employment relations in india ch-13

8/12/2019 Employment Relations in India Ch-13

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5TH EDITION

INTERNATIONAL

& COMPARATIVEEMPLOYMENT RELATIONSGlobalisation and change

Edited by Greg J Bamber,

Russell D Lansbury and Nick Wailes

Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition . Lecturers using the

book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted onany university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.

CHAPTER 13Employment Relations in India

C. S. Venkata Ratnam and Anil Verma


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2 Chapter 13:India

Internat ional & Comparat ive

Employment Relations5thedition


Russell D Lansbury & Nick Wailes

Copyright Allen & Unwin, 2011

Lecture Outline

Key Themes

Context

The Actors

Representation in Indian Industrial Relations

Agreement Making

Economic Context for Reforms

Current Issues in Employment

Labour Laws Reforms Conclusions


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Key Themes Major Economic Reforms in the 1990s paved the way for high

Economic Growth in India and involved the considerable liberalisationof the expansive Labour Laws.

There is a large Rural Sector and a large Informal Sector in which

Unions and Collective Bargaining are rare.

Trade Union Membership overall is lowbut Membership and

Collective Bargaining coverage is higher in the Public Sector and Large

Enterprises.

There are weak Laws regarding Trade Union Recognition and

Representation and poor enforcement of Labour Laws and Collective

Agreement Provisions. Current concerns include lack of protection for workers who have

been made worse-off by the Market-based Labour Reforms, poor

growth prospects in Key Parts of the Labour Market, high rates of

Contract and Casual Workers, increasing downsizing and a low-value

added IT sector.


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Context

The Indian Industrial (IR) Relations System is rooted in BritishCommon Law.

The IR System also reflects Indias Diverse Population.

The Unionisation rate is low at 5% of the total workforce due in

part to large Rural and Informal Sectors, which are not

unionised. Most Unions are concentrated in Large Enterprises and Govt

related Sectors.

After slow development during most of the 20thcentury,

Economic Growth has been highsince the mid-1990s. Indian Labour Laws were liberalised as part of a broader

Deregulation Program in the 1990s, changing what was one of

the most Protective Labour Law Regimes in the world.


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Trade Unions in India 1 Trade Union Movement emerged between 1850-1870with the

emergence of early manufacturing in Textiles, Jute and Light

Engineering.

The First National Federation of Trade Unions, All India Trade

Union Congress (AITUC), was established in 1920 to fight

Colonial Rule and Capitalism. The Movementsplit into three major Federations around the

time of Independence from Britain in 1947: AITUC, The Indian

National Trade Union Congress (INTUC), and Hind Mazdoor

Sabha (HMS). Unions are closely affiliated with Political Parties. The number of

unions proliferated as more Regional Political Parties emerged

after General Election in 1967, some of which set up their own

Trade Union Wings.


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Trade Unions in India 2 One of the largest union to have developed from a Regional

Political Party is the Centre of Indian Trade Unions (CITU) which

is aligned with Communist Party of IndiaMarxist (CPI-M or

CPM).

By the mid-2000s, there were over a dozen Federations of Trade

Unions. There may be over 1,00,000 unions in India, but accurate figures

are not known because the Govt does not collect data on Unions.

Prevalent form is the Union Shop, where Union Membership is

acquired by all employees after employment in an establishment

where a union is recognised by the employer.

The Closed Shop System (where only members of the Union can

be employed) exists informally in Wholesale Markets and on

Railway Stations among Manual Workers.


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Trade Unions in India 3The Indian Constitution and Freedom of Association The Right to belong or not to belong to a Union is guaranteed in the

Indian Constitution (Article 19(c)).

It is not compulsory for a worker to join a union, but it is

unconstitutional to prevent them from joining one.

Trade Union Registration and Recognition are not compulsory.

In order to stop the Proliferation of Unions, the Trade Union Act 1926

was amended in 2001 to require that 10% of workers or 100 workers

(whichever is less) at an establishment be members for Registering a

Union. 7 people are required to form an Unregistered Union.

The Law is silent on whether Unions are formed along Craft,Employment Category or other lines.

Trade Unions can pursue Economic, Political, Social and Welfare

objectives and can raise and maintain Political Funds.


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Trade Unions in India 4Trade Unions and Politics

The Trade Union Movement is closely linked with Political Parties, ashistorically Unions played a major role in the Struggle against Colonial Rule.

Some leaders of the Freedom Struggle were also leaders of the Trade Union

Movement.

Following Independence, this association resulted in Welfare-State and

Socialist Policiesinvolving the Nationalisation of Critical Industries combinedwith investments in Large Scale Public Enterprises.

The close association between Unions and Political Parties has assured

Politicians of Votes from the Working Classesand enabled Unions to better

defend their members interests. But the association also creates problems:

Divisions in Political Parties lead to Divisions in Unions; Industrial Relations

issues become Political Issues in conflicts between State and Central Govts

of different persuasions; and recently, Unions have also struggled with their

Associated Political Parties adopting Neo-liberal Policiesin order to

encourage Investment and Competition as these Policies tend to be

detrimental for workers.


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Trade Unions in India 5

National Trade Union Centres Any Union with a minimum of 5,00,000 Members spread

over at least four Industries and four Stateswill be

recognised as a National Trade Union Centre.

There are five Centres in India which fulfil this criterion:

The All India Trade Union Congress (AITUC) Bharatiya Mazdoor Sangh (BMS)

Hind Mazdoor Sabha (HMS)

The Centre of Indian Trade Unions (CITU)

The Indian National Trade Union Congress (INTUC) There are at least 7 other National Unions which the Govt

consults with.


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Trade Unions in India 6

Enterprise-level Unions There are two kinds of Enterprise-level Unions: Those

affiliated to National Centres and those without any

affiliation to Political Parties.

In some large Organisations/Enterprises, there are over a

hundred Trade Unions.

Trade Unions based on craft, occupational or employment

category and caste are not uncommon in India.

Within an Enterprise there can be separate Unions for

Workers (on the Shop Floor), Staff (Attendants, Drivers,Clerks, Typists etc), Supervisory Staff and

Executives/Officers.


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Management and Employers Organisations The earliest Employer Associations were formed primarily in Industries such as

Jute, Textiles and Engineering in response to Labour Laws enacted afterIndependence from British Rule.

The Principal Umbrella Organisation for Indian employers is the Council of

Indian Employers (CIE).

Employer Organisations proliferated after Independence, and then their

structure was consolidated. CIE was formed when the Employers Federationof India (EFI) amalgamated with the All India Organisation of Employers

(AIOE) in 1956 .

Public Employers at both National and Internationallevels originally had a

separate representative body called the Standing Conference on Public

Enterprises (SCOPE). SCOPE joined CIE in 1973.

Chambers of Commerce, Industry Associations and Representative

Organisations of the Public Sector are all members of these organisations.

CIE represents the interests of Large Scale Industry and represents Indian

employers at the International Council of Employers and at the International

Labour Organization.


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Representation 1 Employers Organisationsin India play two representative

roles:1. They nominate Representatives of Employers in Voluntary or

Statutory Bodiesset up to determine Wages and Conditions of

Employmentin a particular Industry or Sector and for consultation

on Social and Labour matters in the National and Global context.

2. They seek to redress the grievances of employers against

Legislative or other measures by making submissions to the

authorities concerned.

Employers Associations also represent interests of

Employers in various Committees and Institutions,Bipartite and Tripartite fora, and serve as a Forum for

Information Sharing, Policy Formulation and consensus

building on Strategic Issues.


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Representation 2Non Union Firms

In contrast to the past, it has been increasingly common since the1990s to find establishments with no union presence, for instance, in

Software Companies and in several Car Manufacturers.

Employers have adopted Union Avoidance Tactics such as the use of

Greenfield Sites (which have High Capital Investment and Technology

and Lower Labour Intensity), offering Above Average Wages andConditions,and asking employees to participate in Anti Union

Activities

Collective Bargaining

Only about 2% of the total workforce, but over 30% of the workers inthe Formal (Organised) Sector, participate in Collective Bargaining.

In the Public Sector and the largest Public and Private Sector

Enterprises the figure is 70% or more.

Legislation encourages Govt adjudication of disputes.


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Representation 3Historical context for Industrial Relations At the time of Independence, the British gave India a Legal

Frameworkaimed primarily at Dispute Resolution.

After Independence, the Indian Govt adopted the Soviet Model of

planned Economic Developmentand sought to achieve a Socialist

Society.

Industrial Harmony was considered a necessity for State-led

Development.

Several Industries were Nationalised in the early 1970s and, during

the Emergency (1975-77), Labour Laws changes restricted

employers abilityto sack workers and close operations that were nolonger viable. Workers participation in Management was adopted as

a Directive Principle of State Policy.

Prior to the 1990s reforms, two National Commissions on Labour

had recommended Comprehensive Reforms to Labour Laws.


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Representation 4Freedom of Association The Constitutionguarantees the Fundamental Right to Freedom of Association. The Right of Collective Bargaining is not extended to Industrial Workers in

Government Undertakings (e.g. Railways, Post, Telecommunications).

Compensationfor these workers is based on Recommendations of Pay

Commissionsappointed periodically by the Govt.

National Labour Laws do not mandate employers to either Recognise Unions orengage in Collective Bargaining,but some States have provisions recognising

Trade Unions.

India has not ratified some ILO Conventions concerning Right of Association.

Determination of a Collective Bargaining Agent Determining a Collective Bargaining Agent has been a controversial issue

historically.

Some States have measures for recognising Unions as Agents in bargaining, for

example: a Code of Discipline which is common in the Public Sector; Secret

Ballots; a Check-off System; and Membership Verification.


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Representation 5Collective Agreements and Disputes

An Agreement with one Trade Union is not binding on members of otherunions unless arrived at during Conciliation Proceedings.

This means that even if one Union has an Agreement, other unions can raise an

Industrial Dispute with an employer.

A Collective Agreement is binding only for the workers who have negotiated

and signed the Agreement, but a Written Settlement arrived at in the courseof Conciliation Proceedings is binding not only on the actual parties to the

Industrial Dispute but also on the heirs, successors or assignees of the

employer and all the present or future workers in the establishment.

Under the Industrial Disputes Act, disputes can be settled with or without

recourse to the Government Conciliation Machinery.Arbitration or

adjudication follows failed conciliation.

An Award can be an Interim or Final determination of an Industrial Dispute

by a Labour Court, Industrial Tribunal, National Industrial Tribunal or an

arbitrator.Awards are legally enforceable instruments.

Collective Bargaining is rare in the Informal Sector.


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Representation 6

Unfair Labour Practices The Industrial Disputes Act defines the following as

Unfair Labour Practices: Refusal by the Employerto bargain collectively in good faith

with Recognised Trade Unions,

Refusal by a Union to bargain in good faith with the employer

Workers and Trade Unions engaging in Coercive Activities

against certification of a Bargaining Representative

Breaching an Industrial Settlement is punishable under

law. Employers use many tactics to undermine Unions,

Actions which are illegal but go largely unprosecuted.


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Levels of Bargaining and Agreements 1

National-level Agreements Prior to the 1970s, Wage Boards appointed periodically by

the Govt set wages and conditions in some Industries.

From the 1970s, Sectoral Bargaining at the National Level

was prevalent mainly in Govt Dominated Industries (e.g.

Banking and Coal) as well as Steel, Ports and Docks. This is

largely still the case today.

In Pay Determination, Civil Servants Pay provides the

Benchmark for the rest of the Public Sector, and Public

Sector Pay is then the Benchmark for Unionised Private

Sector Workers where Collective Bargaining tends to be

more adversarial and contentious.


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Levels of Bargaining and Agreements 2Firm/Plant-level Agreements While employers generally prefer bargaining at the Plant

Level,Unionspress for bargaining at higher levelsto

increase their Bargaining Power.

Duration of Agreements Duration of Collective Agreements increased during the

1970s and 80s, and again in the 1990s in the Public Sector.

Since 1997, the duration of public sector agreements has

been ten years. Most Private Sector Collective Agreements typically last for

three years. Public sector agreements can have a much

longer duration.


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Levels of Bargaining and Agreements 3Collective Bargaining in practice In practice, most unions are highly politicisedand the Govt

wields enormous discretionary powerwithout the

commensurate responsibility.

This leads to poor Enforcement of the Law and Collective

Agreement provisions,and frequently unions are co-opted intothe Collective Bargaining crisis by the Govt or by Management.

As a result, Union Members do not have confidence in their union

or its ideology and do not hesitate to change unions. Workers can

choose a union to represent them without belonging to it, can

enjoy the Benefit of Collective Bargaining without joining a union,

and Unions can have Collective Bargaining rights without workers

support.


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Economic Context for Reforms There has been a paradigm shift to neo-liberalism since the 1990s, with

emphasis on Economic Growth and Foreign Investment over LabourProtection.

While Indiawas a Major Economic Force in the 17thcentury, and under

British Rule developed Textiles, Steel, Engineering and other Industries, it

followed Import Substitution Policies in the 1970s and did not partake in

Economic Development at the same time as other Asian Economies. However, the Information Revolution in the 1980safforded new

opportunities for Economic Development.

In the last two decades, Indiahas integrated significantly with the Global

Economy,but the majority of Indians remain poor.

The country has achieved unprecedented GDP growth rates since the mid-2000sand is improving its standing in Global Economic, Competitiveness

and Investment-attractiveness Rankings.

Education levels are poor and the Govt is investing heavily in Vocational

Skills and Education.


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Current Issues in Employment-1 A large majority of the Workforce has suffered under the Neo-

liberal Reforms, hence the need for a more Interventionist

Labour Policy.

There is Over Dependence on Agricultureand low prospectsof

growth in Manufacturing and in the Organised Sector.

There is high incidence of Contract and Casual Staff, who formover half to three-quarters of the total workforcein some

large factories.

There is much less employment in the Public Sector, which

historically has been an Engine of Economic Growth. There is hope for increasing employment levels in the Service

Sector, but concerns over the low value that is added by IT

Professionalscompared with other countries.


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Current Issues in Employment-2Search for Flexibility

One of the catch-cries of the Reform Movement since the 1990s has

been for Greater Flexibility in the Labour Market.

Courts, State and National Govtshave responded to the need for

increased flexibility with various Policy Measuresthat also attempt

(often unsuccessfully) to maintain Worker Protection. The Consumer Protection Act 1986prohibits worker action that

impinges on Liberty and normal Civic Activities of Citizens (so City-

wide Freedom protests are not allowable if they interrupt normal

activities).

Similarly, the Right to Collective Bargaining was taken away fromInsurance Workers in the early 1980sas their Agreement with their

employer was found to disadvantage the interests of Policy Holders.

Although some Common Law cases have also established limits on

Industrial Action by Labour, other decisions have expanded Labour

rights or their enforcement.


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Agenda for Labour Law Reforms

Most commentators believe further Reforms to LabourLaware needed to sustain the High Growth rate

necessary to pull large Segments of Society out of

poverty.

Some of the most significant areas for reform include theneed for: Fewer Laws with Better Enforcement;

The elimination of Multiple Definitions across different

Legislations;

Clear Rules for termination of employment; Removing Managerial Functions from the Scope of Bargaining ;

Independent Industrial Relations Dispute Settlement Machinery;

Skills Development Funds outside of Direct Govt control;

a Tripartite National Wages Council.

Edit d b G J B b


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Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition . Lecturers using the

book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted onany university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.





Conclusions Labour Policy in India has been too narrowly focused on the 7% of the

Labour Force employed in the Formal/Organised Sector. The challenge for the Govt is accommodating all Workers and meeting

the plurality of needs in the Labour Market.The Govt is faced with the

Paradox of having to moderatethe at times Excessive Protection for

Workers in the Formal Sector(forming 7% of the Labour Force) while

enhancing protection for workers in the informal sector(forming 93%

of the labour force).

Improvements to Education and Vocational Skills Training are needed.

The Labour Administration and Judiciary lack the Professional Skills

and accountability to match their Discretionary Powers,so there is a

need to build a Cadre of Professionals in these areas.

Improvements to the Dispute Resolution Systemalso sorely needed.

Tripartite Negotiations on devising Policieswhich achieve flexibility

and job securityhave stalled, and need to be restarted.

employment relations in india ch-13

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