Professional Documents
Culture Documents
INTERNATIONAL
& COMPARATIVE
EMPLOYMENT RELATIONS Edited by Greg J Bamber,
Globalisation and change Russell D Lansbury and Nick Wailes
CHAPTER 13
Employment Relations in India
C. S. Venkata Ratnam and Anil Verma
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Lecture outline
• Key themes
• Context
• The actors
• Representation in Indian industrial relations
• Agreement making
• Economic context for reforms
• Current issues in employment
• Labour law reform
• Conclusions
Chapter 13:
2 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Key themes
• Major economic reforms in the 1990s paved the way for high
economic growth in India and involved the considerable liberalisation
of the expansive labour laws.
• There is a large rural sector and a large ‘informal’ sector in which
unions and collective bargaining are rare.
• Trade union membership overall is low but membership and collective
bargaining coverage is higher in the public sector and large enterprises.
• There are weak laws regarding trade union recognition and
representation and poor enforcement of labour laws and collective
agreement provisions.
• Current concerns include lack of protection for workers who have been
made worse-off by the market-based labour reforms, poor growth
prospects in key parts of the labour market, high rates of contract and
casual workers, increasing downsizing and a low-value added IT sector.
Chapter 13:
3 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Context
• The Indian industrial relations system is rooted in British
common law.
• The IR system also reflects India’s diverse population.
• The unionisation rate is low at 5% of the total workforce due in
part to large rural and informal sectors, which are not
unionised.
• Most unions are concentrated in large enterprises and
government-related sectors.
• After slow development during most of the 20th century,
economic growth has been high since the mid-1990s.
• Indian labour laws were liberalised as part of a broader
deregulation program in the 1990s, changing what was one of
the most protective labour law regimes in the world.
Chapter 13:
4 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Chapter 13:
9 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Chapter 13:
10 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Representation 1
• Employers’ organisations in India play two representative
roles:
1. They nominate representatives of employers in voluntary or
statutory bodies set up to determine wages and conditions of
employment in a particular industry or sector and for consultation
on social and labour matters in the national and global context.
2. They seek to redress the grievances of employers against legislative
or other measures by making submissions to the authorities
concerned.
• Employers’ associations also represent interests of
employers in various committees and institutions, bipartite
and tripartite fora, and serve as a forum for information
sharing, policy formulation and consensus building on
strategic issues.
Chapter 13:
12 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Representation 2
Non-union firms
• In contrast to the past, it has been increasingly common since the
1990s to find establishments with no union presence, for instance, in
software companies and in several car manufacturers.
• Employers have adopted union-avoidance tactics such as the use of
greenfield sites (which have high capital investment and technology
and lower labour intensity), offering above-average wages and
conditions, and asking employees to participate in anti-union activities
Collective bargaining
• Only about 2% of the total workforce, but over 30% of the workers in
the formal (organised) sector, participates in collective bargaining.
• In the public sector and the largest public and private sector
enterprises the figure is 70% or more.
• Legislation encourages government adjudication of disputes.
Chapter 13:
13 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Representation 3
Historical context for industrial relations
• At the time of independence, the British gave India a legal framework
aimed primarily at dispute resolution.
• After independence, the Indian government adopted the Soviet
model of planned economic development and sought to achieve a
socialist society.
• Industrial harmony was considered a necessity for state-led
development.
• Several industries were nationalised in the early 1970s, and, during
the Emergency (1975-77), labour law changes restricted employers’
ability to sack workers and close operations that were no longer
viable. Workers’ participation in management was adopted as a
directive principle of state policy.
• Prior to the 1990s reforms, two national commissions on labour had
recommended comprehensive reforms to labour laws.
Chapter 13:
14 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Representation 4
Freedom of Association
• The constitution guarantees the fundamental right to freedom of association.
• The right of collective bargaining is not extended to industrial workers in
government undertakings (e.g. railways, post, telecommunications).
Compensation for these workers is based on recommendations of pay
commissions appointed periodically by the government.
• National labour laws do not mandate employers to either recognise unions or
engage in collective bargaining, but some states have provisions recognising
trade unions.
• India has not ratified some ILO conventions concerning Right of Association.
Determination of a collective bargaining agent
• Determining a collective bargaining agent has been a controversial issue
historically.
• Some states have measures for recognising unions as agents in bargaining, for
example: a Code of Discipline which is common in the public sector; secret
ballots; a check-off system; and membership verification.
Chapter 13:
15 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Representation 5
Collective agreements and disputes
• An agreement with one trade union is not binding on members of other unions
unless arrived at during conciliation proceedings.
• This means that even if one union has an agreement, other unions can raise an
industrial dispute with an employer.
• A collective agreement is binding only for the workers who have negotiated
and signed the agreement, but a written settlement arrived at in the course of
conciliation proceedings is binding not only on the actual parties to the
industrial dispute but also on the heirs, successors or assignees of the
employer and all the present or future workers in the establishment.
• Under the Industrial Disputes Act, disputes can be settled with or without
recourse to the government conciliation machinery. Arbitration or adjudication
follows failed conciliation.
• An ‘award’ can be an interim or final determination of an industrial dispute by
a Labour Court, Industrial Tribunal, National Industrial Tribunal or an arbitrator.
Awards are legally enforceable instruments.
• Collective bargaining is rare in the informal sector.
Chapter 13:
16 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Representation 6
Unfair labour practices
• The Industrial Disputes Act defines the following as unfair
labour practices:
– refusal by the employer to bargain collectively in good faith with
recognised trade unions,
– refusal by a union to bargain in good faith with the employer
– workers and trade unions engaging in coercive activities against
certification of a bargaining representative
• Breaching an industrial ‘settlement’ is punishable under
law.
• Employers use many tactics to undermine unions, actions
which are illegal but go largely unprosecuted.
Chapter 13:
17 India
Copyright Allen & Unwin, 2011
International & Comparative Edited by Greg J Bamber,
Employment Relations 5th edition Russell D Lansbury & Nick Wailes
Conclusions
• Labour policy in India has been too narrowly focused on the 7% of the
labour force employed in the formal/organised sector.
• The challenge for the government is accommodating all workers and
meeting the plurality of needs in the labour market. The government is
faced with the paradox of having to moderate the at times excessive
protection for workers in the formal sector (forming 7% of the labour
force) while enhancing protection for workers in the informal sector
(forming 93% of the labour force).
• Improvements to education and vocational skills training are needed.
• The labour administration and judiciary lack the professional skills and
accountability to match their discretionary powers, so there is a need to
build a cadre of professionals in these areas.
• Improvements to the dispute resolution system also sorely needed.
• Tripartite negotiations on devising policies which achieve flexibility and
job security have stalled, and need to be restarted.
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.