MDI Gurgaon HRM Term II

Technological Change and

Industrial Relations

Group 6 Section D
Adwait Deshpande (16P182)|Gurleen Kaur (16P200)|Himanshu Arora (16P202)
Sarthak Dhama (16P219)|Siddharth Mishra (16P230)|Yadvendra Kishore (16P235)

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Introduction

Technology and innovation today is an integral part of our life. Improvements-both

incremental and breakthrough, in technology have increased the pace of life by
solving problems that we used to face every day by coordinating reality with
imagination. The speed of technological improvement and innovation is so fast that
today‘s technology becomes obsolete tomorrow.
Quick changes in marketing strategies through technological innovations have caused
traditional markets to face business crises as their overheads exceed income. The
concept of SMAC- Social, Mobile, Analytics and Cloud has transformed the way
business is practiced.
The move today is towards paperless transactions for cutting costs, preventing tax
evasion and ensuring financial safety. Public and private departments, financial
institutions and business enterprises have turned tech savvy. The mobile phone in the
pocket today is as important as the shirt on the body. In the absence of the mobile
phone, life appears insecure. They are not mere instruments for conversation but also
gadgets for photography, storage for information and a platform for a plethora of
apps which make our lives easy. Technology has changed the way how we perceive
life every day.
When it comes to Industrial Relations and Human Resource Management, technology
has played an integral role in shaping the way business interacts with labor. New
technologies have opened up employment opportunities in new and emerging sectors.
Skills needed have undergone a sea-change from that of manual dexterity and physical
strength to those of problem solving and project handling. With newer businesses
coming up to solve every day problems and fulfill human needs and aspirations,
technology and innovation plays a key role in influencing human touch in business.
More and more jobs are moving towards automation which reduces the scope for
human involvement in business processes. This is done to move towards the objective
of greater efficiency and minimum defects leading to standard processes producing
the highest quality product.
Right from the time when technology was first introduced in the factory, laborers
have been resistant to technology because they consider it to be a threat to their job.
However, times have changed and Unions no longer resist technology change but are
concerned with the implications on the number of jobs, their content and earnings.
Workers have embraced technological change and try to learn how it solves problems
for them on the shop floor. Automated systems allow few skilled individuals to do
the work, which previously required numerous unskilled and semi-skilled workers.

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They also allow tasks that are beyond human capabilities or those dangerous or
monotonous jobs that would be considered inhuman for people to perform. Further
the labor intensive ways of production are expensive and restrict the market for the
product, which has a negative effect on the employment in the long run.
It's also argued that subjective norms need to be considered as a variable influencing
the behavioral intentions of workers with respect to acceptance of technology change.
Management has a huge role to play in the way how change is introduced in the
economy. By involving workers on the shop floor in understanding processes
fundamentally, management can benefit from incremental innovations. This is
something that Japanese companies have done beautifully for a long period of time.
Due to globalization and liberalization of norms, Information and Communication
Technology and well accepted management ideas such as TQM on quality, JIT,
Computer Integrated Manufacturing(CIM) & Lean Production(LP ) have served to
magnify the impact of technology on employment relationship globally and India in
particular. This has also affected the way management deals with human resources.
Thus, it is important to understand the impact of technology on Industrial relations
and how it has shaped each and every aspect of human resource management.
IR is not a self-contained area of activity. It can only be understood clearly by
reference to the persons, groups, institutions and broader structures with which it
interrelates (including, for example, changing product markets, the processes of
labour market regulation, and the education and training system) within a particular
country, as well as to influences arising from beyond its borders. Therefore, it is
essential to look back at the way technology has impacted industrial relations right
from the time of Industrial Revolution when technology was first introduced.
Following are two incidents from the 19th century explaining how laborers have
reacted to the introduction of technology.

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Captain Swing and the swing riots

Captain Swing was the name appended to several threatening letters during the rural
English Swing Riots of 1830, when laborers rioted over the introduction of
new threshing machines and the loss of their livelihoods. Captain Swing was described
as a hard-working tenant farmer driven to destitution and despair by social and
political change in the early nineteenth century.
Popular protests by farm workers occurred across a wide swath of agricultural
England, from Sussex in the south to Kent in the east, and they had a number of
structural causes. The main targets for protesting crowds were landowners/landlords,
whose threshing machines they destroyed or dismantled, and whom they petitioned
for a rise in wages. They also demanded contributions of food, money, beer, or all
three from their victims. Often they sought to enlist local parish officials and
occasionally magistrates to raise levels of poor relief as well. Throughout England, 644
rioters were imprisoned, 505 transported to Australia, and 19 were executed.
In many places riots many hay ricks were set alight, in some places the protests took
on none-violent forms such as church boycotts and walk outs. In Wroughton in
Wiltshire the protest amounted to people smoking pipes in the cemetery as a means
of getting their point across, as well as the attacks on the threshing machines the
protesters reinforced their demands with wage and tithe riots and by the destruction
of objects of their oppression, such as workhouses and agricultural tithe barns During
these riots many threshing machines were either dismantled or destroyed entirely, this
resulted in 600 rioters being imprisoned, 500 were sentenced to transportation to
Australia, and 19 were executed and 9 were hanged.

The Swing Riots had many underlying and immediate causes, and were
overwhelmingly the result of the progressive impoverishment and dispossession of
the English agricultural workforce over the previous fifty years, leading up to 1830. In
parliament Lord Carnarvon had said that ‗The English labourer was reduced to a
plight more abject than that of any race in Europe‘.

The structural reasons for the Swing 'riots' (or risings) are relatively straightforward:
underemployment, low wages, low levels of relief, and competition for winter
employment from machinery. However, the nature of the events of 1830 suggests that
they may demand just as subtle an interpretation as the events of the previous century.

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For most contemporaries, the riotous but largely bloodless actions of the crowds
presented less cause for alarm than the high incidence of arson during the period of
Swing (October to December 1830). Swing the rick burner was not only more
destructive, but much harder to apprehend than the rioters in this heightened
atmosphere of tension and hostility. The relationship between arsonists and protesters
is difficult to assess – although there is little doubt that a relationship existed.
Whatever the immediate motivations of the arsonists of 1830 and 1831, their actions
undoubtedly gave added strength to the demands of the protesting crowds.

Although, this incident is from a time when industrial relations were not organized
and unions was an unknown concept, but the way the middle class reacted to the riots
and the factors that led to the spread of violence can be assumed to be the first
incident where the power of labor was felt by the management.

Luddite Riots

The Luddites were a social movement of British textile artisans in the nineteenth
century who protested (often by destroying mechanized looms) against the changes
produced by the Industrial Revolution, which they felt was leaving them without work
and changing their way of life.
The movement emerged in the harsh economic climate of the Napoleonic Wars and
difficult working conditions in the new textile factories. The principal objection of the
Luddites was to the introduction of new wide-framed automated looms that could be
operated by cheap, relatively unskilled labour, resulting in the loss of jobs for many
skilled textile workers.
In modern usage, ―Luddite‖ is a term describing those opposed to industrialization,
automation, computerization or new technologies in general.
People had been destroying mechanized looms and spinning devices long before the
Luddite riots, but in 1811 the Luddite movement started spreading through England.
The Luddites met at night on the moors surrounding the industrial towns, practicing
drills and maneuvers, and often enjoyed local support.

There were battles between the military and the Luddites, and many people were the
object of death threats and attacks by the anonymous King Ludd and his supporters.
Some industrialists even had secret chambers constructed in their buildings as hiding
places, in case the Luddites came looking for them.

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The riots eventually came to an end after the murder of William Horsefall by three
Luddites, and their subsequent convictions and hanging, though working-class
discontent continued throughout the 19th century.
Both the Swing and the Luddite riots give us a fair idea as to how workers originally
used to feel threatened by the introduction of new technology. However, with time,
the perception of the workers has changed and they have started to embrace
technology considering it as a means to achieve the collective goal of the organization.
Having said that, the management also plays an important part in introducing changes
and keeping the workers in confidence for any change that affects them.
It must be said at once that the background against which technological change
occurs has altered in recent years so far as its effects on workers is concerned. All
parties have adopted a more humane approach to the worker who is affected by a
change. Many employers have agreed to include provisions in collective agreements
which cushion the impact of change.
Trade unions have become increasingly aware of the problems associated with
changes and have, in many cases, succeeded in negotiating appropriate provisions.
Government has also contributed a great deal to the amelioration of the adverse
effects of technological change. In addition to such concepts as unemployment
insurance and social welfare payments, government has provided training and
retraining programs, manpower placement services, mobility grants and similar
programs.

Trends in IR

In terms of the organization of production, new technologies are increasing the scope
for greater flexibility in production processes, and are resolving
information/coordination difficulties which previously limited the capacity for
production by enterprises at different locations around the world. Where enterprises
are servicing more specialized markets, smaller and more limited production processes
are now involved.

New technology has also made it possible to produce the same level of output with
fewer workers. In both situations, there is increased emphasis on workers having
higher value capacities and skills to perform a variety of jobs. This has blurred the
distinctions (both functional and hierarchical) between different kinds of jobs and
between labour and management generally.

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In addition, efforts to improve products (through innovation, quality, availability and

pricing) have led enterprises to establish cross-functional development teams,
transcending traditional boundaries between engineering, manufacturing and
marketing.

Enterprises have been seeking to "rationalize" their operations to strengthen further

their competitiveness, by reducing costs (including both wage and non-wage labour
costs). Responses have included identifying core functions (i.e., those which define its
essential rationale and competitive edge and must be maintained), and subcontracting
(or reconfiguring existing such arrangements) for the performance of peripheral
functions outside the enterprise; substituting technology for labour; and
"downsizing".

Strategic alliances and company mergers have also increased markedly during the past
decade. This has made the employment environment for workers in the formal sector
in many industrialized, and increasingly in industrializing, countries much more
unstable.

All of these changes have affected IR, and are likely to continue, to a greater or lesser
extent, in individual countries. The manufacturing and public sectors in many
countries have been the traditional base of support for trade unions. They are now
experiencing considerable difficulties in maintaining and increasing membership, as
the source of growth in many economies is increasingly coming from a services sector
whose workers (many of whom are women) have demonstrated a reluctance to join
unions.

Technology has had an impact on a number of issues affecting the laborer including
wages, skill profile, employment, and union response, and training and development.
In a broader context of Human Resources, upcoming technologies like Virtual and
augmented reality, Advanced Machine Learning, Internet of Things, Wearables, etc.
are going to have a huge impact on relations between the employees and the
management. The future of any human resource team is being connected to
technological development and challenging it offers rooms for innovators inside and
outside the industry to adapt new developments to create and redesign the workplace
and employee experience.

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We can already see that time-consuming tasks such as keeping track of employees‘
time, preferences and work patterns are being automated, freeing up HR to focus on
engagement challenges, increasing productivity and aligning the human side of the
organization with business goals. HR managers gain more strength at a boardroom
level, as their departments move away from cost centers to revenue centers. As
systems and objects become more connected, it falls on HR to manage performance.
Concepts like BYOB and work from home are already making a difference in the
service sector and in the future, we can see minimum interaction between the
management and employees face to face.

Automation replacing jobs

According to a World Bank research recently made public, 69 percent of jobs in India
and 77 percent in China face a grave threat by automaton. This in turn could
drastically affect the economic development of these nations.
"As we continue to encourage more investment in infrastructure to promote growth,
we also have to think about the kinds of infrastructure that countries will need in the
economy of the future. We all know that technology has and will continue to
fundamentally reshape the world," World Bank President Jim Kim said.
The World Bank President also mentioned how the traditional path of economic
development might not work in all developing nations. (The traditional economic
path refers to agriculture development and increased productivity, followed by a focus
on light manufacturing and then moving towards full scale industrialization)
In light of the threat of the loss in jobs that these countries face, there is a need to
figure out the kind of path available for economic growth in these nations, which
would have to be followed by revamping the country‘s infrastructure accordingly.
Mechanization and technology have disrupted traditional industrial production,
upended manual jobs and call time on the work that has been done by generations of
families. This trend is not isolated to the US. It is affecting people in countries
everywhere, Kim said.
"When I was in China at the G20, many world leaders talked about the storm clouds
of isolationism and protectionism that were gathering and becoming increasingly
worrisome to everybody. These trends come at a time though when we need more
cooperation, when we need greater economic integration and stronger partnerships

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than ever before if we want the world economy to return to higher rates of inclusive,
sustainable growth.‖
Another survey by PwC focuses on how much we rely on machines and algorithms
when it comes to business decisions. Few experts believe that computers and
technology doesn‘t necessarily mean that we would lose jobs, rather they would
replace specific tasks.
The McKinsey Global Institute (MGI) agrees: ―…a focus on occupations is
misleading. Very few occupations will be automated in their entirety in the near or
medium term. Rather, certain activities are more likely to be automated, requiring
entire business processes to be transformed, and jobs performed by people to be
redefined.‖
This survey by PwC throws light on the extent to which business executives rely on
machine algorithms rather than their own judgment when formulating strategic
decisions. These decisions are a part of the work on CRM systems, HR systems, risk
management systems, etc.

For most of the second half of the twentieth century the economic value generated in
the US - the country's productivity - grew hand-in-hand with the number of workers.
But in 2000 the two measures began to diverge. From the turn of the century a gap
opened up between productivity and total employment. By 2011, that delta had
widened significantly, reflecting continued economic growth but no associated
increase in job creation.

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Production in the second machine age depends less on physical equipment and
structures and more on the four categories of intangible assets: intellectual property,
organizational capital, user-generated content, and human capital
According to an estimate, 47 percent of total US employment is in the high risk
category, meaning that associated occupations are potentially automatable over some
unspecified number of years, perhaps a decade or two.

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Impact of Automation on the IT-BPO Industry

A US-based research firm has predicted

that India's IT services industry will lose
6.4 lakh "low-skilled" jobs to automation
in the next five years, quantifying the
extent of likely pain for the first time,
but Indian industry experts are urging
caution and point to the other side of
the coin — the creation of new jobs in
large numbers.
By 2021, HfS Research said that the IT
industry worldwide would see a net decrease of 9% in headcount, or about 1.4 million
jobs, with countries the Philippines, the United Kingdom and the United States also
taking hits.
The HfS report states that though "low-skilled" jobs will fall by 30%, "medium-
skilled" jobs will increase by 8% and high-skilled jobs will rise by 56%.

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Technological Trends Shaping Jobs

When we talk about the technological drivers of change in Industrial Relations, we are
essentially focusing on the key industry trends that are changing the way Human
Resources and Industrial Relations have worked so far. Some of these can be
categorized as follows-

Mobile Internet and Cloud Technology

Rated as a top trend by a margin of 34% in the key factors shaping technological
change, mobile internet has changed the functioning of businesses by introducing
more efficient services and opportunities so to drastically change workforce
productivity. With cloud technology, the need for local software or processing power
has been done away with, thus facilitating the rapid spread of internet-based service
models.

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Big Data

Big Data involves utilizing the flood of data available to us and bringing out
innovations that shape growth of organizations. In order to fully avail the benefits of
Big Data, we will require having in place the systems to utilize and understand the
abundance of information.

New Energy Supplies and Technologies

Rated as a top trend by 22% respondents, new renewable sources of energy and
hydraulic fracturing (fracking) are changing the energy sphere worldwide. They are
competing with the major players in the industry and are shaping it as much as the oil
prices have, over the past few decades. With all this also comes responsibility since
advancements in the energy sector come with complex geopolitical and environmental
repercussions.

The Internet of Things

With developments in remote sensors, communications, and processing power in
industrial equipment and everyday objects, we have the opportunity to unleash an
enormous amount of data and the opportunity to see patterns and design systems on
a scale never before possible.

Healthcare Industry

The Healthcare Industry has seen a lot of change in the past 20 years due to
technological advancements. There are clearly seen changes in labour market for
healthcare workers and in the impact of these changes on worker safety and health in
the healthcare sector. There has also been an increase in wages and employment
opportunities. However, this increase is majorly seen in the category of skilled
workers.

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Technological change affects the demand for labor in two ways.

First, shifts in the product demand curves will tend to shift labor demand curves in
the same direction, and changes in the elasticity of product demand with respect to
product price will tend to cause qualitatively similar changes in the own-wage elasticity
of labor demand.
The second aspect is the relation between substitution of capital for labor. However,
the behaviour of these two factors depends on whether they happen to be
complements or substitutes. If capital and labor are gross complements, an increase in
technology will be followed by an increase in the demand for labor. And if they are
substitutes, the affect would be vice versa.
An industry such as healthcare requires frequent changes in technology. As a result,
there is a constant need for up-gradation of job tasks and operating procedures. So
the demand for workers who can easily adapt to such technological changes rises, i.e.
there has been a rise in the employment for skilled labor in the healthcare industry.
However, unskilled workers often have to face the way out with these changes.
And while there has been substantial increase in the wages of skilled workers, the
wages of unskilled workers have only seen a modest increase.
Over the period from 1950 through 1985, relative wages of workers with less than a high school
degree in the health sector increased at a rate of 0.6% per year, from 15% below the rest of the
economy to 7% above the rest of the economy.12 For the much briefer period for which data is
available for physicians, their net income grew at a pace well above the economy as a whole.

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References -

1. Technology, Skills and Healthcare Labor Markets, Edward J. Schumacher, Department of

Economics, East Carolina University

2. World Development Report, World Bank Forum

3. http://www.forbes.com/sites/gilpress/2016/07/07/machines-are-taking-all-the-jobs-what-
decision-makers-say-and-do/#371158873b58

4. http://www.firstpost.com/business/jobs-on-threat-automation-may-take-away-60-jobs-in-india-
says-world-bank-3034870.html

5. The Future of Jobs, Global Challenge Insight Report, January 2016, World Economic Forum

6. http://economictimes.indiatimes.com/jobs/it-sector-to-lose-6-4-lakh-low-skilled-jobs-to-
automation-by-2021-hfs-research/articleshow/53052040.cms

7. http://www.techrepublic.com/article/ai-is-destroying-more-jobs-than-it-creates-what-it-means-
and-how-we-can-stop-it/

8. Technological Change & Employment Relations in India, T.N. Krishnan

9. Reshef, Y. Journal of Labor Research (1993) 14: 111. doi:10.1007/BF02685660

10. Emerging Technologies and Impact on Employee Relations Telecommunication Industry,

Anant Deogaonkar, International Journal of Scientific and Research Publications, Volume 3, Issue 9,
September 2013

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