating to general economic and
social measures affecting industrial relations.

Fair redressel of employee grievances by the management

Providing satisfactory working conditions and payment of fair wage.

Introducing a suitable system of employees education and training.

Developing
employees.

To ensure better working conditions, living conditions and reasonable wages.

To develop employees to adapt themselves for technological, social and

economic changes.

To make positive contributions for the economic development of the country.

proper

communication

system

between

management

and

Causes of Poor Industrial Relations

Perhaps the main cause or source of poor industrial relations resulting in inefficiency
and labour unrest is mental laziness on the part of both management and labour.
Management is not sufficiently concerned to ascertain the causes of inefficiency and
unrest following the laissez-faire policy, until it is faced with strikes and more serious
unrest. Even with regard to methods of work, management does not bother to devise
the best method but leaves it mainly to the subordinates to work it out for themselves.
Contempt on the part of the employers towards the workers is another major cause.
However, the following are briefly the causes of poor industrial relations:

Mental inertia on the part of management and labour;

An intolerant attitude of contempt of contempt towards the workers on the part of

management.

Inadequate fixation of wage or wage structure;

Unhealthy working conditions;

Indiscipline;

Lack of human relations skill on the part of supervisors and other managers;

Desire on the part of the workers for higher bonus or DA and the corresponding
desire of the employers to give as little as possible;

Inappropriate introduction of automation without providing the right climate;

Unduly heavy workloads;

Inadequate welfare facilities;

Dispute on sharing the gains of productivity;

Unfair labour practices, like victimization and undue dismissal;

Retrenchment, dismissals and lock-outs on the part of management and strikes

on the part of the workers;

Retrenchment, dismissals and lock-outs on the part of management and strikes

on the part of the workers;

Distinction between human relations and industrial relations

The term human relations lays stress upon the processes of inter-personal
relationships among individuals as well as the behavior of individuals as members of
groups. The term industrial relations is used widely in industrial organizations and
refers to the relations between the employers and workers in an organization, at any
specified time.
Thus, while problem of human relations are personal in character and are related to the
behavior of individuals where moral and social element predominate, the term industrial
relations is comprehensive covering human relations and the relations between the
employers and workers in an organization as well as matters regulated by law or by
specific collective agreement arrived at between trade unions and the management.
However, the concept of industrial relations has undergone a considerable change
since the objective of evolving sound and healthy industrial relations today is not only to
find out ways and means to solve conflicts or resolve difference but also t secure
unreserved cooperation and goodwill to divert their interest and energies toward
constructive channel. The problems of industrial relations are therefore, essentially
problems that may be solved effectively only by developing in conflicting social groups
of an industrial undertaking, a sense of mutual confidence, dependence and respect
and at the same time encouraging them to come closer to each other for removing
misunderstanding if any, in a peaceful atmosphere and fostering industrial pursuits for
mutual benefits.

Industrial Relations in India

IR has undergone a wide change in Indian scenario, during the end of British period in
India an awakening in working class was seen. The world wars forced the
employers to become more friendly with the workers, to see un interrupted
production is ensured during war time. Out of their self interest they have to become
benevolent, At the same time leaders also came up, Mr. Roy Tilak Mahatma Gandhi and
others were instrumental to organize workers union, and also force government to
frame labour laws, to improve the lot of workers. In 1929 Industrial dispute Act was
enacted later in 1947 it became industrial dispute, act where in machineries to
solve industrial dispute were indicated.
(1) The Directive principles of state policy, as enshrined in
o u r c o n s t i t u t i o n stipulate that the state should endeavor to improve the
workers conditions, working conditions, and also productivity of industries
which will improve wealth of nations.
(2) Several acts are enacted by parliament both before and after
i n d e p e n d e n c e which were focusing on workers interests, welfare health etc. The
Tric Act Factory, Act. Industrial Dispute Act; Trade union Act gives major direction to
achieve the constitutional directives.
( 3 ) B e s i d e s t h i s , w a g e s Ac t 1 9 4 8 , B o n u s Ac t 1 9 6 5 , G r a v i d i t y Ac t
1 9 7 2 , E q u a l remuneration Act 1975, are some of the acts in the above direction.
(4) In 1972 National commission on labour, recommended setting up a
permanent industrial Relations commission this was not well received by government.
(5) National conference in 1982 made several recommendations
a) Emphasis on formation of permanent industrial
R e l a t i o n s commission( S t r i n g e n t a c t i o n o n c o n t r a v e n t i o n o f a
m u t u a l l y a g r e e d c o d e o f conducted) A check off system was prescribed
where in by ballot election, how many are real members of a union how many, dual,
bogus etc could come to light.
This did not find well with unions but some unions have arranged for deduction
of their subscription through employers pay counter to some extent the check of system
is working. Causes of industrial unrest in India can be classified mainly under four
heads they are
1) Financial Aspects

a) Demand for increase of wages, salaries and other perks. workers demand goes on
increasing with the increase in cost of living
b) Demand for more perks, and fringe benefits. Issue of bonus also has become a
c o n t e n t i o u s o n e , e v e n t h o u g h B o n u s Ac t h a s c o m e f i x i n g m i n i m u m
r a t e payable as 81/3% of their total salary in spite of profit or loss incurred by the
industry
.c) Incentives festivals allowances, concessions etc requires a hike every now and then,
workers compare these benefits with other industries and demand them without
comparing the capacity of the industry where they are working.
2) Non financial aspects
a ) W o r k i n g h o u r s , r e s t h o u r s , Tr a v e l i n g h o u r s a r e s o u r c e o f d i s p u t e s .
I f h o u s e s a r e provided some section of workers want to include travel time also as
working hours.
b) Introduction of machines, computers modernization, and automation In effect any
act of management which may result in economy in man power is resisted
c) More facilities like free meals free group travel etc are sought every now and then
3) Administrators Causes
a) Non implementation of agreements awards and other local settlements with full
sprit
b) Stifling with recognition of labour unions though registered,
c) Attempt to weaken existing trade unions and trying to foist fake unions
d) Un healthy working conditions
e) Lack of skill on the part of leaders supervisors
f) Disproportionate works loads, favoritism
g) Victimization, nepotism attitude of man agement in recruitment, promotion,
transfer etc
h) Instead of re deployment or skill improvement easier way of retrenchm ent
forced voluntary retirement schemes (C.R.S) are adopted.

4) Government and political pressures

a) Industrial unions affiliating with political unions which are in power,
resulting infrequent shift of loyalty and resultant unrest
b) Politician influencing workers group closes examples is the Nalco taken
over by Sterlite, the state government supported (propped up) strike at chattisgarh
state against Nalco, for months together resulting in total stoppage of the industry for
some time.
c) Some time unions, workers strike against mergers,
a c q u i s i t i o n , t a k e n o v e r , disinvestments policies, of government and private
sectors.

Text Question
1. What is industrial relation? Explain the objective of Industrial relation? Bring out
the significance of industrial relations?
2. Discuss different approaches to industrial relations?
3. What are the principles of good industrial relations?
4. Explain the role of the Government, Employer and the Trade Union in
maintaining sooth industrial relations?