Unit-1

Introduction
 Concept and meaning:

The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and

‘Relations’
‘Industry’ refers to any productive activity in which an individual (or a group of
individuals) is/are engaged. By ‘relations’ we mean the relationships that exist
within the industry between the employer and his workmen.

The term industrial relations explain the relationship between employees and
management which stem directly or indirectly from union-employer
relationship.
Industrial relations are the relationships between employees and employers
within the organizational settings.

The term industrial relations has a broad as well as narrow outlook.

Originally, industrial relations was broadly defined to include the relationships

and interactions between employers and employees. From this perspective,
industrial relations covers all aspects of the employment relationship, including
human resource management, employee relations, and union-management (or
labor) relations.

Now its meaning has become more specific and restricted. Accordingly,
industrial relations pertains to the study and practice of collective bargaining,
trade unionism, and labor-management relations, while human resource
management is a separate, largely distinct field that deals with nonunion
employment relationships and the personnel practices and policies of
employers. The relationships which arise at and out of the workplace generally
include the relationships between individual workers, the relationships between
workers and their employer and the relationships between employees. The
relationships employers and workers have with the organizations are formed to
promote their respective interests, and the relations between those
organizations, at all levels.

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 Industrial relations also includes the processes through which these
relationships are expressed (such as, collective bargaining, workers’
participation in decision making, and grievance and dispute settlement), and the
management of conflict between employers, workers and trade unions, when it
arises.

 Definitions:

Edwin B.Flippo- Industrial relations refer to all types of relations that exist in
an industrial enterprise, and employer and employees constituted them. The
term denotes all types of intra-group relations within and inter-group relations
between these constituent groups. These relations can be formal, informal and
mixed.

Monappa- industrial relations means relationship that emerges out of day-to-day

working and association of labor and management.

Tead and Matcalf- Industrial relationship is the composite result of the attitudes
and approaches of the employers and employees towards each other with regard
to the planning, supervision, direction and coordination of the activities of an
organization with a minimum of human efforts and friction, with an animating
spirit of cooperation, and with proper regard for the genuine well-being of all
the members of the organization.

On the basis of analysis of the above definitions the following salient features
of industrial relations are:

 Industrial relations are outcome of employment relationship in an industrial

enterprise.
As a regulated relationship the focus of industrial relations is on rule making by
participants to facilitate un-interrupted production.
 The work situation may provide methods of adjustment and cooperation
with each other.
 The government agencies involve shaping the industrial relations through
laws, rules and awards.
 The important actors of industrial relations are employees or their
organizations, employers and their associations and government.

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 OBJECTIVES OF INDUSTRIAL RELATIONS
The objectives are given below:-

 To safeguard the interest of labor and management by securing the highest

level of mutual understanding and good-will among all those sections in the
industry which participate in the process of production.
 To avoid industrial conflict or strike and develop harmonious relations.
 To raise productivity to a higher level in an area of full employment by
lessening the tendency to high turnover and frequent absenteeism.
 To improve the economic conditions of workers in the existing state of
industrial managements and political government.
 To protect management and labor interests by securing mutual relations
between the two groups.
 To avoid disputes between management and labor, and create a harmonizing
relationship between the groups so productivity can be increased
 To provide better wages and living conditions to labor.
 To establish industrial democracy based on labor partnership.
 To boost the discipline and morale of workers.
 To improve workers’ lot with a view to solve their problems through mutual
negotiations and consultation with the management.
 To increase industrial prosperity.

 SCOPE OF INDUSTRIAL RELATIONS

The scope of industrial relations is not merely confined(limited) to labor-
management relations or employer-employee relations. It is a comprehensive
and total concept embracing the sum total of relationships that exist at various
levels of the organizational structure. More specifically, it brings relations
among workers themselves within the class of employees, relation among the
management within the managerial class, and relations between the two distinct
classes of workers and management. It consists of a complex network of
relations that arise out of functional interdependence between workers and
managements and between industrial organizations and society.
The scope of industrial relations is quite vast. The main issues involved here
include the following:
 Collective bargaining
 Machinery for settlement of industrial disputes
 Standing orders (rule of conduct for employees)
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 Workers participation in management
 Unfair labor practices

Forms of Industrial relations

 INDUSTRIAL RELATIONS ACTORS

The actors in Industrial Relations are:

Demands
Employees/
about
Trade Unions
working/servic
e condition
Industrial
Employers/ Concerned
Relations
Associations about
productivity/p
rofit
Government Enacts
legislation
Figure 1 Actors in Industrial and rules
Relations

1. Employees and trade unions:

 Unions play a crucial role in organizing the employees and mobilizing them
through a set of demands and also engaging with employers through collective
bargaining.
 The presence of unions in service sector is very limited.
 Educational qualifications, the role of human resource management, career
opportunities and good compensation package discourage the formation of trade
unions in the service sector.
 Employees join trade unions to improve the working environment as well as for
better terms and conditions in employment.

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 The employees also express their grievances in respect of working and
employment condition through unions.
 The unions desire that management must consult them when decisions are taken
about working and service conditions.
2. Employers and employers’ associations:
 Employers desire harmonious industrial relations so that the productivity and
profit of their organization is not affected.
 They desire the right to hire and fire employees, relocate the firm/factory in
case of problem and also introduce modern technology.
 They pressurize the government for soft labor laws and demand complete
freedom in hiring and firing employees.
 Employers also use temporary workers, contract workers and outsource their
work to improve the productivity in the organization and also to operate in a
union less environment.
3. Government:
 Government plays a mediating role whenever the employer and employee are
not able to arrive at a consensus regarding any employment related issues.
 The role of government also changes based on the policies of the political party.
 The government also plays a direct role in industrial relations through
legislations, rules and agreements.

All the three actors in Industrial Relations cannot act independently. They need
the support of each other for successful industrial relations practice. But their
relationships are also shaped by the market, technological and political
contexts.

 THEORIES OF INDUSTRIAL RELATIONS

1. Dunlop’s system approach/ system perspective:

Dunlop (1958) applied the systems approach to industrial relations. System
comprises input, processes, output and feedback. The system can be either
influenced by the environment in case of open system or isolated from the
environment in case of closed system. He defined industrial relations
comprising of actors, contexts, ideology and rules.
Actors: The actors are (i) workers and their organizations, (ii) managers and
their organizations, and (iii) governmental agencies concerned with the
employees. None of these actors can act independently and they depend on
others for mutual benefit.
Contexts: The contexts are (i) technological aspect of the workplace, (ii) the
market or budgetary constraints and (iii) distribution of power among the
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 actors. The actors interact with the general environment comprising of the
above contexts.
Ideology: Ideologies are commonly shared ideas and beliefs regarding the
engagement and roles of the actors that binds the system together. The common
ideology can be healthy industrial relations for the benefit of all the actors.
Rules: Rules are the focus of industrial relations systems. The process and
administration of rulemaking is critical in industrial relations systems, which is
a subset of industrial society. Rules comprise the working condition,
employment and service condition of employees, procedure and process of
implementation of service rules in employment context.

INPUTS
Actors PROCESSES
(employees, Bargaining
employers, Conciliation OUTPUTS
government) Arbitration Rules
Contexts(technolo Adjudication
gy, market, power) legislations
Ideology

FEEDBACK

Criticism of Dunlop’s Model:

 More emphasis on structure rather than on the process and behavior of actors.
 The other important actor, customer, who is very important in the competitive
business environment and determines the market, is not part of the systems
approach.

2. Unitary Approach:

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 The employer and employee work as a harmonious unit and they work for a
common goal.
 No possibility of conflict, but if any conflict arises it is seen as the result of
misunderstanding or mischief.
 Thus, conflict is perceived as disruptive.
 Since there exist direct relations between employer and employee, trade unions
are considered as unnecessary.
 Employees are expected to be loyal and sincere to the organization.

3. Pluralist Approach:
 This approach was developed in the United States of America by John R
Commons.
 He considered society as complex due to the presence of multiple interest
groups with their own goals.
 Conflict can arise and there are possibilities of compromise based on the
interaction between different stakeholders.
 Collective bargaining can be used as a mechanism to sort out the conflict.
 Trade union serves as an interest group to protect the interest of employees.

4. Radical /Marxist Approach:

 According to Marxist approach, industrial relations are market relations.
 Capitalists and wage-workers stand at each side of the labor market as buyers
and sellers respectively of the commodity “labor”.
 Wage-workers sell their labor in exchange for the financial means to sustain
their existence. Capitalists purchase the labor required for the profitable
deployment of their means of production.
 Naturally capitalists have the power advantage.
 The wage to be paid to the labor is the point of conflict between the employer
and employee.
 The employer tries to pay as low as possible to increase his profit whereas the
employees try to obtain wages as high as possible for his/her sustenance.
 Marx saw the trade union as an attempt to strengthen workers’ power position
in their struggle.

Forms of Industrial Relations

 The interaction among the stakeholders in IR is characterized by a certain
'balance of power'. For example In highly regulated industrial relations
environment, the State is likely to be the dominant player. In a market-driven

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economy, employers tend to dominate as a result of the right to 'hire and fire' in
response to market exigencies. In a socialist economy, trade unions tend to have a
dominant role.
 In that process, industrial relations degenerate into a dominance-submission
syndrome in which the dominant stakeholder tends to control.
 The management of industrial relations within the framework of culture of
dominance can take three forms:

a. Managing by contending
b. Managing by conceding
c. Managing by colluding
Other important forms
d. Management by Collaborative Problem Solving
e. Transformational Process Model

a. Managing by contending
assert something as a position in an argument.

Signifies that the stakeholders engage in a contest of will with the dominant
stakeholder holding the reins and steering (making under control) the choice-
making processes as well as choices.
Pressure tactics coupled with employment of leverages like litigations and direct
action go hand-in-hand with the reaction of the dominated to protect threatened
interest.

b. Managing by conceding
admit or agree that something is true after first denying or resisting it.

It indicates that the dominant stakeholder manages interactions with other less
dominant and dominated stakeholders by making concessions to buy peace on an
ad hoc, situational basis.
Note: Ad hoc is a word that originally comes from Latin and means “for this” or
"for this situation." In current American English it is used to describe something
that has been formed or used for a special and immediate purpose, without
previous planning.
A major ploy here is to adopt a 'divide-and-rule' policy.

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The policy control enemies by encouraging disagreement among them.

c. Managing by colluding
cooperate in a secret or unlawful way in order to deceive or gain an advantage over others.
It denotes that the dominant stakeholder strikes up equations with individual
stakeholder representatives or with coalitions of stakeholders, through which,
mechanism of choice-making as well as choices are influenced to favour the
dominant stakeholder.
The collusion character of the interaction leads to the compromise of the interests
of the less dominant stakeholder groups.

d. Managing by collaborative problem-solving

Coming out of this vicious cycle is possible only if the interacting stakeholders
decide to change the culture of dominance and compliance to a culture of dialogue
and mutuality.
This is feasible only if an individual or a coalition of stakeholders change the mode
of choice-making from a contending-conceding-colluding orientation to a
mutuality-based cooperative orientation. This is possible through a collaborative
problem-solving approach, evidence of which is already available in various
organization across the globe.
Managing by Collaborative Problem-solving in the sphere of industrial relations
choice-making is, perhaps, the key to the development of a new philosophy.

e. Transformational process model

The transformational process model is, in essence, a dynamic process in which the
corporation continuously defines the environment and responds appropriately.
It is a continuous process of redefining the organization's own core in relation to
its internal stakeholders in order to, not only remain in existence but also to change
and able to grow.

Forms of worker participation in management

1. Joint Consultation Model

2. Joint Decision Model
3. Self Management, or Auto Management Scheme

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4. Workers Representation on Board

1. Joint consultation model: In the joint consultation model the management

consults with the workers before taking decisions. The workers represent their
view through ‘Joint consultative Committees’. This form is followed
in United Kingdom, Sweden and Poland.

2. Joint decision model: In this form both the workers and management jointly
decide and execute the decisions. This form of participation is followed in U.S.A.
and West Germany.

3. Self management or auto management: In this model, the entire control is in

the hands of workers. Yugoslavia is an example to this model. Where the state
industrial units are run by the workers under a scheme called ‘Self Management or
Auto Management Scheme’.

4. Workers’ representation on board: Under this method, the workers elect their
representative and send them to the Board to participate in the decision making
process.

 INDUSTRIALIZATION STRATEGY AND INDUSTRIAL RELATIONS

Industrialization is the process by which an economy is transformed from

primarily agricultural to one based on the manufacturing of goods. Individual
manual labor is often replaced by mechanized mass production and craftsmen
are replaced by assembly lines.

Characteristics of industrialization include economic growth, more efficient

division of labor and the use of technological innovation to solve problems.

Generally relations between agriculture and industry exist in a framework either

of an industrialization strategy with an internal dynamic directed toward
economic self-development or a strategy with an external dynamic, tending to
integrate the economy into the international capitalist system.
Import substitution industrialization (ISI) is a trade and economic policy that
advocates replacing foreign imports with domestic production. ISI is based on

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 the premise that a country should attempt to reduce its foreign dependency
through the local production of industrialized products.
• In the import-substitution stage, the governments concerned have tended to
be protectionist in approach, but have not restricted IR to any significant extent.
However, this approach has tended to produce inefficiencies and relatively high
labor costs.

Export-oriented industrialization (EOI)/export substitution

industrialization (ESI) is a trade and economic policy aiming to speed up the
industrialization process of a country by exporting goods for which the nation
has a comparative advantage.
• In the early export-orientation stage, experience has shown that the emphasis
shifts to achieving competitiveness in export markets through measures to
ensure a compliant labor movement and favourable labor costs for foreign
investors.
• later export strategies have seen a change of focus away from containment
of labour costs and some easing of restrictions on trade unions, followed by
a reduced role for the State through decentralization of IR/HRM
responsibilities to enterprise level; increased emphasis on education and
training policies to raise the skill levels of the workforce; and a rush to
develop flexible, productive, high performance workplaces.

Country’s industrialization strategy for economic development profoundly

influences its industrial relations.
Import substitution industrialization is associated with industrial relations
policy goals of pluralism and stability while a low-cost export oriented
industrialization strategy was associated with industrial relations policy goals of
cost containment and union suppression.
In countries that moved from a low-cost export-oriented strategy to a higher
value added export oriented strategy the focus of Industrial relations policy
goals shifted from cost containment to work force flexibility and skills
development.

 GLOBALIZATION AND INDUSTRIAL RELATIONS

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 Industrial relation may be defined as the means by which the various interests
involved in the labor market are accommodated, primarily for the purpose of
regulating employment relationships. These relationships are influenced by the
government and its agencies through policies, laws, institutions and programs
and by the broader political, social, economic, technological and cultural
characteristics of each country.

The move towards market orientation (liberalization) in many countries has

been reflected in deregulatory policies by governments, including the reduction
of tariff barriers, facilitating the flows of capital and investment and
privatization of government owned enterprises.
Liberalization has preceded or been forced by globalization.

Both phenomena have been facilitated by the significant growth in world trade
and foreign direct investment and by information technology which has
facilitated rapid financial transactions and changes in production and service
locations around the world.

Increasing international economic interdependence has disturbed traditional

industrial relations arrangements in several broad ways:

 Firstly, such arrangements have normally been limited to the circumstances

created by national markets; but globalization has fundamentally changed, and
considerably expanded, the boundaries of the market place.

 Secondly, globalization has disturbed the status quo between “capital” and
“labor” in each country, in the sense that capital is significantly more mobile in
an open international environment, while labor remains relatively immobile.
This can place “labor” at a relative disadvantage in that capital can now employ
labor in different countries, at lower cost and on a basis which can prejudice the
continuing employment of workers in the originating country.

 Thirdly, globalization is having a contradictory impact on industrial relations. It

is accelerating economic interdependence between countries on an intra-and
inter-regional basis and encouraging similarities in approach by individual
enterprises in competitive markets. This may lead to some
convergence(merging) in industrial relations arrangements around the world. At
the same time there is clear evidence of conflict towards convergence
(merging), based on particular national and regional circumstances.
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The system perspective of industrial relation

What is industrial relations from a Worker's Perspective?

As workers, we associate Industrial Relations with Unions, Industrial Awards, and

labour laws that set the conditions under which the labour or worker work. This
includes pay, safety, employment security and opportunities for training. 150 years
ago people worked 6 days a week, 12 hours a day or more, and there were no
provisions for sick pay or holiday pay. There was no protection for children who
were often a form of cheap labour, or worse, were sold into slavery. As a society
we have come a long way since, and this is largely due to the formation and actions
of labour unions.

What is industrial relations from an Employer's Perspective?

The modern day employer attaches great importance to maintaining good industrial
relations as a cornerstone of business growth and success. Industrial relations, for
the employer, is about negotiations between workers and business
owners/managers that lead to increased productivity and improved product quality
in exchange for better pay and conditions of employment for workers. These
negotiations between business owners/managers and their workers is often referred
to as enterprise bargaining. The reduction of conflict between workers and
business management is also a highly desirable objective in Industrial Relations.

What is industrial relations from a Society Perspective?

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Whether we have good jobs and how we work has a fundamental effect on the
quality of our lives. Unemployment causes social isolation and economic
deprivation. When there is high levels of unemployment, there is social tension and
upheaval. Too much employment has its own set of woes (distress). People who
work long hours often suffer from health issues and family problems. There is a
need to strike a work-life balance to ensure a healthy, happy and productive
populations.

What is industrial relations from a Government Perspective?

The industrial relations processes, and the relationships between employees and
employers, are influenced by the government and its agencies through the
government’s construction, passing and implementation of relevant industrial
relations law, policies, regulations etc.
The legal framework within which Industrial Relations must function is
determined by the government and/or its agencies, possibly in consultation with
other role-players in the industrial relations processes.
These includes things such as trade union representatives, employers and select
employees.
The legal framework can be the legal limitations imposed on an
employer/employee relationship.

For example such as the amount of hours an employee is allowed to legally work
per week and how much an employer is obligated to pay an employee for a certain
amount of work.

In South Africa, for example, the BCEA (Basic Conditions of Employment Act)
can be seen as a governmental contribution to the governing of the relationship
between employers and employees, and can as such be considered the
government’s contribution to guiding the processes of industrial relations.
Qst 1. Desribe the present scenario regarding is industrial relations from a
Worker's Perspective.

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