Employers’ Organisations

UNIT 8 EMPLOYERS’ ORGANISATIONS

Objectives
After going through this unit, you should be familiar with:
● the origin and growth of employers’ organisations in India;
● the structure of employers’ organisations;
● the aims and objectives of employers’ organisations ;
● the functions of employers’ organisations; and
● the role of employers’ organisations in employment relations.

Structure
8.1 Introduction
8.2 Origin and Growth of Employers’ Organisations
8.3 Structure of Employers’ Organisations
8.4 Aims and Objects of Employers’ Organisations
8.5 Functions of Employers’ Organisations
8.6 Membership, Organisation Structure and Functioning of Employers’
Organisations in India
8.7 Legal Status of Employers’ Organisations
8.8 Observations of the First National Commission on Labour on Employers’
Organisations
8.9 Summary
8.10 Self-Assessment Questions
8.11 Further Readings

8.1 INTRODUCTION
While workers get together for joint action through a union, an employer is in many
cases an organisation in himself and meets the union on equal terms. At the same time,
employers find themselves in furtherance of common objectives of evolving attitudes
to labour or approaches to national policies, as also for standardisation of wages and
other conditions of employment in an industry within a local area (National
Commission on Labour: 1969). Thus, Employers’ Organisations (EOs) are formal
groups of employers set up to defend, represent or advise affiliated employers and to
strengthen their position in society at large with respect to labour matters besides
economic matters. While trade unions, which are composed of individual persons,
employers’ organisations are composed of enterprises. Nevertheless, the Trade Unions
Act, 1926 includes in its purview both associations of workers and employers.

8.2 ORIGIN AND GROWTH OF EMPLOYERS’

ORGANISATIONS
The first employers’ association in the form of the Chamber of Commerce was
established in Marseilles in France in 1599. Such chambers are voluntary 59
Trade Unionism organisations of the business community established to promote the commercial,
industrial and civic interests of their members. They also function as Central Agencies
of individual firms, companies, trade and industrial associations for protecting and
promoting business interests by evolving and projecting collective thoughts. The
utility of these chambers was quickly realised in practically all important countries of
the world. It is therefore not surprising , as disclosed by one survey, that there are
nearly 10,000 chambers of commerce in all important countries together with the
underlying membership of millions of business organisations and firms. They have
also formed a body at the international level known as International Chamber of
Commerce with headquarters in Paris. The latter has National Committees in different
countries.

Developments in India
The origin, growth and development of EOs have three distinct phases: (i) the period
up to 1933; (ii) the period between 1934 and 1946; and (iii) the post-Independence
period. Each phase reveals its own structural and functional characteristics; in each
phase the organisations had to undergo changes because of contemporary economic,
social and political developments. The periods referred to also coincide with important
developments in the labour field, and these have had a great impact on the pattern and
development of employers’ organisations and their functioning.

Period up to 1933
With the withdrawal of the East India Company in 1833, the British business interests
as well as the interests of other individual businessmen had to be represented to the
Government of the day. As such, the first Chamber of Commerce was established by
the British businessmen in India based in Calcutta in 1833, followed by establishment
of Chambers of Commerce in Madras and Bombay in 1836.
Indian businessmen did become members of these British Chambers, but in small
number. It is only after the 1880s that they started setting up an independent
organisation and engaging in a struggle with British business interests. The first
Chamber of Commerce, the native Merchant Chamber of Commerce of Coconada,
subsequently known as Godavari Chamber of Commerce, was set up in 1885, the year
of establishment of the Indian National Congress. In 1887, the Bengal National
Chamber of Commerce was established in Calcutta. Subsequently, the British-oriented
Chambers of Commerce and the giant Indian (especially the Parsi) industrial and
business interests formed a federal association, the Associated Chamber of
Commerce (ASSOCHAM), with its headquarters at Bombay. Now, ASSOCHAM
has in its fold maximum number of MNCs and foreign companies including the
British Airways, Cadbury India, Citi Bank, Coca-cola India, Hindustan Lever, Glaxo
India, Johnson & Johnson, Procter & Gamble India, Nestle India, Pepsi Foods, Philips
India, Thomas Cook India (The Hindu, April 29, 1997).
In 1927, the Indian businessmen (supporters of Swadeshi movement) organised a
central body of the Chambers of Commerce and Trade Associations of Indian
business, known as Federation of Indian Chambers of Commerce and Industry
(FICCI). With its headquarters at Delhi, today FICCI embraces all types of trade and
industry interests. It speaks directly or indirectly for 1,00,000 business units — small,
medium and large— employing around 10 million people.
India as one of the original members of the International Labour Organisation (set up
in 1919 by the Treaty of Versailles, also known as Peace Treaty) had the responsibility
of sending a tripartite delegation to the annual meetings of the ILO. According to the
Constitution of the ILO, the Government of the each member country, besides
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nominating the Government’s delegates should nominate employers’ and workers’ Employers’ Organisations
delegates in agreement with their respective organisations, which are most
representative of the interests concerned.
The FICCI, whose representative was attending the annual meetings of the ILO since
1927 to 1930, was informed by the Government of India that under the Treaty of
Versailles, the Chambers of Commerce could not be treated as organisations of
employers which could be consulted by the member-governments in nominating
employers’ delegates to the ILO meetings for discussions relating to labour matters. It
was to meet this situations that a separate central body of the industrial employers was
established by FICCI on December 12, 1932, and this was called the All India
Organisation of Industrial Employers. This name was changed later on, and now it is
known as All India Organisation of Employers (AIOE). The headquarters of the
AIOE is located in New Delhi. Following this, another central organisation of
employers – Employers’ Federation of India (EFI)— with its headquarters at
Bombay was established by ASSOCHAM in 1933. The modest objective of the
EFI, like that of the AIOE, in the beginning was to facilitate the selection of
employers’ delegates for the meetings and conferences of the ILO.

Period between 1934 to 1946

Since the AIOE and EFI began to represent mainly the large-scale industrial
employers, the need for a third limb of EOs representing the medium and small size
employers was felt. Under the inspiring leadership of M. Vishwesvarayya, a renowned
engineer, the All India Manufacturers’ Organisation (AIMO) was set up in
Bombay in 1941 to represent both the trade and labour interests of the member firms
in the medium and small sectors. However, the membership of AIMO is not
necessarily restricted to medium and small size employers. The AIMO could secure
recognition from the Government of India for representation at the national level and
in the 1980s for the International Labour Conference, as any other employers’
organisation.
The Government of India Act, 1935 made provision for representation of employers
and labour in legislative bodies through special constituencies. The constituents of the
AIOE and the EFI thus got an opportunity to be represented in the Central and
Provincial Legislatures. Labour legislations in the thirties in some provinces made it
necessary for employers’ associations to expand their services in the labour field. The
creation of the Labour Department in the Central Government and the constitution of
tripartite bodies like Indian Labour Conference, Standing Labour Committee and
Industrial Committees during the years of Second World War (1939-45), helped
further these activities within local associations and federations.

1947- Present
In the wake of the Independence of the country in 1947, a plethora of labour laws
were enacted, the industrial fabric of the country began to change with the
implementation of successive five-year plans, and the demographic profile and
aspirations of the employees also began to undergo major changes. All these provided
new opportunities and challenges for EOs.
After Independence, the indigenous private industrialists began to train their guns
against the public sector which had witnessed a rapid growth (at least until 1990s,
when privatisation became the “in-thing”). The small and medium sectors have formed
their own associations. With the proliferation of EOs, the need for their unification
began to find expression. After several initiatives and meetings, it was in 1956 that a
super structure called the Council of Indian Employers (CIE)1 was formed to bring
AIOE and EFI, the two national level employers’ organisations under one umbrella. 61
Trade Unionism The CIE got itself affiliated to the Geneva-based International Organisation of
Employers (IOE)2 in the same year, in place of the AIOE and EFI which till then were
affiliated to the IOE separately.
The growth of public sector consequent upon Government’s endeavour to raise it to
the “commanding heights” of the economy led eventually to the claim by the public
sector to represent employer’s interests. As a result, a representative organisation for
public sector, called the Standing Conference on Public Enterprises (SCOPE) was
set up and registered as a society on September 29, 1970. In the year 1973, the
SCOPE joined the CIE3 .

Confederation of Indian Industry (CII)

Established in the year 1895, the CII was a sectoral association till 1991 confining
mainly to the engineering industry. The head office of the CII is in Kolkota. Since,
1991, the CII became broad based and employers belonging to other industries are
associated with it. The total number of companies that are associated with the CII is
4,000; and 25 per cent of this membership is from IT companies, financial services
and other services like consultancy (The Hindu, November 1, 2000). The CII has 35
offices all round the world including offices in the Middle East, UK, USA , Canada
and Singapore. It performs the combined role of defending the interests of employers
in both economic and labour matters.
Commenting on the proceedings of one of the CII’s annual quality summits,
Ramaswamy (2002) observes that the proceedings “scarcely make a mention of
worker involvement or empowerment. The closest they get to workers is a fleeting
reference to Quality Circles, but no details can be had on worker or union response to
them”.

Federation of Associations of Small Industries in India (FASII)

Besides the FICCI, ASSOCHAM, and CII, another federation, the Federation of
Associations of Small Industries in India (FASII) came into existence in the private
sector in the year 1959 to protect the interests of the small industries. FASII has its
headquarters in Delhi.

8.3 STRUCTURE OF EMPLOYERS’ ORGANISATIONS

EOs in India have a three-tier structure: local associations, industrial associations,
and all-India federations.

Local Associations
This type of associations have been formed in most of the industrial cities and other
industrial areas of the country in the form of Chambers of Commerce or Factory
Owners’ Associations. These associations cover all industries in their respective areas.
Their field of activity is not confined to industrial and commercial matters only, but
also extends to labour matters.

Industrial Associations
Industrial Associations are the general pattern of organisations of employers in India.
They are formed at the area/ regional level as also at the all-India level. The regional
industrial associations are generally associated with / affiliated to the central
organisations at the apex level (all-India level). The main reasons for the development
of industry-wise associations is the common nature of the problems confronting each
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industry. Individual employers are also admitted at the apex level. Most of the Employers’ Organisations
industrial associations, in turn, are affiliated to national level federations (all-India
federations) of employers’ organisations.
The setting up of industry-wise wage-boards , industrial committees at the Central and
State levels, and development of collective bargaining at the industry level in certain
regions / industries (like jute, cement, cotton, textiles, engineering, tea, sugar, paper,
and chemicals) helped the growth of these associations.

All-India Federations
They comprise representatives of both industries and geographic centres. AIOE, EFI
and AIMO are the three federations operating at the national level. They have
representation s on consultative bodies in labour matters. Unlike the AIOE and EFI,
the AIMO combines in itself both the trade and labour interests of its members. The
membership of these organisations open to individual firms or joint stock companies
engaged in any industry, and to any association / chamber of commerce representing
any industry in the country.
All the three federations have special committees to deal with specific problems.
Besides, they operate through their regional committees and maintain close links with
the national level chambers of commerce as well.

8.4 AIMS AND OBJECTS OF EMPLOYERS’

ORGANISATIONS

The All India Organisation of Employers

The objects of the AIOE are inter alia:
i) To take all steps which may be necessary for promoting, supporting or opposing
legislative and other measures affecting or likely to affect directly or indirectly,
industries in general, or particular industries;
ii) To nominate delegates and advisers, etc. to represent the employers of India at
the International Labour Conference, United Nations Organisation, International
Chamber of Commerce and other conferences and committees affecting the
interests of trade, commerce and industries, whether as employers or otherwise;
iii) To promote and support all well-considered schemes for the general uplift of
labour and to take all possible steps to establish harmonious relations between
capital and labour”.

Employers’ Federation of India

The principal objects for which the EFI has been established are embodied in its
Constitution. These are:
i) “to promote and protect the legitimate interests of employers engaged in industry,
trade and commerce;
ii) to maintain harmonious relations between management and labour and to initiate
and support all well considered schemes that would increase productivity and at
the same time give labour a fair share of the increased return;
iii) to collect and disseminate information affecting employers and to advise
members on their employer-employee relations and other ancillary problems.”
These objects lie within the field of what may broadly be termed ‘industrial
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Trade Unionism relations’. Although consideration of broad economic problems is not altogether
excluded, the EFI does not generally comment on commercial questions of
customs, taxation and the like which lie in the sphere of the ASSOCHAM.

The All India Manufacturers’ Organisation

The objectives of the AIMO are:
i) “To help bring about the rapid industrialisation of the country through sound and
progressive economic policies;
ii) To help in increasing the aggregate wealth of India;
iii) To raise the standard of living of the people of India by utilising to the fullest
possible extent all the available national resources and talent in the country; and
iv) To play a positive role in relieving the pressure of population on land”.
The industrial relations functions of the AIMO are similar in material particulars to
those of the AIOE and EFI.

Standing Conference on Public Enterprises

The objectives of the SCOPE cover a wider ambit: SCOPE looks upon its tasks as
both internal and external to the public sector. Internally, it would endeavour to assist
the public sector in such ways as would help improve its total performance.
Externally, it would help improve its total boundary role in conveying such
information and advice to the community and the Government. Besides improving
performance of the public sector, its objective is to participate in the policy-making
process of public enterprises.
Activity A
Briefly describe the structure, aims and objects of employers organisations of your
own organisation or any organisation you are familiar with.
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8.5 FUNCTIONS OF EMPLOYERS’ ORGANISATIONS

The main role of an employers’ organisation is to protect and promote the interests of
its members. Its activities are designed and directed on a broader plan; labour
problems are only a part of their overall responsibilities. Economic, commercial and
fiscal matters and policies are equally or even more important for them. Employers’
organisations find it necessary to have legislative support for the realisation of their
objectives. Their main functions in the field of labour are:
a) Communication: The employers’ associations keep their members informed of
all new labour legislations (even at the formative stage), regarding all changes in
labour policy, important court decisions on labour matters, obligations accepted
at the national level, proceedings of important tripartite deliberations, etc.
b) Advisory Functions: They advise their affiliates on complex legal provisions,
procedures etc., when such advice is sought. Some of the employers’
organisations have built up an expert advisory service on labour matters for their
64 members.
c) Educational Efforts: They organise seminars, conferences and training Employers’ Organisations
programmes at different levels to discuss important issues in the labour-
management relations. Important studies on collective agreements, role of the
private sector in national development, etc. have been carried out by the
Employers’ Federation of India.
d) Representational Functions: They are represented on various committees, wage
boards, etc. set up by the government from time to time and place before these
bodies the point of view of employers. They have also set up special committees
of their own to study particular problems.
e) Undertaking Social Responsibilities: They also discharge certain social
responsibilities towards the country and society by participating in national plans
for economic development, eliciting responsive cooperation from the unions in
improving levels of production and productivity, pursuing policies that are
conducive to the development of industry and the economy, adopting
neighbourhood, social development schemes, etc.

8.6 MEMBERSHIP, ORGANISATION STRUCTURE AND

FUNCTIONING OF EMPLOYERS’ ORGANISATIONS
IN INDIA

Membership
As in most countries in India too membership in EOs is voluntary. AIOE has two
categories of members: individual (enterprise) and association (group of enterprises).
EFI additionally has provision for honorary membership whereby individuals with
special skills or experience, such as legal luminaries or professionals are co-opted to
serve on various committees of the federation. While the predominantly private sector
EOs do not bar public sector enterprises becoming members and rather welcome their
entry and indeed have a few, the SCOPE remains an EO exclusively for the public
sector that too mainly the public sector enterprises in the central sphere.
In the year 2002, the AIOE had 72 associate members (i.e. industrial employers /
chambers) and 183 individual members. The EFI had 31 association members and
247 individual members as of 1986. The SCOPE had over 95 per cent of the CPSUs
as its members as of 1986.

Organisation Structure
The AIOE has a unitary type of organisation. It has no sub-organisation on an
industrial or geographical basis. Even though there are important clusters of members
in Kolkata and Bombay, there has been no attempt to create local committees or
offices. The EFI, however, has federal type of organisation structure with its activities
distributed over a central body and the regional committees. Both the AIOE and the
EFI have a governing body, executive committee and the secretariat. The governing
body is the supreme policy-making body, the executive committee is responsible for
implementing the policies and objectives of the organisation and the secretariat with a
permanent staff, is responsible for carrying out the decisions of the governing body.
The SCOPE has two administrative organs, the Governing Council and the Executive
Board besides the Secretariat with permanent staff. The Governing Council lays down
policy and elects office-bearers, the Executive Board oversees implementation of
policies. The Chief Executive of a member enterprise / organisation shall
automatically be a member of the Governing Council. Additionally, it has three
government representatives nominated by the Director-General, Department of Public
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Enterprises as ex-officio members of the Governing Council with full voting rights.
Trade Unionism Finances
EOs are referred to as rich men’s poor clubs. Nearly half of the income of the EFI and
one fourth of the income of the AIOE are from membership subscriptions. Other
incomes include interest on corpus/ deposits, conferences, publications, etc. Excessive
dependence on income from subscription makes EOs financially vulnerable. The
surest way for them to raise funds is to upgrade the quality, relevance and usefulness
of services to their members and other constituents, including the community.

Functioning
EOs in India play two types of roles in representing the interests of their members:
One, they are called to nominate representatives of employers in voluntary or statutory
bodies set up not only to determine wages and conditions of employment of workers in
a particular industry / sector, but also for consultation and cooperation on social and
labour matters in national and global context (See Table 1 for an indicative list of
representation of EOs in various tripartite fora and public bodies / institutions ).
Secondly, they seek to redress the grievances arising from legislative or other
measures by making submissions to concerned authorities. It is difficult to recapitulate
and synthesise the role played by EOs in representing the interests of employers in the
ILO, various committees / institutions , bipartite and tripartite fora at the national
level and on various issues such as legislation, voluntary codes, social security,
bonus, etc.

Table 1 Employers’ Representatives on Various Bodies

Advisory Committee under Equal Remuneration Act

All India Board of Technical Studies (Textile technology)
Central Advisory Board for Child Welfare
Central Apprenticeship Council
Central Board of Trustees of Employees’ Provident Fund
Central Board for Workers’ Education
(Central and Several Regional Committees)
Central Committee on Employment
Central Council on Employment
Central Council of Health & Central Welfare Planning Council
Central Standing Committee on Bonded, Migrant and Casual Labour
Committee on Conventions
Indian Institute of Science, Bangalore
Employees’ State Insurance Corporation
ESIC’s Medical Council and Regional Board
(for various States/ Union Territories)
Indian Institute of Applied Manpower Research, New Delhi
Indian School of Mines, Dhanbad
Various Industrial Committees
Mica Mines Labour Welfare Fund Central Advisory Board
Minimum Wages (Central) Advisory Board
Minimum Wages Advisory Board
National Arbitration Promotion Board
National Children’s Fund
National Council for Training in Vocational Trades
National Labour Institute
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National Productivity Council Employers’ Organisations
National Safety Council
Regional Committee – Employees’ Provident Fund
State Labour Advisory Boards
Shram Vir National Awards and National Safety Awards Committee
Vocational Rehabilitation Centre for Physically Handicapped

The real worth of an EO and the best justification for its support is the range of
services that it provides to its members. Within the overall framework of the need to
develop enlightened human resource management practices, the kind and range of
services that an EO could provide should rest mainly on the needs of the members and
their priorities as also the resources and competence within the leadership and
secretariat of the EO. Some of the basic services every EO may be expected to
provide include the following: (i) study and analysis of problems and dissemination of
information — advice, advocacy and dispute settlement; (ii) guidance or conduct of
collective bargaining. In India this role is voluntary and at the initiative and request of
the members; (iii) training and development of staff and members; (iv) safety and
health at workplace and working environment; and (v) public image and public
relations.

8.7 LEGAL STATUS OF EMPLOYERS’

ORGANISATIONS
EOs could be registered in any of the following legal forms: The Trade Union Act,
1926; the Indian Companies Act, 1956; or the Societies Act, 1860. The AIOE
remained a registered body till 1969 when it was registered under the Trade Unions
Act. The EFI came into being in March 1933 as a company under the Indian
Companies Act. A quarter century later, it was reorganised as an unregistered
Association, a position which continued till 1963 when it too was registered under the
Trade Unions Act.
The main reason for the AIOE opting for registration under the Trade Unions Act was
to allow it to take up test cases before the courts and industrial tribunals. In the case
of the EFI, the motivation was to overcome the burden of income-tax on its steadily
rising income and surplus.
The SCOPE, however, continues to be registered under the Societies Act.

8.8 OBSERVATIONS OF THE FIRST NATIONAL

COMMISSION ON LABOUR ON EMPLOYERS’
ORGANISATIONS
The First National Commission on Labour made the following observations/
recommendations with regard to the employers’ organisations.
1) Registration of employers’ associations should be made compulsory.
Arrangements should be made through the Industrial Relations Commissions
(proposed by the NCL) for certification of employers’ organisations at the
industry / area level for the purpose of collective bargaining.
2) Employers’ organisations should encourage collective bargaining and voluntary
arbitration and avoid third party intervention as far as possible.
3) Regular and scientific arrangements for training of supervisors and middle
management personnel in the art or handling labour should receive due attention
from the employers’ organisations. 67
Trade Unionism 4) From the view point of labour management relations, employers’ associations
should accept the following functions:
i) undertake promotion of collective bargaining at various levels;
ii) encourage observance and implementation by their members of bipartite and
tripartite agreements in real spirit and form;
iii) expedite implementation of wage awards by members without undue delay and
reservations;
iv) work towards elimination of unfair labour practices by employers;
v) encourage adoption by members of personnel policies conducive to productivity
and industrial peace;
vi) promote rationalisation of management or organisation to improve productivity;
vii) arrange employers’ education (a) in the concept of labour partnership in industry,
(b) for ensuring identity of interests of labour and management and (c) for
promoting harmony between the goals of industry and of the community; and
viii) work towards the collective welfare of its members through training, research
and communication in the field of labour-management relations.

Activity B
Briefly explain the legal status of employers organisations in general and functioning
of employers organisations in particular with regard to your organisation or any
organisation you are familiar with.
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8.9 SUMMARY
In this unit we have outlined the origin and growth of employers’ organisations in
India. With the growth of workers’ unions, labour matters started receiving the
attention of the employers’ associations, whose main functions were to protect and
promote industrial and commercial interests of the members. The EOs have a three-
tier structure: local associations, industrial associations, and All-India federations.
In the private sector, four federations — ASSOCHAM, FICCI, CII and FASII form
the industrial wing. The CIE representing the EFI, AIOE, and the SCOPE forms the
labour wing. The CIE nominates employers’ representatives for the annual ILO
conferences. CIE is affiliated to the Geneva-based IOE. The membership of the
employers’ organisations are rather small, compared to the potential for coverage.
Subscriptions being the main source of revenue, low membership coverage affects
their finances. The organisation structure of an EO typically consists of a general
body of members, office-bearers, and executive committee, and the Secretariat. The
EOs provide a wide variety of services in the area of industrial/ employment relations.
The EOs could be registered under the Trade Unions Act, 1926 or Societies Act, 1860
or Companies Act, 1956.

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 Employers’ Organisations
8.10 SELF-ASSESSMENT QUESTIONS
1) Outline the origin and growth of the employers’ organisations in India.
2) What are the aims and objectives of the employers’ organisations in India?
3) Briefly discuss the structure and functions of the employers’ organisations in
India.
4) State the first NCL’s observations on the employers’ organisations.

8.11 FURTHER READINGS

Chatterjee, N. N. 1984. Industrial Relations in India’s Developing Economy,
Calcutta: Allied Book Agency.
Chhabra, T. N. and R. K. Suri . 2003. Industrial Relations: Concepts and Issues,
Delhi, Dhanpat Rai & Co. (P) Ltd.
Government of India, Ministry of Labour and Employment and Rehabilitation, 1969.
Report of the National Commission on Labour, Delhi.
IGNOU. 1988. MS-2, Block-6, Unit-2. Employers’ Associations, pp. 15-24.
IGNOU. 1993. MS-24, Block-2, Unit-8. Management and Employers’ Association,
pp. 50-57.
Oechslin, J.J. 1990. Employers’ Organisations, Geneva: Industrial Organisation of
Employers.
Ramaswamy, E.A. 2002. Managing Human Resources: A Contemporary Text, New
Delhi: Oxford University Press.
Venkata Ratnam, C.S. 1989. “The Employers’ Dilemma: A Study of the Council of
Indian Employers and its Constituents and Their Role in Industrial Relations”.
Bombay: The EFI Solar and Labour Research Foundation.
Windmuller, J. P. and A. Gladstone (Eds.). 1984. Employers’ Organisation and
Industrial Relations, Oxford: Clarendon.

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