LABOUR ENVIRONMENT , ECONOMIC

PLANNING & DEVELOPMENT

 CONTENTS
• Labour legislation
• Labour welfare and social security
• Industrial relation
• Trade unions
• Worker’s participation in management
• Exit policy
• Quality circles
• Planning in India
• Industrial development strategy
• Planning and development for agriculture
 Labour legislation
(Labour laws, considered collectively)
Set of laws suggested by a government and made official by a
parliament

 The Code on Wages

 The Occupational Safety, Health and Working Conditions Code
 The Code on Social Security
 The Industrial Relations Code

• Industrial relation
• Industrial safety and
health
• Child and woman labour
For all List and Enactments by The Ministry of
• Social Security Labour & Employment with over 40+ acts passed in
• Wages the parliament.

• Labour welfare LINK- https://labour.gov.in/list-enactments-ministry

• Employment
• Labour reforms
 Purpose of labour legislation
Labour legislation that is adapted to the economic and social challenges of
the modern world of work fulfils three crucial roles:

ROLE 1- it establishes a legal system that facilitates productive individual

and collective employment relationships, and therefore a productive
economy;

ROLE 2- by providing a framework within which employers, workers and

their representatives can interact with regard to work-related issues, it
serves as an important vehicle for achieving harmonious industrial relations
based on workplace democracy;

ROLE 3- it provides a clear and constant reminder and guarantee of

fundamental principles and rights at work which have received broad social
acceptance and establishes the processes through which these principles and
rights can be implemented and enforced.

The earliest Indian statute to regulate the relationship between employer

and his workmen was the Trade Dispute Act, 1929 (Act 7 of 1929). Provisions
were made in this Act for restraining the rights of strike and lock out but no
machinery was provided to take care of disputes.
Constitutional provisions
with regard to labour laws

I. The relevance of the dignity of human labour and the

need for protecting and safeguarding the interest of
labor as human beings has been enshrined in Chapter-
III (Articles 16, 19, 23 & 24) and 7 Chapter IV
(Articles 39, 41, 42, 43, 43A & 54) of the
Constitution of India keeping in line with
Fundamental Rights and Directive Principles of State
Policy.
II. Labour is a concurrent subject in the Constitution of
India implying that both the Union and the state
governments are competent to legislate on labour
matters and administer the same.
Labour welfare and social security
Labour welfare and social security in India are essential aspects of the country's labor
policy aimed at ensuring the well-being and protection of workers. These initiatives are
designed to provide a safety net for workers and their families, addressing various socio-
economic challenges they may face. Here's an overview of labour welfare and social
security in India:
 Labour Welfare: Labour welfare refers to the efforts made by the government and
employers to improve the working and living conditions of workers. It includes various
measures such as:
1. Healthcare: Providing medical facilities and health insurance for workers and
their families.
2. Housing: Ensuring safe and affordable housing for industrial workers.
3. Education: Establishing schools for the children of workers.
4. Recreation: Setting up recreational facilities like clubs, libraries, and cultural
centers.
5. Canteens: Providing subsidized meals to workers.
6. Safety Measures: Ensuring occupational safety and health standards are met.
Labour welfare and social security
(…continued…)
 Social Security: Social security in India is a system of programs and measures aimed
at protecting workers and their families from various risks and uncertainties. Key components
of social security in India include:
1. Employee Provident Fund (EPF): This is a mandatory savings scheme for organized
sector employees. A portion of the employee's salary is contributed to the EPF, which can
be withdrawn at retirement or during emergencies.
2. Employee State Insurance (ESI): ESI provides health and medical benefits to
employees and their dependents. Employers and employees both contribute to the
scheme, and it covers various health-related expenses.
3. Gratuity: Gratuity is a lump-sum payment made by the employer to an employee who
has completed at least five years of continuous service. It serves as a form of retirement
benefit.
4. Pension Schemes: The government has various pension schemes for workers, such as the
Employees' Pension Scheme (EPS) and the National Pension System (NPS), which offer
retirement benefits.
5. Unemployment Insurance: While India does not have a comprehensive unemployment
insurance system, various state governments have initiated schemes to provide financial
support to unemployed individuals in certain situations.
6. Maternity Benefits: The Maternity Benefit Act provides paid maternity leave to women
workers for a certain period before and after childbirth.
Labour welfare and social security
(…continued)

 Labour Laws: India has numerous labor laws and regulations

aimed at protecting the rights of workers and ensuring fair
labor practices. These laws cover aspects such as wages,
working conditions, industrial disputes, and more.
 Social Security for Unorganized Sector: The government has
launched various schemes to extend social security benefits to
workers in the unorganized sector, such as the Pradhan Mantri
Shram Yogi Maan-dhan (PMSYM) scheme and the Atal
Pension Yojana (APY).
 National and State Initiatives: Both the central and state
governments in India have their own labor welfare and social
security initiatives. These schemes and programs may vary
from state to state.
Industrial Relations
 Industrial relations in India are governed by various laws, regulations, and
government bodies, with the Ministry of Labour and Employment playing a central
role in overseeing and regulating labor-related issues. Here are some key aspects of
industrial relations in India under the Ministry of Labour:
1. Legislation and Regulatory Framework: The Ministry of Labour administers and
enforces several labor laws and regulations that cover various aspects of industrial
relations, including:
1. Industrial Disputes Act, 1947: This law provides the framework for resolving
industrial disputes and regulating the conditions of employment.
2. Trade Unions Act, 1926: It governs the formation, registration, and
functioning of trade unions.
3. Minimum Wages Act, 1948: Ensures fair wages for workers.
4. Payment of Bonus Act, 1965: Regulates the payment of bonuses to eligible
employees.
5. Employees' Provident Funds and Miscellaneous Provisions Act, 1952:
Manages the Employees' Provident Fund (EPF) and other social security
benefits.
 Industrial Relations (…continued…)
6. Employees' State Insurance Act, 1948: Administers the Employee State
Insurance (ESI) scheme for healthcare benefits.
7. Contract Labour (Regulation and Abolition) Act, 1970: Regulates the
employment of contract labor and safeguards their rights.
8. Child Labour (Prohibition and Regulation) Act, 1986: Prohibits the
employment of children in certain hazardous occupations and processes.

Dispute Resolution: The Ministry of Labour plays a vital role in facilitating the resolution of
industrial disputes. It promotes negotiation, conciliation, and arbitration processes to maintain
industrial peace and harmony.
Tripartite Consultations: Tripartite consultations involve discussions and negotiations among
representatives of the government, employers, and workers' organizations. These consultations
often lead to the formulation of labor policies and regulations.
Labor Welfare: The ministry is also involved in various labor welfare activities aimed at
improving the working and living conditions of workers. These activities include health and safety
initiatives, housing schemes, and education programs for workers.
Labor Bureau: The Labor Bureau, under the Ministry of Labour, collects and compiles labor
statistics, including data on industrial disputes, wage rates, and labor market conditions. This
information is used for policy planning and research.
Industrial Relations (…continued)
1. Central Labour Advisory Board (CLAB): CLAB is a tripartite body consisting of
representatives from the government, employers, and workers. It advises the
government on labor-related matters and policy formulation.

2. Labor Codes: India has been working on consolidating and simplifying its labor laws
through the introduction of labor codes. These codes aim to streamline various labor-
related regulations and bring greater clarity to industrial relations. Some significant
labor codes include the Code on Wages, Code on Industrial Relations, and Code on
Social Security.

***It's worth noting that the industrial relations landscape in India is dynamic and can
be influenced by changing economic conditions, labor movements, and government
policies. The Ministry of Labour and Employment continues to play a pivotal role in
ensuring a fair and balanced relationship between employers and workers while
addressing the evolving needs of the labor force.
PLANNING IN INDIA
 As of September 2021, India had been undergoing significant changes
in its labor laws, with the government introducing several reforms to
simplify and modernize the labor regulatory framework. Please note that
labor laws and regulations may have evolved since then, so it's essential
to verify the latest information from official government sources or
legal experts. However, I can provide you with an overview of the key
labor law reforms and planning in India up to that point:
 Consolidation of Labor Laws: One of the most significant reforms
was the consolidation of various labor laws into four labor codes:
 The Code on Wages, 2019
 The Industrial Relations Code, 2020
 The Occupational Safety, Health, and Working Conditions Code,
2020
 The Social Security Code, 2020
 These codes aimed to simplify and rationalize labor laws, making
compliance easier for businesses.
 Ease of Doing Business: The government aimed to improve India's ease
of doing business ranking by streamlining labor laws and reducing
compliance burdens for employers. This involved simplifying
PLANNING IN INDIA (…continued…)
 Flexibility in Hiring and Firing: The Industrial Relations Code introduced provisions
allowing for greater flexibility in hiring and firing employees. It also introduced
changes related to trade unions, industrial disputes, and the resolution of labor-related
conflicts.
 Social Security: The Social Security Code aimed to expand the social security net for
workers by introducing new schemes for provident fund, gratuity, and health
insurance.
 Minimum Wages: The Code on Wages introduced provisions for a universal
minimum wage, which aimed to reduce wage disparities and ensure fair wages for all
workers.
 Occupational Health and Safety: The Occupational Safety, Health, and Working
Conditions Code focused on improving workplace safety and health standards for
workers. It introduced regulations related to working conditions, rest periods, and
occupational diseases.
PLANNING IN INDIA(…continued)
 Compliance and Enforcement: The reforms also aimed to
improve compliance and enforcement mechanisms to ensure that
employers adhered to labor laws and regulations.
 Skill Development: The government has been focusing on skill
development initiatives to enhance the employability of the
workforce and bridge the skill gap in various industries.
It's important to note that labor laws can vary by state in India, and
some states may have additional regulations or amendments to the
central labor laws. Therefore, businesses operating in India should be
aware of both central and state-specific labor laws and seek legal
advice to ensure compliance.
Since labor laws can change over time, I recommend checking with
the Ministry of Labour and Employment of the Government of India or
consulting legal experts for the most up-to-date information on labor
laws and regulations in India.
INDUSTRIAL DEVELOPMENT
SAFETY
Industrial development safety is a crucial aspect of labor laws in any country, including India.
Labor laws in India address various aspects of industrial safety to ensure the well-being of
workers and create a safe working environment. Below are some key aspects of industrial
development safety in India with respect to labor laws:
 Occupational Safety and Health (OSH) Standards: Labor laws in India, including the
Occupational Safety, Health, and Working Conditions Code, 2020, set standards and
regulations for maintaining a safe and healthy work environment. These laws require
employers to provide necessary safety equipment, ensure proper ventilation, maintain
machinery, and take measures to prevent accidents and occupational hazards.
 Safety Committees: Some labor laws mandate the formation of safety committees in certain
types of industries. These committees are responsible for identifying and addressing safety
issues, conducting safety inspections, and promoting a culture of safety within the workplace.
 Safety Training: Labor laws require employers to provide safety training to employees. This
training typically covers topics such as fire safety, first aid, handling hazardous materials, and
using safety equipment. Training helps workers understand potential risks and how to mitigate
them.
INDUSTRIAL DEVELOPMENT
SAFETY (continued…)
 Reporting and Record-Keeping: Employers are often required to maintain
records related to workplace accidents, injuries, and near-miss incidents. These
records are crucial for tracking and improving safety performance and ensuring
compliance with labor laws.
 Emergency Response Plans: Labor laws may require employers to develop
and maintain emergency response plans to address situations such as fires,
chemical spills, or natural disasters. These plans outline evacuation procedures
and measures to minimize harm during emergencies.
 Personal Protective Equipment (PPE): Labor laws often stipulate that
employers must provide appropriate personal protective equipment, such as
helmets, gloves, safety glasses, and respiratory protection, to employees
exposed to specific hazards.
 Hazardous Substances and Chemical Safety: Regulations related to the
handling, storage, and transportation of hazardous substances and chemicals
are typically included in labor laws to prevent accidents and protect workers
INDUSTRIAL DEVELOPMENT
SAFETY (…continued)
 Machinery and Equipment Safety: Labor laws require employers to ensure the safety of
machinery and equipment used in the workplace. Regular inspections, maintenance, and
guarding of moving parts are typically mandated.
 Welfare Facilities: Employers are obligated to provide basic welfare facilities like clean
drinking water, clean restrooms, and adequate ventilation to create a healthy and comfortable
work environment.
 Worker's Compensation: Labor laws may establish worker's compensation programs to
provide financial support to workers who are injured or disabled due to workplace accidents
or occupational diseases.
 Safety Inspections and Audits: Government authorities may conduct safety inspections and
audits to ensure that employers are complying with safety regulations. Non-compliance can
result in fines or legal action.
 It's important to note that specific safety regulations and requirements may vary by industry,
and some states in India may have additional safety regulations beyond the central labor laws.
Employers in India should be aware of both central and state-specific safety regulations and
work to create a culture of safety within their organizations. Non-compliance with safety
regulations can have legal and financial consequences, so it's crucial for businesses to
prioritize industrial development safety and comply with relevant labor laws.
PLANNING AND DEVELOPMENT FOR
AGRICULTURE
Planning and development for agriculture with respect to labor laws is crucial to ensure
the well-being and fair treatment of agricultural workers while promoting the growth and
sustainability of the agricultural sector. Labor laws vary from country to country, so it's
important to consider the specific regulations and practices in your region. However, I can
provide some general guidelines on how to approach planning and development for
agriculture while adhering to labor laws:
 Know the Applicable Labor Laws: Begin by thoroughly understanding the labor
laws that apply to agriculture in your jurisdiction. These laws typically cover aspects
such as minimum wage, working hours, overtime, child labor, and workplace safety.
Compliance with these laws is essential to avoid legal issues and protect workers'
rights.
 Create Fair Employment Contracts: Develop clear and legally compliant
employment contracts for agricultural workers. These contracts should outline the
terms and conditions of employment, including wages, working hours, benefits, and
job responsibilities. Ensure that contracts are written in a language that workers can
understand.
 Provide Adequate Training: Offer training to both workers and supervisors on labor
laws, safety regulations, and best practices for agriculture. This will help prevent
accidents, injuries, and violations of labor laws due to ignorance.
PLANNING AND DEVELOPMENT FOR
AGRICULTURE (…continued…)
 Implement Workplace Safety Measures: Agriculture can be a hazardous industry.
Comply with safety regulations and provide appropriate safety equipment, training, and
protective gear to reduce the risk of accidents and injuries.
 Fair Compensation and Benefits: Ensure that agricultural workers receive fair wages that
meet or exceed the minimum wage set by law. Additionally, consider offering benefits such
as health insurance, paid leave, and retirement plans if required by local regulations.
 Compliance with Working Hours: Abide by laws related to working hours, rest breaks,
and overtime pay. Track and manage working hours accurately to avoid violations.
 Child Labor Restrictions: Familiarize yourself with regulations regarding the employment
of minors in agriculture. In many places, there are restrictions on the age of workers and
the type of work they can perform.
 Respect Worker Rights: Recognize the rights of agricultural workers to join labor unions
or associations. Respect their rights to collective bargaining and fair labor practices.
PLANNING AND DEVELOPMENT FOR
AGRICULTURE (…continued…)
 Regular Audits and Inspections: Conduct regular internal audits and inspections to ensure
compliance with labor laws and safety regulations. Additionally, be prepared for external
inspections by government agencies.
 Engage in Continuous Improvement: Continuously assess and improve labor practices in
your agricultural operation. Solicit feedback from workers, implement their suggestions for
improvement, and stay updated on changes in labor laws.
 Community Engagement: Foster positive relationships with the local community and
engage in sustainable agricultural practices that benefit both workers and the environment.
This can contribute to long-term success and stability.
 Seek Legal Counsel: If you're unsure about specific labor laws or face complex legal
issues, consult with legal experts who specialize in labor law to ensure compliance.
 Remember that adherence to labor laws not only safeguards the rights of agricultural
workers but also contributes to a more sustainable and ethical agricultural industry. It can
enhance the reputation of your agricultural operation and lead to increased productivity and
profitability in the long run.
TRADE UNIONS
Ø According to the Indian Trade Unions Act, 1926, a “Trade union means
any combination, whether temporary or permanent, formed primarily
for the purpose of regulating the relations between workmen and
employers, or between workmen and workmen, or between employers
and employers, or for imposing restrictive conditions on the conduct of
any trade or business, and includes any federation of two or more trade
unions.”

Ø According to V.V. Giri (former president of India ), “trade unions are

voluntary organizations of workers formed to promote and protect their
interests by collective action.” A trade union “must possess definite
aims; its members must be welded together in a united front for the
good of the whole group rather than for the promotion of any selfish
individual interests; and it must, to be effective, take on a definite and
permanent form of organization through which it strives to accomplish
its goal”
Functions of Trade Unions
 According to the National Commission on Labour (NCL), the important
functions of the trade unions are:
 1. To secure for workers fair wages.
 2. To safeguard security of tenure and improve conditions of service.
 3. To improve opportunities for promotion and training.
 4. To improve working and living conditions.
 5. To provide for educational, cultural and recreational facilities.
 6. To cooperate in and facilitate technological advance by broadening
the understanding of workers of its underlying issues.
 7. To promote identity of interests of the workers with their industry.
 8. To offer responsive cooperation in improving levels of production and
productivity,
 discipline and high standard of quality.
 9. To promote individual and collective welfare
Factors Which Contributed to the Growth
Of Trade Unions:

 1. World War I: Though the labour movement in India began about a

century ago, it was only from the end of the First World War (1914-
1918) that it gathered momentum. Prices had shot up during the war
and there had been no corresponding increase in the wages, though the
employers had amassed fantastic profits.
 2.The ILO: The establishment of the
International Labour Organisation, of which India was a founder
member, prompted the formation of trade unions in India.
 3. The Russian Revolution: The success of the Russian revolution gave
an impetus to the labour movement because of the feeling it
generated that the solidarity of the working class could achieve great
things.
 4. The Trade Unions Act: The Indian Trade Unions Act, passed in 1926,
is landmark in the history of trade union movement in India because
this Act gave trade unions a legal status and immunity to its officers
and members against civil and criminal liability for concerted action.
Limitations and Problems of
Trade Unionism in India
 1. Limited Representation: Trade unions encompass only a small portion of the total workforce of the
country. The extent of unionization is very limited in the unorganised sectors; particularly in agriculture
 2. Small Size and Increasing Number:
 . The small size of unions poses problems of weak financial and administrative position, weakening of
collective bargaining power, inter-union rivalry, difficulty in establishing employer-employee rapport, etc.
 3.. Inter-union and Intra-union Rivalries: Inter-union rivalries tend to be intense when the different unions
subscribe to different political ideologies. Sometimes, intra-union rivalries create problems. The personal
aspirations of the members, personality conflicts, personal rivalries, etc., are among the causes of intra-union
rivalries..
 4. Political Infiltration: each political party tries to have its own trade union. As a corollary of this, political
rivalries are extended to trade unions. Split in the political parties and political rivalries may have impact on
the trade union also.
 5. Meagre Funds: Because of the low income of the Indian working class and the small number of members,
the funds of the unions are very meagre. Financial constraints come in the way of having full-time
officials, organisation and administration, so that it is very difficult to properly organise and sustain strikes
 6. Low Income: The low income of the workers is a negative factor in the growth of trade unions. Because of
their low income, workers may feel it difficult to regularly subscribe to the unions. As a result, they may
hesitate to join a union.
 7. Unhealthy Attitude of Employers: Many employers in India still regard trade unions as something very
bad. Many employers are accused of trying to foster disunity among the workers, encouraging inter-union
rivalries,
WORKERS PARTICIPATION
IN MANAGEMENT
Ø Workers’ participation may be defined as a “principle of ensuring industrial
democracy through mutual understanding, faith, trust and cooperation of
workers and managements by establishing an effective communication
system for attaining the wholehearted involvement of each worker in the
area of his competence and concern with a view to maximising results in
regard to the achievement of the organisational goals and individual well-
being.”
Ø Objectives
 Some objectives may be listed as follows:
 1. To promote Industrial democracy.
 2. To give due recognition to the personality of the workers
 3. To safeguard the interest of workers
 4. To regulate the self-centred actions of the capitalists
 5. To give a social orientation to the business
 6. To improve industrial productivity.
Forms of Participation

 The common forms of workers’ participation in management are the following

Ø Collective Bargaining:. The growth of trade unionism, the workers’ awareness of
their rights and strength, and the recognition of the importance of negotiations
by labour and management have contributed to the growth of collective
bargaining. Some of the common subject matters of collective bargaining are
wages, bonus, working conditions, and welfare matters.
Ø Joint Consultation: The functions of joint bodies, comprising representatives of
the management and employees, may range from decision-making on some issues
to merely advising the management as consultative bodies. Though the Joint
Management Councils/Committees have been tried in some countries, they have,
generally, “not been found effective”. Being advisory or consultative bodies,
neither the management nor the workers take them seriously. Often, they merely
work as forums where workers and management freely vent their complaints and
grievances without solving them.
Ø Joint Decision-making and Administration: For the purpose of joint decision-
making and administration, the workers are represented on the Board
of Directors. Sometimes, the worker representative’s role is limited
to participating in decision-making; but the actual execution of
the programmes is the responsibility of the management. In the area of joint
administration, however, workers and management share the responsibility and
power of execution.
Ø Complete Control of Management: In some cases, like the system of self-
management in Yugoslavia, workers have complete control over
the management of the enterprises. The system of complete control
of management cannot, obviously, fit into a capitalistic system. A potential
 danger of complete control of management by the workers is that, like
capitalists, the workers might try to maximise their benefits even at the expense
of the consumers or society.
Ø Workers’ Participation in Share Capital: workers’ participation in equity
and in management are in some sense interrelated from the point of
 view of attaining the ultimate goal of co-partnership in industry. In favour of
the workers’ participation in share capital, it has been said that, besides
giving them a sense of dignity and status as co-partners, equity participation
secures for them a share in the company’s future prosperity while holding
out promises for improved industrial relations and steady growth of
internal finances for the company’s operations.
 WPM SCHEMES IN INDIA
v Works Committees/Joint Committees : The Works Committee, which is statutory
requirement in undertaking employing 100 or more workers, consisting of
representatives of management and employees, may be consulted on matters related to
the working conditions and labour welfare.
v Joint Management Councils :JMC is entitled to be consulted on certain
specified matters. In a set of functions, administrative responsibilities have to be given
to it.
v Shop/Departmental Councils and Joint Councils
 The main functions of the Shop Council are to help management in achieving production targets,
improving productivity, attend to physical conditions of working, welfare and health measures,
and to ensure a proper flow of adequate two-way communication between the management and
the workersThe main functions of the Joint Council are fixation of productivity norms, dealing
with the unresolved problems referred to it by the Shop Councils ensuring the quality of finished
products, etc.
v ESOP (Employee’s stock option scheme )
 Several private enterprises, particularly in the IT sector, in India have
introduced employee’s stock option scheme (ESOP) to attract and retain talented
people and many employees have become multi-millionaires’ thanks to the appreciation
of the stock prices.
QUALITY CIRCLES
Ø A quality circle is “a voluntary group of people who meet together on a regular basis
to identify, analyse and solve quality, productivity, cost reduction, safety and other
problems in their work area, leading to improvement in their performance and
enrichment of their worklife.
Ø Quality Circle (QC) is a participative management concept originated in USA
but concretised and popularised by Japan. The role played by quality circles in
transforming the Japanese industry, generally characterised by low quality of the
products, to one which excels in quality and low cost has made the quality circles
very popular in other countries too.
Ø An organisation may have a number of QCs. If the number of workers
of any particular department/section who volunteer to join the QC is more than the
ideal number that one QC can accommodate, two or more circles may be formed in
the same area. Thus, an organisation could have one or more QC in every
department or section.
STRUCTURE OF QUALITY CIRCLES
v Top Management: For the success of quality circles, support of the top management is essential.

v Steering Committee: The Steering Committee usually consists of the heads of major departments
 of the organisation and is presided over by the Chairman who is preferably the Chief Executive
 of the organisation. The Steering Committee sets the goals and objectives for the quality
circle activities.

v Facilitator: The facilitator is a senior official nominated by the management responsible for
 facilitating and guiding QC activities in his area. The facilitator’s functions include liaisoning with
 the coordinator on all aspects of QC activities; execution of all QC policies, procedures and code
 of conduct; upward and downward communications in respect of QCs, etc.
v Leader: Every quality circle must have a leader whose functions include encouraging members to
actively participate in the circle activities, ensuring proper conduct of the QC meetings, making
regular progress reports and maintaining circle records, providing agenda for the meeting etc. The
leader is elected by the members.
v Members: Members are the group of workers who have voluntarily formed the quality circle.
THE PROCESS OF QUALITY
CIRCLE
 1. Identification of Problems:
 The members may be able to identify several problems in their area. Quality, productivity, cost
reduction, housekeeping and safety are some of the general categories of problems which may be
identified by QC.
 2. Problem Selection:
 Problem selection is a prerogative of the Circle. When several problems are identified, a selection
of problem(s) for the further process of the QC may become necessary.
 3. Problem Analysis:
The circle members analyse the selected problems. If needed, the circle may take the assistance of
experts and consultants.
 4. Recommendation to the Top Management:
 Finally, the circle makes its recommendations to its departmental heads in the first instance,
normally once in 7-8 weeks, and selected cases of all circles are presented to the top
management, normally once in 2-3 months. In a management presentation, the leader
and members describe to their manager what project they have been working on and what
recommendations they wish to make concerning it.
 It is the top management who decides whether the recommendation should be accepted and
implemented.
Ø CONDITIONS FOR SUCCESS OF QCs
 1. Active support and commitment from the part of top
management.
 2. Proper coordination.
 3. Commitment and ability of facilitators and leaders.
 4. Proper education about the quality circle philosophy
and sufficient training for facilitators, leaders and
members.

Ø REASONS FOR FAILURE OF QCs

 1. Lack of commitment and support from the top
management.
 2. Lack of sufficient education about QC philosophy and
training to members, leaders and workers.
 3. Opposition from trade unions.
 4. Wrong notions about QC.
Exit Policy

 The term exit means the right of an industrial unit to

close down. Exit policy means the policy regarding the
retrenchment of the surplus labor force resulting from
the restructuring of industrial units and workers
displaced by the closure of sick units. Exit may become
necessary due to strategic reasons, financial constraints
and environmental changes. Therefore , exit policy
refers to the policy concerned with the action to be
taken regarding surplus manpower in organisations ,
owing to a variety of reasons such as, restructuring,
retrenchment, closure or technological developments.
Significance of an effective Exit policy in India is due to following
factors:

 1. Closure of the sick units would be beneficial for the country’s economy.
Banks, financial institutions, state governments and central government
would be freed from the burden of providing incentives, subsidies and
other concessions to keep the sick units going.
 2. An exit policy will ensure the legitimate dues of the displaced workers
are paid to them speedily and satisfactorily. Without such a policy these
workers will have to lose their dues.
 3. Closure of sick units may cause temporary unemployment . But the
investment made out of sale proceeds to create permanent employment.
4. In the absence of an exit policy, labour is the biggest loser. The
legitimate interests of the workers are protected only when there is a
legal closure of a sick unit.
Some of the measures introduced with regards to the exit policy
in India include :

1. VOLUNTARY RETIREMENT SCHEME

The most important measure is the introduction of voluntary retirement
scheme. It is the most humane technique to provide the overall reduction in
the existing strength of the employees. It is also known as “ Golden
Handshake”.
2.NATIONAL RENEWAL FUND
The government of India created this fund on February 4,1992 to provide a
safety net for the labour. The fund would provide assistance for retraining
and redeployment of labour arising as a result of modernisation and
Technology upgradation and also provide compensation to workers.
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