Lesson: 35

Industrial Relations
Title: Getting Started: Industrial Relations
Topics to be covered:

Definition
Parties to Industrial relations
Features
Scope
Contemporary Issues
Article on Beyond traditional environment By: C. S. Ratnam
Article on Preparing workers for changes in the labour market: The challenge of the knowledge
workers By: Werner Konrad Blenk

Objective: This chapter aims at familarising you with the concept of Industrial Relations, Industrial Disputes and
the Dispute Resolution Procedures in India.
Hello Students,
We are going to study Industrial Relations in India. The journey from the concept to empowerment will be fun
and a learning experience for all of us. At this positive note let us warm up by understanding the labour scene in
India.
I am sure you will agree that that there have been a lot of changes in the Indian economy in the post- liberalised
era. This has its affect on the Indian labour. First let us understand the changes.

The changes that have taken place in the Indian economy since 1991 are as follows:

Tariff and non-tariff trade barriers lowered

Industrial licensing abandoned in many sectors
Private capital permitted in areas reserved for the public sector
Restrictions on foreign direct investment removed
Steps towards privatisation
Food subsidies reduced and
The rupee devalued.

These changes have lead to:

Strengthened presence of multinational companies

Increase in redundancy
Introduction of new technologies
New management techniques etc.

Having understood the environment encompassing the Industrial relations, let us now understand and discuss
the concept of Industrial Relations and study its features and scope.
What do you think is Industrial Relations?
Is it just the relationship between the Union and Management or is it something beyond that?
Let us understand the concept of Industrial Relations.
Yes of course, Industrial Relations is used to denote the collective relationships between management and the
workers. (Please also understand that the two terms, management- labour relations and employer- employee
relations are synonymously used.) But there is more to it!!
In the words of Lester: "Industrial relations involve attempts at arriving at solutions between the conflicting
objectives and values; between the profit motive and social gain; between discipline and freedom, between
authority and industrial democracy; between bargaining and co-operation; and between conflicting interests of
the individual, the group and the community
We shall now examine the concept of industrial relations with the help of some definitions so as to understand
its various dimensions.
One of the most comprehensive definitions which views industrial relations from the perspective of human
relationships is by J. Henry Richardson:
"Industrial relations is an art, the art of living together for purposes of production. The parties while working
together learn this art by acquiring the skills of adjustment.
What are your views on this? Does it sound too ideal? .

Let me share my personal feeling with you as regards this. If the Management and the unions are committed and
responsible towards each other, they can learn this art of living
Let us also look at another definition by H.A. Clegg:
"The field of industrial relations includes the study of workers and their trade unions, management, employers'
associations, and the State institutions concerned with the regulation of employment".
While Richardson called for regulation of relationships in industry from within the organisation as the parties
have to live together by a process of accommodation and adjustment, Clegg assigned great importance to the
role of institutions and to the regulatory role played by the government.
The National Commission on Labour (NCL) also emphasized on the same concept when it observed:
"Industrial relations affect not merely the interests of the two participants- labour and management, but also the
economic and social goals to which the State addresses itself. To regulate these relations in socially desirable
channels is a function, which the State is in the best position to perform.
So, now let us summarise.
In simple words, industrial relations are the outcome of the 'employment relationships' in industry, i.e. between
employers and labour. The government of a nation or state influences these relations to a great extent.
Thus, there are three main parties in industrial relations:
(i)

Workers and their Organisations: The personal characteristics of workers, their culture,
educational attainments, qualifications, skills, attitude towards work, etc. play an important role in
industrial relations.

What do you think is the terminology used for the Workers' organisation?
Yesit is known as a Trade Union
Trade unions are formed for safeguarding the economic and social interests of the workers. They put pressure
on the management for the achievement of these objectives. (We will be studying the role of trade unions in the
due course)
Now coming to the second main player.
These changes have its obvious effects on labour. Ghatoshkar (2000) and Noronha (1996) have summarised
these changes. They state that Indian management has introduced flexibility by:

Restructuring of companies
Banning recruitment of permanent category employees
Shutting of units or departments
Transferring of jobs from bargainable to non-bargainable categories
Introducing functional flexibility
Intensifying the working day through pressure to increase productivity
Opening parallel plants
Employing contract workers and sub-contracting production.

(ii)

Employers and their Organisation: The employers are a very important variable in industrial
relations. They provide employment to workers and try to regulate their behaviour for getting high
productivity from them. In order to increase their bargaining power, employers in several
industries have organised employers' associations. These associations put pressure on the trade
unions and the Government.

And the third player is..any guesses?

It is the State or what we better know as the Government.
(iii)

Government: The Government or State exerts an important influence on industrial relations

through such measures as providing employment, intervening in working relationships. and
regulating wages, bonus and working conditions through various laws relating to labour. The
Government keeps an eye on. Both the trade unions and employers' organisations to regulate their
behaviours in the interest of the nation.

Doesnt the role of the Government in Industrial Relations seem similar to that of your parentsKeeping an
eye on you and your brother sisters and intervening when things are out of your control!!
Let us get holistic and see the overall environment of industrial relations.

INDUSTRIAL
NATIONAL

SCENARIO
ENVIRONMENT

SOCIO-ECONOMIC

FACTORS

Employer
Employees

Government

MARKET

FACTORS

I hope you understand the diagram. Can anyone explain this to me!
Now note a few things!
After independence, the Indian Government laid emphasis on the need for consultation between the
representatives of labour, management and the Government in tripartite and bipartite forums. Tripartite
obviously would mean representatives from three bodies and bipartite means representatives of two bodies.
Moved by the constant pressure of International Labour Organisation, the Government of India constituted
various tripartite bodies like Indian Labour Conference (I.L.C.), the Standing Labour Committee (S.L.C.) and
the Industrial Committees to deliberate on various issues relating to labour and management that have farreaching impact on the country's labour policies and legislation.
Before we move on, let us revise what we have studied so far.
We have discussed the concept of Industrial relations and the main players to it. We have talked about the
regulating relationship among three main parties or players whatever you call it. They are:

The Employees or the Workers Organisation (Trade Union)

The Employers Organisation
The State or Government

PartiestotoIndustrial
IndustrialRelations
Relations
Parties

Trade
TradeUnion
Union

Employers Organisation
Organisation
Employers

Government
Government

Let us now discuss the Features of Industrial Relations. A few notable features pertaining to industrial relations are
as under:
1) Industrial relations are born out of employment relationship in an industrial setting. Without the existence of
two parties i.e. labour and management, this relationship cannot exist. It is the industry, which provides the
environment for industrial relations.
(II) Industrial relations are characterized by both conflict and co-operation. So the focus of industrial relations is on
the study of the attitudes, relationships, practices and procedures developed by the contending parties to resolve
or at least minimise conflicts.
(III) As the labour and management do not operate in isolation but are a part of the large system, so the study of
industrial relations also includes vital environmental issues like technology of the workplace, country's socio-

economic and political environment, nation's labour policy, attitude of trade unions, workers and employers.
(IV)

Industrial relations also involve the study of conditions conducive to the labour, management co-operation
as well as the practices and procedures required to elicit the desired co-operation from both the parties.

(V) Industrial relations also study the laws, rules, regulations, agreements, awards of court, customs and traditions,
as well as policy framework laid down by the government for eliciting co-operation between labour and
management. Besides this, it makes an in-depth analysis of the intervening patterns of the executive and judiciary in
the regulation of labour-management relations.
How do management and Union operate in an organisation
Let us understand the flow with the help of a Diagram:

Management

Objectives and goals affect

(1)
Workers
Collective
Desire

(2)
Unions
begin
organizing

(3)
Collective
negotiations

Objectives and goals affect

Labour
(union)

Laws and Regulations

Daily HR
activities
carried out by

(4)
Contract
is
administered

Can anyone try and explain this diagram to me!!

Summarising this diagram, the two main entities in the Industrial Relations scene that is management and union
participate in the process. The process can be described as follows:

Labour forming themselves into a union

Union beginning to organise

Collective Negotiation

Contract administration
This brings us to the next topic for today that is the scope of Industrial Relations. The scope can be studied under
three main categories. These categories are:

Promotion and development of healthy labour-management relations

Maintenance of industrial peace and avoidance of industrial strife and

Development of industrial democracy.

1) Development of Healthy Labour-Management Relations: The promotion of healthy labour management

relations pre-supposes:
a) The existence of strong, well-organised, democratic and responsible trade unions and associations of employers.

This can lead to:

Job security of employees

Increased workers' participation in management

Negotiations, consultations and discussions

Good labour-management relations.

(b) The spirit of collective bargaining and willingness to take recourse to voluntary arbitration. The collective
bargaining recognises equality of status between the two conflicting groups and prepares the ground in an
atmosphere of trust and goodwill, for discussions, consultations and negotiations on matters of common interest
to both industry and labour.
Please do not worry if you dont understand Workers participation and Collective Bargaining because we
would be studying this in detail later.
(c) Welfare work, whether statutory or non-statutory, provided by the state, trade unions and employers create,
maintain and improve labour management relations and thereby contribute to industrial peace.
I hope you all understand statutory and non-statutory..statutory means required by law and non-statutory
means not required by law.
Now coming on to the second main perspective in this regard
(2) Maintenance of Industrial Peace: Industrial peace pre-supposes the absence of industrial strife. Industrial
peace is essential for increased productivity and harmonious labour-management relations.
.
The industrial peace can be largely nurtured through the following means:
(a) Machinery should be set up for the prevention and settlement of industrial disputes: It can be brought
about by developing various legislative and administrative enactments like Trade Unions Acts, Industrial
Disputes Act, Industrial Employment (Standing Industrial Orders) Act etc.
And obviously it has to be remembered that prevention is better than cure!!
(b) The Government should have the power to refer disputes to adjudication: The State can do so under various
circumstances like the following:

When the situation tends to get out of hand and the employees and employers cant reach on to a
solution acceptable to both the parties
Industry is faced with economic collapse due to continued stoppage of production on account of strikes
or lockouts
It is in the public interest to do so during periods of emergency
There is fear of foreign attack
Production needs to be carried on without interruption etc.

(c) The Government enjoys the power to maintain the status quo: This power is exercised when the government,
after referring the dispute to arbitration, finds that either party is continuing the strike or lockout and that strike
or lockout is likely to negatively affect the life of the community and to create chaos in the industry.
(d) The provision of the bipartite and tripartite forums for the settlement of disputes: These forums act on the
basis of the Code of Discipline in industry, the Code of Conduct, Standing Orders etc.
(e) The industrial peace can also be attained by the creation and maintenance of implementation cells and
evaluation committees which have the power to look into implementation of agreements, settlements and awards
and also violations of statutory provisions laid down under various labour laws.
Now doesnt this last point sound interesting!!
(iii) Development of Industrial Democracy: The idea of industrial democracy states that the labour should have the
right to be associated with the management of an industry. To achieve this objective, the following techniques are
usually employed:

(a) Establishment of the Shop Councils and Joint Management Councils at the floor and plant level. These
councils aim at:

Improving the working and living conditions of employee

Improving productivity, encourage suggestions from employees

Assisting the administration of laws and agreements

Serve as a channel of communication between the management and employees

Creating among the employees a sense of participation in the decision-making process and

Sense of belonging to the industry.

These methods and activities provide the necessary climate for the development of industrial democracy in the
country.

Please research on the role of joint management councils and shop council and we will discuss that in class
tomorrow.

And now some talk on human rights.

(b) Recognition of Human Rights in Industry: This implies that labour is not a commodity of commerce, which
can be purchased and disposed of at the whims and fancies of employers. The workers are to be treated as
human beings whose sense of self-respect is to be fostered. Their urge for self-expression (through closer
association with management) should be satisfied. These are the basic prerequisites for achieving industrial
democracy.
Any special comments on that?
(c) Increase in Labour Productivity: The factors that contribute to higher productivity of labour are:
Improvement in:

Level of efforts and skills of workers

Production process,
Materials,
Equipment,
Layout,
Work methods etc.

It can be brought about by:

The suggestions of workers

Research and development
Special studies and technological development
Improvement in the output resulting from capital intensification within the framework of the same
technology
Increasing the productivity of labour by adopting a proper motivational system

I am sure that all of you will agree that the above mentioned points would lead to increased job performance and
maintenance of good industrial relations.

(d) The availability of proper work environments necessary so that the worker can effectively carry out his

assignment, as it is the environment, which stimulates or depresses, improves or destroys the relations between
labour and management.
I am sure all of you will agree on this point related to work environment. Imagine that you are studying in a class
with poor lighting, no ventilation etc. Would you be able to concentrate on the discussion?
Isnt it then not important that a conducive environment be provided to a worker in the factory? The temperature
level, ventilation, lighting, canteen and overall hygiene are so important for the workers. In fact it is important for all
the employees.
As future managers or rather as entrepreneurs, you should always take care of your employees .If you keep your
internal customers (employees) happy your external customers are automatically taken care of. Off course it makes
good business sense as well. Whether you do this from a commercial angle or as philanthropy, it will pay off.

Now let us revise the scope of Industrial Relations. We have studied this under the following points:

Development of healthy labour-management relations

Maintenance of industrial peace and avoidance of industrial strife and

Development of industrial democracy.

Activity: In each of these categories which do you think is the best way of maintaining
and promoting Industrial Relations in any organisation or Industry? Do the strategies
vary at the macro and micro level?
Let us end with discussing the contemporary issues in Industrial Relations:
(i)

Low Wages. Low wages have been a perennial problem and have been a source of industrial dispute for
years despite the existence of Payment of Wages Act and the Minimum Wages Act. The acts do not seem to
be solving the problem due to their poor implementation. In many of the factories, workers are still given
wages below subsistence level, which leads to high degree of dissatisfaction and subsequent decrease in
productivity. In many industries, the minimum wages have not been revised at par to compensate for it.

I am sure that is not a very good practice anyways. Wont you call it exploitation of labour?

(ii) Employment of Women. In the Indian cultural setup, the employment of women is a major problem
even though things have started changing in the recent times. There are special provisions regarding the
employment of women in the Factories Act, which prohibit employment of women during the night shift and
also on heavy machinery. Under the Equal Remuneration Act, women are entitled to equality of wages at par
with the male workers. Some employers don't follow the above provisions in letter and spirit and continue to
exploit the women workers by virtue of their strong position and because of mass illiteracy and superstition

among the women workers.

So the women of today rise up and fight for your rightswhy cant we take it upon us to educate the women in
this regard!!
(iii) Ignorance and illiteracy. Various labour laws that have beer made would be beneficial to the workers if
implemented properly. For this it is important that the workers themselves understand the underlying
principles and provisions of the law and demand whatever is due to them. With high rate of ignorance and
illiteracy prevailing among the workers, it car be imagined how many of them know about the laws. It is here
that the exploitation of workers takes place and legal provisions are ignored totally.
(iv) Industrial Housing. Another burning issue in the industrial relations field is that of accommodation to the
industrial employees. Here the problem is that the firms are not able to provide accommodation to the
employees and further that the house rent allowance (HRA) that they provide is not sufficient to keep pace
with the ever -rising demands of the landlords
(v) Child Labour. The law requires that no child below the age of 14 is allowed to work in any factory and the
adolescent is not allowed to work in hazardous conditions. The Supreme Court has passed a ruling strictly
prohibiting the employment of children in any kind of factory. But still one finds instances of violation of law.
This reminds me of one of the examples that my teacher gave in our class, when I was a student. She taught us
marketing of services. One fine day she received snail mail .In the window of the envelope was sandpaper that
caught her attention .On opening the envelope she read that those were the hands of children who work in the
factories!!
Now you can imagine what all do these kids go through!! Why cant any one of us ensure that this doesnt
happen again?
I leave you with this thought!! Ponder on this and see what can we do to improve the situation.

Article From Human Capital (Volume No.6, November 2003)

Beyond traditional employment

A Comprehensive look at the changing contours of the employment relationship.

We are passing through rapid, traumatic and discontinuous changes where speed, not external environment is
usually accelerating change, in most case internal environment is usually accelerating change, in most cases
internal environment is usually accelerating change, in most cases internal environment is seeking to decelerate
it. And, it is said, if the rate of change in an enterprise is less than the rate of change in its external environment
that enterprise is most likely go into oblivion sooner than later.
The five most significant inventions that we have witnessed in the millennium-electricity and electrical
appliances, automobiles, telephones, computers and television have made things mobile and rechargeable with
remote control and enabled convergence of technologies that virtually removed barriers of time and space and
rendered the finite capacities of people- to listen, to see and to move from one place to other - infinite.
The transition from industrial revolution to information revolution, the process of global integration of financial
and product markets, advanced technologies and intensification of competition and labor (the latter, through
cost cutting strategies) have distinctly impacted traditional patterns of employment.
With the passage of time, several old occupations are likely to die and many new are likely to emerge. A study
estimated in 1999 that in five years, 80 per cent of existing jobs in telecommunications will become redundant
and many new jobs come into vogue.

Tertiarization of the economy

Economic activities in all economies are classified into three sectors: primary, secondary and tertiary. To begin
with most economies are agricultural engaged in primary sector activities. As industrialization takes place
secondary sector accounts for bulk of employment and GDP. In the post-industrialization area the tertiary or the
service sector becomes the major provider of jobs and the main source of DGP and its growth. In India, since
mid-1980s service sector has been growing fast. In the post-liberalization era there is a virtual stagnation, if not
decline in relative terms, in manufacturing. Now tertiarization is taking place and it accounts for bulk of the
employment and GDP. Our population crossed one billion and workforce is estimated at around 376 million. 67
per cent of our workforce is still engaged in agriculture and contribute to a mere quarter (25%) of the GDP. 15
percent are engaged in industry and contribute twice that percentage (30%) of our GDP. The reminder of 18
percent are in tertiary sector their proportion is steadily growing and contribute to 45 per cent of our GDP.
The tertiarization of the economy requires new skills and new work values and in some cases new forms of
employment and work organization.
Today we are also talking about the old economy (off-shoot of industrial revolution) and the new economy (offshoot of information revolution). In the new economy speed counts, not size. Market cap is much higher than
physical assets. People power is assessed not by quantity (sheer numbers) which is declining any way but by
their quality. Increasingly, brawn power is replaced by brainpower. The transition from muscle to mind
warrants a change in management philosophy based on direction and control to consensus and commitment.
Communication has two be two way and transparent, motivation is not by fear or favoritism but through
fairness and equity, and leadership does not reside at the top and empowerment is what counts. As Horst Albach

points out, if in the past Karl Marx saw the essence of industrial capitalism as it developed through the 19th
century in the separation of the worker from his means of production, in the era of information revolution, we
see a potential for the reunification of the worker and his/her means of production: his/her brain.
Several studies highlight the high value of human capital and the huge cost of its neglect. This is more so now
than ever before. In 1992 Gary Stanley Becker won the Nobel Prize in Economics for his theories on human
capital. The same year Peter Drucker wrote in Harvard Business Review that what many organizations say
routinely-People are our great asset engineering concepts had disparate effect of maximum downsizing, called
it the biggest lie! Publicly there is recognition that high skills, training, good communications and consensual
and commitment systems provide sustained competitive advantage. Privately, however, employers and
managers have been adopting contradictory strategies that emphasize deregulatory, hire and fire, low skill and
low wage or the more you get policies. My own studies confirm that inducement strategies may get higher
increase in output but at such cost that bottom lines do not improve proportionately or to a commensurate
extent. Investment in education, skills and development of positive work values and involvement of people may
bring moderate gains in productivity, but their effect on the bottom line-whether return on sales or investmentwill be much higher. For, under the latter system, the focus is on smart work, not hard work; work
simplification, not work intensification. Where there is scope and opportunity to use not just the body, but also
the brain creatively and innovatively, the gains-physical, financial and emotional-can be quantum, not just
incremental. The rewards are phenomenal for the company and staggering for the individual. At the lower end if
the brawn worker earns Rs. 5 an hour, the brainworker earns up to or more than Rs.5, 000 an hour. The profile
and aspirations of the brainworkers are different from those of brawn workers.
DIVERSITY IN EMPLOYMENT
FULL-TIME EMPOYEES
PART-TIME EMPOYEES
HOME WORKERS
CASUAL WORKERS
CONTINGENT WORKERS
SUBSTITUTE WORKERS
MIGRANT WORKERS
FOREIGN WORKERS
TELE WORKERS
APPRENTICES
CHILD LABOUR
WOMEN WORKERS
WORKERS WITH FAMILIES
DISPLACED WORKERS
DISABLED WORKERS
RATIONALISED WORKERS
Evolving employment relationship.
India has, over the past decade, has been making the transition from plan to market economy. The post-WTO
scenario compels us to be competitive. But the UN Social Summit at Copenhagen (1995), the pressures to link
international trade with social clause (Singapore and Seattle Labour Ministers Conference in, 1995 and 1999),
he ILOs declaration on Fundamental Principles and Rights at Work (1998), its commitment to ensure decent
work (1999) and the sustained campaigns (clean clothes campaign in Europe, for instance) for social labeling
(carpets, tea, soccer balls, for instance), consumer boycotts (footwear, for instance), voluntary initiatives for

labour, health and safety and social and ethical auditing of firms across the entire spectrum of supply chain and
the building momentum for Social Accountability (SA 800) mean that Indias competitiveness cannot be based
on cheap labour. Some trans-nationals are now realizing the need to develop a humane work place, discharge
social responsibility and ensure compliance with fair labour standards. Sustained development and competitive
advantage is based on creation of wealth, improving environment and ensuring social equity. These values have
to be put into action through integrity, commitment, transparency and accountability.
The emerging trends portend that the feudal master and servant relationship has no place in the modern,
globalising economy. Unfortunately, while governments and unions in developed countries seem to agree on
this, employers from these countries continue to constantly explore opportunities for international division of
labour based on cheap labour. The universal values are thus coming into conflict with common interests of
employers. For vast proportions of the workers and their unions in developing countries such as workers,
fundamental principles rights at work (embodying fair, core labour standards which prohibit use of child labour
and forced labour, end discrimination in employment and remuneration and guarantee freedom of association
and right to collective bargaining): For the millions who are unemployed and underemployed there is no
question of rights at work (without work what can one talk about rights at work?) and decent work is a distant
dream.
Still, implication of the consolidation of forces in favour of universal core/fair labour standards is that India
businesses, which want to compete in international market, have to care for not only their employees, but also
those employed across the supply side. There is also another reason why this is important. To the extent
technology minimizes differences in product quality, customer patronage and business success is contingent on
well trained and motivated the staff that work with dealers and suppliers.
Paradoxically, as Rosabeth Mary Kanter observed, this means that with shrinking core, regular workforce,
human resource departments face a new situation: What was formerly inside the organization is going outside
and what was formerly outside the organization is coming inside. Formerly strong relations are becoming loose
and formerly loose relations are becoming strong.

RECENT TRENDS IN EMPLOYMENT PATTERNS

Declining stability and security in employment
Declining labour intensity
Growing irregular labour force, i.e., casual, contract, contingent, part-time,
temporary, fixed-term, job-sharing, peripheral labour
Shift from contract of service to contract of service (self-employment/business
relationship)
Increase in home-based work and the consequent blurring of the gap between
work and home when work is home and home is work.
Decline and/or the death of few occupation and the birth of a few others
Decline in mutual commitment. One person, one skill, on job, one company
concept is fading.
Declining influence of trade unions

Transforming employment structures

There is a need for structural transformation in Indias employment pattern. The country may boast that it has
achieved self-sufficiency. It means nearly two-thirds of 376 million workforce producing food for one billion. It
also means that an average worker with a family size of four being able to produce enough food for the family.
What about the other needs? This explains that if the labour intensity on the land does not come down we do not
see any prospect for the landless laborers in agriculture ever-emerging crossing the poverty line without making
food prices beyond the reach of the common man. Two things must happen to overcome the problem here.
First, land reforms which are politically risky, with our parliament being dominated by the land-owning class.
Second, rural industrialization and harnessing of the potential for food processing industries capitalizing on
seasonal differences between India and the markets in the developed West. This will change the skill mix and
thus transform the existing feudal orientation in employment relationship for better.
New technologies in communication and transportation as well as mobility of capital and immobility of labour
are resulting in shift away from mass production to parallel production over widely dispersed territories. As
national boundaries are receding and firms are facing greater competition, they are creating activity networks
internationally. These new inter-firm dependencies do not necessarily conform to industrial relations structures
that assume the independence of individual firms. An ILO study asserts that the various forms of organization
of the production and distribution of goods for the world market often involve complex, hierarchical networks
of inter-firm relations. The present trends differ from those of the past in the following three ways. International
subcontracting has grown relative to other types of commercial relative to other types of commercial relations,
and trade in intermediate good and services constitute a growing share of total international trade. Domestic
subcontracting is one the rise, and commercial linkages between firms are changing intensely.
The study also notes that a major share of trade and production occurs not in the markets at large, within the
internal and intermediate markets Production chains are becoming, in several cases, buyer-drivenThese
firms design and/or market, but do not make the brand-named products they order. They are part of a new breed
of manufacturers without factories that separate the production of goods from the design and marketing stages
of the production process.
Since 1980s, the world market for manufacturing goods, and product life cycles and employment intensity have
been shrinking. Some have begun to argue that the era of mass production is over and needs to be replaced with
what Piore and Sable call, flexible specialization, or what Womack, et. al. Call lean production or what Imai
calls as Toyotoism or what Roobeck calls as post-Fordism. With new manufacturing methods, new
approaches to work organization are requires. According to Storey, essential features of superior forms of new
methods of manufacturing and work organization include:
A fuller utilization of available work time
Flexibility of work and of labor deployment
Team working of one kind or another
Just-in-time production
Continuous improvement
Learning by doing
Innovative ideas contributed by employees
The elimination of, non-value-added activities, and maintenance functions themselves.

In the circumstances, enhancing competitiveness should focus attention not merely on macro environment, but
also on manufacturing itself. It is in manufacturing that we have a deep technological lag. To overcome this we
need a conscious and systematic effort to modernize the industry and change the age-skill mix of workforce.
Advanced technologies need a reorientation in human resource management policies and practices. The link
between manufacturing and shop-floor employees underline could be understood better and facilitated through a
series of softer elements including, for example, internal customer supply chains, new way of working cellular
factory layout, etc. The flattening of organizational structures, shifting from sequential to parallel approach,
integrating producers and customers into dynamic interaction and combining the efforts to head and hand, have
become integral elements of the emerging systems of work organization.
Competing in the new economy means understanding the new rules of the game. Success can no longer be
based on past criteria. We need to understand the present, anticipate the future and their implications. Reducing
transaction costs through IT is an imperative, as well as leveraging on time, speed, flexibility, technology and
innovation, and working with people who are committed to new ways of working, living and growing.
The new paradigm shift suggests that cost cutting as a competitive strategy becomes necessary for many
enterprises, but soon such companies may reach a dead end. Value addition has infinite possibility. Productivity
is necessary, not sufficient. Staff cost may be two per cent to 20 per cent. Other costs are over 80 per cent. Ask
employees 10 percent of other cost and get 20 percent more wages: Take one, give two. Problem solving is
good, but not adequate. Opportunities need to be harnessed. Customer satisfaction is important, but value
creation is preferable. Working hours may shrink or stabilize to provide work-family balance. But firms should
be ready for 24 hours, 7 days a week, 365 days a year service.

Managing differences
The worlds of Indian industrial worker are many. There are some who seek work, but no able to get it. There are
others, fortunate enough to get work, but not willing to perform. In Margaret Thatchers terminology the former
are workers and the latter, shirkers. At on end we have over 92 per cent of out labour force in the
unorganized sector, a large proportion of which could be categorized sector, a large proportion of which could
be categorized as exploited workers.
NON-TRADITIONAL EMPLOYMENT METHODS
Managing without managers
Managing without traditional structures
Managing without traditional owners
Managing without unions
Managing without quality boundaries
Managing without full-time workforce
Virtual organizations and virtual workforce
Many of them may not have a letter of appointment that renders them vulnerable to firing without proof because
there was no proof of hiring. Most of them are unskilled overworked, underpaid and exposed to relatively more
difficult, if not hazardous jobs and lack any access to employee benefits and social security provisions. At the
other end are a small but growing proportion of new professional workers in the modern sector who have
become willing slaves in the market economy due to their high aspirations and ambitious competitive behavior
want to have more in less time. Typically they work for about 12 to 14 hours a day six and a half days a week.
They do not show any interest in unionization, prefer individual contracts and lack interest in collective
relations due to lack of lateral trust in the face or cut-throat competition with their colleagues. There is a third
category of workers, who constitute a fraction of the 8 per cent organized labour, who wield power through
political patronage and perfected the art of exploiting meek managements and supine consumers and

community. There is another aspect of diversity in workforce based on differences in race, religion, sex, gender,
age, language, etc. Mergers and acquisitions and globalised operations bring in additional cultural differences. If
this diversity is not to become adversity, there is a need to identify the different needs of the different groups
and manage them. In the years ahead, issues like the following will need special attention:
Balancing work and family responsibilities
Dual career planning
Taking care of the needs of workers with families
Creating an inclusive work environment for both men and women as colleagues and undertaking
proactive, preventive measures to deal with prejudice, stereotyping and sexual harassment
Identifying and providing for workers with special needs due to their background-primary and
secondary-factors.

Conclusion
First, typical employment contract is becoming a typical and what was a typical is becoming typical. The fulltime core is shrinking and the contingent periphery is growing. Managements should take care to see that their
arguments for flexibility do not become a cover for introducing dual systems for exploitation on the basis of
comparatively cheap labour. Employment contract is not to be viewed merely in commercial terms. The days of
bonded labour (and bonded employers) are numbered, if not gone already. But the need for human bondage is
eternal. The emerging pattern of employment contract cannot ignore the need for combining commercial
contract with emotional contract and balance it with fairness and justice.
Secondly, downsizing may be right sizing. But take care to see that you do not downgrade your organization in
the name of downsizing. If companies are not loyal to its workforce, they cannot expect the workforce to be
loyal to them. Without a loyal, dedicated internal customers (workforce), companies cannot build a loyal,
committed external customer base. Companies need to treasure knowledge that might be lost because its owners
employees left. There is also the need to take stock of accumulated experience to avoid repeating old
mistakes and to identify and implement the best practices. With a foot lose workforce organizations cannot
accumulate knowledge and become learning organizations. You can buy hardware and software, not mind ware.
Experience that resides in peoples minds and hearts needs to be shared, not shed; preserved, not to be disposed;
passed on to the succeeding generations, not terminated. Similarly relations between and among people and
groups of people have to be built on the basis of trust, not bought. Most organizations have to develop the
wherewithal to preserve mind ware for posterity. For this top management should shift focus form closed to
open strategic discussions; break with top-down control oriented planning; create new roles for supervisors and
middle mangers whose jobs have become redundant due to information technology; and move away from
conflict based responses to efforts for developing cooperative relations.
Finally, quoting Konosuke Matsushita: For you, the essence of management lies in extracting ideas from the
minds of the executives and putting them into the hand of the workers. For us, the essence of management lies
in the art of mobilizing the intellectual resources of everyone working or the company. Since we have
understood the true nature of economic and technological challenges better than you, we know that intelligence
of a group of executives, impressive as this might be, is no longer enough to guarantee success. It means that
individual managers should see their role as a coach. This means moving from telling to asking, asking to
involving, ordering to persuading, knowing to letting other know, decision taking to decision-making, and
deciding to inspiring.

Preparing workers for changes in the labour market:

the challenge of the knowledge workers
Article By
Werner Konrad Blenk
Director, ILO Manila
In our times the main carrier of economic change is the knowledge economy Knowledge flows globally and
unequally, unchecked and instantly, so that as a banker clicks the computer in Frankfurt, capital moves in
Tokyo. An order arrives in London production schedules change in Bangkok. Geographic boundaries have not
disappeared politically but they are eroding economically. Some countries, firms and workers are taking
extraordinary advantage of the opportunities generated by globalization, while others are suffering from it.
When looking at Asia, we see that a number of countries, despite the economic crisis in the late 1990s, has been
and are at the forefront of making use of the opportunities generated.
The knowledge economy has flourished, driven by the communications revolution that has released information
from spatial and temporal constraints. The knowledge economy is now also a networking economy. Like the
shift from the agrarian to the industrial economy, the rise of the knowledge economy is changing many of our
assumptions and transforming the world of work Preparing workers for the changes that the knowledge
economy creates is a major task for governments, for the unions, and for industries. Making this process safer
for the workers and all of us has become a major pre-occupation after 11 September.
The changes are large, we see striking new economic and social phenomena in the knowledge economy. They
include new types of firms and competitive strategies, new ways to interact and also new education and training
possibilities. Is the promise of the knowledge economy too good to be true? The opportunities are clearly
enormous - the knowledge economy is widening and upgrading skills Most ICT-intensive enterprises need
workers with multiple skills On the other hand progress is uneven between countries and regions. There is even
fear that ICT may lead to some de-skilling. It may also lead to de-skilling if personalized knowledge is devalued
Many people lack the knowledge of the qualifications, or cannot adapt to change Older workers may not be
given a chance. Young people have to build careers in a turbulent, fragmented and shifting labour market.
The challenge therefore is to make the knowledge economy a socially just economy, a source of inclusion and
equality, where rights are respected and peoples' needs are met.
From the ILO's perspective, education, skills and learning were always high on the priority list In the
knowledge economy they become the prime determinants of success or failure inclusion or exclusion.
When we look at the general picture, we see skill shortages emerging in many industrialized countries The
OECD estimated 600,000 vacancies worldwide for workers with ICT skills Training systems have to respond
fast if business is not to be stifled but the need for education and training applies not only to technology
specialists, but also across the board. Everyone, young and old have to cope with new demands. And as the pace
of change accelerates, this means constant renewal of skills throughout life. Life-long learning in the knowledge
economy is intrinsically linked with long-term productivity and worker mobility. Yet at present, no society h as
in place really effective institutions for learning beyond the age of twenty-five. Public policies are needed to
ensure that the social and economic goals are simultaneously achieved. If nothing is done, it is most likely that
the countries with the best-educated people will benefit most. A major new effort is required to support
education systems in the developing world. The ILO World Employment Report 2001 has examined some of
these challenges and some of its results are reported in the following sections.

Literacy and Basic Education

First we need to focus on the main bottleneck - difficulties in literacy and basic Education. Education, after all,
is one of the most important contributions that governments can make to ensure participation in the network
knowledge economy.
In many industrialized countries, such as the Republic of Korea and Singapore, efforts have been made to equip
schools with computers and connect them to local networks and the Internet In the OECD area, massive
investment (some US$ 16 billion annually, but still only I to 2 percent of all education spending) goes into ICT
hardware and software for schools. The United States now spends more on ICT than on books and other printed
material. Access to the Internet in secondary schools is becoming universal in the OECD area.
Connectivity in schools has only recently been addressed even in the world's wealthiest countries. In the world's
poorest, it is a distant reality. Improving the quality of education and increasing enrolment in schools remain the
fundamental goals in many developing countries There is little information on the extent of connectivity in
schools in developing countries. A 1999 survey found that only 50 percent of schools have electricity, and only
7 5 percent have the necessary infrastructure to support an Internet host. The poor communications
infrastructure in low-income countries, inadequate and unreliable electricity and telephone networks, and high
telecommunications costs are formidable obstacles to connectivity. Add to this the very low household incomes,
a resource poor public education system, a dearth of appropriate learning materials and teachers equipped to
support a digital literacy programme, and the likelihood of access to the information society is bleak. Changing
this course could occur only with a radical redirection of education policy and increased public investment,
supported by substantial financial and technical resources In contrast, some of the rapidly growing middleincome countries, such as Malaysia and Thailand, are making good progress in connecting their schools to the
Internet.
Schools have a major task of "democratizing" access to the Internet, thereby correcting the disparities in home
access, which are based largely on income. In the U.S., many programmes have targeted schools in poorer areas
In Australia, the government funds an educational community access pilot project in rural areas for the socioeconomically disadvantaged In Malaysia, in a collaborative effort by the government, international development
agencies and the private sector, a Mobile Internet Unit provides basic digital literacy programmes that target
"non-mainstream" schools Nevertheless, in many low-income countries where there are major deficiencies in
the education system, access remains elusive The majority of the people have had no exposure to the Internet.
A partial, although promising solution is community-based learning centres which are springing up in many
parts of the world Their sponsors vary - governments, donors, private enterprise, NGOs, and charity
organizations are all involved.
Simultaneously, barriers to entry to traditional education systems are now being lowered through the
communications revolution. Rich, interactive "distance learning" offers those who have access to it a vast array
of information and contacts with teachers and others Distance learning can be a powerful multiplier to school
system where these lack resources in money books and teachers. Distance learning is generating new, often
global partnerships between traditional and new "virtual" educational institutions, governments, enterprises and
international and non-governmental organizations. Although many developing countries still has limited access
to these technologies, major investments in telecommunications and information systems may dramatically
improve access over time.

The Skills Challenge

In the knowledge economy workers increasingly need higher levels of education, as well as various abilities and
behavioral characteristics that help them adapt to rapidly changing work and social environments People's
ability to find and retain a job has much to do with the possession of "foundation skills" that need to be
regularly updated and supported with specific skills through training and lifelong processes.
ICT is a leading growth sector in the industrialized economies. It stands to reason, then that the greatest demand
for skills is also in this core sector of the communications revolution. One estimate for the U S finds that the
demand for ICT skills is three times greater in the ICT sector can give a misleading impression of the overall
demand for such skills In the vast majority of the OECD countries, the ICT sector employs no more than 5
percent of the workforce. On the other hand, while employing a relatively small share of the total workforce the
ICT sector is nevertheless the engine of growth in several industrialized countries, contributing a
disproportionate share of overall GDP Growth. Skill shortages in that sector, therefore, are a brake on growth.
There is an important conclusion to draw, notwithstanding. In volume, the greatest demand for ICT-related
skills is economy-wide, not just in the ICT sector. Thus, the most important challenge is the provision of ICT
skills ~n the on-ICT sectors, the economy as a whole.
Beyond numbers, it has proven exceedingly difficult to define the skills in demand It is equally difficult to
know just how workers obtain their skills - particularly in some of the most recent applications of networking or
software development. What is clear is that those working in ICT-related fields often have not acquired any
specific qualifications to do so through education or training programmes. While they may have the immediate
technology related skills, a number of industry surveys demonstrate that graduates are not "work-ready": they
often lack the management, problem-solving, and interpersonal skills needed for being effective on the job.
There is increasing demand for people who combine the latest technical knowledge and problem-solving ability
with good communications skills. Across a broad range of occupations, a blend of computer-specific skills with
business or other knowledge-specific to be particular field is now common and needs to rapidly find its way into
curricula.
About 70 percent of the workforce uses some form of ICT. The existence of an "ICT revolution" in the
workplace appears to be found among workers who are younger, with more formal education, with
responsibility who work fulltime in larger organizations, commanding higher pay, in the financial and business
services sector and in managerial, professional or clerical positions. And many appear to be women. This is not
surprising for the most intensive use of ICT devices on the job is concentrated among clerical and
administrative staff, the majority of whom are women. This raises serious issues of equality.
Available evidence suggests that people acquire the skills they need on the job from a variety of sources,
beginning with their formal education. For example, the majority who enter the ICT and ICT-related sector do
so through a three- or four-year university degree obtained in fields such as electrical engineering. The problem
here is "up-stream" - the limited supply of students in mathematics and physics. The low percentage of women
enrolling in electrical engineering and IT-related subjects is particularly evident. In developing countries, the
skills profile of ICT workers is similar to that of the developed countries. For example, approximately 75
percent of those employed by the software companies in India are engineering graduates.
Enterprises can either invest in the training of their own workforce or purchase the skills they need from the
market. In those enterprises in which ICT is the core business, they do both. The reason is the decline in product
life cycles and the rising importance of time-to-market in the most intensely competitive markets Leading-edge
companies make significant investments in training At IBM and Nokia, for example, approximately 15 out of a
total of 200 working days per year are typically spent learning new skills When an enterprise is faced with a
product life cycle as short as six months, a training period of even six weeks represents one-quarter of the time

to market. Hence, search for ready-made "talent" is also on the rise, as this allows economies of time to be
made.
In many countries, both the access to and the content of training are the outcome of social dialogue between
trade unions and employers' organizations, with or without the presence of government. The negotiation of
training occurs at enterprise, industry or national tripartite levels. Trade unions have long had training among
their core services and functions.
There are clear signs that some trade unions are placing continued training high on the list of services they offer,
as well as at the bargaining table Thus, trying to boost employability along with job security.
This mirrors the need for lifelong learning as a requirement for all people In fact, it can be argued that lifelong
learning is becoming as important an entitlement for today's employee as the right to a pension became in the
past For example, evidence from India shows that unions have begun to take up the issue of training for new
technologies.
Many firms such as Motorola view training not merely in relation to the product development needs of the firm,
but as a policy for attracting and retaining the best people. Employees at the cutting edge of the ICT field are
highly motivated to keep up to date with the latest technologies, have very marketable skills, and use their
employment as a means of further developing these skills- IBM seeks to create a learning environment
conducive to retaining its employees, but the firm acknowledges that there will always be qualified people who
leave With these "alumni" IBM nevertheless tries to keep contact, since with the greater mobility of some skills,
employees could always return, and teamwork in any case can span the boundaries of any firm.
SMES have limited capacity to engage in the kind of training that may be needed to address their skills
shortages, or indeed in any training at all. For small firms, the cost of carrying a less-than-fully productive
employee for six months or a year is often too great a burden on their limited resources. Rather than developing
their own skills, they purchase them from the labour market, attempting to hire workers away from other
companies in related fields. This in turn results in firms' outbidding one another for an existing pool of skilled
workers instead of joining in cooperative efforts to enlarge the overall pool.
The development of basic technological skills is the pre-employment responsibility of the government and the
individual. A major issue in that development, however, is the slow reform of public-sector education and
training. The traditional higher education system is constrained by its inability to change direction quickly.
When there is a strong demand for new courses and combinations of courses, the development and accreditation
of these courses can take up to three years. This is indeed long, in terms of "Internet-time". This is one reason
why public-private partnerships in the area of education and training are on the rise. Nokia has been
instrumental in building up ICT training institutes in China and South Africa (the South African
Telecommunications Institute), for example. In a partnership with the United Nations Development Programme
(UNDP), Cisco Systems is also active in the promotion of education and training as a means of narrowing the
digital divide.
The ICT industry 1las an obvious stake in closing t he skills gap. In Europe, major LCT companies have joined
farces by creating a Skills Consortium through which to undertake a pilot project. The aim is to create a
framework for students, education and training institutions and governments that defines and delivers the skills
and competencies required by Europe's ICT industry.
In conclusion, education and training are fundamental in a knowledge economy. It is probable that inadequacies
in education and training have always been brakes on economic growth. They have arguably become more so in
the digital age. This is because many of the benefits to come from the communications revolution depend upon

the use of the greater flows of information to create new knowledge Places with higher levels of education,
school systems in which not merely facts are relayed but in which students learn how to learn through the new
technologies, and enterprises in which continuous learning is both encouraged and expected will be favoured in
the digital age. For this to occur, institutions need to adapt, and the full range of labour market institutions also
need to change too.
The global economy is often presented, as a fait accompli in which is nothing one can do but adapt. This is not
the case, and training for the knowledge economy is a case in point. Training is a dialectical process between
the trainee and the trainer, between the individual and the firm. Unions influence training structures and
contents, by industry, and by governments. This is an important entry point for values, for what we call dignity
at work, for concerns of equity and equality. In doing so, we will promote a globalised knowledge economy
which actually works better for workers and their families.
Beyond training, what can we do to promote this goal? I believe we need to make "Decent Work for All' a basic
issue When we ask people what the main problems are in their lives, many refer to poverty, to exclusion, to
unemployment When asked what is the solution, the reply is "work", and they always refer to decent work
obtained in conditions of freedom, equity, security), and human dignity. Training certainly is a necessary
ingredient for decent work. It will allow us to respond better to the aspirations of millions of people all over the
world.

Changes in the Indian Economy

Tariff and non-tariff trade barriers lowered
Industrial licensing abandoned in many sectors
Private capital permitted in areas reserved for the
public sector
Restrictions on foreign direct investment removed
Steps towards privatisation
Food subsidies reduced and
The rupee devalued.

Changes have lead to:

Strengthened presence of multinational
companies
Increase in redundancy
Introduction of new technologies
New management techniques etc.

Acc. To. J. Henry Richardson

Industrial relations is an art, the art of
living together for purposes of
production. The parties while
working together
learn this art
by acquiring
the skills
of adjustment.

According to H.A. Clegg:

The field of industrial relations includes
the study of workers and their trade
unions, management, employers
associations, and the State institutions
concerned with the regulation of
employment

According to NCL
Industrial relations affect not merely
the interests of the two participants
labour and management, but also the
economic and social goals to which the
State addresses itself. To regulate
these relations in socially desirable
channels is a function, which the State
is in the best position to perform.

Parties to Industrial Relations

Trade Union

Employers
Organisation

Government.

Features of Industrial Relations

Industrial relations are born out of employment
relationship in an industrial setting.
Industrial relations are characterized by both
conflict and co-operation
Vital environmental issues
Industrial relations also involve the study of
conditions conducive to the labour, management
co-operation.
Industrial relations also involve the study of
conditions conducive to the labour, management
co-operation.
Policy framework laid down by the government

Management
Objectives and goals affect

Daily HR
activities
carried out by

(1)

(2)

(3)

(4)

Workers
Collective
Desire

Unions begin
organizing

Collective
negotiations

Contract is
administered

Objectives and goals affect

Labour
(union)

Scope of Industrial Relations

Promotion and development of healthy labourmanagement relations
Maintenance of industrial peace and avoidance of
industrial strife and
Development of industrial
democracy.

Contemporary Issues in Industrial

Relations
Low wages
Employment of Women
Ignorance and Illiteracy
Industrial Housing
Child Labour.