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Published: Mar 31, 2023
Updated: Mar 31, 2023

Bharat Bijlee

The changing face of Industrial Relations in India

Industrial Relations (IR) in India had been very cordial during both ancient and medieval periods. Employers and employees enjoyed good mutual respect and there was peaceful co-existence between the two.

I would like to focus on Industrial Relations (IR) in India during these periods:

Ancient India

India was predominantly a pastoral and agrarian economy during ancient and medieval times. Trade and business interests were few and far between. A large number of occupations were carried out by small manufacturers in their cottages, and were mostly family-run. Slavery and serfdom were common. Employer-employee relations were those of master and slave and, later on, of master and servant. Ancient scriptures and laws of our country laid emphasis on the promotion and maintenance of peaceful relations between capital and labour. The utility of unions has stated: “If men are united, nothing can deter them.”

Colonial period

IR is a by-product of the industrial revolution, and it owes its origin to the excessive exploitation of workers by the owners of industries. Their relationship was that of two unequals -- the powerful employers and their powerless workers. It was, in fact, a master-servant relationship, which continued for long. In the early stages, the Government of India adopted the policy of laissez-faire and later on, enforced penalties on workers for breaches of contract. Some legislative measures were also adopted for the purpose. Sporadic attempts were made to form trade unions, which were resisted and crushed by the employers.

Post-First World War

Post-Second World War

The Second World War brought a new spurt in the field of IR. The exigencies of the war made it essential for the Government of India to maintain uninterrupted flow of goods and services for successful conduct of the war effort. Therefore, it embarked upon a two-fold action for maintaining/countering IR:

• Statutory regulation of IR through the Defence of India Rules. IR during the war was kept alive for six months by an ordinance.
• The tripartite deliberations during 1942-46. Revision of the Trade Disputes Act, 1929, helped the Union Government in enacting the ID Act, 1947.

The first tripartite labour conference was held at New Delhi under the chairmanship of Dr BR Ambedkar. The conference consisted of two organizations, namely, the Indian Labour Conference (ILC) and the Standing Labour Committee (SLC).

The following objectives were set before the two tripartite bodies:

• Promotion of uniformity in labour legislation
• Laying down a procedure for the settlement of industrial disputes

IR in post-Independence era

The following forces were operating at the time of India’s independence:

• Inherited IR legacies from our colonial masters with a colonial mindset, colonial habits and colonial culture.
• Coincidentally, our freedom struggle coincided with the struggle of the working class for better IR. After independence, our leaders had to fulfill those promises and pledges made to the workers during the freedom struggle.
• Most of our leaders were influenced by Fabian Socialist and Marxist/Communist philosophies. Our IR was deeply influenced by all the above forces.

These philosophies got reflected in our Constitution:

• Preamble of the Constitution
• Fundamental Rights
• Directive Principles of State Policies

This trinity of Indian Constitution is the fountainhead of all factors which shape and guide the spirit of IR.

This was further put into practice when we launched our Five-Year Plans. Each of the successive Five-Year Plans emphasized the well-being of the working class, cooperation between workers and employers, harmonious industrial relations, workers’ rights and workers’ participation, welfare state, etc.

This was the period when the Industrial Policy Resolution, 1956 facilitated the growth of public undertakings, both at the Centre and at the state level. Through these PSUs, the government wanted to present itself as a model employer in terms of IR. In 1957 (15th ILC), voluntary schemes for workers’ participation in management and workers’ education schemes, followed by the voluntary code of discipline and voluntary code of conducts in 1958 (16th ILC), were introduced to counteract the unhealthy trends of litigations and delays.

In 1969, the first National Commission on Labour was formed.

The Emergency of 1975 had its impact on IR. The Government of India amended the Constitution (Article 43 A) to provide for workers’ participation, and added Chapter 5 B in the Industrial Dispute Act, 1947.

Governments thereafter competed with each other to provide measures for protection of workers’ interests and formation of workers’ welfare.

This was the period of amendments. This provided excessive protection to labour. The result was that we had a pampered labour class and a stagnant, regulated and controlled IR in the late 1980s.

Therefore, looking at the above analysis, it can be observed that the scenario was conducive to keeping the workforce happy and therefore projected/maintained a good IR scenario during the ancient and the medieval period.

IR’S DRAMATIC CHANGE POST 1991

Pre-globalization: The traditional IR in India was made reactive, negative, passive, ad hoc and legalistic. It was selfish by being confined to its own members, without having any concern for business organizations or society at large. It was inflexible, rigid and ideologies-bound, which have lost their relevance.

However, post 1991, globalization brought and inducted the following changes/dynamics in the Indian economy:

• Global competitiveness is of international standards in quantity, quality, cost effectiveness and customers’ concerns. This, in turn, required introduction of the stateof-the-art technology, followed by innovation, creativity and strategic alignment of divergent resources, to create a performing climate.
• Such a performing climate caused the need for a dynamic and synergetic employee relationship.
• The emerging business scenario demanded from the industrial society a major technological revolution, which created a situation where space, distance and time lost their relevance.
• National boundaries withered away completely. The world truly became a global village. This facilitated the movement of business across borders. Therefore, global entrepreneurs, known as MNCs and TNCs, came up with multi-locational and multi-cultural characteristics of continuous mergers and acquisitions around the globe.
• Global competitiveness became the only rule of the global business game, where only the fittest can survive.
• Major joint ventures of Indian and foreign collaborators in banking, insurance, IT, telecom, BPOs, automobiles, hotels and entertainment, fast food and drinks, tours and travels, hospitals / pharmaceuticals, etc., were formed. Therefore, giant multinationals like GE, GM, Toyota, IBM, Microsoft and many others started showing interest in the big Indian market.
• Low-cost Chinese goods also made inroads, due to which traditional industries started facing acute competition and were compelled to think smart by shedding their extra baggage; i.e., resorting to re-structuring and downsizing.
• This was also necessitated by the day-to-day technological innovations and their applications in industries. This exercise amounted to generating surpluses for employees and management, and created an HR crisis in industries.

Due to the above scenario, traditional IR had to grapple with the following challenges:

• The tradition of IR underwent tremendous pressure, as it was made to cater to the requirements of a controlled, protected and regulated market. In the current times, it faces hindrances to address the need of a competitive global market.
• The global market forced industries to meet the requirements of flexible, resilient and constructive employee relations as against the nature of the traditional industrial relations of maintaining status quo and no change.
• Traditional institutions of IR started losing their importance and relevance. Trade unions got marginalized, and in certain situations were kept outside the mainstream business.
• ‘Strike and Lockout’ lost its cutting edge. In many cases, collective bargaining got replaced by individual bargaining. Ideological decisions were replaced by business pragmatism.

IR had to struggle with the following new business requirements:

• A change in the requirement of the organizational structure from a monolithic and pyramidal one to a flat, lean and smart organizational structure.
• Offices became intelligent, paperless and fitted with modern electronic gadgets, which led to the requirement of reduced manpower to run the business.
• Global employers, with multi-locational working dispensations, preferred to approach their employees directly without intervention of any outside agency or trade unions.
• The practice to negotiate with the employees on all matters, including compensation package and productivity, etc., introduced new management principles of HR interventions like six sigma QC, workers’ empowerment, team-working, etc., to reach out to the workforce directly.
• Employees were standard-raised to educated and skilled employees, with expectations and aspirations. This career-oriented, multi-skilled workforce brought in a sizeable number of female employees. The problems and perspectives were noticeably different from those of old blue-collar employees.
• New players like consumer forums, NGOs, environmental campaigners and electronic media started replacing trade unions in many grey areas.
• The Principle of Flexibility proved to be of vital importance, and brought an inevitable requirement of outsourcing, franchising and labour flexibility, including numerical flexibility (size of workforce), skill flexibility (composition of workforce), functional flexibility (employment, job enrichment), locational flexibility (flexi-timings), pay flexibility (flexi-pay), place flexibility (flexi-working places – working from home), etc.
• Contracting out non-core activities such as catering and housekeeping services, security, parking, courier services, medical and health services, education and training, etc. became common.
• Changing pattern of managerial practices -- Diverse forms of employment, including life-long vs short-term, parttime, house worker, contract worker/contingent worker, fixed-term employment, etc.
• The changing nature of work -- robotized working, unmanned workstation (power plants), field work (journalists, sales executives), open 24 hours, 365 days (banks, restaurants, call centers) became yet another new phenomenon.
• Use of electronic gadgets in offices like telephone, mobile phone, computer and its numerous utilities such as MS Office, e-mail, SMS, internet, etc., brought self-reliance.
• Pressure from international bodies – ILO/WTO/WB/IMF, International Labour Standards are exerting pressure on IR.
• The pandemic introduced a new way of working from home.

The above scenario, dynamics and changes in the business world pushed the traditional IR to adopt a constructive and positive approach towards collective bargaining and give up the traditional IR practices.

Therefore, the industrial scenario underwent a dramatic change in modern times.

Industrial disputes rising despite legislation

Legislative action was brought in to regulate industrial disputes, as it was observed that the collective effort of individual disputes has the potential to arrest economic development at the national level.

It was also envisioned that through legislative action, a medium can be provided wherein the employer and employee can make use of 3rd party impartial forums for conciliation and adjudication. However, after the failure of conciliation, no time-bound, specialized adjudication forum was established for resolution of disputes. Therefore, it was observed as a time-consuming process.

Despite these high objectives and noble intentions, legislative actions were not capable of controlling industrial disputes, as these forums could not address the complexities of individual businesses. The inequality, sought to be equalized through legislations, became an excuse of either party for not promoting industrial harmony.

Legislations are always created with the concept of ‘one size fits all’. However, business complexities are multi-faceted. Beyond the limited success of preventive flash strikes/lockdowns and setting-up of works committees, legislations have done little to enforce trust between divergent parties.