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MGMT 568 - Comparative Management
Individual Assignment 2
Labour Relations
Research Country – India
Submitted By – Chandandeep Singh
Professors - Allan Cahoon, Dr. Gloria Miller
Royal Roads University Labour Relations in India| 2/4/2013
2 | P a g e C H A N D A N D E E P S I N G H
Labour Relations
With Globalization the importance of Labour Relations has become crucial in the globalized
industrial world.
In my understanding, Labour relations are the immediate collective relationships between
management and employees or group of employees specifically represented by unions.
In my opinion the labour relations are highly dependent on the governance style of a
corporation and the laws and political decisions prevailing within the country.
Objectives & Importance
1. To safeguard the interests of labour and management
2. Avoid industrial conflict
3. Raise productivity
4. Promote industrial democracy
5. Eliminate strikes, lockouts
6. Improve the working, economic and social conditions of workers and organization
In a nutshell, strong labour relations discourage the unfair practices on the part both
management and labour unions and provide healthy work environment between workers and
management.
International Labour Organization
The ILO is the international organization responsible for drawing up and overseeing
international labour standards.1
As of 2012, 185 countries in the UN are members of the ILO and
ILO aims to promote rights at work, encourage decent employment opportunities, enhance
social protection and strengthen dialogue on work-related issues.2
Indian Labour Relations – Back Ground of Issues at Glance
 World Bank considers India as a highly regulated and most rigid labor law country in the
world3
 The labour in India consists of about 487 million workers, the second largest after China4
 National Sample Survey organization’s survey of 2009-10 indicated that the organized sector
of India employed 28 million workers whereas; 437 million workers were employed in
unorganized sector. It also indicated that 246 million workers were mainly employed in the
agricultural sector, 44 million I construction and rest in the manufacturing sector5
 Multinational and national giants like Nestle, Honda, Hyundai, Hero Honda, Toyota, Suzuki
and Mahindra & Mahindra have been hit in the past by strikes6
Royal Roads University Labour Relations in India| 2/4/2013
3 | P a g e C H A N D A N D E E P S I N G H
Actors in Indian Labour Relations System
Like every other country, there are mainly 3 classical actors in the Indian Labour Relationship
System which are: 7, 8
1. The Government
2. Employees
3. Employers
Source: http://industrialrelations.naukrihub.com/industrial-relation-system.html
Employer associations, trade unions and courts acts as the working representatives of these
actors. With globalizations there are new actors emerging in the Indian Labour Relations
System which mainly are consumers and community. 9
The actors play the following roles in industrial relations: 10
1. Collective and interactive bargaining
2. Establishment of mechanism for settlement of industrial disputes
3. Standing orders
4. Workers participation in management
5. Elimination of unfair labor practices
Labour Laws Governing the Indian Labour Management System
India has various labor laws mainly formed to prohibit discrimination, child labor and to
promote the humane work conditions with an aim to offer social security, minimum wage, form
trade unions and enforce collective bargaining. Following image shows the framework of Indian
Labour Law:
Royal Roads University Labour Relations in India| 2/4/2013
4 | P a g e C H A N D A N D E E P S I N G H
Source: http://img545.imageshack.us/img545/3778/labourlawsinindia.png
Royal Roads University Labour Relations in India| 2/4/2013
5 | P a g e C H A N D A N D E E P S I N G H
Main Labour Unions in India – Functions and Involvement
At present there are twelve Central Trade Union Organizations in India however, following
three out of them play major role in the upbringing of Indian Labour Relations.12
Name Objective
All India Trade Union Congress (AITUC)13
 To establish a socialist state in India
 To promote, safeguard the interests,
rights and privileges of the workers in all
matters relating to their employment
Indian National Trade Union Congress (INTUC)14
 Unionization of unorganized sector
 Abolish child labour
Centre of Indian Trade Unions (CITU)15
 Improvement of the unorganized sector
Current Issues
1. Man-days lost due to Strikes and Lockout: The following table shows that the large number
of disputes from year 2000-2006 had caused the loss of 176.66 million lost workdays due to
strikes and lockouts:16
Legal Countrywide Laws
Minimum wage
(US$/month)
Standard work day
Minimum rest while at
work
Maximum overtime
limit
Premium pay for
overtime
India
90
9 hours
30 minutes per 5 hour
200 hours per year
100%
China
182.5
8 hours
None
1 hour per day
50%
United States
1242.6
8 hours
None
None
50%
International comparison of few importance aspects of labour laws among India, China and
United States as of 201111
Royal Roads University Labour Relations in India| 2/4/2013
6 | P a g e C H A N D A N D E E P S I N G H
Source: http://industrialrelations.naukrihub.com/analysis-of-strikes.html
2. Child Labour: Child labour in huge issue for the Indian Labour relations system as according
to ILO, 60% workforce of 246 million workforce of the agriculture sector in India is child
labour.17
3. Migrant Workers: Highly skilled labour normally migrates to countries in Middle East and
North America as they are attracted by better salaries and working conditions there. The
Washington Post reported that 4 million Indians works as migrant labourers in Middle East
alone and are credited to have built the modern architecture there including buildings like
Burj Khalifa.18
4. Forced Labour: The is a large number of forced labour victims in India in the form of women
and girls forced into prostitution, migrants trapped in debt bondage, and factory or farm
workers forced by clearly illegal tactics and paid little or nothing.19
Source: http://www.ilo.org/sapfl/Informationresources/ILOPublications/WCMS_081967/lang--en/index.htm
Royal Roads University Labour Relations in India| 2/4/2013
7 | P a g e C H A N D A N D E E P S I N G H
5. Political Disturbances: Many politicians like Datta Samant were also union leaders and few
analysts consider that strikes and other labour protest are called to promote the interest of
political parties.20, 21
6. Rigidness in laws & high percentage of unorganized sector: India's workforce is likely to hit
502 million by 2012, with the share of informal/unorganized workers at more than 90 %.22
Rigid labor laws of the country are condemned to be the reason of low employment growth,
large unorganized sector, underground economy, use of casual labor and low per capita
income.23
The high percentage of casual labour is considered to the reason of slow economic
growth and low GDP of the country.24
Importance of Unionization
1. Major Issue in the Indian Labour Relations System – Non-Unionization of Unions to
Unionization of Unions: There are thousands of labour unions in India with 12 major central
unions however, with the existence of thousands of the unions the financial strengths and
resources of the unions are scattered and these unions are weak to offer major support to
the workforce. Unionization of these unions into one single strong unit is required at this
stage for the uplifting and promotion of a strong labour relations system in the country that
can challenge any rigidness of the national or multinational employer or government. Below
table shows the number of labour unions in the country since 1990’s:
Source: http://industrialrelations.naukrihub.com/figures.html
2. Unionization of the Unorganized Sector: Unionization of the unorganized sector is very
substantial as it employs the 90% of country’s workforce. It will improve labour relations
within the country and transform this informal sector to a formal licensed tax paying sector
Royal Roads University Labour Relations in India| 2/4/2013
8 | P a g e C H A N D A N D E E P S I N G H
governed under the leadership of the unions. It will also abolish child labour, migrant
labour and forced labour issues with a mass effect.
Main Blunders in Indian Labour Relations System
1. 1974 railway strike in India:25
The 1974 railway strike in India was initiated by 17 million
workers for 20 continuous days to demands the raise in pay scale that was stationary for
many years and is known to be the largest known strike in the history of India. The strike was
ferociously crushed by the government, thousands of workers lost the jobs and were sent to
prison.2
2. Great Bombay Textile Strike: 26
The strike was led by union leader and politician, Datta
Samant for the welfare of the mill workers of Bombay. Objective of this year long strike was
to obtain bonus and wage increases. Nearly 250,000 workers and more than 50 textile mills
went on strike in Bombay. It demolished the textile industry from Bombay and closed over
80 mills in Central Bombay and left more than 150,000 workers unemployed.
Implications for Managers/Leaders/ Companies/ Foreign Managers
1. Halts in Production
2. Lost efficiency of Managers
3. Wastage of time and resources in Labour disputes
4. Challenge to corporate objectives and commitments of product delivery
5. Loss of FDI for domestic managers and confusion for foreign managers to whether invest in
the Indian company or not
Royal Roads University Labour Relations in India| 2/4/2013
9 | P a g e C H A N D A N D E E P S I N G H
Notes:
1. http://www.ilo.org/global/about-the-ilo/lang--en/index.htm
2. http://www.ilo.org/global/about-the-ilo/mission-and-objectives/lang--en/index.html
3. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia
4. http://shelf3d.com/i/Labour%20in%20India
5. http://labour.nic.in/content/division/admin1.php
6. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia
7. http://www.freepatentsonline.com/article/Indian-Journal-Industrial-
Relations/228172473.html
8. http://industrialrelations.naukrihub.com/industrial-relation-system.html
9. http://www.docstoc.com/docs/14903135/Industrial-Relations-Trends - Page 4
10. http://industrialrelations.naukrihub.com/industrial-relation-system.html
11. http://www.doingbusiness.org/data/exploretopics/employing-workers
12. http://industrialrelations.naukrihub.com/trade-unionism.html
13. http://aituc.in/aim.html
14. http://www.intuc.net/index.php?articleid=5
15. http://www.citucentre.org/
16. http://industrialrelations.naukrihub.com/analysis-of-strikes.html
17. http://www.ilo.org/global/publications/WCMS_126685/lang--en/index.htm
18. http://www.washingtonpost.com/wp-
dyn/content/article/2010/02/05/AR2010020503845.html
19. http://www.ilo.org/sapfl/Informationresources/ILOPublications/WCMS_081967/lang--
en/index.htm
20. http://www.nytimes.com/1988/12/18/world/for-indian-business-a-force-to-reckon-
with.html
21. http://countrystudies.us/india/95.htm
22. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia
23. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia
24. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia
25. http://www.frontlineonnet.com/fl1819/18190750.htm
26. http://www.rediff.com/news/2007/jan/18sld2.htm

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The Situation of Labour Relations in India

  • 1. MGMT 568 - Comparative Management Individual Assignment 2 Labour Relations Research Country – India Submitted By – Chandandeep Singh Professors - Allan Cahoon, Dr. Gloria Miller
  • 2. Royal Roads University Labour Relations in India| 2/4/2013 2 | P a g e C H A N D A N D E E P S I N G H Labour Relations With Globalization the importance of Labour Relations has become crucial in the globalized industrial world. In my understanding, Labour relations are the immediate collective relationships between management and employees or group of employees specifically represented by unions. In my opinion the labour relations are highly dependent on the governance style of a corporation and the laws and political decisions prevailing within the country. Objectives & Importance 1. To safeguard the interests of labour and management 2. Avoid industrial conflict 3. Raise productivity 4. Promote industrial democracy 5. Eliminate strikes, lockouts 6. Improve the working, economic and social conditions of workers and organization In a nutshell, strong labour relations discourage the unfair practices on the part both management and labour unions and provide healthy work environment between workers and management. International Labour Organization The ILO is the international organization responsible for drawing up and overseeing international labour standards.1 As of 2012, 185 countries in the UN are members of the ILO and ILO aims to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues.2 Indian Labour Relations – Back Ground of Issues at Glance  World Bank considers India as a highly regulated and most rigid labor law country in the world3  The labour in India consists of about 487 million workers, the second largest after China4  National Sample Survey organization’s survey of 2009-10 indicated that the organized sector of India employed 28 million workers whereas; 437 million workers were employed in unorganized sector. It also indicated that 246 million workers were mainly employed in the agricultural sector, 44 million I construction and rest in the manufacturing sector5  Multinational and national giants like Nestle, Honda, Hyundai, Hero Honda, Toyota, Suzuki and Mahindra & Mahindra have been hit in the past by strikes6
  • 3. Royal Roads University Labour Relations in India| 2/4/2013 3 | P a g e C H A N D A N D E E P S I N G H Actors in Indian Labour Relations System Like every other country, there are mainly 3 classical actors in the Indian Labour Relationship System which are: 7, 8 1. The Government 2. Employees 3. Employers Source: http://industrialrelations.naukrihub.com/industrial-relation-system.html Employer associations, trade unions and courts acts as the working representatives of these actors. With globalizations there are new actors emerging in the Indian Labour Relations System which mainly are consumers and community. 9 The actors play the following roles in industrial relations: 10 1. Collective and interactive bargaining 2. Establishment of mechanism for settlement of industrial disputes 3. Standing orders 4. Workers participation in management 5. Elimination of unfair labor practices Labour Laws Governing the Indian Labour Management System India has various labor laws mainly formed to prohibit discrimination, child labor and to promote the humane work conditions with an aim to offer social security, minimum wage, form trade unions and enforce collective bargaining. Following image shows the framework of Indian Labour Law:
  • 4. Royal Roads University Labour Relations in India| 2/4/2013 4 | P a g e C H A N D A N D E E P S I N G H Source: http://img545.imageshack.us/img545/3778/labourlawsinindia.png
  • 5. Royal Roads University Labour Relations in India| 2/4/2013 5 | P a g e C H A N D A N D E E P S I N G H Main Labour Unions in India – Functions and Involvement At present there are twelve Central Trade Union Organizations in India however, following three out of them play major role in the upbringing of Indian Labour Relations.12 Name Objective All India Trade Union Congress (AITUC)13  To establish a socialist state in India  To promote, safeguard the interests, rights and privileges of the workers in all matters relating to their employment Indian National Trade Union Congress (INTUC)14  Unionization of unorganized sector  Abolish child labour Centre of Indian Trade Unions (CITU)15  Improvement of the unorganized sector Current Issues 1. Man-days lost due to Strikes and Lockout: The following table shows that the large number of disputes from year 2000-2006 had caused the loss of 176.66 million lost workdays due to strikes and lockouts:16 Legal Countrywide Laws Minimum wage (US$/month) Standard work day Minimum rest while at work Maximum overtime limit Premium pay for overtime India 90 9 hours 30 minutes per 5 hour 200 hours per year 100% China 182.5 8 hours None 1 hour per day 50% United States 1242.6 8 hours None None 50% International comparison of few importance aspects of labour laws among India, China and United States as of 201111
  • 6. Royal Roads University Labour Relations in India| 2/4/2013 6 | P a g e C H A N D A N D E E P S I N G H Source: http://industrialrelations.naukrihub.com/analysis-of-strikes.html 2. Child Labour: Child labour in huge issue for the Indian Labour relations system as according to ILO, 60% workforce of 246 million workforce of the agriculture sector in India is child labour.17 3. Migrant Workers: Highly skilled labour normally migrates to countries in Middle East and North America as they are attracted by better salaries and working conditions there. The Washington Post reported that 4 million Indians works as migrant labourers in Middle East alone and are credited to have built the modern architecture there including buildings like Burj Khalifa.18 4. Forced Labour: The is a large number of forced labour victims in India in the form of women and girls forced into prostitution, migrants trapped in debt bondage, and factory or farm workers forced by clearly illegal tactics and paid little or nothing.19 Source: http://www.ilo.org/sapfl/Informationresources/ILOPublications/WCMS_081967/lang--en/index.htm
  • 7. Royal Roads University Labour Relations in India| 2/4/2013 7 | P a g e C H A N D A N D E E P S I N G H 5. Political Disturbances: Many politicians like Datta Samant were also union leaders and few analysts consider that strikes and other labour protest are called to promote the interest of political parties.20, 21 6. Rigidness in laws & high percentage of unorganized sector: India's workforce is likely to hit 502 million by 2012, with the share of informal/unorganized workers at more than 90 %.22 Rigid labor laws of the country are condemned to be the reason of low employment growth, large unorganized sector, underground economy, use of casual labor and low per capita income.23 The high percentage of casual labour is considered to the reason of slow economic growth and low GDP of the country.24 Importance of Unionization 1. Major Issue in the Indian Labour Relations System – Non-Unionization of Unions to Unionization of Unions: There are thousands of labour unions in India with 12 major central unions however, with the existence of thousands of the unions the financial strengths and resources of the unions are scattered and these unions are weak to offer major support to the workforce. Unionization of these unions into one single strong unit is required at this stage for the uplifting and promotion of a strong labour relations system in the country that can challenge any rigidness of the national or multinational employer or government. Below table shows the number of labour unions in the country since 1990’s: Source: http://industrialrelations.naukrihub.com/figures.html 2. Unionization of the Unorganized Sector: Unionization of the unorganized sector is very substantial as it employs the 90% of country’s workforce. It will improve labour relations within the country and transform this informal sector to a formal licensed tax paying sector
  • 8. Royal Roads University Labour Relations in India| 2/4/2013 8 | P a g e C H A N D A N D E E P S I N G H governed under the leadership of the unions. It will also abolish child labour, migrant labour and forced labour issues with a mass effect. Main Blunders in Indian Labour Relations System 1. 1974 railway strike in India:25 The 1974 railway strike in India was initiated by 17 million workers for 20 continuous days to demands the raise in pay scale that was stationary for many years and is known to be the largest known strike in the history of India. The strike was ferociously crushed by the government, thousands of workers lost the jobs and were sent to prison.2 2. Great Bombay Textile Strike: 26 The strike was led by union leader and politician, Datta Samant for the welfare of the mill workers of Bombay. Objective of this year long strike was to obtain bonus and wage increases. Nearly 250,000 workers and more than 50 textile mills went on strike in Bombay. It demolished the textile industry from Bombay and closed over 80 mills in Central Bombay and left more than 150,000 workers unemployed. Implications for Managers/Leaders/ Companies/ Foreign Managers 1. Halts in Production 2. Lost efficiency of Managers 3. Wastage of time and resources in Labour disputes 4. Challenge to corporate objectives and commitments of product delivery 5. Loss of FDI for domestic managers and confusion for foreign managers to whether invest in the Indian company or not
  • 9. Royal Roads University Labour Relations in India| 2/4/2013 9 | P a g e C H A N D A N D E E P S I N G H Notes: 1. http://www.ilo.org/global/about-the-ilo/lang--en/index.htm 2. http://www.ilo.org/global/about-the-ilo/mission-and-objectives/lang--en/index.html 3. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia 4. http://shelf3d.com/i/Labour%20in%20India 5. http://labour.nic.in/content/division/admin1.php 6. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia 7. http://www.freepatentsonline.com/article/Indian-Journal-Industrial- Relations/228172473.html 8. http://industrialrelations.naukrihub.com/industrial-relation-system.html 9. http://www.docstoc.com/docs/14903135/Industrial-Relations-Trends - Page 4 10. http://industrialrelations.naukrihub.com/industrial-relation-system.html 11. http://www.doingbusiness.org/data/exploretopics/employing-workers 12. http://industrialrelations.naukrihub.com/trade-unionism.html 13. http://aituc.in/aim.html 14. http://www.intuc.net/index.php?articleid=5 15. http://www.citucentre.org/ 16. http://industrialrelations.naukrihub.com/analysis-of-strikes.html 17. http://www.ilo.org/global/publications/WCMS_126685/lang--en/index.htm 18. http://www.washingtonpost.com/wp- dyn/content/article/2010/02/05/AR2010020503845.html 19. http://www.ilo.org/sapfl/Informationresources/ILOPublications/WCMS_081967/lang-- en/index.htm 20. http://www.nytimes.com/1988/12/18/world/for-indian-business-a-force-to-reckon- with.html 21. http://countrystudies.us/india/95.htm 22. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia 23. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia 24. http://tilt.ft.com/#!posts/2011-06/22571/friday-review-labour-issues-bubble-asia 25. http://www.frontlineonnet.com/fl1819/18190750.htm 26. http://www.rediff.com/news/2007/jan/18sld2.htm