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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS

A CONCEPTUAL STUDY THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS


(With Special Reference to Kota Region)

A Synopsis Submitted For Consideration of Ph.D. In Vardhaman Mahaveer Open University

By M SHYAMSUNDER RAU C 364 Kota 324 005 Rajasthan

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS

A Conceptual on the Impact of Globalization On Industrial Relations (With special reference to Kota region) with the advent of liberalization and New Industrial Policy, it is now often said that Indian vision of 2020 is a big leap towards making her a super power and for her economy to have global perspectives. Internally too, due to several economic reforms like liberalization, liberal EXIM policies, disinvestments plans leading to over subscription of the PSUs, Schemes like VRS, mergers and acquisitions, outsourcing and like, the country has achieved all round economic progress and industrial growth. Further the mass production of top quality goods at competitive prices, indigenization of several commodities, patenting and intellectual Property Rights, and so in have led to higher productivity and reducing unit costs. Many believe that this has been made possible through incorporating latest technology and scientific work methods that all organization to economize or cut costs. But if it has been only due to introducing new technologies, certainly the United States, the UK and other industrially advanced countries would not be overtaken by Germany, Japan and to some extent by china and India. The success in these countries largely depends upon the way they have managed to surpass other nations through better union management. It is difficult to conceive of any industrial society devoid of social and group phenomena or such institutional relationships intertwined with a variety of attitudes and expectations, from both management and employees. Consequently, industrial relations (IR) cannot be viewed in isolation from its wider context. The term IR can be defined as a specialist area of organization management dealing with the human relations and human activities on a work place. The term however is used in a restrictive sense to include only the formal and collective relationship between management and employees through the medium of trade unions. Several studies have been conducted on the discipline of IR but they have failed to promulgate any causative theory or predictive model nor has there been any right approach towards setting up a conceptual framework, comprising of methods and means to understand the diversity and complexity or IR. So far research has been done with a view to bring about analytical considerations however the present study aims at preparing a conceptual as well as theoretical rationalization in the light of globalization and liberalization and to study how these phenomena have shown their impact on the entire gamut of IR in general, and for the sake of exemplifying the impact on the selected organizations of Kota region in particular. This study will also suggest ways and means for the subjective analysis of the economic scenario in the worker management setup in most organizations and for the possibility of evolving an comprehensive system of industrial relations.

A noteworthy feature of this study shall be its focus on the selected organizations of Kota region namely shriram Fertilizers and Chemicals (DSCL group), Chambal Fertilizers and Chemicals Limited, Gadepan (Birla Group), samcor Limited (Samsung group) and

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS instrumentation Limited, a semi government undertaking and their role in the development of the economic liberalization and in the promotion of globalization trends. The selection of organizations has been made keeping in view the impact of Globalization that they have witnessed despite severe labor and union exigencies. This study is also an attempt to prepare a critique in the discipline of industrial relations. The current scenario in the Indian Industrial panorama has been very depressing owing to increasing number of sick units and growing unionism. The role of industrial tribunals has also been very discouraging. In such a scene of devastation a few organization including those under study have not witnessed any strike or dispute for the last many decades. When such organizations exist in our country, it becomes all the necessary to study the causes and affects of those healthy phenomena which have been responsible for such an achievement or whether these phenomena owe anything to globalization. The present study will therefore ponder upon the socio-ethical, economical, political, technological and environmental climate that has been affected in the wake of globalization, last, but not least, the study aims at suggesting some HR/IR initiatives to be taken at all levels, from strategic to the grass root level, in order to improve the performance and productivity of the organization concerned, Globalization: Its Present Status Globalization has come to mean an integration and democratization of the worlds culture, economy, and infrastructure through transnational investment, rapid proliferation of communication and information technologies, and the impacts of free- market forces on local, regional and national economics. The term globalization also refers to the increasing interconnectedness of nations and peoples around the w orld through trade, investment, travel, popular culture, and other forms of interaction. Many historians have identified globalization as a 20thcentury phenomenon connected to the rise of Western-dominated international economy. However, there are evidences that several ideologies of Indian origin have played a significant role in this era of economic. One characteristic of globalization ion the modern age has been expanding commerce between countries around the world. The roots of this phenomenon reach far back in history. Long-distance trade routes grew out of the transportation systems that developed out of the need to move resources by land and sea. In turn, trade and expansion led to increased contact between different civilization and societies. Todays globalized world has been characterized by a brain drain, or exodus of talented people from various continents to Europe and North America. Business activities are becoming increasingly global as numerous firms expand their operations into overseas ma rkets. Many U.S. Firms, for example attempt to tap emerging markets by pursuing business in China, India, Brazil, and Russia and other Eastern European Countries. Multinational corporations (MNCs) which operate in more than one country at once, typically move operations to wherever they can find the least expensive labor pool able to do the work well. Production jobs requiring only basic or repetitive skills- such as sewing or etching computer chip- are usually the first to be move abroad. MNCs can pay these workers a fraction of what they would have to pay in a domestic division, and often work them longer and harder.

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS Most U.S. Multinational businesses keep the majority of their upper- level management, marketing, finance, and human resources divisions within the United States. They employ some lower- level managers and a vast number of their production workers in offices, factories, and warehouses in developing countries. MNCs based in the United States have moved many of their production operations to countries in Central and south America, China, India, and nations of Southeast Asia. The BPO industry has further outlaid this phenomenon and has given rise to several issues of development, employment and economy. Mergers and acquisitions are also becoming m ore common than in the past. In spite of their economic benefits to the organizations, these trends have raised serous issues of social and ethical considerations; the present project will discuss this impact too in the context of the organization under study. WTO and Globalization During the study the researcher intends to examine the role of such international bodies like WTO and CII and their recommendations as forwarded to organizations. World Trade Organization (WTO) is an international body that promotes and enforces the provisions of trade laws and regulations. The world trade organization has the authority to administer and police new and existing free trade agreements, to oversee world trade practices, and to settle trade disputes among member states. The WTO was established in 1994 when the members of the General Agreement on Tariffs and Trade (GATT), a treaty and international trade organization signed a new trade pact. The WTO was crated to replace GATT. Although the WTO replaced GATT, the trade agreements established by GATT in 1994 are part of the WTO agreement. However, the WTO has a significantly broader scope than GATT. GATT regulated trade in merchandise goods. The WTO expanded the GATT agreement to include trade in services, such h as international telephone service, and protections for intellectual property- that is, creative works that can be protected legally, such as sound recordings and computer programs. The WTO is also a formally structured organization whose rules are legally binding on its member states. The organization provides a framework for international trade law. Members can refer trade disputes to the WTO where a dispute panel composed of WTO officials serves as arbitrator. Members can appeal this panels rulings to a WTO appellate body whose decisions are final. Disputes must be resolved within the time limits set by WTO rules.

Since it creation, the WTO has attracted criticism from those concerned about free trade and economic globalization. Opponents of the WTO argue that the organization is to powerful because it can declare the laws and regulations of sovereign nations in violation of trade rules, in effect pressuring nations to change these laws, critics also charge that WTO trade rules do not sufficiently protect workers, rights, the environment, or human health. Some groups charge that

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS the WTO lacks democratic accountability because its hearings on trade disputes are closed to the public and press. WTO officials have dismissed arguments that the organization is undemocratic, noting that its member nations, most of which are democracies, wrote the WTO rules and selected its leadership. WTO supporters argue that it plays a critical role in helping to expand world trade and raise living standards around the world.

Industrial Actions and Disputes and the role of unions. Industrial Action is termed as an action taken by workers, usually with the aim of achieving an improvement in pay or terms of employment. Industrial action occurs when industrial relations between workers and employers break down. It can take a number of forms, many of which put workers in breach of their contract of employment. In workplaces where trade unions are recognized, industrial action that is sanctioned by the union is said to be official; action not sanctioned by the union is unofficial. In the united kingdom, official action must be preceded by a ballot of the union workers; if it is not, the union and the workers lose their immunity against civil claims for the damages caused by their industrial actions. The best-know form of industrial action is the strike, whereby workers stop working and often picket the gates of their workplace with the aim of persuading other workers suppliers, and those collecting goods for distributio n not to enter. Other forms of industrial action may involve a refusal to perform specific duties, know as a go-slow; a work to rule in which the safety and other rules for operating machinery or doing specific tasks are painstakingly followed; or a ban on overtime. Some forms of industrial action may be subject to legislation. Unionized workers include industrial and office workers and public employees in government administration, school systems, and hospitals. They also include engineers, professors, nurses, teachers, and other professional employees. Employee are less likely to be unionized in private service-sector firms such as retail stores, restaurants, bank, and insurance companies, because employers in those areas have aggressively opposed unions. Industrial unions include all workers, skilled as well as unskilled, in single industry such as automobile or steel manufacturing. Public-sector union emerged in the post independence era after the government passed laws allowing government workers t o organize ( to form groups to protect their rights and interests)and bargain collectively. Later general unions, which represent workers from widely varying industries or occupations, become more common as unions broadened their membership to include people working in jobs outside the unions original industry. Unions help workers negotiate the terms and conditions of their work with their employers. Before unions existed, workers often labored for low wages and long hours in unsafe or unhealthy workplaces. They could be fired without cause at the whim of an employer and thus had no job security. In unionized jobs employees work under conditions negotiated through the process of collective bargaining, in which the union negotiates with the employers on behalf of the employees. The collective agreements they negotiate include clauses that outline job classifications, rates of pay, workday length, overtime rates, workers health and safety

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS measures, and work distribution. Such agreements also include grievance and arbitration procedures that are designed to settle conflicts that arise during the term of a contract. Unions also negotiate with employers to determine the level of union security (the extent to which workers are required to join or fund the union once it is established).types of union security arrangements include the closed-shop agreement, in which union membership is a condition of employment in a workplace, and the union-shop agreement, in which a person does not have to be union member to be hired but mist join the union after becoming employed. Collective agreements last for a set period of time, after which they are renegotiated. If the employers and unions cannot reach a collective agreement, either party can apply pressure to the other through a work stoppage created by an employer is known as a lockout. Lockouts are less common than strikes. Often just the threat of a work stoppage is enough to push the two sides to an agreement. However, before a legal work stoppage can occur, the parties mist apply for conciliation. Under conciliation, a government-appointed mediator tries to help the two side reach an agreement. If they do not, a cooling-off period of about ten days follows, in which employees remain at work and the parties may continue to negotiate. Only after the cooling off period ends can the employers or employees begin a legal work stoppage. Unions in India have also taken an active role in politics. Much of this political work is done by central labor bodies, organizations formed by groups of unions to represent the general concerns of unions and workers. These unionized organizations are fighting or legislation that is in the interest of their members and other workers. They have supported legislation setting workers compensation and minimum standards for working conditions. These Unions have also pushed for social welfare measures, including universal medical coverage, unemployment insurance, and health and safety legislation. In addition, unions have supported broader community issues, including human rights, pay equity for women, and environmental standards. It will be evident from this study that such undesirable actions, disputes and strikes have been curtailed due to globalization. It is mainly because of workers participation in management and business decisions. It means involvement of workers in some way with making decisions in a business organization. Worker participation can take many forms. A consultative council may regularly bring together labor unions and management to discuss points of mutual interest. Workers can be organized in quality circles hat meet in small groups to find ways to better organize their work. Decision making may include even the most junior worker, giving everyone some say in how work in conducted. Financially, workers may be given or invited to buy shares in the company, encouraging them to participate in the affairs of the company as stockholders. In a worker cooperative, the shares and control of the company lie with its worker. Worker participation can lead to greater motivation of staff. Impact t of Globalization

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS The impact of globalization extends from human and social or ethical perspective to the strategic or technological perspective. Thus it has a wide scope and the present work attempts to highlight this impact as consequences of globalization and liberalization. Due to liberalization of economy, several organizations have taken a number of steps to improve operational efficiency. This includes the introduction of quality management system, identification of NPAs and finding ways and means to transform organizations into strategic business units or profit centers. Another step that was taken in the wake of globalization or in the post-New economic policy 1991 era was the governments decision to disinvest their stake in the equities of leading public sector undertakings. Eventually many business houses have begun consolidating their businesses and large number of acquisitions and mergers have started taking place. With large mergers and the development of new free markets around the world, major corporations now wield economic and political power then the governments under which they operate. In response, public pressure has increased for businesses to take on more social responsibility and operate according to higher levels of ethics. Firms in developed nations now promote-and are often required by law to observe-nondiscriminatory policies for the hiring, treatment, and pay of all employees. Some companies are also now more aware of the economic and social benefits of being active in local communities by sponsoring events and encouraging employees to serve on civic committees. Businesses will continue to adjust their operations according the competing goals of earning profits and responding to public pressures for them to behave in ways that benefit society. Among the employment benefits that are prevalent are VRS, ESOP and other fringe benefits. However, on the recruitment front, as globalization evolves from being a mere corporate buzzword to basic economic reality, more and more organizations are realizing that they need managers and workers with skills that conform to the international standards. The CEOs and senior recruitment consultants have to talk about why selecting and developing global managers. Hence organizations are keen to take care of expatriation and repatriation issues or meeting relocation costs to keep their employees motivated and to retain the best performers and keep building a global talent pool. In this era of globalization, it is also necessary to study corporate governance, a concept that is multi dimensional. It includes the very fundamental issues like how organizations function in day-to-day dealing with customers, trade unions, suppliers, shareholders, government and the public. Owing to so many forces, corporate governance requires more internal discipline over external accountability. The internal discipline implies that the quality of corporate governance must be of high order and that workers- management relations are conceived to achieve industrial harmony. Another astonishing fact in this era of globalization is the interaction between technological changes, primarily micro electronic technology, and industrial relations, while looking at the consequences it is felt that technological changes provide unprecedented opportunities for employers to gain control over the workforce and workers. The present day high-tech information society has resulted in a shift in emphasis away form brawn to brain or

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS from muscle to mind in the use of human energy. Instead of conventional principles based on direction and control. Modern organizations have resorted to consent and consensus. The decisions are least unilateral and such progressive ideas like workers empowerment and workers participation in management have been adopted. As a result these organizations, their workers as knowledge Workers, their products as Knowledge based products (owing to value additions)n and last but not least, of h aving contributed to the knowledge Economy which the nation ins gradually heading towards. Globalization has also given competitive advantage to most organizations. Accelerated growth, productivity improvement, and accent on total quality have been great milestones. Truly speaking, in a global economy, organizations that have entered into strategic alliances and initialed innovative practices have made huge differences to their enterprises. However, world Bank and IMF have also advised such organizations to focus their attention on social and labor issues and align themselves to the effort being made by institutions like UNESCO and ILO. In India, the confederation of Indian Industries (CII) has addressed itself to social and ethical issues and a few organizations have shown concern to these issues including those under study in this project.

Globalization has necessitated certain structural adjustments (restructuring and diversifications), which as led to cutting off the jobs and recession in the employment scenario. Social security systems in most industrialized countries have become vulnerable. Such large scale redundancies like stopping indexation of wages, workforce reduction and like are a major cause of concern but at the same time the rise of informal sector employment and part time employment has offered some relief. Privatization proved a major thrust to promote global trends. Eventually the trade unions become concerned about their job loss and potential adverse effects on their group dynamics and their rights. Hence some unions initially came forward to impede the growth of privatization in general and restructuring and diversification in particular. But gradually they understood that in fact privatization is beneficial for the trade unions as they gain more rights like right to organize, right to collective bargaining. The right to strike which has been restricted or denied in public services is now made available to private enterprises. It is yet to determine the negative effects of privatization on collective bargaining and trade dynamics and thus it becomes one of the objectives of this study.

Industrial Organization Psychology To study industrial Relations, the researcher will frequently make use of the fundamental principles of Indus trial-organizational Psychology (I-O Psychology), a term that implies application of various psychological techniques to the workplace and other organizations. Psychologists in this field advise businesses and organizations on a variety of subjects like the selection and training of workers; how to promote efficient working conditions and techniques; how to boost employee morale, productivity, and job satisfaction; and the best ways to evaluate employee performance and create incentives that motivate workers, I-O psychology first become

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS prominent during World War II (1939-1945), when it become necessary to recruit and train the large number of new workers who were needed to meet the expanding demands of the war industry. Industrial-organizational psycho logists have also studied the effects of fatigue on workers to determine the length of working time that yields the greatest productivity. In some cases such studies have proven that total production on particular jobs could be increased by reducing the number of working hours or by increasing the number of rest period, or breaks, during the day. IO psychologists may also suggest less direct requirements for general improvement of job performance, such as establishing a better line of communication between employees and management. Objectives of the study The present study, while contemplating all the ongoing factors of globalization has embarked upon evaluating its impact on socio-economic, legal, political and technological scenario as has been witnessed in Indian industry in general and the selected organizations in particular.

This study is designed with the following objectives: ? To analyze the impact of globalization as an economic force and the reforms implied therein ? To develop a conceptual framework in the form of a guideline or code of conduct, this may act as a base for framing IR strategies, and outlining the union Management negation procedures. ? To study the impact of activities conducted by agencies like WTO and CII in the area of IR, improvement of Union Management relations and settlement of industrial disputes. ? To examine the organizational machinery and its working to find out whether it conforms to the latest industry standards and specifications laid down under TQM and ISO ? To appreciate and highlight attempts made by organizations for acquiring higher quality work and excellence in their industrial relations. ? To determine the adverse or negative effects, if any, of globalization and the related reforms. The present study is based on the assumption the globalization has far reaching impact not only on economy or business capital or trade relations between two or more organizations but also on social, political, ethical technological and environmental issues. It is hypothesized that globalization has greatly contributed to framing legal and IR policies, conceptualizing the long term industrial relations, and resolving the union management disputes whenever occurred. The study is intended to be a most optimistic work carried out with a trust and faith in Indian organizations that are now setting examples of being centers of excellence at global levels.

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS

The study will therefore be a contribution to that critical debate which is ongoing among the management critics and other experts who are trying to establish globalization as a western dominated movement. Sampling and methodology Prior to designing an effective conceptual framework and certain guidelines, the project aims to study and put on record the behavioral patterns of organizations that have felt deeply the impact of globalization and liberalization. The population shall comprise the senior managers, middle managers, trade union leaders, academicians and bureaucrats who are either working in the selected organizations or have formerly worked or have deep insight about the working patterns of these organizations. The data shall be collected through personal interviews, questionnaires, literature surveys and observation. The chapter scheme is proposed to be as follows: Chapter on will highlight the climate and conditions of Indian industries in terms of globalization and its related section in the context of the selected organizations. The concept of globalization will be discussed in detail in this chapter. The chapter will also include elaborate section on WTO and the prevalent Acts and Laws and Labor Tribunals pertaining to Trade unions and industrial negotiations. Chapter two shall attempt to register globalization as a great economic force for the Indian Industries. Examples shall be cited of such organizations which have been benefited by global trends. Such issues like employment , quality management and promotion of business as SBU shall be taken up in this chapter Chapter Three will discuss the social-ethical impact of globalization to show how it has managed to divert the attention of the organization towards social responsibilities ethical behavior in negotiations, union management relations and settlement of disputes. Chapter Four will elaborate the technological and environmental dimensions of globalization. Efforts will be made to suggest such measures for the organization to equip them with the necessary high tech information so as to conform to the latest demands of the industry. Chapter five will attempt a conceptual framework of the study undertaken it will be attempted to theorize the issues and findings in order to frame a set of guidelines or code of conduct for organizations to follow. The chapter will be also analyze these guidelines whether the y conform to the international standards and also meet the Indian requirements. The inferences to be drawn will be suitably supported by case studies and real life examples form selected organizations. Chapter Six will summaries the findings and results and results obtained of discussion and analyses. It will also concentrate on suggesting such strategic and organizational changes as

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS to transform these organization to the model organization. Last , but not least, there will be appendices carry literature survey, questionnaires , tables and graphics etc. Future Prospects While globalization brings people together , it has also provoked a relation a reaction from those who feel that their life style are being threatened . In the given context , the major question arises is : how are organization going to respond? As far as the economics aspect of globalization is concerned, India organizations, have learnt a lesson from the Soviet Union as well as South Asian crises. As a future strategy, all members nations of WTO or at least those who advocate globalization, need to talk about certain things like restrictions on global trade and fundamentalism in corporate governance , they need to talk about redefining the industrial relation with trade unions, workers management relations and most important their participants in strategic decision making. Whatever business an organization is engaged in, the internet customer (the employee) is a major priority . Globalization inherently possess such ideals and beliefs , which can be utilized to the optimum extent to see that the customers is satisfied. It is assumed that this study shall open new avenues of global trends in the field of economy , liberalization , industrial relation , organizational Development each factor aiming at improving the industrial relations and harmonizing the industrial environment.

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THE IMPACT OF GLOBALIZATION ON INDUSTRIAL RELATIONS

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