Chapter 6

Labour and Management Relations

6.1 Trade Unions – Concept and Functions of Trade Unions in India

6.2 Collective Bargaining
6.3 Labour Turnover –
6.3.1 Causes of Labour Turnover
6.3.2 Effects of Labour Turnover
6.3.3 Measures to prevent the Labour Turnover
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6.1 Trade Unions – Concept and Functions of Trade Unions in India

6.1.1 Trade Unions – Concept

Trade Unions in India are registered and file annual returns under the Trade Union Act (1926). Statistics on
Trade Unions are collected annually by the Labour Bureau of the Ministry of Labour, Government of India.
As per the latest data, released for 2012, there were 16,154 trade unions which had a combined
membership of 9.18 million (based on returns from 15 States - out of a total of 28 States and 9 Union
Territories). The Trade Union movement in India is largely divided along political lines and follows a pre-
Independence pattern of overlapping interactions between political parties and unions. The net result of this
type of system is debated as it has both advantages and disadvantages. Bharatiya Mazdoor Sangh is the
Largest Trade union of India.

The firm or industry level trade unions are often affiliated to larger Federations. The largest Federations in
the country represent labour at the National level and are known as Central Trade Union Organisations
(CTUO). As of 2002, when the last Trade Union verification was carried out, there are 12 CTUOs recognised
by the Ministry of Labour.

6.1.2 Functions of Trade Unions in India

i. Increasing Co-operation and Well-being among Workers:
The modern industry is complex and demands specialization in jobs. This results in extreme division of labor,
which leads to the growth of individualism and development of impersonal and formal relationships. There
is no common unifying bond among the workers.

It is in this context that the trade unions come into the picture and they promote friendliness and unity
among the workers. Besides this, the trade unions also discuss the problems, which are common to all the
workers. It is a platform where workers come together and know each other. The trade unions also provide
some kind of entertainment and relaxation to the workers.

ii. Securing Facilities for Workers:

Most of the industrialists are not very keen on providing the facilities and proper working conditions to the
workers. They are more interested in getting their work done to the maximum extent. In such conditions,
trade unions fight on behalf of the workers and see that the facilities have been provided by the
management.

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iii. Establishing Contacts between the Workers and the Employers:
In present days, there are many industries, which have grown into giants. A single unit in a particular
industry may employ hundreds of employees. Many times a worker or employee may not have a chance to
see their managers. In this situation, the workers are not able to express their grievances before their
employers, and even the management does not know the difficulties faced by the workers.

The trade unions play an important role in bringing to the notice of the employers the difficulties and
grievances of the employees. They try to arrange face-to-face meetings and thus try to establish contacts
between the employees and the employers.

iv. Trade Unions working for the Progress of the Employees:

The trade unions try to improve the economic conditions of the workers by representing their cases to the
employers and try to get adequate bonus to the workers.

v. Safeguarding the Interests of the Workers:

Most of the industries try to exploit the workers to the maximum. They do not provide any benefits such as
increasing their wages, granting sick leaves, giving compensation in case of accidents, etc. The workers are
not made permanent even after many years of service and in some cases they are removed from service
summarily. The trade unions provide security to the employees in such situations.

vi. Provision of Labor Welfare:

The economic conditions of the industrial workers in India are very poor. The standard of living is very low. A
majority of industrial workers in India are illiterate or semi-literate. It is the responsibility of the trade unions
to get them proper housing facilities and promote the socio-economic welfare of the laborers. The trade
unions also try to arrange educational facilities for the children of the workers.

6.2 Collective Bargaining

 Collective bargaining is the official process by which trade unions negotiate with employers, on behalf
of their members.
 Collective bargaining is only possible where an employer recognises a trade union and between them
they decide on the scope of negotiations.
 Most collective bargaining arrangements in the UK are voluntary. Good employers recognise the
benefits that come from voluntary union recognition, such as being able to negotiate wages and
other terms and conditions collectively for large groups of workers at the same time.
 But the law also allows unions to make even hostile employers recognise them, if enough workers
become union members and support union recognition. This is known as ‘statutory recognition’.
 If your employer recognises a union for collective bargaining and you’re a member, improvements to
your contract terms such as pay rises, negotiated by the union, should be automatically incorporated
into your employment contract.
 Collective bargaining with a recognised union is the best way to get decent wages, terms and
conditions. If you’re not already a union member, it’s a good idea to join.
 If you’re already a member but your union is not yet recognised, consider speaking to someone from
your national union for advice on how to go about getting recognised .

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6.3 Labour Turnover :

Definition:
Labour turnover refers to the rate at which employees leave employment. Labour turnover can be evaluated
by relating the number of employees leaving their employment during a period of time to the total or
average numbers employed in that period.

6.3.1 Causes of Labour Turnover

A) Avoidable causes are:

(i) Lower wages;
(ii) Bad working conditions;
(iii) Unsympathetic attitude of the management;
(iv) Lack of opportunities for promotion;
(v) Lack of proper training;
(vi) Improper manpower planning;
(vii) Lack of proper incentives;
(viii) Bitter relationship between management and workers;
(ix) Lack of conveyance, accommodation, medical and educational facilities and recreational amenities etc.

B) Unavoidable causes:

Sometimes workers have to leave the organisation because of management requirements and
administrative actions. They also leave their employment at their own will, that is, on personal reasons. In
the latter case the management can do nothing but remains a helpless onlooker. So, unavoidable causes
may be administrative or personal.

(1) Administrative causes:

(i) Termination of service due to indiscipline, insubordination, bad conduct etc.

(ii) Retrenchment or lay-off due to shortage of resources, low demand for recession.

(2) Personal causes:

(i) Change for better job;

(ii) Death;
(iii) Retirement due to old age;
(iv) Change for better working conditions, better environment;
(v) Change for secured job;
(vi) Marriage, especially of women workers;
(vii) Illness and accident rendering the worker permanently incapable of doing any work;(viii)
Domestic need and responsibility etc.

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6.3.2 Effects of Labour Turnover:

Labour turnover is harmful and costly. It results in increased cost of production due to the following
reasons:

a) With frequent changes in labour force, production planning cannot be properly executed resulting in
substantial loss in production.
b) Since the new workers have no previous experience in production there is loss arising out of
defective work,
rk, increased spoilage and wastage resulting in high cost of production.
c) Newly recruited workers are likely to mishandle tools and equipment which results in breakages.
d) The organisation has to incur extra cost for workers’ training.
e) Labour turnover causes increased replacement cost.
f) Labour cost increases because of lower productivity of newly recruited workers as they do not
possess the same expertise as the old workers who have left the organisation.

6.3.3 Measurement of Labour Turnover Ratio:

There are four methods for measuring Labour Turnover Ratio (LTR):

a) Accession Method:

Accession reveals the additions to the payroll.

Under this method, Labour Turnover Ratio is calculated by dividing the total number of accession during a
particular period (e.g. a week, a month etc.) with the average number of workers during the said period.

It is calculated as:

(b) Separation Method:

It appears when workers leave, discharge, retire etc. Under this method, Labour Turnover Ratio is calculated
by dividing the total
al of separations during a particular period with the average number of workers during
the said period.

It is calculated as:

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(c) Replacement/Net Labour Turnover Method:

Replacement arises when there is one accession plus one separation. Under this method,
method Labour Turnover
Ratio is calculated by dividing the number of replacements during the period with the average number of
workers during the said period.

It is calculated as:

(d) Flux, or, Separation-cum-Replacement

Replacement Method:

Practically, it is the combination

tion of two methods viz. method of separation and method of replacement.
Under this method Labour Turnover Ratio is equal to the separation plus replacement in a period divided by
the average number of workers in the period.

It is calculated as:

6.3.3 Measures to prevent the Labour Turnover

The following measures may be adopted to minimize the labour turnover.

1. Appointing right person on the right job.

2. Fair and equal treatment of all workers throughout the organization.
3. Improvement of working conditions.
nditions.
4. Provision of fair wages, allowances and other monetary benefits.
5. Provision of proper training facilities to new as well as existing employees.
6. Provision of medical facilities to protect employees from sickness.
7. Provision of welfare activities.
8. Allowing workers participation in the management.
9. Adopting sound promotion and transfer policies.
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REVIEW QUESTIONS

1. Write notes on Trade Unions Concept

Concept.
2. Explain Functions of Trade Unions in India
India.
3. Write short note on Collective Bargaining of Trade Unions in India.
4. Explain Causes of Labour Turnover
Turnover.
5. Explain Effects of Labour Turnover
Turnover.
6. What are Measures to prevent the Labour Turnover
Turnover.

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