TYBA-SEM-VI-Economics-Paper-XV-Industrial-and-Labour-Economics-II-English-Version-munotes

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1 1
Module 1
INDIAN LABOUR MARKET
Unit Structure :
1.0 Objectives
1.1 Introduction to Labour Market
1.2 Characteristics of Labour Markets
1.3 Child Labour
1.4 Women Labour
1.5 Labour Reforms
1.6 Summary
1.7 Questions
1.0 OBJECTIVES
 To introduce the co ncept of labour market
 To study the charactristics of labour markets
 To study the concepts of child labour and women labour
 To study the labour reforms in India
1.1 INTRODUCTION TO LABOUR MARKETS
1.1.1 Introduction:
A labour market is the place where worke rs and employers interact with
each other. In the labour market, employers compete to hire the best, and
the workers compete for the best satisfying job. In a labourmarket,services
of human labour are bought and sold like other commodities. But there is a
vast difference between labour market and commodity market. Labour
market can never be perfect market.Labour market is defined as the
market for hiring and supplying labour to perform certain jobs at a wage
rate.Labour market can be defined as a process by which supplies of a
particular type of labour and demands for that type of labour balance or
seek to obtain a balance.

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2 1.1.2 Concept of Labour Markets:
The labourmarket, also known as the job market, refers to the supply of
and demands for labour, in wh ich employees provide the supply and
employers provide the demand. It is a major component of any economy
and is intricately linked to markets for capital, goods, and services.
The labourmarket refers to the supply of and demands for labor, in which
employ ees provide the supply and employers provide the demand. The
labour market should be viewed at both the macroeconomic and
microeconomic levels.
1.2 CHARACTERISTICS OF LABOUR MARKETS
The basic characteristics or features of labour markets are as follows -
1. Labour market is concerned with labour which is a human resource.
2. The relationship between a buyer and a seller in a labour market is
likely to the continued for some time.
3. It is process in which a balance between supply of a particular kind of
labour and demand is maintained.
4. It is a market where wage rates differ for the same kind of work due to
lack of perfect mobility.
5. Labour markets are normally local markets.
6. In labour market price does not change very often, but remains constant
for a period of time.
7. As labour is not homogeneous, we find different types of workers in
labour market.
8. In the labour markets, workers try to increase their strength by forming
their trade unions and resort to collective bargaining.
9. There is exploita tion of labour in the labour market.
10. Wages, terms and conditions of employment etc. are determined in the
labour market through bargaining tussles between workers and
employers.
11. Labour cannot move with the same ease and facility with which goods
are transported from one place to another. So, there is lack of mobility
of labour.
12. Labour market is essentially an imperfect market.

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3 1.3 CHILD LABOUR
1.3.1 Introduction
Child labour is called to the employment of children in any work. Children
being deprived by child labour loses their childhood, their right to go to
school, contribute to the economy of a nation. Besides these, child labour
affects mentally, physically, social ly or morally. The Constitution of India
stated that no children, below the age of 14 years, shall not be employed to
work in any factory or mine or any other hazardous employment. But in
rural India, it is common to see children of poor families are worki ng in
fields or elsewhere to contribute to the family income. These children are
deprived of educational opportunities and lost in the depth of poverty.
1.3.2 History of Child labou r in India
In the historical and sociological documentation of early Indian
civilisation, the upbringing of children for labour is found. They were
brought on account of caste, kinship, age, gender, etc. Rulers like
Chandragupta Vikramaditya, Ashoka trie d to control it by propounding
moral edicts in which obedience towards parents and respect for elders
was praised. However, the point to show loyalty and obedience to one’s
elders was moral, socially approved and valued behaviour. Later, the
Arabs, Turks, Afghans and the Mughals invaded India and forced people
to impoverish and degenerate. The foreign invasions have destroyed the
wealth and socio -cultural ethics of India. Due to the economic
deterioration, the children too faced adverse vicissitudes along w ith the
adults. Families were unable to afford wholesome food and amenities for
their families and children. Emphasis on elementary education faded away
with time. Elementary education was restricted to the higher castes in
society. Girls get an education hardly in comparison to boys. No one took
any remedial steps.
1.3.3 Causes of Child Labour:
Children should belong to schools, not to workplaces. Child labour
seduces children from their Right to Education and reinforces
intergenerational cycles of illiter acy. There are many reasons for child
labour and exploitation:
a) Poverty : Poverty is the most vital cause of child labour. Poverty leads
to growth as unskilled workers and enables a person to earn low wages in
adulthood. So, parents force their children t o go to work to increase the
volume of income. Thus, a child -labour trap is formed. Due to getting
involved in a job, these children lose the opportunity for education, which
reflects in the literacy rate of India.
b) Condoning Social Norms : Many household s, factories, mines exploit
children as workers with low wages. For decades after decades, this
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4 c) Lack of Decent Work Opportunities : With the equipment of
advanced machinery throughout the world, adults a re losing their source
of income. Then, they force their children to go for income, even at low
wages.
d) Migration and Child Labour : Many countries in the world have
refugees in their areas. These refugees are poor enough to feed
themselves. So, children from these families make habits to carry out
labour to contribute to their family income.
e) The Covid -19 pandemic : The COVID -19 pandemic may potentially
reverse the positive trends of the fight against child labour. Fall in living
standards, the deteriora ting condition of employment, rise in informality,
reduction in remittances and migration, contraction of trade, temporary
closure of schools, etc. are the effects of the Covid -19 pandemic.
1.3.4 Child Labour Solutions:
Here are some ways to provide soluti ons for child labour -
 Awareness about child labour must be spread in our society.
 Child labour prevention laws should be stringent.
 Government has to make sure that all children in India are getting their
primary education in schools.
There are many Non -Governmental Organizations (NGOs) dedicated to
preventing child labour. They help the administration to rescue children
from the darkness of child labour in India.
Telephone Helpline – Call 1098: 1098 is a toll -free number and it
operates across India. It i s operated by Childline India Foundation which
works for child rights and child protection. Anyone, including children
themselves, can call and give information on this number.
PENCIL Portal : PENCIL is an online platform developed by
the Ministry of Labour and Employment with an aim in the effective
enforcement of the no child labour policy. The portal was launched in
2017. PENCIL stands for Platform for Effective Enforcement for No
Child Labour.
Moreover, it can be said that awareness in every person can eradicate
the problems of child labour
1.4 WOMEN LABOUR
1.4.1 Introduction:
Different aspects of female labour, which form a significant pa rt of the
total labour force are yet to be analysed although women’s studies had
long been identified as a major thrust area of research. It is very important
to know the dynamics of female labour force in a restructuring agrarian
economy, more so in the c ase of India having sharp regional differences. munotes.in

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5 We focus the neutrality of technology and gender. Female agricultural
labour and female family labour are the two categories on which the
impact of technology is explored under different agro -climatic conditi ons
within Andhra Pradesh. The time allocation of women in agriculture,
however, shows that the line between the waged and unwaged activities of
a woman often becomes blurred.
Most of the unwaged activity is of expenditure saving type, such as
collection o f wood, fetching water, child care, and dairying and allied
activities. Class, caste and gender in concrete situations have been
analysed providing a potential for better under standing of the problem.
The study spans almost the whole of Andhra Pradesh and , perhaps this
breadth of analysis somewhat hinders the depth of analysis. Yet, the study
gives several insights for further investigations. Researchers interested in
gender studies will find the book helpful.
The main thrust of work has been to examine th e effect of the seed -
fertilizer package on various aspects of women’s labour, waged or
unwaged. We have also examined the level of development of a region, its
cropping pattern, labour absorption; labourorganisation wage payments
and other related aspects because she feels that the levels of development
of the three regions of the State of Andhra Pradesh she chose for the study
are not the same.
However, while discussing the differential outcomes in different regions,
in several cases, the probable source o f difference has not been analysed
adequately. A mere mention of a series of differential out comes without an
effort at linking them with the socio -economic development of the regions
makes the argument analytically poor.
The common variable in the villag es studied comprises availability of the
green revolution technology. An attempt has been made to compare the
villages grouped as irrigated (command area) with un -irrigated areas (non -
command area).
A micro -level analysis of work pattern, employment and un employment
levels of female agricultural workers has been attempted. Rural
households undertaken for the study have been classified as agricultural
labour households and cultivating households. The total sample size was
182.
The village -wise split -up was d one depending on the size of the village.
Though almost in all the cases caste factors as well as class factors have
been referred to with equal importance, the author mentions that the caste -
wise collection of data has not been given im portance while dec iding the
sample; only the class factor has been considered. This is alright as long as
there is a high correlation between the two variables, class and caste.
However, in some cases her analysis leaves room to question the existence
of this correlation. A nd in these cases at least the caste factor should have
been considered at the time of sample selection. We did not consider the munotes.in

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6 households as the units of analysis because different crucial economic
variables affect the members of the households in a diff erent manner.
Therefore, we have taken female workers as the unit of analysis.
It is found that close associations exist among caste, literacy and work
performed by female agricultural workers. Agricultural workers usually
belong to Scheduled Castes, Sched uled Tribes and other backward castes.
Looking at the literacy rates, it was again found to be the lowest among
the above -mentioned castes. Among the forward castes, as educational
status improves, women would not work as agricultural workers.
1.4.2 Proble ms of Women Labour
The workplace is rife with many concerns and obstacles that must be
tackled daily for the working Indian woman. While the scope and severity
of these problems varies, the most common ones can be summarized as
follows:
a) Gender Pay Gap
There is no country on the planet where women get paid equally to men
for doing the same work. Even the Nordic countries, which have
extremely high overall gender parity, cannot claim equal pay for equal
work. India has the distinction of being the BRIC (Br azil, Russia, India,
and China) economy with the lowest gender parity, which includes wage
parity. The Global Gender Gap Report from 2010 revealed this. For more
than a century, salary inequality between men and women has been a
global problem. After the i nitial successes, however, progress has been
modest.
According to the survey, India has a 25.4 percent pay difference between
men and women. This means that a woman’s median hourly wage is 25.4
percent lower than a man’s median hourly wage. Some of the cau ses for
the gender wage gap, according to the survey, could be a preference for
male employees over female employees, a preference for male employees
being promoted to supervisory roles, and career pauses for women owing
to family duties and other socio -cultural issues.
b) Sexual Harassment
Sexual harassment is an abominable reality for Indian women daily . Every
day, their greatest challenge is to retain their holiness in their homes, on
the road, in their educational institutions, and at work.
Despite the increase in numbers, women are finding that their complaints
are not being adequately addressed by their employers. Employers are
either uninformed of the law’s provisions or have only partially
implemented them, and those that do set up internal panels ha ve members
who are poorly trained. According to the Sexual Harassment of Women at
Workplace (Prevention, Prohibition, and Redressal) Act of 2013, every
commercial or public organisation with 10 or more employees must have
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7 c) Inadequate Sanitation Facilities
Women suffer as a result of a lack of sufficient sanitation facilities in the
workplace. According to Indian Census figures from 2011, there are 587
million women in India, accounting for 48 percent of the populat ion.
Despite this, only 29% of women over the age of fifteen participate in the
labor. At least part of the reason for this could be traced to women’s lack
of safety, which could be linked to their lack of access to bathrooms.
d) Gender based Discriminatio n
According to a report by recruiting agency TeamLease Services, five out
of ten employees in India Inc have experienced some form of
discrimination. In terms of benefits, hours, leave, earnings, opportunities,
and promotions, there is gender segregation i n the workplace. According
to the firm’s recent poll, ‘Bias@Workplace,’ India Inc. (mostly in the top
8 cities) has yet to fully embrace the concept of equal opportunity. The
survey revealed a high frequency of biased hiring and workplace practices.
Pregna nt women and women with young children are also at a
disadvantage throughout the recruitment process and when competing for
job prospects, according to the TeamLease survey.
1.4.3 Measures of Women Labour
1. PROTECTION OF WOMEN WORKERS INTERNATIONAL
SCENARIO
The United Nations’ primary concept is that women’s rights should be
equal. The International Labor Conference adopted a Declaration in
Philadelphia in 1944. “All human beings, regardless of race, creed, or sex,
have the right to pursue both their material and spiritual well -being in
conditions of freedom and dignity, economic stability, and equal
opportunity,” it declared. The International Labor Organization’s mandate
to promote social justice and decent work, which is properly compensated,
productive wor k carried out in conditions of freedom, equity, security, and
dignity, includes women’s rights as an inherent aspect of the values,
principles, and objectives. The International Labor Organization’s
Resolution on Gender Equality and the International Labor Organization’s
International Labor Organization’s International Labor Organization’s
International Labor Organization’s International Labor Organization’s
International Labor Pay Equity and Maternity Protection, proposed in
2004 and ratified by the Intern ational Labor Organization’s Governing
Body in March 2005. Gender mainstreaming is now required in all ILO
technical cooperation programmes. It was reaffirmed in the Resolution of
the 2006 International Labor Conference.
The Commission on the Status of Wom en has made significant
contributions to the advancement of women’s rights. It has made
recommendations on pressing issues in the sphere of women’s rights with
the goal of putting the principle of equal rights for men and women into
practise, as well as de veloping plans to put such suggestions into action.
The Equal Remuneration for Women and Men Convention of 1951, the munotes.in

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8 Discrimination (Employment and Occupation) Convention of 1958, the
Workers with Family Responsibilities Convention of 1981, the
Elimination of the Worst Forms of Child Labor Convention of 1999, the
Part-time Workers Convention of 1994, and the Home Workers
Convention of 1996, the Maternity Protection Convention of 2000, the
Termination of Employment Convention of 1982, and the Employment
Policy Convention of 1964 are all instruments for protecting women’s.
2. LAW RELATED TO WOMEN PROTECTIONS
The Indian Constitution: As a “Fundamental Right,” the Constitution
guarantees equality.
Article 15 includes provisions for women, children, and individuals who
are socially and educationally disadvantaged. These provisions are not
discriminatory in any way.
In matters of public employment, Article 16 guarantees equal opportunity.
Women are guaranteed one -third seats in Panchayats under the 73rd
Amendment Act of the Constitution, and one -third seats in Municipalities
under the 74th Amendment Act.
The National Commission for Women Act, 1990
Creates a National Commission for Women to review existing statutory
protections for women, prepare periodic reports to the Central
Government on matters relating to safeguards for women’s rights,
investigate complaints of deprivation of these rights, and provide financial
assistance in the litigation of issues affecting women.
Sexual Harassment of Women at Workplace (Preventi on, Prohibition
and Redressal) Act, 2013
The Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013 is a legislative act in India that seeks to protect
women from sexual harassment at their place of work. This statute
superseded the Vishakha Guidelines for prevention of sexual harassment
introduced by the Supreme Court of India. The Bill lays down the
definition of sexual harassment and seeks to provide a mechanism for
redressing complaints. It provides forthe constitution of an ‘Internal
Complaints Committee’ at the workplace and a ‘Local Complaints
Committee’ at the district and block levels. A District Officer (District
Collector or Deputy Collector), shall be responsible for facilitating and
monitoring the activities un der the Act. prohibits sexual harassment of
women at work. The Sexual Harassment of Women at Workplace
(Prevention, Prohibition, and Redressal) Act, 2013 is an Indian law that
aims to protect women at work from sexual harassment. The Supreme
Court of Indi a’s Vishakha Guidelines for the Prevention of Sexual
Harassment were superseded by this Act. The bill establishes a definition
of sexual harassment as well as a procedure for dealing with complaints. It
establishes a ‘Internal Complaints Committee’ within the workplace, as
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9 District Officer (District Collector or Deputy Collector) is in charge of
facilitating and overseeing the Act’s functions.
The Maternity Benefit (Amendment) Bill, 2016
On March 9, 2017, the Indian Parliament passed a law offering women
working in the organized sector compensated maternity leave of 26 weeks,
up from the current 12 weeks, a decision that will benefit approximately
1.8 million women. The law will apply to all businesses with ten or more
employees, and the benefit will be limited to the first two children. The
entitlement for the third child will be 12 weeks. As a result, India now has
the third -highest maternity leave in the world. Canada and Norway off er
50 weeks and 44 weeks of paid maternity leave, respectively.
1.4.4 RECOMMENDATION S
The more women employees are informed about their company’s policy
on sexual harassment and gender discrimination, and the more they are
encouraged to report all incident s of discrimination without fear, the more
secure and empowered they will feel. This can be accomplished by raising
awareness and providing training on security and safety, dos and don’ts
when riding in company cabs, emergency contacts, police help lines,
company contact points, awareness of the company policy on sexual
harassment, gender discrimination or gender biassed approach, and the
complaint process, providing training to all female employees and
educating them about their rights and facilities, sens itization of male
employees through training sessions.
1.4.5 CONCLUSION
With the number of reported crimes against women steadily increasing,
many more cases go unreported due to fear and societal stigma. Sexual
violence is an act of power as much as it is a display of sexual desire,
according to criminal law. As a result, all of a woman’s rights, including
her right to property, health, education, and a dignified existence, must be
respected, protected, and fulfilled. Law enforcement must look into these
offenses in particular and use an iron fist to put a stop to them. Women are
unable to fully participate in public life because of a lack of safety. As a
result, ensuring safety or seeking solutions must be done within a legal
framework.
Only then will wome n be able to exercise the full spectrum of rights that
come with being a legitimate citizen. We are the same country that
celebrated P.V. Sindhu’s Olympic victory and admired Kalpana Chawla’s
space mission. When a woman is given the correct opportunities t o
develop her gift and explore her potential, she has a world of options open
to her. Let us treat women with the respect they deserve, and they will
provide us with endless reasons to be proud of them

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10 1.5 LABOUR REFORMS
1.5.1 Meaning of Labour Reforms:
Policy makers face several kinds of choice and, hence, trade -offs. They
can emphasise on en forcing higher wages only but at the cost of low
employment. Higher growth at the cost of low wages is another option to
the policy makers.
Again, job security of existing work ers may be the concern for
policymakers at the cost of encouraging employers to adopt labour -
displacing techniques of employment.
Such trade -offs are bound to emerge when economic restructuring takes
place and cause embarrassment to the gover nment and the policymakers.
A proper balance between choices is of utmost importance so that nei ther
labour welfare is injured nor industrial peace is disturbed. Thus, labour
reforms are of great important as the laws enacted in the labour market
aim at r egulating the market, protecting employment and ensuring social
security of workers.
Labour reforms essentially mean taking steps in increasing production,
productivity, and employment opportunities in the economy in such a
manner that the interests of the workers are not compromised. “Essen -
tially, it means skill development, retraining, redeployment, updating
knowledge base of workers -teachers, promotion of leadership qualities,
etc. Labour reforms also include la bour law reforms” (INDIA 2006; p 601,
GOl Publication Division). Labour laws are con cerned with the trade
union rights of the work ers, industrial relations and job security and
policies relating to wages, bonus and other in centive schemes.
1.5.2 Labour Policies before the Reform Era:
Before we move to the labour policy in the pre - reform era of 1990s, we
must make one im portant observation of the Indian labour mar ket. Indian
labour market is characterized by a sharp dichotomy. Here one finds a
small en clave of organisedlabour. This organised sector is stringently
regulated.
On the other hand, a large number of establishments oper ate in the
organised sector where labourers cannot organise themselves to pursue
their common interests due to various constraints. Most importantly, this
sector is virtually free from any outside control and regulation with little
or no job security.
This sector, thus, pro vides ‘too little to too many’. Further, wages are ‘too
high’ in the organised sector and ‘too low’, even below the subsistence
level in the unor ganised sector. This dualistic set up sug gests how far the
Indian labour market is seg mented.
Social security to organisedlabour force in India is provided through a
variety of legisla tive measures. These are payment of compen sation to munotes.in

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11 workers in cases of industrial acci dents and occupational diseases leading
to disablement or death, provident fund, pension including family pension,
health insurance, payment of gratuity, maternity benefit, em ployees’
deposit -linked insurance scheme, etc.
Several steps were taken in India to provide social security as back as
1923. The trend towards conferring benefits to the work ers gained
momentum only after independ ence. But considering the needs of the
coun try, the present social security arrangements are inadequ ate. More
than 90 p.c. of workers in India are outside the purview of the pre vailing
social security arrangements as work ers of small unorganised sector as
well as in formal sectors remain outside the purview of these arrangements.
Another aspect about l abour policies that influence labour market are
labour laws re lating to forming trade unions, industrial re lations, and job
security
As far back as 1926, Trade Union Act was passed. In India, any seven
employees could form a union. During the freedom str uggle, Indian trade
union contributed handsomely. Today, the trade union is more widespread
and has taken deep roots. It is now better or ganised and is now on a
permanent footing. But at the same time, one finds same major defects in
the Indian trade unio n movement.
It is alleged that trade unions in India are interested in the growth of
capital thereby blunting the edge of a trade union which is a product of
conflict between labour and capi tal. Often employers counter the moves of
the workers to hit back the aggressiveness of workers’ unions.
Since workers are not disci plined, leaders’ resort to strike and work stop -
page even on flimsy grounds. Above all, in ter-union rivalry and political
rivalries are con sidered to be the major impediments to have a s ound
industrial relation system in India. It is also said that Indian labour laws
are highly protective of labour, and labour markets are relatively
inflexible. As usual, these laws are applicable in the organised sector only.
Prevention and settlement of disputes and benign industrial relations are
the two impor tant objectives of India’s industrial relations policy.
Industrial disputes are governed by the Industrial Disputes Act, 1947, that
aims at promoting good relations between employers and workmen,
protecting workers against retrenchment, and settling disputes through
conciliation, arbitration or adjudication.
However, industrial relations climate was far from sat isfactory when trade
unions resorted to mili tancy in the 1960s and early 1970s. Betwe en 1972
and 1981, the average number of work days lost per year per employee in
the manu facturing sector stood at 4.070. This figure went up to 5.736
between 1982 and 1992 —a very high figure compared to other countries
in the contemporary period.
India’s labour laws for the workers in the organised sector give workers
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12 months to 2 years. Job security in India is so rigid that workers of large
private sector employing over 100 work ers cannot be fired without
government’s per mission.
Above all, in the public sector, one author aptly remarked that ‘workers
here have enjoyed almost complete job security since independence’.
Promotions are based on seniority and thus workers get fixed ann ual wage
increments unrelated to work perform ance.
This really tells on the efficiency of the workers leading to low
productivity in the manufacturing industry. Even the owners of sick
industries are not permitted to downsize the establishments or to clos e
them down. In view of this, one finds the tendency of Indian firms to
employ casual or contract workers who are not protected by the country’s
labour laws.
Thus, the conclusion in the words of Pradeep Agrawal is; The labour
market poli cies followed in I ndia in the past have led to serious problems
due to low labour produc tivity even in the context of an economy where
the firms were shielded from both interna tional competition (by the very
high import tariffs) and domestic competition (by the li censing policies).
This, in turn, created an in efficient and internationally uncompetitive in -
dustrial sector which eventually led to lower wages (for example, Indian
wages in the manufacturing sector are only seventh the Singaporean
wages), fewer jobs, and high er unemployment.
P. Agarwal adds further that these labour policies, if pursued in the neo -
liberal regime, will create variety of problems in the midst of growing
domestic and international competi tion. It has been also observed that the
so- called labour market regulations operating since 1947 have tended to
discourage both the growth of employment and productivity.
Further, it has pushed many activities into the unorganised sector. This is
evident from the fact that annual growth rate of employment in t he
unorganised sector was much higher (2.73 p.c.) than the organised sector
(1.58 p.c.) during 1981 -91.
1.5.3 Labour Policies and the Reform Era:
Since protective labour policies and inflexible labour laws are not in the
long-term interests, flexible labou r market policies gained legiti macy in
the climate of economic liberalism so as to promote efficiency and
productivity of labour and protect them against any hazards.
The Indian neo -liberal economic reforms introduced in mid -July 1991
paid rather little a ttention to employment generation. That is why one
finds poor employment growth dur ing the reform period —an adverse
conse quence of the reform process.
Before we start our discussion on the la bour market policies in the reform
era, one must say that the existing labour laws are com mendable in paper
but not in implementation. This is what the second National Commission munotes.in

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13 on Labour set up in October 1999 observed in its Report presented on June
2002; “It can be said that our labour laws… have been criticised as being
ad hoc, complicated, mutually incon sistent, if not contradictory, lacking in
uniformity of definitions and riddled with clauses that have become
outdated and anachronis tic, in view of the changes that have taken place
after they were introduce d many years ago.”
The Government of India has in recognised the following rights of
workers as alienable to every worker under any system of labour laws and
labour policy. These are:
(i) Right to work of one’s choice (ii) Right against discrimination (ii i)
Prohibition of child labour (iv) Just and humane conditions of work (v)
Right to social security (vi) Production of wages including right to
guaranteed wages (vii) Right to redress grievances (viii) Right to organize
and form trade unions (ix) Right to collective bargaining (x) Right to
participation in management.
Along with these rights, workers need many forms of security, like labour
market se curity, employment security, job security, in come security, work
security, etc. These are of critical impor tance in the globalised era as these
people are exposed to increased risk of insecurity. Really, a pathetic
condition prevails in the unorganised sector. That is why a Na tional
Commission for Enterprises in the Un organised Sector headed by Arjun
Sengupta was set up to provide some sort of social se curity to
theunorganised workers. It submitted its report in August 2007.
Unfortunately, these may of rights of workers are rarely met or enforced.
This is one of the most common and most effective criti cisms of labour
legislation in India.
1.5.4 Criticism :
(i) Labour Market Reforms are Imperative:
India’s experience of growth during the liberalised regime is rather
stunning, but its overall impacts on employment in the organised sector,
per worker productivity are not altogether rosy. As employment, during
the period considered, grew slowly compared to the GDP growth rate the
period has been described very aptly as ‘jobless growth’ or ‘job loss
growth’. Employment decelerated in all sectors in the post -liberali sation
period.
Another disturbing aspect of the current employment growth is that both
the shares of self -employment and wage labour both casual and regular
have increased. One then observes concentration of employment in the
unorganised/informal sector. E arlier, this in formal sector was considered
as the ’employ ment of the last resort’.
Such informal as well as non -agricultural employment neither re sults in
higher productivity nor better wages to the workers. Work conditions have munotes.in

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14 been deteriorating grad ually as employers of this sector prefer to employ
workers on a contract basis.
However, the hiring of casual or con tract labour is not peculiar in the
unorganised informal sector in India. One can see the grow ing incidence
of casualisations and contract ualisation of the labour force even in the
organised sector. Thus, protection or se curity of workers is rather a dream
worker are at the discretion of the employers.
It is also observed that employment dis crimination against women
workers has in creased substantially in the reform period though
empowerment of women is consid ered an important avowed objective in
India.
In addition to declining employment opportunities in the organised sector,
we see that wages are not increasing in commensuration with the
workload that the workers carry now. In other words, workers are
exploited not only in the unorganised sector but also in the organised
sector in spite of the legislation providing social security to these workers.
Unfortunately, most of these legislation s are dated and not adequate ‘fit’ in
the current globalised -liberalised economy. In fact, labour market in India
is now showing a great deal of inefficiency and a high cost structure
economy.
Rigid institutional structures in the labour market need to be made flexible
and transpar ent, It is commonly alleged that the employ ment growth in the
organised sector is largely impeded by ‘the prevalence of excessively rigid
labour laws’ (11th Plan Document). It is found that in India there are 45
laws at the nati onal level and close to 4 times that at the State levels (since
labour falls in the Concur rent List) that monitor the functioning of the
labour markets.
It is, thus, necessary to review the existing laws and regulations so that the
(i) corporate sector ca n be induced to adopt more labour intensive sectors,
and (ii) unorganised sec tors which are traditionally labour -intensive
sectors are encouraged to facilitate the ex pansion of employment.
(ii) Different Aspects of Labour Market Regulations:
Against the backdrop of current liberalised Indian economy, we can say
that as changing labour laws is a sensitive issue it requires consensus
among all the parties involved. The three issues involved in the labour
market regulations are: (i) the wage setting process, (ii) the labour market
conditions, and (iii) the hiring and firing process.
The issue of labour reforms has been a source of debate since the reforms
era begun in 1991 when the State withdrew itself from intervening the
labour market. Historically, the go vernment had a ‘social pact’ with labour
reflected in the labour laws of the country. Employers argue that the rigid
labour laws are fetters to their development in the current competitive
environment. Flexibility in the labour market is of urgent necessit y. munotes.in

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Indian Labour Market
15 But in the name of flexibility in labour laws, one must not ignore the
interests of labour so that their jobs are not threatened. Thus, labour
market reforms must ensure greater flexibility to our firms and employers
in such a way that labour is adequat ely protected against any casualties.
A belated attention was made by the Government on the need for bringing
about changes in the labour laws in 1999 when the Second National
Labour Commission was constituted. The Commission was asked (i) to
suggest natio nalisation of existing labour laws applicable in the organised
sector, and (ii) to suggest ‘umbrella’ legislation for insuring a minimum
level of protection to workers in the unorganised sector.
The two aspects of labour reforms that have come to the surfa ce in recent
times are Chapter V -B of the Industrial Disputes Act and the Contract
Labour (Regulation and Abolition) Act. Under Chapter V -B of the ID Act,
all establishments employing more than 100 workers must obtain prior
approval for closure, retrenchme nt, and lay -offs from the appropriate
Government authority.
It has been recommended by the Second National Commission on Labour
that the provisions may be applicable to organisations employing over 300
persons. Some argue that the limit be raised to establ ishments employing
more than 1,000 workers. Employers want the provision relating to ‘prior
permission’ needs to be deleted. Another alternative is to pitch the
compensation to be paid to workers in the event of closure, retrenchment
or lay -offs be raised at a higher level.
The objective of the Contract Labour (Regulation and Abolition) Act is to
abolish contractual employment in activities and processes in core
production/service activities. However, contract workers must enjoy
prevalent social security pr ovisions and other benefits.
(iii) Unorganised Sector and Umbrella Organisation:
These are all about formal or regular em ployment. But an umbrella
legislation is in deed of great importance so that the unorgan ised sector —
where most workers are engaged —is protected. It is necessary to take
steps to improve quality of employment in the unorganised sector.
Any significant improve ment in their incomes and the quality of em -
ployment is feasible if the ‘institutional envi ronment in the labour market
makes it feasi ble for the formal sector to reach out to the workers of the
unorganised sectors on a de centralised basis. This is also possible if provi -
dent fund, ESI and a variety of welfare funds are extended to the
unorganised sectors. All these would give the workers a better deal in
terms of wages, and security of all kinds.
Unfortunately, the quality of employment is far from satisfactory and the
NSSO 61st Round (2004 -05) shows, as usual, that as most of the workers
do not have any (written) job contracts th ey are not eligible for leave and
social security benefits, if any. Thus, what is needed is ‘the creation of a
formal relation ship between the worker and the hiring es tablishment’. munotes.in

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16 1.6 SUMMARY
Thus, in the current scenario, greater flexibility in labour laws must be en -
sured so that firms can adjust to changes in demand when necessary. The
Government admits that the labour laws —such as Chapter V -B of the ID
Act, and Contract Labour (Regu lation and Abolition) Act —lack
flexibility. Further, those laws focu s on job protection and thus inhibit
employment. These aspects re ceived attention in the Mid -term Appraisal
of the Tenth Plan.
However, the 11th Plan Document says that the V -B provisions of the ID
Act, 1947 ‘has not proved to be a major obstacle in downs izing by several
manufacturing enter prises during the past few years with the aid of
generous packages for voluntary retire ment.’ The labour market is
required to be made more flexible in the days to come so that labour force
shifts gradually from the un organised sector to the organised ones.
However, trade unionists as well as work ers of the organised sector are of
the opinion that labour market reform is anti -labour. But as far as labour
laws are concerned, workers of the organised sector, especially in PSEs,
enjoy virtually ‘complete’ job security. But protective labour policies may
cause damages in the long run in the midst of rising number of
unemployment.
Further, if employers enjoy more bargain ing power, interests of the
workers may be at jeopard y. Indeed, this is what we observe in the rising
incidence of contract - based employ ment leading to conflicts with the
more gen eral requirement that society must ensure ‘de cent work’ for all.
With growth rate picking up, a harmonious balance between eff iciency
and the quality of employment involving the relationship between
management and labour and welfare aspects needs to be maintained.
In the ultimate analysis, labour laws, significant as they are, are not the
true drivers of growth. Changes in labour laws are only one of the issues
that merit attention. Flow -ever, the Second National Labour Commission
Report goes on stating that these labour laws ‘have to be visualised and
effected in a broader perspective of infrastructural facilities, social
securit y, and Government policies.’The Commission adds that it is
necessary to provide for both protective and promotional measures, the
latter being highly relevant for the workers in the unorganised sector.
1.7 QUESTIONS
1. Explain the meaning and characteristi cs of labour market.
2. Discuss the problems faced by child labour and measures to correct it.
3. Explain the various problems faced by women labour.
4. Critically examine Labour market reforms.
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17 2
NATIONAL COMMISSION AND
GLOBALISATION
Unit Structure:
2.0 Objectives
2.1 Exit Policy and Safety Net for Labor
2.2 Second National Commission on Labour
2.3 Globalization and Its Impact on Labour Market

2.4 Summary

2.5 Questions

2.0 OBJECTIV ES
 To understand the concept of Exit Policy and Safety Net for Labour
 To study the role of Second National Commission on Labour and its
approach in drafting Law on Labour Management relations
 To study the concept of Globalization and its impact on Labour m arket
2.1 EXIT POLICY AND SAFETY NET FOR LABOR
2.1.1 Exit Policy:
Exit policy is a condition for the emergence of a competitive environment
that there are no barriers to entry and exit of firms in the market. There
should be free entry and free exit fr om the industry. Particularly, when a
firm is making losses, it should have freedom to exit either partially or
totally so that resources can be reallocated to their next best alternative
use. According to PD Hajela, three broad circumstances could be rele vant
to an exit policy. A situation of sickness and lack of economic viability
could be the first situation. A situation where modernization is the need of
the hour could be the second situation. In the third situation, the firm could
be in a position to b ring about a marked improvement in technology and
methods of production. In the second and third situations, the firm might
restructure more than exit while in the third, it might exit rather than
restructure. In all these situations, the exit of labor is inevitable and the
extent of exit would depend upon the type of restructuring. Exit of labor in
the context of restructuring would assume different forms under different
situations. It could be lay -off in which workers are not retrenched but
rendered unemp loyed for short periods. It could retrenchment due to
rationalization or technological up -gradation. It could be exit on account munotes.in

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18 of closure of the industrial unit. In India, the exit policy is the result of a
well-planned program of restructuring and hence there will be substantial
exit of labor as a result of the implementation of the exit policy. (Ref. P -
38-39, Labor Restructuring in India by PD Hajela, Common Wealth
Publishers, (1998) Exit policy as part of labor market reforms is demanded
in India to ma ke allowance for ‘Hire and Fire’ policy. There is
overstaffing in public sector enterprises and government departments. In
order to improve the profitability and efficiency of these enterprises, there
is a need to reduce the staff strength. The proposal fo r introducing exit
policy was made in September, 1991. The World Bank and the
International Monetary Fund have been putting pressure on governments
to introduce labor market reforms to allow employers shift workers from
one unit to another and to reduce ex cess labor. It is estimated that about 45
lakh workers are employed in sick units both in the public and private
sectors. Out of these, 4.1 lakh workers are employed in the sick public
sector units. The passage of exit policy will render these workers
unem ployed. A large number of companies have initiated voluntary
retirement schemes. A study by Business Standard Research Bureau
shows that 23 manufacturing companies cut their workforce by 40,338 in
2000 -01 over 1998 -99. From 2, 50,079 in 1998 -99, the employ ee strength
in these companies fell to 2, 09,691 in 2000 -01. The public sector
enterprises reduced jobs by 1, 20,000 in a period of three years (1997 -
2000). Public sector banks also reduced employees by more than one lakh
through voluntary retirement schem es. The government policy has been to
make the task of retrenchment of workers easier. For example, in his
Budget speech for 2001 -02, the Finance Minister announced that the
threshold for hiring and firing employees without government permission
under the provisions of the Industrial Disputes Act was proposed to be
raised from units employing 100 persons to 1000 persons. If this proposal
was accepted, it would have had serious consequences for labor because
75 per cent of the organized labor force is employ ed in units employing
less than 1000 workers.
2.1.2 Safety Net for Labor
The New Economic Policy of 1991 had adversely affected labor over the
last 17 years. In order to provide a safety net for labor, the Government of
India set up the National Renewal Fund in February 1992. The objectives
of the National Renewal Fund were as follows:
1. To provide assistance to firms to cover the costs of retraining and
redeployment of employees as a result of modernization and
technological up -gradation of existing cap acities and from industrial
restructuring.
2. To provide funds for compensation to employees affected by
restructuring or closure of industrial units both in the public and
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National Commission and Globalisation
19 3. To provide funds for employment generation schemes in the orga nized
and unorganized sectors in order to provide a social safety net for
labor.
The NRF had three components. They are as follows:
1. The Employment Generation Fund (EGF).
2. The National Renewal Grant Fund (NRGF), and
3. The Insurance Fund for Employees (IFE).
The Employment Guarantee Fund was set up to provide resources for
employment generation schemes in both organized and unorganized
sectors. The National Renewal Grant Fund was set up to deal with
payments under the Voluntary Retirement Scheme (VRS) and
compensation tow workers affected by closure/rationalization resulting
from approved rehabilitation schemes in both the public and private sector
enterprises. The Insurance Fund for Employees was set up to cater to the
compensation needs of the employee s in future. However, a great part of
the funds available under the National Renewal Fund was utilized for
compensating the retrenched employees. There was very little retraining
and redeployment under the fund. The VRS implemented in the public
sector ent erprises was not to the benefit of the enterprise but went to the
benefit highly employable persons who took the money and joined private
sector enterprises.
In the year 1998, the VRS package was made more attractive. The
compensation benefit was increased from 15 days wages for every
completed year of service to 45 days. For those who have completed 30
years of service, the compensation package consisted of 60 months of
wages. Thus the Government was single mindedly pursuing the objective
of reducing the s taff strength in public sector enterprises without taking
care of the other two important objectives of the NRF i.e. retraining and
redeployment. Having realized the limitation of the scheme, the
Government set up Employees’ Resource Centers and Employees
‘Assistance Centers for the purpose of counseling, retraining and
redeployment of retrenched workers in different parts of the country.
In the year 2000, the National Renewal Fund was abolished. Assistance
for compensating the retrenched employees in centr al public sector
undertakings is provided by the Administrative
Ministries from April, 2001 and the scheme of retraining and
redeployment of employees of public sector undertakings is now handled
by the Department of Public Enterprises.
Measures to Improve the Safety Net for Labor
Some of the measures suggested by Prof. P . D. Hajela for expeditious
action and to make the safety net for labor more effective are as follows: munotes.in

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20 1. Firms may be so restructured that increased productivity resulting from
modernizati on and technological up -gradation is allowed to absorb
the work force without commensurate increase in real wages.
2. Re-training should be given top priority. Both employers and the
government should contribute generously to the retraining effort.
3. Retr enched employees should be given a bigger compensation
package so that they can look after themselves during the intervening
period between severance and re -employment. The Government may
put retrenchment funds in deposits with higher returns to take care of
better compensation.
4. Extensive counseling for self-employment should be provided.
5. Area development programs could be undertaken in places where
workers are retrenched so that redeployment takes place without much
dislocation and the workers’ locat ion preferences are respected.
6. Workers should be trained in participative management so that not
only their productivity goes up but also they become competent
entrepreneurs.
7. Technological change and adaptation through greater research effort
in publ ic and private sectors is important and should be an integral part
of any exist policy in India
2.2 SECOND NATIONAL COMMISSION ON LABOUR
On 15th October 1999, the Government of India decided to set up the
National Commission on Labour (NCL) with Mr. Ravind ra Varma as the
chairperson indicating the following terms of reference:
(a) to suggest rationalisation of existing laws relating to labour in the
organised sector; and
(b) to suggest an "umbrella" legislation for ensuring a minimum level of
protection t o the workers in the unorganised sector.
The Resolution of the government setting up the Commission desired that
the Commission should take into account the new environment generated
as a consequence of globalization of the economy and liberalisation of
trade and industry. At the same time, it urged upon the National Labour
Commission to take into account the need to ensure a minimum level of
protection and welfare to labour, to improve the effectiveness of measures
relating to social security, safety at pl aces of work, occupational health
hazards; to pay special attention to the problems of women workers,
minimum wages, evolving a healthy relation between wages and
productivity; and to improve the protection and welfare of labour. The
Commission submitted i ts report to the Government on June 1, 2002.
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21 Philosophy of the Commission
An idea of the philosophical attitude of the NCL can be had from the
following statements of the Commission: "Competitiveness depends not
merely on technology, credit, inputs and m anagerial skills, but also on the
contribution that labour makes. The commitment of the workforce to
quality and productivity must be high. The commitment and the new work
culture that it calls for, can be created only when workers feel that they are
recei ving fair wages, a fair share of profits and incentives, and the respect
or consideration due to partners."
In a subsequent paragraph, the Commission states: "The level of wages
depends an undertaking. “Workers have to be interested in productive on
the ec onomic efficiency of ity as the management. “
Approach of the NCL in drafting Law on Labour Management Relations
1. The law will apply uniformly to all such establishments.
2. Since extent of unionisation is low, wherever agreement and
understanding is not possi ble, recourse to assistance by the third party
should be obtained through arbitration or adjudication. A settlement
entered into with a recognised negotiating must be binding on all
workers. (Emphasis added)
3. The Commission is of the view that provisions mu st be made in the
law for determining negotiating agents, particularly on behalf of
workers.
4. The Commission is of the view that changes in the labour laws be
accompanied by a well -defined social security package that will
benefit all workers, be they in th e 'organised' or 'unorganised' sector
and should also cover those in administrative, managerial and other
categories which have been excluded from the purview of the term
'worker'.
5. There is a need to define two terms, 'wages' and 'remuneration', the
former to include only basic wages and dearness allowance, and no
other for the purpose of contribution to social security and calculation
of bonus and gratuity and all other payments including other
allowances as well as overtime payment together with wages as
defined above will be 'remuneration'.
6. The Commission did not feel the necessity of defining industry, since
all establishments employing 20 or more persons irrespective of the
nature of activity in which the establishment is engaged, are covered.
7. The Commi ssion did not consider it desirable to change the definition
of 'strike' as provided in the Industrial Disputes Act 1947 and it held
that "Go slow" and "work to rule" are forms of action which must be
regarded as misconduct.

8. Term 'retrenchment' should be defined pre - cisely to cover only
termination of employment arising out of reduction of surplus workers munotes.in

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22 in an establishment, such surplus having arisen out of one or more of
several reasons.
9. The Commission recommends that in case of socially essential
services like water supply, medical services, sanitation, electricity and
transport, when a dispute is not settled through mutual negotiations,
there may be a strike ballot as in other enterprises, and if the strike
ballot shows that 51 per cent workers are in favour of a strike, it
should be taken that strike has taken place, and the dispute must
forthwith be referred to compulsory arbitration (by arbitrators from the
panel of the Labour Relations Commission (LRC) or arbitrators agreed
to by both sides).
10. A spe cial provision may be made in the Trade Union Act to enable
workers in the unorganised sector to form trade unions, and get then
registered even when an employer -employee relationship does not
exist or ist difficult to establish; and the provision stipulat ing 10 per
cent of membership shall not apply in their case.
11. The Commission strongly believes the role that bilateral interaction,
dialogue and negotiations can play in promoting harmonious relations.
Since our Trade Union movement is fragmented and the co nstituents
are not willing to give up separate identities, one of the ways to
strengthen the incentives for consolidation can be in the field of
registration and recognition, where the criteria for eligibility can be
upgraded or at least propor - tionately upgraded.
12. Negotiating agent should be selected on the basis of check off system,
with 66 per cent entitling the Union to be accepted as the single
negotiating agent, and if no union has 66 per cent support, then Unions
that have the support of more than 25 per cent should be given
proportionate representation on the college.
13. For ascertaining the bargaining agent, check off system has the
advantage to determine the relative strength of trade unions based on
continuing loyalty reflected by the regular payment of union
subscription.
14. Check off system in an establishment employing 300 or more workers
must be made compulsory formembers of all registered trade unions.
15. The Commission recommends that recognition once granted, should
be valid for a period of four yea rs, to be co -terminus with the period of
settlement. No claim by any other trade union/federation/centre for
recognition should be entertained till at least 4 years have elapsed from
the date of earlier recognition.
16. Any worker who, pending completion of do mestic enquiry, is placed
under suspension, should be entitled to 50 per cent of his wages as
subsistence allowance, and at 75 per cent of wages of the period
beyond 90 days, for no fault of the worker, so that however the total
period of suspension shall not, in any case, exceed one year. munotes.in

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23 2.3 GLOBALISATION AND ITS IMPACT ON LABOUR
MARKET
INTRODUCTION
This unit provides an overview of the consequences of technology change
on employment relationship in India. New technologies opened
employment opportunities in new and emerging sectors. Skills needed
have undergone a change from that of manual dexterity and physical
strength to those of troubleshooting and process handling. Group based
incentivization and company specific bargaining are becoming more
common. U nions no longer resist technology change but are concerned
with the implications on the number of jobs, their content, and earnings. It
is also argued that subjective norms need to be considered as avariable
influencing the behavioral intentions of workers with respect to
acceptance of technology change implications for practice and future
research directions are also discussed.
TECHNOLOGICAL CHANGE – THREE TRANSFORMATION
STAGE
The technological progress over the last century has undergone a slow but
defini te transformation. This can be categorized into three different stages
viz. craftsmanship, mechanization and automation. Each of the stages had
an influence on the nature of work and the skill level required to perform a
job. The early craftsmanship was ch aracterized by the worker /craftsman
having control over the entire production process, from procuring the raw
materials to the finished goods. This required end -to-end knowledge,
where the worker got involved in activities right from pitching to potential
customers to delivering the final produce/service. Each product/service
could be characteristically of the employee. This model of operation can
still be found in some of the present -day service firms, what are termed as
Service Complexes and Service Shop s. The second stage of mechanization
was brought about by the application of principles of scientific
management where tasks were broken down to simpler and specialized
ones for large -scale production of standard goods, and methods of
estimating errors and hence lack the inherent human flexibility in
production. Technology need not be restricted to just technical automation
but can also involve a whole package of resources like capital,
entrepreneurship and management. Further, technology as such is not
quantified but what relating to its manifestations like a particular
technique of production, productivityof a particular input, scale economics
etc.
Technological Change and Impact on Labour
Technological change and its impact on the work force have become a
focus of attention all over the world. The innovations include advanced
communication systems, industrial robots, flexible manufacturing systems,
computer - assisted design (CAD ), and computer -assisted manufacturing
(CAM ). These modern technologies incorpo rate powerful and low -cost munotes.in

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24 micro electronic devices that have the potential to increase productivity in
office and factory production tasks. They share widespread appeal and are
being diffused throughout the world. There are, however, conflicting
views abo ut the implications of changing technology for employment.
Some experts say that the pace of technological change is accelerating and
that thousands of workers in plants and offices are affected as labour
saving or capital -intensive innovations are used mo re widely. Other group
of experts asserts that technological change is beneficial for all groups in
our society and the changes are more evolutionary than revolutionary in
nature. This means that technology ultimately creates more jobs than it
eliminates. The Bureau of Labour Statistics has been studying
technological change and its impact on the work force for a longtime.
Assessing the impact of technology on labour force is very complex.
Technological changes are affected by and are affecting many factors like
 Changes in output,
 Consumption patterns,
 International competition,
This relationship between changing technology and employment is
continuously changing and is not very clear. In the mid-1950's, in response
to concern about the implications of developments classified under the
general term "automation," Bureau of Labour Statistics began an intensive
evaluation of the possible effects of the diffusion of electronic computers
and other changes. To explore the impact of these emerging technologies
on productivity, employment, job skills, and labour -management relations,
the Bureau conducted a series of plant -level case studies in industries such
as petroleum refining and electronics . More recently, about 35 industry
reports, covering a cross section of the economy, are available describing
the cases about the impact of technology on labour. The reports include
industries such as motor vehicle manufacturing and telephone
communications where the pace of change is rapid, as well as industries
such as bake ry products where change is slow. The speed of introduction
of new technology has been increasing in many industries as these
industries modernise to reduce costs and compete more effectively in
domestic and foreign markets. The research confirms that adva nced
electronic computers, robots, flexible manufacturing systems, CAD/CAM,
and technologies to increase productivity in office tasks are being
introduced more extensively in industries, such as steel, motor vehicle
manufacturing, metal working, and bankin g, to name a few. However, the
pace of change varies by industry. It also varies among plants within an
industry not all have the funds or thevolume of business that would
support the adoption of the latest technologies, which often are very
costly. Techno logical changes are introduced in the tasks like materials
handling mechanization, larger capacity equipment, and machines with
faster speeds.
In general, it is concluded from the study that relatively few employees
have been displaced because of technolog ical change. The introduction of
new technology has also created many kinds of jobs particularly when the
country has been stronger economically. Moreover, investment in new munotes.in

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National Commission and Globalisation
25 technology generally takes place during periods of economic expansion
when there i s also growth in employment. Introduction of the computers
has extended the scope of activities for many industries, creating
employment opportunities. In addition, the computer led to job
opportunities in new occupations such as systems analyst, programme r,
key punch operator, console operator, and tape librarian. New industries to
manufacture the computer and its related equipment and furniture were
formed, resulting in employment for many workers in all types of
occupations. Today, thousands of workers a lso are employed in
manufacturing robots, microelectronic devices, advanced communication
equipment, and other technologies that are gaining prominence . Measures
have been undertaken to facilitate the orderly introduction of new
technology. These include:
 Provide advance notice to workers affected by the new technology
 Coordinate labour adjustment with technical planning
 Provide employees with new skills associated with modern
technology and
 Retrain those displaced for other work.
LIBERALISATION AND LABOUR MARKET
With the liberalization of Indian economy in 1991 several private players
started carving a major role in the economic output and simultaneously
governments both at the centre and state levels started assuming a smaller
role in running businesses . Increased domestic and foreign competition
resulting from the economic reforms induced domestic Manu factures to
improve efficiency and bring into use advanced technologies on a larger
scale. This is supported by the fact that during the period 1991 -98 there
were about 3250 technical approvals in India with the top five technical
collaborators. The subsequent break down of trade barriers, globalization,
advancements in Information and Communications Technology (ICT) and
well accepted management ideas such as TQM on quality, JIT, Computer
Integrated Manufacturing (CIM) & Lean Production (LP ) have served to
magnify the impact of technology on employment relationship globally
and India in particular.
Technological Change and Employment
Labour employment is affe cted by many factors, two major directly
relevant factors are per unit labour requirement for aproduct (man hours
per unit) and the total demand for the product. It is likely that
technological improvement leads to reduction in per unit labour
requirement but at the same time because of the increased demand made
possible by the lesser cost of the technologically advanced product, it can
lead to rise in overall demand for labour. This expected rise in demand for
labour has however not been equally true for a ll sectors / industries. In a
study of employment in organized manufacturing sector in India, it was
found that even though real gross value added has grown at 7 .4percent per
year during 1981 -2002, employment of workers increased only by 4.3 and
most of t his growth happened in the early part of the 90s while the latter munotes.in

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26 half of 90s and early part of the current decade have shown a reducing
trend in organized manufacturing sector employment . At the same time,
employment in Organized Services sector has been picking up in the latter
half of last decade and early part of this decade. Organized manufacturing
sector seems to have shown a sharp decline in employment post 1996
while services have gained during this period. As a consequence of
technological moderniz ation of banks, it was found that though there was
an overall increase in employment, this growth has been made possible by
an emerging volume of employment in previously new areas such as
systems analysts, console operators etc. In a case of technology tr ansfer
toan Indian engineering MNC from its foreign parent company during the
period 1974 -1984, even though the fixed capital increased byabout 400
percent. Further even within the same industry, there seems to be a shift in
the occupational and work profi le of the employees decreased by 8 percent
whereas the total employment increased by 3 to 5 percent, indicating a
shifting of workforce from workers to supervisory and executive squads
and a corresponding shift in the skill requirements. In an aggregate st udy
of the organized manufacturing sector for the period 1982 -2002, it was
found that the increase in gross value added is accompanied by greater
employment of employees in the supervisory unit as against the worker
cadre. Further there has been a change i n demand for the type of
employees within the same occupational group, from operatives and
labourers to professional and technical workers inmany of the industries
such as Banking, Software Services and Textiles.
Impact on Skill Profile
As the manufacturin g and service technologies continuously develop like
in the case of just -in-time inventory, manufacturing cells, robotics, and
service quality concepts etc, there is anincreasing pressure on the
organizations to the largest contributor after agriculture to the employment
providing jobs to about 21 million people. When new types of
technologically advanced looms were introduced in textile firms, the skill
requirements changed to those of monitoring and troubleshooting of the
production process instead of dir ectly getting involved in the production.
This is because with the introduction of new automated machinery, the
technologies are no more separate from each other and detection of faults
requires a thorough understanding of the production process and
famili arity with different equipment’s used. Hence the skill required for
the job, which previously emphasized manual dexterity, physical strength
in manual and repetitive tasks has beentaken over by the need for machine
trouble shooting and process handling ski lls. The roles and responsibilities
of the senior workers were more flexible in the modernized mill sand they
were expected to handle a higher number of departments compared to
rigid and specific allocations along different categories of work within
depart ment in the non -modernized mills.
The impact of new technology on skill requirement in the textile industry
has been widely reported. Textile industry in India has a special place with
4 percent contribution to the GDP and 12 percent of the world's textile
production (GOI 2009). The cotton mill workers account for 20 percent of munotes.in

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National Commission and Globalisation
27 the total employment in the manufacturing sector and the textile industry
introduction of new production processes but may be related to even
initiation of new management ideas. For instance, at the beginning of the
nineties, when Motorola started measuring workers performance against
quality & outputs instead of measuring against a time clock, it became
necessary for its workers to know their equipment and production process,
and be able to initiate any trouble shooting process themselves which were
previously not in their ambit. This required the worker to unlearn deeply
held attitudes and values when they were just responsible for working on
individual machines to those of understan ding the production process as a
whole. However, the effect of increased investment in technology on
wages has not always been positive. Study of the Indian subsidiary of a
MNC found that the wages as a proportion to value added remained at
about twelve pe rcent and has not changed significantly with the
introduction of new technology over the years. Further, in a study of sixty
select MNCs, found that the aggregate rise in wages and salaries was
much lower than the aggregate increase in operational expenses ,
suggesting that the growth rate of wage bills has not kept pace with
investment in operations.
Impact On Wages
The impact of technological change on wages has been mixed. Budhwar
(2003) in his study of 137 Indian firms in six manufacturing sectors in
India found that collective bargaining and provisions of labour laws have a
significant influence in determining the basic wages and bonuses of blue -
collared employees, hence indicating that the wages are still determined
by factors not directly related to in dividual / firm performance and
technological change However, this is also sector specific. In a study by
Singh & Nandini (1999) in the software industry, it was found that
technological change does have a significant effect on salaries paid to
employees. Chakravarty (2002) in her study of spinning mill workers
found that the modernized mills required `unusual skills' from workers
compared to the traditional ones. The impact on wages because of
technology change is also influenced by the political process. Betcherman
(1991 ) argues that there is a positive correlation between wage levels and
introduction of advanced technology but how the pie is distributed will
depend on the balance of power between the negotiating parties. In the
Canadian context, he found that skilled blue -collared workers, both
unionized and non -unionised, could bargain a higher pay compared to
those doing manual work. Further, the union’s bargaining power was
lower for technology innovators than among non -innovators. In a similar
vein, i n the case of modernized textile mills in India there is an emergence
of distinct and firm specific skills which require higher cost and time
investments (Chakravarty 2002). Hence companies are willing to pay
higher wages in these mills as contrasted to no n-modernised mills. This
necessitated decentralized bargaining in the case of modernized firms
while the non-modernised ones went in for industry wide bargaining. In
thelatter case since the skills are not specific to an organization but rather
are generic to the industry they required support of the wider political
base. Nagaraj (2004) in his study of employment in organized munotes.in

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Industrial and Labour
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28 manufacturing sector notes that while real wages ofworkers have roughly
stagnated during 1981 -2002, the real emoluments of supervisor s have
gone up by 77 percent during the same period indicating that the increase
in wages due to technology change has not been favourable to the workers
in general.
Impact OnWorkers
The reasons for introducing new technology vary from one organisation to
another. New production system in a plant is brought in by the
management typically in response to the change in market conditions,
which require more `efficient' technologies to be adopted. Studies indicate
that after a time lag major technological change s have always induced
significant changes in the organisation processes. The unions and the
employees into confidence before introduction of automation. This was
done through a free flow of information, education, and training of
employees in terms of what computerization means and what changes it
can bring in. The transformation of Bank of Baroda from a large public
sector bank with a legacy culture to a highly customer centric, technology
driven bank through a variety of initiatives including implementati on of
Core Banking solutions is credited to clear and transparent communication
with the employees (Khandelwal 2007 ). Studies inthe Indian context have
shown that attitudes in terms of job satisfaction and freedom and
autonomy at the work place were found to be significantly positively
related to technology acceptance (Gurtoo & Tripathy 2000,
Venkatachalam &Velayudhan 1999). Venkatachalam & Velayudhan
(1999) in their study of a steel plant found significant and positive
correlation between meaningful, interesting job and technology, indicating
that new technology introduction does have an influence on how the
employees feel at work . Unlike in the West Indian employees rarely
differentiate thework and develop a feeling of "we -ness" if policies and
practices instil among employees the feeling of `acceptance and belonging'
(Dayal 1999 :220) .
Globalisation's impact on labour market flexibility via its interaction with
economic uncertainty, serving as potential determinants of labour market
flexibility. We consid er new globalisation and economic uncertainty
indices within a panel dataset of 136 countries from 2000 to 2017. We find
that globalisation promotes labour market flexibility, while economic
uncertainty decreases labour market flexibility. The interaction of
globalisation with economic uncertainty also positively affects labour
market flexibility. Our findings are robust to various sensitivity analyses,
that is, different estimation procedures, different globalisation indicators
(including various controls) and excluding outliers.
2.4 SUMMARY
1. Exit policy is a condition for the emergence of a competitive
environment that there are no barriers to entry and exit of firms in the
market. There should be free entry and free exit from the industry.
Particularly , when a firm is making losses, it should have freedom to exit munotes.in

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National Commission and Globalisation
29 either partially or totally so that resources can be reallocated to their next
best alternative use.
2. The New Economic Policy of 1991 had adversely affected labor over
the last 17 years. In o rder to provide a safety net for labor, the Government
of India set up the National Renewal Fund in February 1992.
3. On 15th October 1999, the Government of India decided to set up the
National Commission on Labour (NCL) with Mr. Ravindra Varma as the
chairperson . The Commission submitted its report to the Government on
June 1, 2002.
4. Technological change and its impact on the work force have become a
focus of attention all over the world. There are conflicting views about the
implications of changing te chnology for employment. Some experts say
that the pace of technological change is accelerating and that thousands of
workers in plants and offices are affected as labour saving or capital -
intensive innovations are used more widely. Other group of experts asserts
that technological change is beneficial for all groups in our society and the
changes are more evolutionary than revolutionary in nature.
2.5 QUESTIONS
1. Discuss the concept of Exit Policy and Sa fety Net for Labour and
suggest measures to improve it.
2. Explain the recommendations of the Second Commission on Labour in
drafting Law on Labour Management Relations.
3. Elaborate the impact of Globalization on labour market.


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30 3
Module 2
TRADE UNIONISM - I
Unit Structure:
3.1 Objectives
3.2 Introduction
3.3 Definition of Trade Union
3.4 The features of Trade Unions
3.5 Functions of Trade Unions
3.6 Historical Evolution of Trade Unions in India
3.7 The Present Status Tra de Union i n India
3.8 Problems faced by Trade Union in India
3.9 Measures to Strengthen Trade Union in India
3.10 Summary
3.11 Questions
3.12 Further Readings
3.1 OBJECTIVES
1. To understand the meaning and Functions of Trade Unions
2. To understan d the his torical development of Trade Unions in India
3. To explain present scenario of Trade Unions in India
4. To understand the Problems of Trade Unions in India
3.2 INTRODUCTION
The process of modern industrialization paved the path for emergence of
trade unions and gradually the trade unions have become an integral and
powerful force in the contemporary system of production and distribution
of goods and services. As a result of which universally their role has been
widely debated. So far India is concern ed; the role and policies of the trade
unions have special significance since their inception. Hence, it is
pertinent to look into the process of the evolution of trade unions to
understand the factors which have contributed for their origin and growth
to attain the cu rrent position. Trade unions imply to some extent a
community of outlook. Based on the sense of common status and need of
mutual help it could be understood as an organization rather than many munotes.in

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31 forms of organization. It aims at developing a spir it of class consciousness
and solidarity for self -respect, rights, and duties. It creates an organization
to safeguard their common interest, self -protection and strengthening their
social and economic position. It is the trade unions which serve as the bas e
for the t rade union movement. Hence, without the trade unions a trade
union does not exist. The trade unions also serve as the principal
institutions where workers learn the lessons of solidarity and self -reliance
In many of the developed nations the tra de union mo vement resulted with
the process of industrialization. Similarly, development of trade union
movement in India can also be linked with the emergence and expansion
of the large -scale industries. With the development of large -scale
industries many changes oc curred in the working and living environment
of workers and created a number of new and complex problems. Many of
the factors like Introduction of machinery, new lines of production,
concentration of industries in certain big cities gave birth t o a new cla ss of
wage earners and divided the industrial society into capitalist and
labourers or haves and have -nots.
3.3 DEFINITION OF TRADE UNION
A trade union is a complex institution which has economic, sociological,
political and legal aspects. The nature and functions of trade unions is
subject to time and space. Hence, there are a number of definitions each
giving a different aspect of the trade union. However, none of them are
complete in themselves.
 According to the Sidney and Beatrice Webb, “A trade union is a
continuous association of wage earners for the purpose of maintaining
or improving the conditions of their working lives”.
 Accordin g to the Mr. J Cunnison “A monopolistic association of
wage earner and the general purpose of association is to strengt hen
their power to bargain with the employers.”
 According to the Dale Yoder , “A trade union is a continuous long -
term association of employees, formed and maintained for the specific
purpose of advancing and protecting the interests of members i n their
working relationship.”
 According to the Danke r, “A trade union is a continuing organization
of employees established for the purpose of protecting or improving
through collective action, the economic and social status of its
members.”
 Indian Trade Uni on Act 19 26 specifies the term as, “A trade union is
any combination, whether temporary or permanent, formed primarily
for the purpose of regulating the relations between workmen and
employer, or between workmen and workmen, between employers and
employers, or for imposing restrictive conditions on the conduct of any
trade or business, and includes may federation of two or more trade
unions.”

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32 3.4 THE FEATURES OF TRADE UNIONS
The features of the trade unions can be derived from the above -mentioned
definit ions.
i. It is a voluntary organization or association of either employees or
employers or even independent workers.
ii. It is generally permanent in nature; it cannot be temporary for
specific cause or casual in nature.
iii. It is formed by the collective efforts of their me mbers to make it
strengthen through maximum members for strong bargaining power.
iv. There are various objectives of the union. Main objectives can be
illustrated such as to promote and protect economic, social and
vocational interest of the union mem bers or e ven for the employees
employed in the organization.
v. There is various socio - economic and political ideologies which
influenced the origin and growth of the union.
vi. They are adaptive towards the changing social, economic, legal,
political and enviro nmental f actors.
vii. It is formulated with a specific objective to eliminate the
exploitations of the workers through worker’s participation
management.
3.5 FUNCTIONS OF TRADE UNIONS
The functions of trade unions can be discussed under four categories
namely, basic, economic, social, political and international.
A) Basic Functions:
The important basic functions of trade unions listed by the National
Commission on Labour union are:
1. To secure for workers fair wages.
2. To safeguard security of tenure and improve conditi ons of s ervice.
3. To enlarge opportunities for promotion and training.
4. To improve working and living conditions.
5. To provide for educational, cultural, and recreational facilities.
6. To co -operate in and facilitate technological advance by broadening
the underst anding of workers on its underlying issues.
7. To promote identity of interest of workers with their industry.
8. To offer responsive co -operation in improving levels of production
and productivity, discipline, and high standard of quality.
9. To promote individual and co llective welfare. munotes.in

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33 B) Militant Functions (Economic functions).
The primary function of a trade union is to protect the basic interests and
needs of themembers by striving to better the terms and conditions of
employment, secure for workers’ better wages and to improve their
working and living conditions.
The underlying idea of forming a trade union is to acquire collective
strength for:
1. Protecting and advancing terms and conditions of employment of its
members.
2. Negotiating and setting terms and cond itions of employment and
remuneration.
3. Improving the status and working and living conditions of the workers.
4. Reduced hours of work and better treatment from employers.
3. A share in the profit of the industry and participation in its
administration .
4. Provisions for apprenticeship, incentive payments, promotions, bonus,
gratuity and economic benefit plans.
In order to successfully perform these functions, a trade union has to fight
for the rights of the workers and may have to adopt methods such a s
collective bargaining, negotiations, strikes and boycotts. Hence these
functions are known as militant or fighting functions. They are also known
as economic functions.
C) Social Functions:
The social functions carried out by the trade unions are as follows :
1. Organizing welfare and recreational activities such as mutual
insurance, providing monetary and other help during periods of strike
and economic distress.
2. Running cooperatives.
3. Initiating and developing workers’ education schemes.
4. Providing housing facilit ies.
5. Participating in community development and community protection
activities.
6. Engaging in cultural activities and
7. Cooperating with governmental agencies in social welfare programme.

D) Political Functions:
1. Carrying on political education of the workers.
2. Obtaining political power and influence through developing political
parties of their own, and extending help to candidates of other political
parties who are sympathetic to the cause of labour. munotes.in

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34 3. Carrying on lobbying activities for influencing the course of la bour
and other legislation.
4. Participating in, and representing the workers on, advisory institutions
and bodies.
5. Developing militancy and revolutionary urge amongst workers, and
6. Protesting against governmental decision and measures detrimental to
the intere st of workers.

E) International Functions:
1. Participating in the organization and activities of the International
Labour Organization (ILO).
2. Associating with the International Federations of Trade Unions such as
the World Federation of Trade Unions (WFTU), th e Inte rnational
Confederation of Free Trade Unions (ICFTU) and the International
Trade Union Secretariatsfor the purpose of building working class
unity and solidarity, and
3. Sending monetary and other help to workers of other countries during
periods of nee d.
3.6 H ISTORICAL EVOLUTION OF TRADE UNIONS IN
INDIA:
In comparison to Great Britain and USA trade union movement is
relatively recent inits origin. It started hardly around hundred years back.
By 1850s when trade unionswere emerging in Great Britain,
industrializ ation was just beginning in India. However, the industrial
growth was slow and so also the trade union movement. Irrespective of the
number of modern industrial organizations in existence, one thing that was
commonwas the existence of deplorable an d pathetic working and living
conditions for the workers during the last quarter of the nineteenth
century.
The history of trade unionism in India is interspersed with economic and
political events which mounded its growth pattern and contributed to its
present stren gths and weaknesses. While the union movement has now
emerged as a formidable politico -economic force in the industrial sector,
its looseness of structure could well be inferred from the secular decline of
average union membership. It may theref ore be nece ssary to recall major
events -formation of unions, political developments, economic situations -to
understand the growth pattern of unionism.
There were some sporadic protests by the industrial workers mostly in the
textile mills against the inhum an working a nd living conditions even in the
absence of any formal workers organization. There were some
associations which emerged during the periodof 1890 to 1910. But these
were mostly philanthropic or humanitarian organizations working for
welfare work for the indus trial workers. However, with the growth of the
number of industries and so also the number of workers, gradually the
awareness among the workers started growing against the exploitation of
the workers. This was further strengthened by the spi rit of nationalis m.
Thus, by the time of the First World War, the stage in India was ready for munotes.in

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Trade Unionism -I
35 the emergence of the trade union movement. Subsequently the prevailing
conditions during the war period, formation of the International Labour
Organisation (ILO) etc. paved the path for the formation of the trade
unions.
The Development of Trade Unions in India can be studied under the
following stages:
A. Period up to First World War (from 1875 to 1918)
B. Between the Two Great Wars (1918 -1938)
C. During and After the Sec ond World War (1939 -1947)
D. Post-Independence Period (1947 to date)
A) Period up to First World War (from 1875 to 1918):
Trade Union Movement in India started quite late. Bombay Mill hands
association found in 1890 by Shri N.M. Lokhanday, a factory worker, is
said to be the first tra de union in India.The first concerted action was taken
in1875 under the leadership of Sorabji Shaparji who along with some
social workers started an agitation to draw the attention of the Government
to the deplorable conditions of wo man and child labour in In dian
industries. Though there were no trade unions, one can find instances of
strikes even in the last quarter of the 19th century. For example in 1877,
workers of The Empress Mills at Nagpur observed a strike over wage
rates. Organising the Labour Conferenc e in 1884 in Bombay under the
leadership of N.M.Lokhande was animportant incident during 1880s. A
Memorandum was prepared and submitted to the Second Factory
Commission highlighting the poor conditions of the workers. However,
there was no improvement on the prevailing condition of labour. As a
result, a mass meeting was organised in Bombay in April, 1890 which was
estimated to have been attended by about 10,000 workers. A resolution
was passed in the meeting raising the followin g demands. Weekly off, half
an hou r rest at noon, reducing working hours, Payment of wages not later
than 15th day of each month and Compensation to injuries sustained by a
worker on duty.
The owners of the Textile Mills agreed to grant weekly holiday to t he
workers. Being encouraged this ach ievement the Bombay Mill Hands
Association was formed in 1890 by N.M. Lokhande. This was in no sense
a trade union, but this can be considered tobe the starting point of the
Indian labour movement. During the period fro m 1882 to 1890, two
provinces namely, Bom bay and Madras had witnessed 24 strikes.
Following the formation of the Bombay Mill Hands Association, a number
of unions were formed in different parts of the country as the following;
The Amalgamated Society of Ra ilway Servants of India and Burma (for
Europe an and Anglo -Indian railway employees); The Printers’ Union of
Calcutta, 1905; The Bombay Postal Union at Calcutta and Madras, 1907; munotes.in

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36 TheKamgar Hitbardhak Sabha, 1909 and The Social Service League,
1910.
B) Between the Two Great Wars (1918 -1938):
After the First W orld War trade union movement got intensified. Trade
unions in the form of associations by the workers started emerging also
witnessing a change in leadership passing from the hands of social
workers into th e hands of the national leaders some of whom were ac tive
in the freedom movement. This was also the period which witnessed wide
scale labour unrest all over the country. The factors responsible for this
situation were as follows:
 The Swaraj Movement, widen ing gulf between employers and
employees and mass awake ning among the workers demanding racial
equality with their British employers further intensified the movement.
 Establishment of the International LabourOrganisation (ILO) in 1919
giving dignity to the workers all over the world.
 The non -cooperation movement led by Mahatma Gandhi during 1920 -
21 and his support to the demands of working class also greatly
influenced thelabour movement.
A Number of trade unions were formed around in 1920. Notable of them
was Madras Textile Labour Union formed under the leadership of B.P.
Wadia in 1918. This was followed by formation another 14 unions in
different parts of the country during 1818 -1Further, the active association
of Mahatma Gandhi with the Ahmadabad TextileL abour Association gave
a new turn to the labourmovement by a pplying the principleof non -
violence. After the formation of the ILO, the government nominated
delegates including the workers representatives to the first Conference of
ILO held in Washington in1 919.The workers’ nominations, however, were
made by the govern ment unilaterally withoutconsulting the then existing
unions in the country. As a result, all the 64 the then existentemployee’s
association with a membership of 1,40,854 met in Bombay and estab lished
the All India Trade Union Congress (AITUC) on 30th Octob er, 1920 as a
centra lorganisation of trade unions. Such a move got the support from a
number of leaders like, Sri Jawaharlal Nehru, Motilal Nehru, Guljari Lai
Nanda, Sardar Vallabh Bhai Patel, C.R. Das etc. of the All India Congress.
The primary aim of formi ng the association 83 Development and
Functions of Trade Unionswas to facilitate the selection of workers’
delegates to the ILO and coordinating the functions of individual trade
unions.
In 1921 the ILO adopted a resolution which urged that the labour s hould
be given full freedom to form a union. As per the records of the AITUC
published in 1925 there were 167unions with a membership of around
2.23 lakhs in 1924. The enactment of the TradeUni on Act in 1926 paved
the path for regulated trade unionism. Till 1929 AITUC was the only
central Trade Union functioning in India. However, because of some
ideological differences in its Nagpur session held in 1929 there was a split
in the AITUC which resu lted in the formation of All India Trade Union munotes.in

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Trade Unionism -I
37 Federation (AITUF) un der the leadership of N.M. Joshi. With the
formation of AITUF, the strengthof AITUC in terms of number of trade
unions came down to 21 and total membership around 94,000.
Subsequently, in 1933 it was renamed as Nation Trade Union Federation
(NTUF). In the Ca lcutta session of the AITUC held in 1931, there was
another rift whereby the communist and the left -wing unionists got
themselves separated from the main body to form separate union name d as
Red Trade Union Congress (RTUC) was formed under the leadership of
B.T. Ranadive and S.V. Deshpande.
Thus, by the early 1930s there were three central labour organisations i.e.
AITUC, AITUF and RTUC. There were some other independent
organisations lik e the AllIndia Railwaymen’s Federation (AIRF) and the
Ahmedabad Textile Lab our Association (ATLA). In 1938, there was
another unity move through the efforts of V.V. Giri, in the AITUC in its
special session held at Nagpur. The NTUF was affiliated as a sepa rate unit
to the AITUC. However, in 1940 the NTUF was dissolved and finally
merged with AITUC. Thus, Nagpur the venue where the first split in
AITUC took place got itself sanctified in 1940 by bringing back unity in
the trade union movement.
84 Trade Union ism In 1937, there were general elections and the Indian
National Congress pledged in its manifesto that if it was voted to power, it
would improve the conditions of workers.
C) During and After the Second World War (1939 -1947):
The Second World War which br oke out in September 1939 made an
impact on the status in the Indian trade union mov ement. The leaders of
the in the AITUC belonging to various factions again got divided on the
question of whether the AITUC should support the Government on war.
The nation alist and the communists mostly remained neutral with their
approach towards the war. Bu t the radical democrats under theleadership
of M.N.Roy were in full support of the war. Because of conflicting views
on this issue another rift took place in 1941 and t he radicals left the
AITUC and formed a new central labour federation known as the Indian
Federation of Labour (IFL). In 1947, the Indian National Trade Union
Congress (INTUC) was formed as a labour wing of the Indian National
Congress.
D) Post-Independence P eriod (1947 to tilldate):
Independence and the partition of the country shattered the hope o f the
workers for securing high wages and better working conditions from the
national Government. In order to retain the amenities already earned by
the workers, a series of strikes swept the country in 1947 with
involvement of 18.41 lakh workers resulting a loss 165.63 lakh man -days.
In post -independence period, various political parties were formed and
kept control over various trade unions. The trade union leaders workingin
the INTUC who were supporters of the newly f ormed political party,
seceded fromit and formed a new central trade union organization called
the Hindustan Mazdoor Panchayat (HMP). The HMP and the Indian munotes.in

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38 Federation of Labour merged and formed Hind Mazdoor Sabha (HMS) in
1948. In 1949, the radica ls and leftist groups, which did not agree with the
principles of both AITUC and HMS left the AITUC and formed another
organization in the name of United Trade Union Congress (UTUC) on
30th April 1949.
In 195 9, a few unions led by the members of the Socialist party seceded
from the HMS and formed Hind Mazdoor Panchayat, as an organisation of
Samyukta Socialist Party. Further, in 1962, a new organisation called
Confederation of Free Trade Unions (CFTU) was form ed with the support
of Swatantra Party. There was agai n a rift in theAITUC in 1970 when the
Communists divided into CPI and CPM. The CPI held theAITUC and the
CPM formed a new central organization namely, the Centre of
IndianTrade Union (CITU).
In 1972, th e Indian National Congress split in two groups, result ing in the
division of INTUC in two groups. The ruling Congress retained its control
over the INTUC and other group under the leadership of Morarji Desai,
Nijalingapa and Kamraj formed anew union namely , National Labour
Organisation (NLO). Another interesting development took place in May
1972, when a limited accord was reached between the AITUC, the INTUC
and the HMS regarding the procedure to be followed for the recognition of
trade unions. As a result , a National Council ofCentral Trade Unions
(NCCTU) was form ed with representative of the AITUC, INTUCand
HMS. The basic idea behind it was to isolate the CITU. Consequently, the
CITU set up a United Council of Trade Unions (UCTU) in September
1972 as a ri val bodyof NCCTU. After the declaration of Emergency in
1975 a gain, the INTUC, the AITUC and theHMS combined and joined
with the employers’ representatives on what was calledthe National Apex
Body. This body ceased to exist as soon as the state of Emergenc ywas
lifted in 1977.
3.7 THE PRESENT STATUS TRADE UNION IN INDI A
The Indian Trade unions have now got a legal status and these are no more
ad-hoc bodies or strike committees. They have now become a permanent
feature of the industrial society. They have su cceeded in organising
Central Union Federations which help in the determination of principles,
philosophy, ideology and purposes of the unions and give some sense of
direction to the otherwise scattered and isolated unions. Local, firm -level
or industry -level trade unions are often affiliated to larger Federations.The
large Federations in the country representing labour at the National level
and are known as Central Trade Unions or Central Trade Union
Organisations (CTU or CTUO).
The present status can be a pproximated based as per the report titled,
“Trade Unions in India” p ublished in 2010 by the Labour Bureau,
Ministry ofLabour and Employment which cited . The total no. of
registered Trade Unions was 18602 in the year 2010. The number of
Unions submitting r eturns was 2937 i.e. 15.8 percent of the total registered
unions. The average membership for workers union was 1735 only. Out of munotes.in

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Trade Unionism -I
39 total of 18602 registered unions as many as 18546 unions. Out of 18546
Workers Unions, 92.16 per cent were State Unions and rem aining 7.84 per
cent were Central Unions.
3.8 PROBLEMS FACED BY TRADE UNION IN INDIA
The Indian Trade Union movement is more than 80 years old and during
this period, it has made considerable progress. However, the movement
has not grown on sound lines. In dian trade unions suffer from a number of
difficulties.
1) Lack of Bala nced Growth:
Trade Unions provide protection against adversity imposed by Big
Industrial Houses but those working in agriculture sector, small scale and
cottage Industries are still withou t any backing, hence decreases union’s
potential strength.
2) Small Size o f Union Membership:
Employees fear management actions in case of strike support in terms of
pay cut and punishment leading to hesitation in joining a trade union,
although they desire t he benefits. Hence trade unions suffer from low
membership, with exception of a few.
3) Poor financial Position:
Trade Unions depend upon the contributions from philanthropists, low
subscription amount deposited by members and in absence of sources of
financ e only weaken their positions.
4) Outside Leadership:
Unions in India have depen ded for their leaders mainly on social workers,
lawyers and other professional people. Politicians seem to have taken a
liking for trade union leadership. As a result, uncommitted and inefficient
leadership has been a serious weakness of Indian trade union s

5) Political Control
Affiliation with political parties leads to publicity of grievances of
working class for sole focus of gaining political gains, however, solutions
cannot bederived from the partially explained situations.
6) Lack of Able Leaders:
Leaders t hat call strikes on small issues which are easily resolvable
through communications with management or the one that have secret
pacts with employers are not healthy for any trad e union since their
corruption is detrimental to interests of the workers when unil ateral
decisions are taken without discussion with members in general body.
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40 7) Poverty and Low Level of Wages of the Workforce:
On account of general poverty and poor wages, workers are not able to
regularly subscribe to the fund of the union. The unions in India thus
suffer from weak financial position. Unions therefore have to depend upon
extraneous sources which ultimately dilute the strength of the union.
8) Indifferent Att itude of the Members
Delayed subscription fees after numerous reminders by union tre asurer,
absence from participation in union meetings and activities such as
demonstration, hunger strike, slogan shouting shows the prevalent
indifferent attitude of member employees towards union operations as
they expect of fice bearers to achieve their dema nds on their own.
3.9 MEASURES TO STRENGTHEN TRADE UNION IN
INDIA:
Trade unions plays vital role in maintaining and expanding the Industrial
efficiency rate through vari ous actions. Trade union realize workers about
their duties and responsibilities. The obj ective of a responsible trade union
is to make necessary arrangements for uninterrupted production activities
and promote harmonious relations between employees and em ployers. It
becomes helpful to improve the wagepolicy and maintain the uniformity in
it. The presence of effective and responsible trade union safeguards the
interest of employer as well as employee. The measures should be taken
for strengthening trade unions as follows:
1) Improve financial position:
Funding is essential to unions for print pamphlets , booklets, banners and
travelling expenses of office -bearers in course of activities relating to
employee causes and demands. Hence, it is recommended that finan cial
position of unions be improved through charging subscription fees in tune
with cost of un ion operation, timely payment of subscription fee and
philanthropist contributions.
2) Workers Education:
Workers Education is very important aspect to make the trad e union
activities positive. Proper training and technical sessions should be
conducted for maki ng the employees, workers aware about their own
duties for the organization. He should be trained for making him aware
about the Indian laws, rules and regulati ons in details.

3) Increase Membership
Employees need to recognize the importance of continuity -based
cooperation and collective bargaining, and the initiative for such
awareness may lie with union office bearers, since strength in increased
membership place s them in a better position. The philosophy of the hour is
United We Stand and Divided We Fall.

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41 4) Effective Leadership:
Union leaders should be one of the workers only. Worker can realize the
problems faced by the co -workers easily. The education, dedicat ion
towards the union, and regular time investment forunion activities makes
the union leadership eff ective. The workers leadersof unions should be
dedicated, cool in nature, patience and capable to organize effective action
plans. The outside social activ ists / lawyer / political leaders cannot be an
effective leader.

5) Internal Unity:
Unity at the end of all trade unions is the need of the hour. The rivalry
relation among the different union makes the labour movement in
effective. The laws regarding singl e policy, single movement, single
approach is required in Indian scenario to make the labour movement
strong.

6) Free from political pressure:
The influence of political leaders should bekept away from the trade
unions. As discussed in the problems face by the trade unions, the political
leadership mislead the leaders of the union.
3.10 SUMMARY
Trade union is t he forum of people with similar interest who can raise
voice against the exploitations done by the other parties. It provides the
strength to sit at t he equal level for collective bargaining. Trade Unions
are voluntary organization of Workers as well as Emp loyers formed to
protect and promote the interest of their members. They are the most
suitable organizations for balancing and improving the relation s between
the employer and the employees. A trade union is a continuous association
of wage -earners for the purpose of maintaining and improving the
conditions of their working lives . The trade union movement in India was
influenced by both economic and po litical conditions. The movement
accelerated its pace along with spread of industrialization. The initial p ush
was provided by economic factors (like low wages and soaring cost of
living) and in later years political factors added a new dimension to the
movement.
3.11 QUESTIONS
1) What is a trade union? Discuss the objectives and functions of trad e
unions.
2) briefly explain the Problems of trade unions in India.
3) Briefly describe the evolution and development of trade unions in
India prior toindependence.
4) What me asures should be taken to strengthen Trade Unions in India?



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42 3.12 FURTHER READINGS
 Sinha, P.R.N.etl. (2004), ‘IndustrialRelations, Trade Unions, and
Labour Legislations, Delhi: Pearson Education.
 Venkata Ratnam, C. S. (2000). “NGOs and Trade Unions” in Venkata
Ratnam,
 C. S. and Pravin Sinha (Eds.), Trade Union Challenges at the
Beginning o f the21st Century, New Delhi: Indian Industrial Relations
Association and Excel Books.
 C. S. Venkata Ratnam (2006), Industrial Relations , New Delhi, Oxford
UniversityP ress.
 Self-Learning Material ‘Industrial Relations and Labour Laws’ (BCOP
602) Cours e: Bachelor of Commerce (Prof.), Semester -VIDistance
Education ProgrammeI.K.Gujral Punjab Technical University
Jalandhar.
 Dr. E. Sunitha, ‘Lecture Notes On Management of In dustrial
Relations’ Semester - III, Department Of Master Of Business
Administration Instit ute Of Aeronautical Engineering (Autonomous),
Dundigal, Hyderabad -500 043
 Self-Learning Material,‘Industrial Relations and Labour Laws’ (MBA -
968) Course: Master Busin ess Administration Semester -IV Distance
Education Programme I.K. Gujral Punjab Technical University
Jalandhar.
 Datt R. and Sundaram K.P.M. (2009), Indian Economy, S.Chand&
Co., New Delhi
 Mishra S.K. and PuriV.K. (2008), Indian Economy, Himalaya
Publishing House, Mumbai

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43 4
TRADE UNIONISM - II
Unit Structure:
4.1 Objectives
4.2 Introduction
4.2.1 Concept of Outside Leaders
4.2.2 Role of Outside Leadership in Trade Union
4.3 International Labour Organization (ILO)
4.3.1 Objectives of ILO
4.3.2 Functions of ILO
4.3.3 Constitu tion of the ILO
4.3.4 India and ILO
4.4 Summary
4.5 Questions
4.6 Further Readings
4.1 OBJECTIVES
1. To understand the Role of Outside Leadership in Trade Union.
2. To understand the objective and functions of the International Labour
Organiz ation.
3. To understa nd the impact of ILO on Labour Legislations in India.
4.2 INTRODUCTIO N
Leadership is a pervasive expression and phenomenon with diverse
meanings. Leadership in this perspective entails considerate utilization of
power and focus on salien t issues that posit ively affect the lives of others.
Trade union leadership personifies the trade union as an institution that
focuses on the dignity of labour, craves harmonious workplaces and
desires good quality of (worker) work -life. Their utility come s from the
impacts in the lives of both working and non -working -class people and
their families. Effective trade union leadership holds cardinal prospects to
solve problems emanating from socio -economic and political globalization
on workers’ collectives.

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44 4.2.1 Concept of O utside Leaders :
Trade union leadership can be viewed as evolving out of dynamic
reciprocity between leaders and followers i.e. workers in the context of
industrialization process. In trade unions we find two types of leaderships
'outside leadership' and 'I nsider leadership'. 'Outside leader' is the term
usually applied to the persons holding leadership positions in trade unions
who are not actual 'labourers' or 'employees.
As S.D.Punekar and S. Madhuri’ , point out, the definition of leade rship
given by Boga rdus best describes leadership in a trade union. (The
definition is quoted above in section 2.1) Trade union leadership can be
viewed as evolving out of dynamic reciprocity between leaders and
followers i.e. workers in the context of ind ustrialization proc ess.
N.K.Sengupta in his paper entitled 'Leadership in Trade Unions' describes
'who are the outsiders?' He observes - "The outsider is either a
professional trade unionist belonging to one of the national trade unions or
a politician and at times a freelan cer.
Outside leaders such as politicians, professionals and inside leaders
emerging from employees themselves appear in the leadership scene of
trade unions in India. Though same outsiders may develop vested interests
and give priority t o self -interests ov er workers' interests, there are some
outsiders who work for the protection of workers' interests and are loyal to
the employees. It can be said that unless and until inside leadership
becomes sufficiently self -relict and self -dependent, outside leadership will
play an important role in trade unions in India.
Outsiders in Unions One of the crucial problems facing the Indian trade
unions today is the question of trade union leadership. The control of the
Indian trade unions by political pa rties has naturally resulted in the latter
providing and controlling the top leaders not only of the national
federations but also, in many cases, of individual unions whether operating
at the plant or the industrial level. It is through these leaders that the
Indian politic al parties control the policies and the day -to-day working of
the trade unions. Such leaders have come to be known as “outsiders”.
Besides the politicians, social workers, lawyers and doctors have also been
providing leadership to the In dian trade unions. The trade union law
provides for the presence of outsiders as office bearers (the Trade Unions
Act, 1926 stipulating that the outsiders may hold one half of the positions
in a union; and the Trade Unions (Amendment) Act, 2001 limiting th e
proportion of out siders to 1/3rd of the total number of office -bearers or 5,
whichever is less generally, and 50 per cent in the unorganized sector).
But this is not the main reason for their presence. Workers felt the need for
them a hundred years ago, and they still do, although for different reasons.
In the early years’ outsiders were needed because the illiterate and
ignorant workers, drawn largely from socially deprivileged groups, were
too fearful of their employers. That can hardly be said to be t he reason
today, at least not in medium and large enterprises in the organized /
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45 dramatically and organizing a trade union is no longer the seditious
activity it was once thought to be. And ye t the institution o f outside
leadership is alive and kicking.
4.2.2 Role of Outside Leadership in Trade Union:
Leadership to the trade union movement in India came from outside the
industry right from the beginnings of the movement. The initial
momentum w as given by the lea ders of the freedom struggle. Before
independence, it was Mahatma Gandhi who spearheaded the trade union
movement. Under the charismatic leadership of Gandhi, the philosophy of
the trade union movement was articulated and practiced. His ideas on the
trade union movement later on became a philosophy to be studied,
followed and practiced. All major political parties have their trade union
affiliates. Although, the relationship between political parties and the trade
unions is not openly adm itted but the nexus between them is widely
accepted.
Two important features of trade unionism in India have been outside
leadership and political affiliation. Since, the very inception of trade
unions in our country these have been inseparable mixed with t he political
awaken ing. Instead of it being developed through the evolutionary
process, entire union growth has been engineered by outsiders, mostly
politicians who have maintained a close and continuous association with
the trade union movement. Today eac h bigger political party has its own
labour wing. Such association of outsiders with trade unionism has
notbeen an unmixed evil for workers and even for the trade union
movement.
The leadership of most of the Trade Unions in India has been outside
leadersh ip mainly drawn fro m political parties. As the labour movement in
India is deeply involved in the policies and politician, most of the political
leaders are also drawn from Trade Unions. For example, Lok Nayak
Jayprakash Narain, former President of India, V .V. Giri, Former G overnor
of A.P., Khandubhai Desai, Former Union Minister, A.P. Sharma, George
Fernandes, all worked as Trade Union Leaders. Infact, political parties
invented Trade Unions in India.
Under the Trade Unions Act, 1926, any person not actually engaged or
emplo yed in the industry concerned is deemed to be anoutsider, Section 22
of the Act requires that ordinarily not lessthan half the officers of a
registered union shall be actively engaged or employed in an industry to
which the union relates. "Officers" includ e the members of the executive.
The controversy about outsiders in a union in India is as old as the
enactment of the Trade Unions Act or perhaps older. Upto 1920, the
Government, while permitting unions or associations of their own
employees, di d not allo w outsiders to be connected with them.
The Royal Commission on Labour emphasized the need for training
insiders for accepting greater responsibilities in managing union affairs.
The evil effects of outside leadership as analyzed by the National
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46 i) It has undermined the purposes of the unions and has weakened their
authority as more weight is usually attached to political considerations
rather than to economic and social objectives, and often even personal
benefits and prejudices may be more important than the cause of
labour itself. "Participation by those not belonging to the working class
opens the door not only for the genuine sympathizer and for the
political organizer, but also forthe exploiter who has no purpose to
serve but his own advan tage.

ii) It has been responsible for the slow growth of inside or internal
leadership and has thus prevented the trade union movement in the
country from being self -reliant and truly democratic.

iii) As most of the leaders of trade unions are not from the rank and file
and lack of industrial background and technical knowledge, they have
failed to put forth the labour view -point effectively and protect its
interests properly.

iv) It is contended that an 'outsider' is more prove to cause disturbance of
industrial p eace o r harmony. The argument of the union organizers is
that anyone who has devoted his life to unionwork and has been a full -
time union worker, whether he had ever worked as an employee in an
industry or not, should not be treated as an 'outsider'. Exper ience
reveals that in many cases unions with Inside leadership have not
shown only special concern for industrial harmony. For an employer,
in many cases, the objection to an 'outsider' is in essence an objection
to practical individuals, e.g., dismissed e mployees or p oliticians.

v) It is contended that an 'outsider' is more prove to cause disturbance of
industrial peace or harmony. The argument of the union organizers is
that anyone who has devoted his life to union work and has been a
full-time union work er, whether he h ad ever worked as an employee in
an industry or not, should not be treatedas an 'outsider'. Experience
reveals that in many cases unions with Inside leadership have not
shown only special concern for industrial harmony. For an employer,
in many cases, the objection nto an 'outsider' is in essence an objection
to partical individuals, eg., dismissed employees or politicians.
While a dismissed employe eworking as a union leader is alleged to create
difficulties in the relations between the un ion and the employer. t he
presence offor a proper understanding of the role of outsiders in trade
unions, it is important to recognize the other side of the picture a?
a) The present state of unionism, consciousness amongst workers and
much improvement in th eir conditions are largely due to outside
leadership

b) The outsiders being beyond the jurisdiction of employers, add, to the
strength and bargaining power of trade unions. Theyact as free agents
of labour and are not afraid of any action beingused against them for
their union activit ies.
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47 c) Quite often the so -called outsiders have proved to be immensely
helpful in consolidating and unifying the unconscious and ignorant
mass of labour either by the weight of their personality or by providing
it true guidance a nd useful services.

d) The polit ical affiliation of outsiders has often servedas a platform to
ventilate workers' grievances and sometimes mobilize public opinion
towards labour's cause.

e) Indian workers being the complicated nature of industry makes the
unions require the services of edu cated or technical personnel, not
necessarily connected with the plant as helpers or well-wishers.
Industrial negotiations have become more complex owing to the legal
framework and procedures under which they areto be conduc ted.
Unions must have whole time off ice-bearers and their own expertise.
More affluent unions can afford to pay forthem, but others have to
depend upon outsiders.

f) Trade Union legislation in India deals with outsiders ina somewhat
different manner than in many other countries, legislation in many
countries contains no provision concerning grounds for
disqualification from holding office in a trade union or employer's
organization.
The evil effects of the outside leadership analyzed by National
Commission on Labour are as follows - Outside lea dership undermined
the purpose of Trade Union and weakened their authority. Personal
benefits and prejudice sometimes weigh more than unions. - Outside
leadership has been responsible for the slow growth of Trade Union s. -
Internal leadership has not been developed fully. - Most of the leaders
cannot understand the workers problems as they do not live the life of a
worker.
4.3 INTERNATIONAL LABOUR ORGANIZATION (ILO)
The ILO was established as an agency for the League of Nations
following World War I. It was established by the Treaty of Versailles in
1919 . Its founders had made great strides in social thought and action
before the establishment of the organization itself. In 1946, the ILO
became a specialized agency of the United Nations. Its unique tripartite
structure gives an equal voice to workers, employers and governments
providing a unique platform for promoting decent work for all women and
men. The ILO has played a significant ro le in promoting labour and
human rights. It had held a significant position during the Great
Depression (1930s) for ensuring labour rights. It played a key role in the
decolonization process and in the victory over apartheid in South
Africa.The organization got the Nobel Peace Prize in 1969, for its efforts
to improve peace amongst the classes, and for promoting justice and fair
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48 International Labour Organization (ILO)
Establishment: 11 April 19 19Headquarters : Geneva, Switzerlan
4.3.1 Objectives of ILO:
The four strategic objectives at the heart of the Decent Work agenda are:
1. To develop and effectuate standards, fundamental principles, and
fundamental rights at work.
2. To ensure that men and women have equal access to decent work
while en hancing opportunities for the same.
3. To magnify the coverage and effectiveness of social protection for
everyone.
4. To strengthen Tripartism and social dialogue.
In support of its goals, the ILO offers expertise and k nowledge about the
world of work, acquired over more than 90 years of responding to the
needs of people everywhere for decent work, livelihoods and dignity. It
serves its tripartite constituents and society as a whole in a variety of
ways, including:
1. Formu lation of international policies and pro grammes to promote
basic human rights, improve working and living conditions, and
enhance employment opportunities.
2. Creation of international labour standards backed by a unique system
to supervise their application.
3. An extensive programme of international technical cooperation
formulated and implemented in an active partnership with
constituents, to help countries put these policies into practice in
effective manner.
4. Training, education, and research activities to h elp advance all of
these efforts
4.3.2 Functions of ILO
The ILO plays an important role in the formulation of policies which are
focused on solving labour issues. The ILO also has other functions, such
as:
1. It adopts international labour standards. They are adopted in the form
of conventions. It al so controls the implementation of its conventions.
2. It aids the member states in resolving their social and labour problems.
3. It advocates and works for the protection of Human rights.
4. It is responsible for the resea rch and publication of information
regardi ng social and labour issues.
5. The Trade Unions play a pivotal role in developing policies at the ILO,
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49 to strengthening independent and democrat ic trade unions so they can
better defend workers’ rights and interests.
6. The ILO also assumes a supervisory role : it monitors the
implementation of ILO conventions ratified by member states. The
implementation is done through the Committee of Experts, the
International Labour Conference’s Tripartit e Committee and the
member -states. Member states are obligated to send reports on the
development of the implementation of the conventions they have
approved.
The Declaration of Philadelphia, which is also a part of the constitution of
I.L.O., was adopt ed at the 26th session of the International Labour
Conferences held in Philadelphia in May 1944. The Declaration reaffirms
the fundamental principles upon which the Organisation is based and, in
particular, that:
(a) Labour is not a commodity;
(b) Freedom of expression and of association are essential to sustained
progress;
(c) Poverty anywhere constitutes a danger to prosperity everywhere and
(d) The war against want requires to be carried on with unrelenting vigo ur
within each nation, and by continuous and concerted international
efforts in which the representatives of workers and employers,
enjoying equal status with those of Governments, join with them in
free discussion and democratic decision with a view to th e promotion
of the common welfare."
4.3.3 Constitution of the ILO:
The functions of the International Labour Organization are carried on
through its three principal organs, namely (A) The International Labour
Office which is its permanent secretariat; (B) the Governing Body, which
is its executive ; and (C) the International Labour Conference. The
composition of these organs is given below:
A) International Labour Office:
The International Labour Office with its headquarters at Geneva, acts as a
secretariat, a world in information centre and a publish ing house. It is
staffed by experts drawn from different countries. It remains engaged in
researches and studies on problems connected with labour and serves as a
clearing house of information on social and indust rial questions. The
International Labour Of fice has branches and correspondents in many
countries.
B) Governing Body:
It is the executive council of the I.L.O., which exercises general
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50 responsible for setting up expert committees an d coordinating their works
etc. It normally meets thrice a year. The Governing Body of the
International Labour Office consists of 48 members, 24 representing
Governments, and 12 representing employers and 12 repr esenting
workers. Ten out of twenty -four Gov ernment seats are held by ten
countries of chief industrial importance of which India is one. I
C) International Labour Conference :
The General Conference, which is usually convened once a year is
composed of four r epresentatives of each of the Member States of whom
two shall be Government delegates and the other two delegates
representing respectively the employers and labour of each of the
members. Each delegate may be accompanied by advisers not exceeding
two in n umber for each item on the agenda of the Con ference.
4.3.4 India and ILO:
India, a Founding Member of the ILO, has been a permanent member of
the ILO Governing Body since 1922. The first ILO Office in India started
in 1928. The decades of productive partne rship between the ILO and its
constituents h as mutual trust and respect as underlying principles and is
grounded in building sustained institutional capacities and strengthening
capacities of partners. It has a two -directional focus for socio -economic
deve lopment: overall strategies and ground -level approaches. The ILO's
overarching goal is Decent Work, i.e., promoting opportunities for all
women and men to obtain decent and productive work in conditions of
freedom, equity, security and dignity. DW is at th e heart of ILO's
strategies for economic and social progress, central to efforts to reduce
poverty and a means to achieve equitable, inclusive and sustainable
development India's 11th Plan's vision of faster and inclusive growth
through a process which yie lds broad -based benefits and ensures equality
of opportunity for all – with a strong emphasis on decent working and
living conditions for all. A number of India's 11th Plan targets are in
consonance with the DW agenda. The Decent Work Technical Support
Team (DWT) for South Asia stationed in New Delhi, through its team of
Specialists, provides technical support at policy and operational levels to
member States.
 Technical Assistance Activities:
The I. L.O.'s Asian Field Office in Bangalore continued to rende r
assistance in the field of technical assis tance. The services of three I. L.O.
experts on social security were secured in 1953 with a view to advising the
Government of India on the organization of the Employees' State
Insurance Scheme and the methods of its administration as well as the
developme nt of the penal system of medical benefits. One of the experts
organized practical training course for instructors with the object of
training a nuclear staff for operating the training schemes of the
Employees' S tate Insurance Corporation. Expert assistan ce was also
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51 matters relating to the organisation and administration of the Scheme were
referred to the experts for advice.
 Impact of ILO On La bor Legislations in India:
Major impact of ILO on Labor legislations in India With the evolution and
expansion of small plants, factories and industries in the Indian
subcontinent starting in the mid of the nineteenth century, new
possibilities for employm ent were generated, resulting in a ongoing
migration of the labor from poor rural areas to factories and mills located
basically in urban areas. During time, in the lack of any control on
organization’s labor by the state, the employers were very less conc erned
for the needs of their workers; wages were very low, very long working
hours, and unsatisfactory the employees’ employment conditions. The
situation led to the depiction of a large number of labor legislations
beginning since the year of 1881. These labor legislations include, The
Factories A ct 1881, Workmen’s Compensation Act -1923, Mines Act
1923, Trade Unions Act -1926, Trade Disputes Act -1929, Payment of
Wages Act -1936, Employment of children act - 1938 and Maternity
Benefit Act in 1939.
 The Fact ories Act 1881: This act is the basis of al l industrial and labor
laws in India. It contained requirements for working hours of women
and workers with the minimum age of children for employment. When
International Labor Organization was established in 1919 , this Act was
amended and subsequently ret racted, resulting in the declaration of the
Factories Act 1934. It makes provision for health, safety, and hygienic
condition of the workers, special provision for women and young
workers. It also forbids child la bor. It provides limits of work for a
child in factories, including seasonal factories.

 Mines Act 1923: This Act make provisions for labors working in
Indian mines. The working hours for labor employed on surface were
limited fifty per week and ten per d ay. According to Mines Act periods
of work shall not be more than 12 hours in any day, this also include
rest period. For workers who are employed underground, the daily
limit for them is nine hours per day. The Act does not cover provisions
related to ove rtime work. No worker can work more than si x days in a
week. The Act does not make any provision for wages during the day
of rest.

 Trade Union Act and Payment of Wages Act. The Indian government
under British set up an enquiry committee in 1926 to determ ine the
shortcomings for anomaly of payment of wages to industrial labors. As
the result Trade union act of 1926 come up.

 The Royal Commission on Labor was appointed in 1929, the
commission considered the reports and suggestions of the enquiry
committee and recommended for implementing prevention of
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52
 The Payment of Wages Act 1936 was passed to regulate the payment
of wages to definite classes of people employed in industry. The object
of the Act obviously was to of fer a low -priced and quick therapy for
empl oyees to whom the Act applied and to recover wages due to these
employees.

 The Weekly Holidays Act of 1942: This act recommends one paid
holiday in a week for people working in any restaurant, shop, or
theatre excluding position of management, and confi dential positions.
The government is authorized to award additional paid half -day
holiday in a week.

 The Industrial Disputes Act, 1947: This act came into being on the 1st
day of April 1947. The Act provided for establishment of industrial
tribunals by t he appropriate government in British India. It established
a full -fledged industrial tribunal for adjudication of industrial disputes
for the first time.

 The Industrial Employment (Standing Orders) Act, 1946: Thi s act
came into force for the first time to employers in industrial
establishments which are employing hundred or more workers. This
act provides the way to define the terms and conditions of employment
of worker in the form of standing orders.

 The Merch ant Shipping Act, 1923 provided for an agre ement between
the master of the ship and seaman concerning their terms of service.
4.4. SUMMARY
The ILO has done a lot in influencing the labour movement in India.
Without the I. L.O., the pace of labour legislation in India would have been
quite slow and the labour movement perhaps would not have achieved so
much success during such a short period. Only tripartite U.N. agency, the
ILO brings together governments, employers and workers representatives
of 187 member States to set labour standards, develop policies and devise
programmes promoting decent work for all women and men. Today,
the ILO's Decent Work agen da helps advance the economic and working
conditions that give all workers, employers and governments a stake in
lasting peace, prosperity and progress.
4.5 QUESTIONS
1. Write a note on the role of outside leadershi p in trade unions.
2. Descr ibe the objectives and functions of the International
LabourOrganisation.

3. Examine the impact of I. LOon Labour Legislations in India.
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53 4.6 FURTHER READINGS
 Sood, Santosh (1984) - Trade Union Leadership in India - A case
study, Deep and Deep Publications , New Delhi.
 IGNOU. 1993. “Leadership and Management in the Trade Unions”, in
MS-24, Block2, Unit -6, Union Management Relations.
 Punekar S. D. and S. Madhuri.1967) ‘Trade Union Leadership in
India: A Survey ‘Lalvani Publishing House , Bombay
 Edwin J.Masi hi (1985) , Trade Union Leadership In India : A
Sociological Perspective Ajanta Publications, Delhi
 TinuoyeAdekunle Theophilius, Victor Ikechukwu Ogharandukuetl.
‘Leadership and Followership in the Context of Trade Unionism,’
Chapte r - 6
See discu ssions, stats, and author profiles for this publication at:
https://www.researchgate.net/publication/354496738 Sept. 2021 ,
DOI: 10.4018/978 -1-7998 -2807 -5.ch006
 Daniel Maul ( 2019) ‘The International Labour Organization - 100
Years of Global Social Policy’, Published by Walter de Gruyter GmbH
Genthiner Strasse 13 10785 Berlin Germany ISBN 978 -3-11-061588 -3
e-ISBN (PDF) 978 -3-11-065072 -3 e-ISBN (EPUB) 978 -3-11-064666 -5
 Singh Anur ag &Dr. Amit Kumar Singh, ‘Impact of ILO on Indian
Labor Laws’, International Journal of Research in Management &
Business Studies (IJRMBS 2014) Vol. 1 Issue 1 Jan - March 2014,
ISSN : 2348 -6503 (Online) ISSN : 2348 -893X (Print )
 Saxse na S.R. (1972), A Refr esher Course on Labour Problems and
Social Welfare, Prakashn Kendra, New Building, Aminabad, Lucknow
(India
 Mishra S.K. and PuriV.K.(2008), Indian Economy, Himalaya
Publishing House, Mumbai.
 U. Ratna Sen, Industrial Relations in Indi a - Shifting Paradigms
(2005), Macmillan, New Delhi.
 Saxena S.R. (1972), ‘A Refresher course on Lobour Problems and
Social Welfare’, Prakashan Kendra, Lucknow (India)
 Puri V.K &Misra S.K. (2017), ‘Indian Economy’, Himalaya
Publishing House Pvt. Ltd. Mumba i ISBN:978 -93-5273 -172
 https://www.oitcinterfor.org/en/general/mission -vision -and-functions
 https://www.u n.org/youthenvoy/2013/08/ilo -international -labour -
organization/
 https://en.wikipedia.org/wiki/International_Labour_Organization
 https://www.ilo .org/
 https://www.egyankosh.ac.in/bitstream/123456789/71001/2/Unit -6.pdf
 http://ir.unishivaji.ac.in:8080/jspui/bitstream/123456789/3704/7/07_C
hapter%202.pdf


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54 5
Module 3
INDUSTRIAL RELATIONS -I
Unit Structure:
5.1 Objective s
5.2 Introduction
5.2.1 Concept of Industrial Disputes
5.2.2 Historical Background of Industrial Disputes
5. 2.3 Causes of Industrial Disputes
5.2.4 Causes of Industrial Disputes in India
5.2.5 Settl ement Mechanism for Industrial Disputes in India
5.3 Concept of Collective Bargaining
5.3.1 Features of Collective Bargaining
5.3.2 Importance of Collective Bargaining
5.3.4 Growth of Collective Bargaining in India
5.3.5 Pre -Requisites f or Succ essful Collective Bargaining
5.4 Summ ary
5.5 Questions
5.1. OBJECTIVES
1. To understand the concept of industrial dispute.
2. To study the various causes of industrial disputes
3. To understand the industrial dispute resolution mechanism in India.
4. To understa nd the concept of collective bargaining.
5. To study the importance of collective bargaining.
6. To understand the pre -requisites for successful collective bargaining.
7. To know the development of collective bargaining in India.

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55 5.2 INTRODUCTION
Industri al Dispute was disturbing the economic, social and political life of
a country. A strike in a public utility service like water supply, power gas,
posts & telegraphs or telephone service, railways or roadways or any
hospital, sanitation and defense will di sorganizes public life. The workers
lose the wages for the strike period. It results in a huge wastage of man
days and dislocation in the production work. Industrial Disputes crease
issues between employer and employee. Thus, the government was
implementing many wel fare measures to the working employee that help
to maintain good relationship between employer and employee. Economic
production is one of the basic activities of human aggregate. It plays a
determining role in shaping the social structure and soci al relat ions of that
human aggregate. Therefore, in a rural mode of production, there is no
conflict between worker and employer. But with the advent of
industrialism and division of labour, the relationship between employer
and employee became more impers onal. Co nsequently, different labour
problems have been emerged. Industrial disputes are also the inevitable
consequences of modern industrial life. Owing to differences between
employers and workers, there are strikes, lockouts, go -slow tactics and
absent eeism re sulting a considerable loss of manpower and output.
5.2.1 Concept of Industrial Disputes:
Industrial Dispute means any dispute or difference between employers and
employers or between employers and workmen or between workmen and
workmen.
According to Sect ion 2 (t) of the Industrial Disputes Act , "Industrial
dispute means any dispute or difference between employers and
employers, or between employers and workmen, or between workmen and
workmen which is connected with the employment or non -employment or
the terms of employment or with the conditions of labour of any person.
5.2.2 Historical Background of Industrial Disputes
a) Before 1918 -19:
Before 1918 -19, strikes were not very common in India. It was the public
was because neither labour was organi zed nor o pinion enlightened. But
strikes began to occur after the organization of labour and development of
modern industrialization. The first strike occurred in a textile factory in
Bombay in 1882. This was followed by other strikes. During 1882 to
1890, twenty -five trikes were recorded in the Bombay and Madras
Presidencies. But these strikes were unsuccessful. In 1905, there were a
number introduction of electricity and thus, before World War I strikes in
Bombay due to the expansion of working hours. Thus, before World War -
I strikes were quite infrequent because the workers lacked leadership and
organization. Further, they had an entirely passive outlook life and
regarded a return to their homes in villages as the solace.
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56 b) After World War I:
After the terminatio n of the First World War, a sharp increase in industrial
disputes took place. The Russian Revolution had created a revolutionary
tide all over world. Therefore, Indian workers were also affected by it.
During this period, strikes were very succ essful. Be sides, the
establishment of ILO also attached a great dignity to lab organizations
which encouraged the growth of trade unionism India. Apart from this,
rise in prices, rise of labour leaders the movement for national
independence, are also some o f the imp ortant factors which are
responsible to the substantial increase in the frequency of strikes. But
during the period of 1923 -1927 there was a substantial fall in the number
of strikes. By this period, wages increased and prices fell considerably.
Beside wor king hours were reduced and conditions of work also improve
to a large extent.
c) Disputes After 1929:
The depression, which set in, affected the industries adversely. Therefore,
the employers tried to counteract the depression by retrenchment, wage -
cuts and better methods of production. Consequently, there started a
second round of industrial unrest. In 1928, the workers in Bombay
organized a big strike against the introduction of rationalizations. The
workers who participated in the strike were victi mized an d therefore,
another big strike occurred in 1929 which covered all the workers in the
Bombay Cotton Mills. This strike was very significant due to two reasons.
Firstly, as a result of this strike Communist influence spread amongst the
Indian worker . Second ly, this strike paved the way for the enactment of
the Trade Disputes Act of 1929.
During 1930 -1937there were short -lived strikes. The election held under
the Provincial Autonomy raised great hopes in the minds of Indian
workers. But after election, worker s did not find any immediate
improvement in their conditions. Therefore, discontentment was again
raised among workers and general strike occurred in Kanpur, Bombay and
Bengal.
d) Disputes After 1939:
With the outbreak of the World War II in 1939, disc repancy increased
between the worker's earning and cost of living. Besides, there was
inflationary rise in the prices of all essential commodities. Therefore, the
number industrial disputes increased to a large extent. In 1940, textile
workers in Bombay we nt on s trike. Similarly, textile workers of Kanpur,
jute workers of Bihar and Bengal, coal miners of Dhanbad Jharia and steel
workers of Jamshedpur also went on strike. tore, in order to check this
unrest, the Government declared es illegal in all essentia l indus tries. These
restrictions were ed according to the Defence of India Rules. The result
was at during the period from 1942 to 1946 there were no large -scale
strikes and lock -outs. But as soon the war came to a close restriction were
removed, strikes a gain bu rst forth all over country. In July 1946, there
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57 e) Industrial Disputes After Independence:
After Independence on 15th August 1947, various social and political
changes took place the country. At th at time , nation's economy was
adversely affected due to the scarcity of goods and inflationary conditions.
Besides, the partition also created various difficulties. Consequently, the
Government could not pay considerable attention towards the labour
problem s. Mor eover, the militant propaganda so gave an impetus to
strikes. Therefore, industrial unrest prevailed in all labour organizations
and a number of strikes took ace in Bombay, Madras and Uttar Pradesh. In
Bombay, there as a big strike in 1947 in which ab out o ne lakh of workers
wasinvolved. Another big strike occurred in Buckingham and Carnatic,
Madras. In addition to these strikes, there were number of demonstrations
all over the country.
Therefore, in 1947, the Government came forward with the Truce
Reso lution, which stressed the need for co -operation between workers and
employers. In 1948, strikes again occurred in Coimbatore, Nagpur,
Kanpur, Bengal and Bombay. In 1949 -50, lockouts occurred in the textile
Mills in M. P. and Kanpur. The textile workers in Bomb ay went on strike
over the question of bonus payment. This was one of the biggest strikes in
which about two lakhs of textile workers were involved. In 1952, the
Defence workers in Government Ordnance Factory, Poona, textile workers
at Ahmedabad, Jaip ur an d Bombay and transport operators in Bombay
went on strike. In 1953, strikes. occurred in the iron and steel workers at
Burnpur and in tea plantation in Assam. In 1955, strike also occurred in
textile mills at Kanpur in which workers opposed to the int roduc tion of
rationalization.
In 1956, general strikes also occurred in Bombay, Ahmedabad and
Calcutta against the issue of States Reorganization. Besides during this
year, strikes also occurred at Kharagpur, Nagpur and in a number of
collieries and quarri es in West Bengal and Bihar.
5. 2.3 Causesof Industrial Disputes:
Industrial disputes are a common feature of all industrialized economies,
whether it is a capitalist economy or socialist economy or mixed economy.
Industry and industrial dispute always go ha nd in hand in fact they are the
two sides of the same coin. The employees who give their services and
time to the industry are interested in higher wages, good working
conditions and want to have a voice in management. The employers on
theother hand are more interested in profits, productivity, quality and
control of cost. With both these forces acting in opposite direction there is
a maximum possibility of disputes and so industrial disputes has become a
major feature of industrialization. Industrial disputes may arise out of
economic, political, social or from socio – economic background. At the
same time the attitude of the employers and employees is alsoresponsible
to a great extent. The factors leading to industrial disputes may be
industryrelated, managem ent related, government related or union related.
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58 The causes of industrial disputes can be broadly classified into two
categories: economic and non -economic causes. The economic causes will
include issues relating to compensation like wages, bonus, allowances, and
conditions for work, working hours, leave and holidays without pay,
unjust layoffs and retrenchments. The non -economic factors will include
victimization of workers, ill treat ment by staff members, sympathetic
strikes, political factors, indiscipline etc.
The most common causes of industrial disputes can be listed as;
A) Economic causes:
i. Wages and other benefits
ii. Inadequate wages
iii. Undesired deductions from wages.
iv. Poor fringe benefi ts
v. No bonus or other incentives, etc.

B) Terms and conditions of Employment:
i. More hours of work.
ii. Working in night shifts.
iii. Promotion, lay off, retrenchment, dismissal, etc

C) Working conditions:
i. Environmental conditions such as too hot, too cold, noisy, dirty,
mess y, etc
ii. Improper plant and workstation layout
iii. Old and trouble giving machines.
iv. Frequent changes in products, etc.

D) Denial of legal and other rights of workers
i. Not proceeding as per labourlaws and regulations, standing orders
etc.
ii. Violation of already ma de m utual agreements (Le. between
employer and workers).

E) Institutional causes
i. Non recognition of the labour union by the management
ii. Matters of collective bargaining.
iii. Unfair conditions and practices.
iv. Pressing workers, not to become members of union, etc

F) Psycho logical causes
i. Difficulty in adjusting with each other (i.e. employer and worker).
ii. Clash of personalities.
iii. Authoritarian Leadership (administration).
iv. Demand for self -respect and recognition by workers.
v. Strict discipline.

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59 5.2.4 Causes of Industrial Disputes in India:
Industrial disputes are natural in the industrial sector since the interests of
the employers and the workers are diametrically opposite. While the
former aim at maximization of profits, the latt er aim at maximization of
wages and salaries. Disputes on the issues of wages and allowances,
bonus, hours of work. leave, privileges, victimization of employees, etc.,
are quite common in all countries. The two most important causes of
industrial disputes in In dia have been the issue of’ ‘Wage and Allowance’
and ‘Personnel and Retrenchment’ .
Causes of industrial disputes in India are varied. The following are some
of the important causes of industrial disputes in India:
The Ministry of Labor, Government of India has classified the causes of
industrial disputes in 1991 in the following categories:
• Wages and allowances.
• Personnel.
• Retrenchment.
• Layoff.
• Leave, hours of work, shift working.
• Bonus.
• Indiscipline.
• Violence.
• Gherao.
• Inter and In tra-union rivalry.
• Non -implementation of law, awards, agreements.
• Charter of demands.
• Workload or work norms.
• Labor surplus or shortage.
• Demands for better amenities.
• Change in or suspension of manufacturing process
Discussed below are the majo r caus es of industrial disputes in India.
1) Demand for Wages and Allowances :
The most striking cause of industrial disputes in India is the demand for
higher wages and allowances by the workers. While the price level has
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60 wages could not keep pace with it. This led to a situation where workers
resort to strike for raising their rate of wages. In India most of the
industrial disputes have resulted from demand for the higher wages. If
steps could have been taken for ensuring a system of automatic adjustment
process in the wages and prices then the number of disputes would have
been reduced to minimum. Since the cost of living index is increasing,
workers generally bargain for higher wag es to meet the rising cost of
living index and to increase their standards of living. In 2002, 21.4% of
disputes were caused by demand of higher wages and allowances. This
percentage was 20.4% during 2003 and during 2004 increased up to
26.2%. In 2005, wag es and allowances accounted for 21.8% of disputes.
2) Personnel and Retrenchment:
Another important cause of industrial dispute in India is the retrenchment
and personnel which accounted nearly 29 per cent of the total disputes
during 1961 -76. During 1981 -84, these causes resulted in about 21 to 22
per cent of the total industrial disputes occurred in the country.
3) Leave and working hours:
Leaves and working hours have not been so important causes of industrial
disputes. During 2002, 0.5% of the disputes were becaus e of leave and
hours of work while this percentage increased to 1% in 2003. During
2004, only 0.4% of the disputes were because of leaves and working
hours.
4) Demand for Bonus :
Bonus has always been an important factor in industrial disputes. Another
import ant cause of industrial disputes in India is the demand for bonus by
the workers. This has resulted from workers’ increasing demand to share
profits of the industrial units and employers’ non -acceptance of this
provision. 6.7% of the disputes were be cause of bonus in 2002 and 2003
as compared to 3.5% and 3.6% in 2004 and2005 respectively.
5) Demand for Improved Working Conditions :
Industrial disputes in India has also resulted from demand for improved
working conditions such as leave, lesser hours of work, better working
conditions like better safe measures, canteen facilities etc. About 2 to 3 per
cent of the total disputes is resulted from such demand.
6) Lock -Outs:
Lock -out declared by the employers to counter the militant workers is also
another import ant cause of industrial disputes in the country. Lock out is
the result of prolonged strikes and irresponsible trade unionism.
7) Indiscipline:
Indiscipline on the part of workers has contributed to a substantially large
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61 1992, indiscipline as a factor fluctuated in the 15 to 21 per cent range.
Indiscipline of serious nature to leads to commission of inquiry and
investigation where the concerned worker is given an opportunity to make
submission before the committee. The defaulting person is also allowed to
use the services of a union representative who becomes a part of the
inquiry committee. However, disputes generally arise when the
management takes unilateral decisions on the defaul ting person without
giving due opportunity to the worker or the union to represent their case.
The dismissal of two workers in the Toyota factory at Bangalore when the
case of dismissal was subjudice sparked an indefinite strike by the workers
union in the year 2005.
8) Charter of Demands.
The Charter of Demands as a cause of industrial disputes ranged from a
high of seven per cent in 1991 to a low of five per cent in 1997. The
importance of Charter of Demands as a cause of industrial dispute has
reduced over time because industries also raise a Charter of Demands and
on the negotiating table, demands by workers union are countered by
demands by the management or the owners in a spirit of give and take.
Wage revisions are linked to revisions in produ ctivit y and production.
9) Other Cause s:
There are varieties of other causes which are also very much responsible
for higher incidence of industrial disputes in the country. These causes
include introduction of rationalization measures in the factory, e mploye rs’
apathy to recognize trade unions, conflict between rival unions, insult of
union leaders by the employer, fear of retrenchment arising through
computerization, strikes of political nature etc. All these other causes are
responsible for about 30 p er cen t of the disputes during 1961 and 1976 and
around 40 per cent during 1981 -86.
5.2.5 Settlement Mechanism for Industrial Disputes in India
or
Settlements of Industrial Disputes: Policy of the Government:
Growing industrial disputes is not a healthy sign o f industrial development
in the country. Thus, from the very beginning the Government has been
taking various steps and policies for the settlements of industrial disputes
in the country.
The main objectives of industrial relation policy of India ar e:
i) Prevention and peaceful settlement of industrial disputes and
ii) Promotion of better industrial relations.
The Industrial Disputes Act 1947 and its Amendments in 1956: In order to
prevent and settle the industrial disputes, the Government of Indi a pass ed
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62 Following are some of the provisions of the Act to settle industrial
disputes in the country:
When preventive measures become either inadequate or ineffective and a
strike or a loc kout is apprehended or declared, then different methods for
the settlement of Industrial disputes are applied. These methods according
to an ascending scale of participation by outsiders to the dispute, are
known as negotiation, conciliation, mediati on and arbitration. Negotiation
involves the disputing parties while conciliation involves a third party
also. The role of a mediator is positive. By his suggestions, he attempts to
bring about a compromise between the parties of dispute. In arbitration,
the arb itrator submits a final settlement to thedisputants, acceptance of
which is either voluntary or compulsory. A part from this, there is a
method of investigation by a party. All methods are very significant in the
settlement of in the indus trial disp utes.
The problem of industrial relations is very significant. During British
period, these relations were treated from the viewpoints of law and order.
But after the First World War, when industrial unrest mounted in the
country and a working -class moveme nt emerged, the Government realized
the shortcomings of her prevailing policy. Besides, the Russian Revolution
and the establishment of I. L.O. also encouraged workers for improving
their working and living conditions. Therefore, the Industrial Disputes Act
of 1929 was passed. In order to resolve labour disputes, this Act made a
provision for the establishment of a machinery. By 1938, a provision for
compulsory conciliation was made by the Bombay Government. During
the Second World War, when ther e was demand for increased production,
compulsory conciliation and adjudication were introduced.
Industrial Disputes Act, 1947:
Industrial Disputes and their settlement have been provided in Industrial
Disputes Act, 1947. The Act defines the relevant term s and define s the
Industrial Dispute, Industry and the mechanism of the settlement of
dispute .
After 1947, when industrial disputes were increased account of economic
and political conditions, the Govern ment passed the Industrial Di sputes
Act of 1947. Accordingly , Works Councils were to be set up in every
industrial establishment employing more than one hundred workers.
ciliation was made compulsory in public utility services. strikes were
banned. But after 1951, the experiences of the Second Five -Year Plans
indicated that strong trade are essential for a planned economic
development of the count ry. Hence, the collective contention began to
occupy the place of adjudication. But the process of its advancement is
very slow. The machinery for indu strial peace has been set up under
Industrial Disputes Act, 1956, and the Industrial Disputes (Central Rules,
1957.

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63 The machinery for industrial peace consists of:
1. Works Committee;
2. Conciliation Officers;
3. Boards of Conciliation;
4. Courts of Enquiry;
5. Labour Courts;
6. Industrial Tribuna ls; and
7. National Tribunals.

1) Works Committee :
A Works Committee is to be set up in every industrial establishment
employing more than one hundred workers on any day in preceding
twelve months. Such a Works Committee is to consist of an equal number
of rep resentatives of the employers and workers. It shall be the duty of the
Works Committee to promote measures for securing and preserving amity
and good relations between the employer and workmen and, to that end,
comment upon matter s of their common interest or concern and endeavor
to compose any material difference of opinion in respect of such matters.
It functions at the plant level.
2) Conciliation Officers :
Conciliation officers are appointed by the appropriate Government either
for a specifie d area or for specified industry in a specified area or for one
or more specified industries. They are appointed either on a temporary or
permanent basis. They act as meditator in industrial disputes. In case of
public utility services, they have to commen ce proceeding s immediately
on receipt of the notice of a dispute. work is purely executive and they are
not empowered to give a final decision. There work is purely executive
and they are no empowered to give a final decision. At present the
conciliation ma chinery in t he Central sphere rests with the Chief Labour
Commissioner. To assist the Chief Labour Commissioner, there is a field
organization consisting of Regional Labour Commissioners, Assistant
Labour Commissioners and Labour Enforcement Officers. Simi larly, the
State Governments have their own conciliation machineries, headed by the
Labour Commissioners.
3) Board of Conciliation:
A Board of Conciliation is to be set up by the appropriate Government. It
consists of a Chairman and two or four other members . The Chairm an has
to be an independent person. The other members are appointed in equal
numbers to represent the parties to dispute and any member appointed to
represent a party is recommended by that party. If any party fails to make
a recommendation wit hin the pres cribed time, the appropriate Government
appoints such persons as it thinks fit to represent that party. The Board is
obliged to commence its proceedings after having the prescribed quorum
even though the Chairman might be absent. The duty of th e Board is t o
endeavor bring about a settlement of dispute. If the settlement of dispute is
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64 sends a report thereof to the appropriate Government together with a
memorandum of the settl ement signed by parties to the dispute. On the
contrary, if no settlement is arrived at, the Board after the close of the
investigation submits a report to the appropriate Government regarding the
proceedings, circumstances relating to the dispute and its findings.
4) Court of Enquiry:
According to Section 6 (1) of the Industrial Disputes Act, the appropriate
Government may, by notification in the Official Gazette, constitute a
Court of Enquiry for enquiring into any matter appearing to be connected
witn or relevant to an industrial dispute. The Court may consist of one
independent person or of such number of independent persons as the
appropriate Government may think fit and where a Court consists of two
or more members, one of them shall be appointed as the Chairman. T he
proceedings of the Court commence after having the prescribed quorum
even if the Chairman might be absent. The duty of the Court is to enquire
into the matters referred to it and report thereupon to the Government.
5) Labour Courts:
The Govern ment by Noti fication in the Official Gazette, can constitute
one or more labour Courts for adjudication of industrial disputes. The
Court consists of one person only. A person to be appointed has to be a
person who has held any judicial office in India for not less th an seven
yearsor has been a presiding officer of a Labour Court for not less five
years. The Labour Courts adjudicate on the following matters:
a. the legality of an order passed by an employer Standing Orders;
b. interpretation of Standing Orders;
c. discharge or dismissal of workmen;
d. withdrawal of concession or privilege; and
e. illegality of a strike or lockout.
6) Industrial Tribunal:
Industrial Tribunal is another authority of adjudication. The appropriate
Government may, Notification in Official Gaze tte, consti tute one or more
Industrial Tribunals for the adjudication of industrial disputes relating to
any matter. A Tribunal consists of one person only who must either a
District Judge or a High Court Judge. Two persons to be nominated as
assessors to a dvise the Tribunal in the processing’s before it. The
functions of the Tribunal are purely judicia l but like Civil Court, the
Tribunal cannot execute awards mad by it. Besides, after announcement of
the award, the Tribunal has no power to alter or modify th e award.
7. National Tribun al:
The National Tribunal consists of one person only , to be appointed by the
Central Government. The Tribunal is assisted by assessors. Both
employers and Employees are prohibited from declaring a lockout or
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65 lockout or strike is not given. Strikes are also prohibited during
conciliation and seven days after their conclusion. The Central
Government may, by Notification in Official Gazette, constitute one or
more Nati onal Industrial Tribunals for the adjudication of industrial
disputes which in the opinion of the Central Government, involve question
of national importance or of such nature that industrial establishments
situated in more than one State are likely to be interested in, or affected
by, such disputes.
8) Arbitration and Adjudication Procedure :
Thus, the above machinery for the settlement of disputes is exclusively
based on a third party's intervention. But there has been much controversy
over the issue of ar bitration, adjudication, and collective argumentation.
The working of adjudication and arbitration has been detrimental to the
growth of trade unionism. Some labour leaders suggest that voluntary
conciliation and arbitration should be treated a part of coll ective
bargaining. Thus, peace is indispensable for the development of an
undertaking or industry.
Tripartite Machinery:
The machinery at the Centre mainly consists of Indian Labour Conference,
the Standing Labour Committee, the Industrial Committees, and t he
Committee on Conventions. There is also the Labour Ministers'
Conference which is closely associated with the machinery.
National Arbitration Promotion Board :
The Government set up a Notional Arbitration Promotion Board in 1967
to popularize the accept ance of voluntary arbitration as a means of settling
labour disputes.
Joint Management Councils:
The scheme of Joint Management Councils sponsored by the Government
in 1957 ensures closer association of workers in management on a
formally defined basis. J oint Management Councils are, at present
functioning in 89 establishments. In order to extend the scheme to as many
establishments as possible, Central and State Governments have set up
special agencies. Efforts are being made to introduce the scheme in th e
public sector undertakings.
Since the 1950s various measures have been taken by the Government of
India to solve industrial disputes. These measures can be classified into the
following four groups:
i) Commission of Inquiry Conciliation, ii) Arbitration /A djudication by
Tribunals and iii) Joint Consultation. Out of these, commissions of inquiry
were used in early 20th century to deal with issues concerning an entire
industry or a large part of it. For instance, inquiry commissions were
appointed to investig ate labor demands for bonus and food price rise
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66 the functions performed by these commissions. Collective bargaining
evolved in the natural course of the trade union movement. Joint
consultation in the initial years was mainly through the tripartite
machinery. In later years, the government sought to introduce bipartite
consultation through various participative schemes. The most important
measures taken by the government to solve indust rial disputes were
therefore conciliation and arbitration/adjudication. Therefore, "obviously
this can best be achieved by the parties themselves. Labour legislation and
the enforcement machinery set up for its implementation can only provide
a suitable fr amework in which employers and workers can function. The
best solution to common problems, however, can be found by mutual
agreement."
5.3 CONCEPT OF COLLECTIVE BARGAINING
Collective bargaining is a two -party procedure between employers and
trade unions for arriving at commonly agreed solution on matters such as
wages and working conditions. It is an institutionalized representative
process. The term ‘collective’ indicates that the representatives are trying
to negotiate an agreement for a group of person s. ‘Bargaining’ is the
process of meeting, presenting demands, discussion, presenting counter -
offers, giggling and haggling, threatening and a number of other activities
that go into the negotiation of an agreement. The essence of collective
bargaining lie s in the mutual trust and confidence which the parties have
in each other and the co -operation they are ready to extend to one another
as well as the sincerity of purpose to solve their differences and to arrive at
an agreement.
Definition
 According to Dale Yoder , “Collective bargaining is the term used to
describe a situation in which the essential conditions of employment are
determined by bargaining process undertaken by representatives of a
group of workers on the one hand and of one or more employers on the
other.”
 In the words of Flippo , “Collective bargaining is a process in which
the representatives of a labour organization and the representatives of
business organization meet and attempt to negotiate a contract or
agreement, which specifies the n ature of employee -employer -union
relationship.”
5.3.1 Features of Collective Bargaining:
1. It is a collective process. The representatives of both workers and
management participate in bargaining.
2. It is a continuous process. It establishes regular and stab le relationship
between the parties involved. It involves not only the negotiation of
the contract, but also the administration of the contract.
3. It is a flexible and dynamic process. The parties have to adopt a
flexible attitude through the process of bar gaining.
4. It is a method of partnership of workers in management
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67 5.3.2 Importance of Collective Bargaining :
Collective bargaining has a significant place in modern industrial society.
It has benefited all the stake holders of the industry in particular an d
society in general. The significance of collective bargaining can be
brought out through the role it has played in the industry and the society
over the years.
A) Importance to employees :
1. Collective bargaining develops a sense of self -respect and
responsi bility among the employees.
2. It increases the strength of the workforce, thereby, increasing their
bargaining capacity as a group.
3. Collective bargaining increases the morale and productivity of
employees.
4. It restricts management’s freedom for arbitrary a ction against the
employees. Moreover, unilateral actions by the employer are also
discouraged.
5. Effective collective bargaining machinery strengthens the trade unions
movement
6. The workers feel motivated as they can approach the management on
various matt ers and bargain for higher benefits
7. It helps in securing a prompt and fair settlement of grievances. It
provides a flexible means for the adjustment of wages and
employment conditions to economic and technological changes in the
industry, as a result of w hich the chances for conflicts are reduced.
B) Importance to employers :
1. It becomes easier for the management to resolve issues at the
bargaining level rather than taking up complaints of individual
workers
2. Collective bargaining tends to promote a sense of j ob security among
employees and thereby tends to reduce the cost of labor turnover to
management
3. Collective bargaining opens the channel of communication between
the workers and the management and increases worker participation in
decision making.
4. Collective bargaining plays a vital role in settling and preventing
industrial disputes

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68 C) Importance to society :
1. Collective bargaining leads to industrial peace in the country
2. It results in establishment of a harmonious industrial climate which
supports whic h helps the pace of a nation’s efforts towards economic
and social development since the obstacles to such a development can
be reduced considerably
3. The discrimination and exploitation of workers is constantly being
checked.
4. It provides a method or the r egulation of the conditions of employment
of those who are directly concerned about them.
5.3.4 Growth of Collective Bargaining in India:
The textile industry in Ahmedabad has the longest history of settlements
of disputes by mutual negotiation and volunta ry arbitration. In 1918,
Mahatma Gandhi was the leader of the textile workers of Ahmedabad.
Gandhiji advocated conflict resolution by negotiation and mutual
discussion between labor and management through their trade unions.
Negotiation, conciliation, and a rbitration were to be resorted to in their
order of succession in resolving conflicts. The 1918 wage dispute between
the Ahemadabad Textile Labor Association and the Ahmedabad Mill
Owners’ Association was finally settled through an arbitration board
repres enting both employers and workers.
In 1920, a central federation of trade unions known as AITUC was
formed. In 1925, a trade union check -off system was started in TISCO.
Since then, negotiations between the management and the trade unions
have taken place in an informal manner in TISCO. Joint negotiations in
cotton textile mills in Madras and Bombay had also taken place. The
Trade Union Act was passed in the year 1926 which provided registration
to trade unions. The Trade Dispute Act of 1929 empowered the
government to appoint Boards of Conciliation for settling trade disputes
and made strikes in public utility services as a punishable offence. The
Bombay Trade Disputes Conciliation Act of 1934 provided for the
appointment of Labor Officers and Special Conc iliators and empowered
the government to appoint Commissioner of Labor as the Chief
Conciliator
In 1938, the Bombay Industrial Disputes Act was passed which provided
for elaborate machinery for promotion of peaceful and amicable
settlement of industrial di sputes. In 1946, the Bombay Industrial Relations
Act was passed to replace the Bombay Industrial Disputes Act 1938. This
Act provided for constitution of Joint Committees, conciliators, Labor
Courts, Wage Boards, and Industrial Court. The employers of indus trial
establishments are required to constitute joint committees consisting of
representatives of labor and management. Conciliators are required to
settle industrial disputes. Labor Courts, Wage Boards, and Industrial
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69 representative unions, qualified unions, primary unions, and approved
unions. A representative union is the sole bargaining agency. An
agreement reached with such a union is effective and binding on both the
parties.
The Industrial Disputes Act, 1947 provides for the constitution of Works
Committees in industrial undertakings and appointment of conciliation
authorities in the form of Conciliation Officers and Board of Conciliation
and adjudication authorities in the fo rm of Labor Court, Tribunal, and
national Tribunal. The Act contains a detailed list of unfair labor practices
on the part of employers and recognized trade unions. Refusal by the
employer or the trade union to bargain collectively is considered an unfair
labor practice and is therefore a punishable offence. In 1947, the Indian
National Trade Union Congress (INTUC) was set up as a central
federation of trade unions.
In the post -independence period, many new central federations of trade
unions were set up s uch as Hind Mazdoor Sabha (1948), United Trade
Union Congress (1948), Bhartiya Mazdoor Sangh (1955), and Center of
Indian Trade Unions (1970). These federations were responsible for
accelerating the setting up of trade unions at the plant, region, and indu stry
levels. Simultaneously, the employers’ organizations were also set up in
various industries which resulted in bargaining at various levels.
Tripartite industrial committees were formed to deliberate on the problems
of particular industries. In 1948, industrial committees were formed for
plantations, coal mining, cotton textiles, cement and tanneries and leather
industries. Later , industrial committees were also formed for jute,
chemicals, engineering, electricity, road transport, building and
constru ction, iron and steel and mines. These committees discussed on a
number of issues such as wages, working conditions, welfare amenities,
retrenchment and closure, lay -off, bonus, standing orders, social security,
contract labor and labor legislation.
In 195 7, tripartite Central Wage Boards were set up in a number of
organized industries such as cotton textile, sugar, cement, jute, tea, coffee
and rubber plantations, iron and steel, coal mining, iron ore mining,
limestone and dolomite mining, engineering, por ts and docks, heavy
chemicals land fertilizers, leather land leather goods, electricity
undertakings and road transport industry. All the wage boards were
required to work out wage structure for the industry as a whole and some
were asked to deal with bonu s, gratuity and hours of work.
In the post reform period beginning from 1991, the Government of India
appointed the second National Commission on Labor in 1999 to suggest
rationalization of existing laws relating to labor in the organized sector so
as to make them more relevant and appropriate in the context of
globalization and opening up of the Indian economy. The commission
submitted its report in June 2002.
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70 5.3.5 Pre -Requisites for Successful Collective Bargaining :
Collective bargaining could be an eff ective instrument in the settlement of
disputes and advancement of the cause of labor if certain basic conditions
are fulfilled. These basic conditions are as follows:
1. Existence of a truly representative, enlightened and strong union
functioning strictly on constitutional trade union lines.
2. Existence of a progressive and strong management conscious of its
responsibilities to the owner of business, the employees, consumers,
and the nation.
3. Agreement on the basic objectives and recognition of mutual right s
and obligations.
4. Delegation of authority to local management when there are several
units of a company.
5. Acceptance of a fact -finding approach and willingness to use new
techniques and tools for the solutions of industrial problems.
5.4 SUMMERY
Now a d ays, Government of India, taking some effective measures to
reduce the causes of industrial disputes. The Government has to focus the
disputes and reduce the industrial conflict in forthcoming days to offer
most valuable and useful welfare measures to the employees those who
work in the private and public organization and tried to increasing the
national economy. Collective bargaining is a continuous process because
of the dynamics of the industry. New situation requires negotiation,
interpretations, and con sensus. Local, industry -wide, nation -wide labor
relations and developments affect the agreements once reached. Collective
bargaining is regarded as an instrument for maximization of production
and a means for equitable distribution of wealth produced by la bor and
management in the industry.
5.5. QUESTIONS
1. What is industrial dispute? Briefly explain the causes of industrial
disputes in India.

2. Explain the measures taken to solve industrial disputes in India.

3. Discuss the Settlement Mechanism for Industrial Dispu tes in India

4. What is collective bargaining? Explain the importance of collective
bargaining.

5. What is collective bargaining? Describe the pre -requisites for
successful collective bargaining.

6. Write a note on collective bargaining.

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71 5.6 FURTHER READING S
 PuriV.K&Misra S.K. (2017), ‘Indian Economy’, Himalaya
Publishing House Pvt. Ltd. Mumbai ISBN:978 -93-5273 -172-5

 Saxena S.R. (1972), ‘Lobour Problems and Social Welfare’,
Prakashan Kendra, Lucknow (India)

 ‘Labour and Planning’ (1964) edited by Mukerjee Radhakamal, Allied
Publishers Pvt. Ltd. Madras

 Agnihotri Vidyadhar (1970), ‘Industrial Relation In India’, Atma
Ram & Sons Publishers, Delhi

 Anthony Raj Arul Edison, &RajakrishnanV.S(2018), ‘A Study on
Industrial Disputes and Its Effec ts: Exceptional Re ference to Indian
Industries’ Eduve International Journal of Interdisciplinary Research,
Vol. 01 Issue 06 Sep. 2014, ISSN 2348 -6775 (Online)
 Mamoria C.B. and Mamoria S. (2002) ,‘Dynamics of Industrial
Relations ’, Himalaya Publishing se, Mum bai.
 Mamoria, Mamo ria, Gankar “Dynamics of Industrial Relations”
Himalaya Publishing House, 14th Edition, 2012.
 C.B.Mamoria, & VSP Rao “Personnel Management - Text & Cases”,
Himalaya Publishers 15th edition, 2012.


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72 6
INDUSTRIAL RELATION -II
Unit Structure:
6.1 Objective s
6.2 Introduction
6.2.1 Meaning and Definitions of Workers' Participation in
Management
6.2.2 Features of Workers’ Participation in Management
6.2.3 Objectives of Workers Participation
6.2.4 Importa nce of Worker’s Participation in Management
6.2.5 Evolution of Participative Management in India
6.2.6 Forms of Workers’ Participation in Management in India
6.3 Working Conditions & Life Style of Industrial Labour
6.3.1 Various aspects of working conditi ons / Scope of Working
Condition
6.3.3 Provisions Regarding Working Conditions under the Factories
Act of 1948
6.3.6 Working Conditions in Different Industries
6.4 Summary
6.5 Self-Assessment Questions
6.6 Further Reading
6.1 OBJECTIVE S
1. To understand t he of Workers’ Participation in Management
2. To understand the various forms of Workers’ Participation in
Management in India.
3. To study the present state of Workers’ Participation in Management
in India.
4. To understand the working conditions and lifestyle of Indian workers.

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73 6.2 INTRODUCTION
The idea of workers’ participation arose in Europe, where collective
bargaining has usually been at the branch or industry level; this often left a
gap of employee representation at the enterprise or plant level, which
became filled by bodies such as works councils, works committees,
enterprise committees. Workers’ Participation in Management is an
essential ingredient of Industrial democracy. The International Labour
Organization has been encouraging member nations to p romote the
scheme of Workers’ Participation in Management. Workers’ participation
in management implies mental and emotional involvement of workers in
the management of Enterprise. Worker’s participation management
(WPM) in India was introduced by Mahatma G andhi in 1920 who
emphasized that equal importance and status should be provided to each
worker, with dignity of work and mutual exchange of interest between
labour and management.
6.2.1 Meaning and Definitions of Workers' Participation in
Management:
Worker’s participation means involving workers in the decision -making
power in the organization. It gives a feeling of belongings to the workers
in the organization. It is coming together – beginning, keeping together -
progress, working together - success.
Workers' Participation in Management is a very broad concept which has
attained several different meanings over the period. ‘Traditionally the
concept of Workers’ Participation in Management (WPM) refers to
participation of non -managerial employees in the de cision-making process
of the organization. Workers’ participation is also known as ‘labour
participation’ or employee participation’ in management.
Definitions:
 According to International Labour Organization(ILO ), “Workers’
participation, may broadly be ta ken to cover all terms of association of
workers and their representatives with the decision -making process,
ranging from exchange of information, consultations, decisions and
negotiations, to more institutionalized forms such as the presence of
workers’ m ember on management or supervisory boards or even
management by workers themselves."

 According to Keith Davis , “Participation refers to the mental and
emotional involvement of a person in a group situation which
encourages him to contribute to group goals and share the
responsibility of achievement.”

 According to Walpole, “Participation in Management gives the worker
a sense of importance, pride and accomplishment; it gives him the
freedom of opportunity for self -expression; a feeling of belongingness
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74
6.2.2 Features of Workers’ Participation in Management:
1) Workers participate in management not as individuals but collectively
as a group through their representatives, and participation means
menta l and emotional involvement rather than mere physical presence.

2) Workers’ participation in management may be formal or informal. In
both the cases it is a system of communication and consultation
whereby employees express their opinions and contribute to
managerial decisions.

3) Workers' Participation in Management (WPM) is the participation
resulting from the practices which increase the scope for employees’
share of influence in decision -making at different tiers of
organizational hierarch with associated as sumption of responsibility
6.2.3 Objectives of Workers Participation :
1. To achieve industrial peace and harmony.
2. Purpose of participation is to ensure human dignity and to get the
workers’ a respectable statusin the society.
3. To build the most dynamic Human Resources by develop internal
motivation in the workers.
4. To boost the morale of employees and satisfy the workers’ social and
esteem needs.
5. To raise the levels of the employee production, productivity, and
product quality.
6. To satisfy workers by making them feel, that they have their voice in
the management.
7. To give workers a better understanding of their role in the working of
industry.
8. To develop better mutual understanding so that the workers do not
resist a change for the betterment of the concern (e.g., introduction of
work study, etc.)
9. To minimize the number of grievances and therefore, industrial
disputes.
6.2.4 Importance of Worker’s Participation in Management:
1. Increase Industrial Productivity :
The increased productivity is possible only when there exists fullest co -
operation between labour and management. It has been found that poor
labour management relations do not encourage the workers to contribute
anything more than the minimum desirable to retain their jobs. Thus,
participation of workers in m anag ement is essential to increase industrial
productivity.
2. Increases the level of commitment:
An important prerequisite for forging greater individual commitment is the
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75 allows i ndividuals to express themselves at the work place rather than
being absorbed into a complex system of rules, procedures, and systems.
3. Reduced Industrial conflict:
Industrial conflict is a struggle between two organized groups, which are
motivated by the belief that their respective interests are endangered by
the self -interested behaviour of the other. Participation cuts at the very
root of industrial conflict. It tries to remove or at least minimize the
diverse and conflicting interests between the part ies, by substituting it with
cooperation, homogeneity, and common interests.
4. Quality of decisions is improved :
I am sure that you will agree that communication is never a one -way
process, also note that it is seldom, if ever, possible for managers to have
knowl edge of all alternatives and all consequences related to the decisions
which they must make. Because of the existence of barriers to the upward
flow of information in most enterprises, much valuable information
possessed by subordinates never reaches their managers. Participation
tends to break down the barriers, and makes the information available to
managers. To the extent such information alters the decisions, the quality
of decisions is improved.
5. Human Resource Development :
Participation provides educa tion to workers in the management of
industry. It fosters initiative and creativity among them. It develops a
sense of responsibility. Informal leaders get an opportunity to reinforce
their position and status by playing an active role in decision -making a nd
by inducing the members of the group to abide by them.
6. Participation in Management helps workers realize their self -worth
and enables them to express themselves, this in turn compensates any loss
of feeling found in material benefits.
6.2.5 Evolu tion o f Participative Management in India:
Gandhiji recommended such a radical step, when, in 1946, he advised
certain employers, who were faced with a strike of the workers, to
withdraw, leaving the factory and management altogether in the hands of
the wo rkers themselves. In between these two limits, workers'
participation may take the form of joint committees for such functions as
safety measures, social and cultural activities, production and productivity
personnel counselling, and control of working con dition s, auditing, profit
sharing, recruitment and dismissals, and management of the enterprise.
Earlier in 1937, Gandhiji had pleaded for a milder form of workers'
participation, when he said, "It is vital to the well -being of the industry
that the workme n shou ld be regarded as equals with shareholders and that
they have, there - fore, every right to possess an accurate knowledge of the
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76 organizations should have the same access to the transa ctions of the mills
as the shareholders."
The beginning towards WPM was made with the Industrial Disputes Act,
1947, which made Works Committees mandatory in industrial
establishments employing 100 or more workers. The joint management
councils were establ ished in 1950 which increased the labour participation
in management. Since July 1975 the two -tier participation called shop
councils at shop level and Joint councils were introduced. Workers’
participation in Management Bill was introduced in Parliament i n 1990 .
The Industrial Policy Resolution adopted by the government in 1956
stated that there should be some joint consultation to ensure industrial
peace, and improve employer -employee relations. A study team was
appointed in 1962 to report on the working of join t councils and
committees. During the emergency of 1975 -77, the interest in these
schemes was revived by the then Prime Minister by including Workers’
Participation in industry in the government’s 20 -point program.1
The government started persuading large e nterprises to set up joint
consultative committees and councils at different levels.
The Janata Government who came to power in 1977 carried on this
initiative. It was again emphasized by the Congress government who came
back in 1979. This continue d in a “ non- statutory vein” till the late 1980s,
and the response from the employers and employees stayed Luke -warm.
Then, the 42nd Amendment to the Constitution was made. Now, Article
43-A reads: The State shall take steps, by suitable legislation, or in any
other way, to secure the participation of workers in the management of
undertakings, establishments or other organizations engaged in any
industry. Thus, participative management is a constitutional commitment
in India. And then, on May 30, 1990, the governme nt introduced the
Participation of Workers in Management Bill in the Rajya Sabha.The bill
requires every industrial enterprise to constitute one or more `Shop -Floor
Councils’ at the shop floor level, and `Establishment Council’ at the
establishment level. These councils will have equal representation of
employers and employees. The bill also provides for penalties on
individuals who contravene any provision of the bill.
6.2.6 Forms of Workers’ Participation in Management in India:
Since Independenc e variou s schemes have been formulated by the
Government of India to encourage workers’ participation in management.
The scheme of workers participation in management in India was
sponsored by the Government of India. The demand for participation in
manage ment nev er came from the trade unions. Section 3 of the Industrial
Disputes Act, 1947 empowered the central and state governments to order
employers of industrial establishments employing 100 or more workmen
to constitute Works Committees. In 1947, accordi ng to th e Industrial

1Refer for detail: Page 246 of Industrial Relations, Trade Unions and Labour
Legislation
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77 Truce Resolution adopted at the Industries Conference, Unit Production
Committees were recommended to be set up in industrial establishments
for promoting the efficiency of workers and improving production. Under
the industrial policy resoluti on of 1948, the Government of India accepted
the need for establishing bipartite production committees. In 1958, the
scheme for Joint Management Councils was introduced. In 1977, WPM
was established in commercial and service organizations in the pu blic
sector. In 1976, Article 43 A was inserted in the Indian Constitution under
the Directive Principles of State Policy. Article 43 A of the DPSP states
that “the State shall take steps by suitable legislation or any other way to
secure the participation o f work ers in the management of undertakings,
establishments or other organizations engaged in any industry.” In 1983, a
new scheme of Employees’ Participation in Management for public sector
undertakings was introduced. In 1990, a comprehensive bill in res pect o f
WPM was introduced in the parliament. The bill is yet to be passed.
The following are the main schemes of WPM implemented in India:
 Works Committee, 1947.
 Joint Management Councils, 1958.
 Board Level Participation, 1970.
 Shop Councils and Joint Counci ls under old 20 -point program, 1975
 Unit Councils and Joint Councils in Commercial and Service
organizations in the public sector, 1977.
 Institutions of Employees’ Participation in Management for Public
Sector Undertakings, 1983.
 Joint Councils in Govern ment services, 1956 and
 Institutions in some private sector enterprises.
The structure for workers participation in management created in India is
as follows:
1. Work Committees :
The Industrial Disputes Act 1947 provides for the setting up of works
committ ee consisting of representatives of management and workers in
equal proportion in undertakings employing 100 or more workers. These
committees are advisory in nature and their decisions are in the form of
recommendations Such a committee consists of equal number
ofrepresentatives of employer and workers. The main purpose of works
committees is to providemeasures for securing and preserving amity and
good relations between the employer andemployees.

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78 2. Joint Management Councils:
The JMC is a more develo ped fo rm of workers participation in
management which was tried out in the 1950s and 1960s on a voluntary
basis. In 1958, Joint Management Councils were introduced. JMCs were
to be entrusted withadministrative responsibility for various matters
relating to welfa re, safety vocational training, preparation of holiday
schedules etc. But the JMCs did to received much support from unions or
management. These are joint bodies consisting of the representatives of
management and employees. Thefunctions of JMCs may range fro m
decision -making on some issues to simply advising the management as
consultative bodies. The decisions of these councils are advisory in nature
through employers often implement the unanimous decisions of them.
Working conditions, accident, prev ention, i ndiscipline, absenteeism,
training are the important matters before joint management councils.
3. Board Representation:
Under this scheme, one or two representatives of workers are nominated
or elected on the Board of Directors. The basic idea behin d incorpo rating
workers’ representation on the Board of Directors is to safeguard the
workers’ interest, usher industrial harmony and good relations between the
workers and management. This is the highest form of workers’
participation in management. The G overnment itself, as an employer,
introduced this scheme in several public sector enterprises such as
Hindustan Antibiotics Ltd., Hindustan Organic Chemicals Ltd., National
Coal Mines Development Corporation, Bharat Heavy Engineering Ltd.,
National Textile Mills, e tc. This scheme required the verification of trade
union membership, identification of the representative union and selection
of a worker director who is selected out of a penal of three persons
furnished to the government by the representative un ion withi n a
prescribed period. Subsequent to the nationalization of banks in 1970, the
Government, under the Nationalized Banks (Management and
Miscellaneous Provisions) Scheme 1970, introduced the nomination of
workers’ representatives as directors to th e Boards — one representing
employee and the other representing officers for a tenure of 3 years.
According to a study of the scheme introduced in the nationalized banks
conducted by the National Labour Institute, the scheme has failed in its
objectives be cause of the contentions raised about the scheme by both
employees (trade unions) and employers.
4. Co-Ownership:
Under this scheme of workers’ participation in management, commonly
known as Employee Stock Ownership Plan (ESOP) the workers are
offered share s in the company. There are different plans made available to
employees depending on their position. Employee Share Ownership
provides a financial incentive to the workers which makes them motivated
and committed. Moreover, as the employees now are part ow ners of t he
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79 own. This renewed work commitment shown from the employees
increases the level of productivity which in turn increases profitability.
5. Constitutional Amendment and 1975 Sch eme:
In the year 1975 the constitution was awarded and section 43 A was
inserted in the Directive
Principles of the Constitution. In accordance with this amendment the
state shall take steps by suitable legislation to secure participation of
workers’ in th emanageme nt of undertakings, establishments engaged in
any industry. The scheme provided for the formation of joint councils at
shoplevel and plantlevel and covered only thosemanufacturing andmining
units, which employed 500 or more workers. Shop and plant level cou ncils
were assigned specific functions relating to production and productivity,
reduction of absenteeism, safety etc.
6. Scheme of Workers’ Participation in Management:
After two years, commercial and service organizations with 100 or more
employees were brou ght within the preview of a participative scheme,
similar to that 1975 scheme. This scheme is applicable to institutions like
hospitals, the PST, Railway and State Electricity Boards. In practice, this
scheme suffered with number of problems and finally re sulted in
ineffective functioning of manyforums and their subsequent closure.
a) New Scheme for Employee Participation 1983:
In December 1983 a newscheme of participation was prepared and
noticed. This scheme isapplicable to all central public secto r enterpri ses. It
is implemented at the board level. Themode ofrepresentation of worker
representatives is to be determined by consultation with the
concernedunions and parity in representation between management and
unions continued to be equal. Thescheme brought w ithin ambit of the
councils a wider spread of work -related issue. At the plant level, the
council could discuss issues relating to personnel, welfare environment,
plant operations andfunctioning etc.
b) Workers’ Participation in Management Bill 1990 :
For the f irst time in 1990 the Government introduced a bill to make three
tier representativeforums of participation. Following are the salient
features of this Bill:
i. In this Bill the term ‘worker’ has been defined to include all types of
employees -manag erial as wel las non -managerial. Workers doing
managerial jobs are termed as ‘other workers.
ii. The Bill provides for the setting up of shop floor councils and
establishment councils in accordancewith the provisions of the scheme
to be framed and notified by Central Gove rnment.
iii. The Bill provides that in the Board of Management of every body of
corporate owning an industrialestablishment representation will be
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80 iv. Appropriate Government (Central/State) may appoint inspec tors for
purpose of this act and everyinspect shall be deemed to be a public
servant within the meaning of Indian Penal Code.
6.3 WORKING CONDITIONS & LIFE STYLE OF
INDUSTRIAL LABOUR
Man is always affected by his environments. His work, efficiency,
psychol ogy, and hea lth move and develop according to environment
setting. Hence with reference to industrial Labour, the role of working
conditions is of great importance. It is a well -recognized fact that healthy
and inspiring atmosphere leads the worker for mor e work, whil e slum and
unhealthy atmosphere decreases his working capacity. Therefore, it has to
be realized that there must be good working conditions for workers in
industries. It is because more provision of financial incentives cannot
contribute toward s higher eff iciency of labour. In fact, the roots of bad
factory morale "are not always economic, although wages and security are
obviously dominant motives to but even then, physical factors have an
important any worker. influence in shaping the mental ba ckground of
work. A badly lighted workshop not only hampers production because the
light is insufficient, but also because in short time workers areforced to
spend more and more effort in maintaining the standard of work, and
finally grow slack and cease t o care.
6.3.1 Various aspects of working conditions/ Scope of Working
Condition:
Under working conditions, we include the following aspects of industrial
organization.
 Sanitation;
By sanitation, we mean the cleanliness inside the factory. There should no t
be accumul ation of dirt and dust. The floor should be cleaned and walls
should be painted or varnished.
 Ventilation:
Adequate ventilation is another aspect of working conditions. It is affected
by windows and ventilators etc. In every factory, there sho uld be prope r
arrangement for adequate ventilation by the circulation of fresh air.
 Temperatur e:
Temperature and humidification are also important aspects of working
conditions. The climatic conditions, especially in summer, make physical
work unpleasant d ue to high t emperature.
 Drinking water :
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81  Lighting :
Lighting is yet another important aspect of working conditions: Natural
lighting may be deriv ed from the side windows, window pans and the
roof. In every part of a factory where labourers work or pass, there should
be sufficient and suitable lighting.
 Latrines and urinals:
Latrines and urinals are also important aspects of working conditions.
Ther efore, in ev ery factory arrangement for sufficient latrine and urinal
accommodator should be made for employees.
 Rest shelters:
Adequate and suitable shelters, rest some and lunch rooms are very
important. They also affect the work and efficiency of the wo rkers.
 Worki ng hours :
Working hours efficiency of labour. Therefore, the working hours should
be fixed in such a manner as may not be injurious to the health of workers
 Overcrowding:
Overcrowding is also injurious to the health and efficiency of the worker s.
Therefore , there should not be overcrowding to an extent injurious to the
workers.
 Fencing of machinery and safety provisions:
Fencing of machinery and adequate safety provisions are also important
for the prevention of accidents. Hence, there are anoth er important aspect
of working conditions.
6.3.3 Provisions Regarding Working Conditions under the Factories
Act of 1948:
In 1947 the Government of India introduced a Bill in the Parliament for
the radical overhaul of the existing law. The Bill was passed into an Act
on 23rd September, 1948. The new Act is called the Factories Act and was
put into force on 1st April, 1949. It extends to the whole of India, except
the State of Jammu and Kashmir. The Act has made the following
provisions for regulating the w orking condi tions of labour in different
factories.
A) Health
i. Cleanliness:
Section 11 of the Act contains elaborate provisions regarding
'Cleanliness'. It is required that every factory shall be kept clean and free
from effluvia arising from any drain, privy or Ac cumulation of dirt and
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82 effective method, from the floors and benches of workrooms and from
staircases and passages, and disposed of in a suitable manner. If, in view
of th e nature of the operations carried on in a factory, it is not possible for
the occupier to comply with all or any of the provisions, the State
Government may by order exempt such factory or class or description of
factories from any of the provisions and s pecify alte rnative methods for
keeping the factory in a clean state. by washing, using effective method.
ii. Disposal of wastes and effluents.:
As regards disposal of wastes and effluents, Section 12 of the Act lays
down that every factory is required to make effective a rrangements for the
disposal of wastes and effluents due to the manufacturing process carried
on therein. The Act empowers the State Government to make rules
prescribing the arrangements to be made for this purpose.
iii. Ventilation and temperature :
As regards ventilation and temperature Section 13 of the Act provides that
effective and suitable provision is to be made in every factory for securing
and maintaining adequate ventilation by the circulation of fresh air, and
such a temperature as will sec ure to work ers therein reasonable conditions
of comfort and prevent injury to health. The State Government is
empowered to prescribe a standard of adequate ventilation and reasonable
temperature for any factory or class or description of factories or parts
thereof, a nd direct that a thermometer shall be provided and maintained
insuch place and position as may be specified.
iv. Dust and fume:
Section 14 of the Act provides that in very factory in which, by reason of
the manufacturing process carried on, there i s given off any dust or fume
or other impurity such a nature and to such an extent as is likely to be
injurious or offensive to the workers employed therein, effective measures
all be taken to prevent its inhalation and accumulation in any workroom,
and if any exhaus t appliance is necessary for this purpose, it shall be
applied as near as possible to the point of origin of the dust, fume or other
impurity.
v. Artificial humidification:
Section 15 of the Act provides that in respect of all factories in which t he
humidity of the air is artificially increased, the State Government is
empowered to make rules regarding standards of humidification, methods
used for artificially increasing the humidity of the air, tests for determining
the humidity of the air to be c orrectly ca rried out and recorded, and
methods to be adopted for securing adequate ventilation and cooling of the
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83 vi. Overcrowding:
Section 16 of the Act lays down that no room in any factory is to be
overcrowded to an extent injurious to the health of the workers employed
therein.
vii. Lighting:
According to provisions contained in Sect 17 of the Act, in every part of a
factory where workers are wo ing or passing there shall be provided and
maintained sufficient and suitable lighting natural or artifici al or both. In
ever factory all glazed windows and skylights used for the lighting the
workrooms shall be kept clean on both the inner and outer surfaces. The
State Government may prescribe standards of sufficient and suitable
lighting factories or for any class or description of factories or for any
manufacturing process.
viii. Drinking Water:
Section 18 of the Act contains provisions regarding drinking water. In
every factory, effective arrangements shall be made to provide and
maintain at suitable p oints conve niently situated for all workers employed
therein sufficient supply for wholesome drinking water.
ix. Latrines and Urinals:
According to Section 19 of the Act, in every factory, sufficient latrine and
urinal accommodation of prescribed types shall b e provided conveniently
situated and accessible to workers at all times while they are at the factory.
Separate enclosed accommodation shall be provided for male and female
workers. All such accommodation shall be maintained in a clean and
sanitary conditi on at all t imes. Sweepers shall be employed whose primary
duty would be to keep clean latrines, urinals and washing places

x. Spittoons:
It has been laid down in Section 20 of the act that in every factory there
shall be provided a sufficient number of spit toons in co nvenient places and
they shall be maintained in a clean and hygienic condition. The State
Government may make rules prescribing the type and the number of
Spittoons to be provided and their location in any factory and provide for
such further ma tters relat ing to their maintenance a clean and hygienic
condition.
B) Safety
Measures have also been provided for the safety of workers and
prevention of accidents. Section 21 of the Act has provided that adequate
fencing of machinery shall be secured in case of da ngerous machinery.
Besides every part of an electric generator, a motor, or rotary convertor,
transmission machinery or every dangerous part of any other machinery,
shall be securely fenced by safeguards of substantial construction which
shall b e kept in p osition while the parts of machinery they are fencing are
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84 further precautions as it may consider necessary in respect of any
particular machinery or part thereof, or exempt, any partic ular machinery
or part thereof from the provisions wearing tight -fitting clothing (Section
22). Section 28 of the Act provides that in every factory every hoist and
lift shall be of good mechanical construction, sound material and adequate
stren gth properl y maintained, and shall be thoroughly examined by a
competent person at least once in every period of six months.As regards
lifting machines, chains, ropes and lifting tackles Section 29 of the Act has
provided that all parts of every lifting ma chine and e very chain, rope or
lifting tackle shall be of good construction, sound material and adequate
strength, free from defects properly maintained and thoroughly examined
by a competent person at least once in every period of twelve months. As
regard s floors, s tairs and means of access, Section 32 of the Act has
provided that all floors, steps, stairs, passages, and gangways shall be of
sound construction and properly maintained, and where it is necessary to
ensure safety, steps, stairs, passages and gangways sha ll be provided with
substantial handrails. Section 34 of the Act has further provided that no
person shall be employed in any factory to lift, carry, or move any load so
heavy as to be likely to cause him injuryon, or in the immediate vicinity of
the proces s.
C) Welfare
i. Washing Facilities:
According to Section 42 of the Act, in every factory adequate and suitable
facilities of washing shall be provided and maintained for the use of the
workers therein. Separate and adequately screened facilities shall be
convenientlyaccessible and shall be kept clean.
ii. Facilities for sittin g:
Section 44 of the Act provides that in every factory suitable arrangement
for sitting shall be provided and maintained for all workers obliged to
work in a standing positio n, in order t hat they may take advantage of any
opportunities for rest which may occur in the course of their work.
iii. First -aid appliances:
Section 45 provides that there shall in every factory be provided and
maintained so as to be readily accessible duri ng all workin g hours first -aid
boxes or cupboards, equipped with the prescribed contents and the number
of such boxes or cupboards to be provided and maintained shall not be less
than one for every one hundred and fifty workers ordinarily employed at
any t ime in the fa ctory.
iv. Canteens:
According to Section 46 of the Act, the State Government is empowered
to make rules requiring that in any specified factory wherein more than
two hundred and fifty workers are ordinarily employed, canteens shall be
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85 v. Shelters, rest -rooms and lunch -rooms :
In every factory when more than one hundred and fifty workers are
ordinarily employed, adequate and suitable shelters or rest -rooms and a
suitable lunch -room, with provisi on for drinking -water, where workers can
eat meals brought by them, shall be provided and maintained for the use of
the workers (Section 47).
vi. Creches:
According to Section 48 of the Act, every factory wherein more than fifty
women -workers are ordinarily emp loyed, there shall be provided and
maintained a suitable room or rooms for the use of children under the age
of six years of such women.
6.3.6 Working Conditions in Different Industries:
As regards the general working conditions in various i ndustries, it has
been recognized that the situation is not yet satisfactory. The Labour
Investigation Committee conducted an extensive survey of the working
conditions in different industries. The Committee has observed that
"working conditions in bigger units are on t he whole, satisfactory but
smaller and unregulated units specially those housed in old buildings,
present unsatisfactory conditions as to light ventilation etc., and leave
much rooms for substantial improvements." Most of the employers rarely
do what they are compelled to do by law. They are generally indifferent
towards the improvement of working conditions and content themselves
by complying the provisions made under law. As a result of this attitude,
provisions made in regard to protection and machinery, etc., are
sometimes disregarded. However, in case of certain progressive employer
we find that extra care for safety and welfare have been taken.
a) Textile mills:
In the textile mills the general conditions of working on the whole are
satisfac tory. The buil dings are well -lighted and well -ventilated. The
general lay -out of the machinery is quite proper and sufficient space is
available to workers for their movement. A few cotton mills in
Ahmedabad, Bombay, Sholapur, Delhi, Modinagar and Madura, have
provided air-conditioning. In other places, conditions are quite intolerable.
Electric fans havebeen provided in most of the mills. The working
conditions in woolen and silk mills are satisfactory to a great extent.
b) Engineering industry:
In engineer ing industry, arrangement of lighting and ventilation is
adequate and satisfactory. But working conditions in printing presses is
highly unsatisfactory. Serious overcrowding and congestion is generally
noticed there. In Potteries, provisions for ventilatio n and lighting are not
much satisfactory. Safety measures have also not been provided except at
Bangalore.
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86 c) Sugar industry :
In sugar industry, on the whole, working conditions in Madras and
Bombay are better than those in Uttar Pradesh and Bihar. There is an acute
probl em of sanitation inside and outside the factories. As regards cotton
ginning and bailing factories, ventilation and lighting provisions are very
poor. Safety precautions have also not been taken. Machinery and fast -
moving pulleys and belts ar e not properly guarded in some units.
d) Mica factories:
In mica factories, working conditions are satisfactory in bigger concerns
but in small concerns ventilation and sanitary arrangements are very
deplorable. In bidi industries in Madhya Pradesh, the worke rs per the
working conditions are even worse. form their duties in dark and dingy
places and there is hardly sufficient place for the free movement of
workers.
e) Mining industries:
In most in mining industries, working conditions are also unsatisfactory.
Arrangements for light and ventilation are not sufficient. of the mines
there is no provisions for rest, shelters and creches.
f) Plantation:
Similarly, in plantations, the conditions are no better. Generally, tea
gardens are situated in malarial regions where workers become easy
victim to diseases. Besides, facilities for creches and canteens have not
been properly provided.
Thus , the working conditions of industrial workers in India are still
unsatisfactory. Employers have adopted indifferent attitude towards
working conditions and the provisions not been strictly enforced.
However, the Government have attempted to cover all workers within the
purview of legal protection. Hence after Independence various Acts with
regard to working conditions have been passed. The Factories Act of 1948
makes elaborate provisions for health and safety, but separate measures
have also been adopted for regulating working conditions in mines,
plantations and transport. In mines, the working conditions are being
regulated under theMi nes Acts, 1952. Similarly, in plantations, the
working conditions are controlled under the Plantation Labour Act, 1951.
Besides, the Indians Railways Act, 1890 (amended in 1930), the Indian
Merchant Shipping Act, 1923 (amended in 1951), the Dock Workers
(Regulation of Employment) Act, 1948, have also provided adequate
measures for the regulation of working conditions. In addition to the above
Central Acts, there are some State Acts relating to workers in shops and
commercial establishments.
Under the above laws, a comprehensive code has been developed to
ensure satisfactory working conditions, safety of persons and the provision
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87 context of industrial development, improvement in the working conditions
is of paramount importance. It can result greater productive efficiency on
the part of workers. During the Third Five -Year Plan, efforts were made to
keep abreast of the modern developments in these and various other
aspects relating to the human factor in industry. In view of the rapid
expansion of the output of machines and the increase in depths and
mechanization to which it leads, it has become imperative that there
should be greater vigilance and stricter enforcement of rules and
regulations regarding working conditions of labour.
6.4 SUMMARY
The rationale forWorkers’ Participation in Management (WPM) lies in the
fact that it gives workers a sense of belongingness to the organization and
also a sense of commitment to various decision s taken. WPM means
associating workers at every level in decision making. The main objective
of WPM in India is to achieve organizational effectiveness and the
satisfaction of the employees. There are at least five levels of participation
that can be devel oped at the enterprise level: informative, consultative,
associative, administrative, and decisive participation. The Government of
India has introduced a number of schemes of participative management.
Participation of Workers in Management Bill, 1990 is t he most recent one
when the Government, for the first time, introduced a bill to make three -
tier representative forums of participation. Workers’ Participation in
Management paves way for increased production and productivity through
the means of more effe ctive and efficient management, alongside better
industrial relations. The conditions under which a labourer performs his
duty have got a profound influence on his health, working capacity,
psychological adjustment and quality of work. Besides, working
conditions also affect the earnings of workers and industrial relations.
Better working exhausted nor they feel them depressed. conditions inspire
efficiency and productivity conditions have adverse effects on workers.
industry and for each class of workers, a minimum standard of working
conditions has been fixed. while bad working Therefore, for each industry
and for each class of workers, a minimum standard of working condition
has been fixed.
6.5 QUESTIONS
1. DefineWorkers’ Participation inMana gement and expl ain its
objectives?
2. What are the different forms ofWorkers’ participation inManagement
available in Indian Industrial Organizations?
3. What is ‘Workers Participation in Management’? Explain the
objectives and forms of WPM in India
4. What is mea nt by the term 'working conditions? examine the working
conditions in some Indian industries.
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88 6.6 FURTHER READING
 Bhagoliwal T.N, Personnel Management & Industrial Relations,
Sahitya Bhavan, Agra, 1991.
 Monappa Arun, Human Resources Management, Tata Mc G raw Hill
 Sarma A .M, Personnel and Human Resources Management, Himalaya
Publishing House (Pvt.) Ltd.,Mumbai, 1998.
 Tripati P.C., Personnel Management & Industrial Relations, Tata Mc
Graw Hills, New Delhi, 199
 Pathange Bhanu Priya1, Dr. Venkateshwara Rao ‘A S tudy on Workers
Participation In Management At Selected Infrastructure Company’,
MuktShabd Journal , Volume IX, Issue - VIII, August/2020 Issue No :
2347 -3150
 PahujaHeena, ‘Workers Participation Management in India’,
International Journal of Science, Techn ology & Managem ent
www.ijstm.com Volume No 04, Special Issue No. 01, May 2015 ISSN
(online): 2394 -1537
 MurarkaSejal,‘A Study of Worker’s Participation in Management
Practices to Deal With Uncertainty in Industrial Relatio ns-A
Theoretica l Framework’, Annual Research Journal of SCMS, Pune
Vol. 9, March 2021 ISSN 2348 –0661 Print 21 © 2021 Symbiosis
Centre for Management Studies, Pune Annual Research Journal of
Symbiosis Centre for Management Studies
 Saxsena S.R. (1972), ‘A Re fresher Course on Labour Problems and
Social Welfare’, Prakashn Kendra, New Building, Aminabad,
Lucknow (India)

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89 7
Module 4
LABOUR WELFARE AND SOCIAL
SECURITY
Unit Structure :
7 .0 Objectives
7.1 Introduction
7.2 Concept of Labo ur welfare
7.3 Theory of Labo ur Welfare
7.4 Principles of Labo ur Welfare
7.5 Labo ur Welfare Agencies
7.6 Labo ur Welfare Officer
7.7 Summary
7.8 Question s
7.9 Reference s
7.0 OBJECTIVES
After studying this unit, you will understand the following.
 To Explain the concept of labor welfare.
 To Understand the theory of labor welfare.
 To Understand the principles of labor welfare.
 To Understan d Labor Welfare Agencies.
 To Explainthe concept of Labor Welfare Officer.
7.1 INTRODUCTION
Labour welfare is a flexible and elastic concept. Now days, welfare has
been generally accepted by employers as a social right. But the degree of
importance given by them varies. Therefore, the Government also
intervenes and introduces legislation from time to time to bring about
uniformity in providing such amenities. The intervention of the state,
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90 7.2 CONCEPT OF LABOUR WELFARE
The term "welfare" refers to workers living in relation to the physical,
social, and psychological environment of an individual or a group. There
has been a major change in the concept of labor welfare. The social and
economic development of a country should be directed towards the
implementation of labor welfare and labor protective laws. In the
industrialized world its Survival requires adaptation of the individual to
his environment.
Workmen are paid for the types of his services but th e payment depends
on the nature of the work, his efficiency, the ability of the industry to pay
and the importance of his work in that particular industry. A worker has to
maintain balance in the workplace. He has to adapt to the physical
conditions of wor k as well as the type of supervision, colleagues.
The acceptance, respect, goodwill, attention, and recognition that the
worker receives from his work group, community, family, and
neighborhood form an integral part of the modern concept of worker
welfare. The physical concept of labor welfare is the ability of a worker to
meet his physical needs such as food, clothing, and shelter from his salary
pocket. But economic status governs his social status in modern society;
His social status is determined by the food he can afford, the type and
quality of clothes he and his family members wear, and the type of home
with amenities. Welfare is thus a material concept as well as a social
concept. Every society has its own moral rules and ethics. A worker has to
follow his moral values. Do's and don'ts in society. For example,
prohibition may be a state law but it may be customary to serve drinks to
guests on certain social occasions such as wedding ceremonies, death
ceremonies, etc.
All these physical, social, and mo ral concepts of labor welfare are
interrelated. The purchasing power of money -wages determines the social
status of the worker and the morals of the society that govern his daily
behavior. So, welfare is a whole concept. On the other hand, the concept
of labor welfare as a comprehensive concept varies from society to
society, country to country and changes with changing times. Therefore, it
is difficult to determine the minimum and maximum condition of labor
welfare. What are minimum requirements for Wester n workers may be
maximum for workers in developing countries. Similarly, what is
minimum for officers may be maximum for junior cadre workers.
Younger workers have different needs than older workers. The welfare
needs of the same worker are different at di fferent stages of their life. It is
related to time, age and culture, social and moral values etc.
Labor welfare is a broad concept. In a country like India, which has
adopted the principles of democracy, state system and socialist society, it
becomes im portant to create the social system required for industrial
development. The industrial development of the country cannot speed up
unless a certain type of society is created in the country. If various
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91 for them, a society can be formed in the country which will be united and
sufficient for rapid industrial development, therefore the consideration of
the welfare of the workers is important.
The term welfare of workers generally includes things such as leisure,
entertainment, health and medical facilities, canteens, accommodation,
and transport facilities etc. Labor welfare programs include programs
aimed at improving the personality of workers by eliminating anxiety,
depression, and illn ess. At the same time, all the efforts made in order to
increase the productivity of the workers can be included in the concept of
worker welfare. Labor welfare can be described in three dimensions
namely holistic welfare activities, social and relative we lfare programmes.
Labour welfare is a flexible and elastic concept. Its meaning and
implications differ widely with times, regions, industries, countries, social
values and customs, the general economic development of the people and
the political ideologie s prevailing at particular moments. As such, a
precise definition is rather difficult.
DEFINITIONS:
1. In the words of Prof. H.S. Kirkaldy. “The whole field of welfare is one
in which much can be done to combat the sense of frustration of the
industrial worke rs, to relieve them of the personal and family worries,
to improve their health, to offer them some sphere in which they can
excel others and to help them to a wider conception of life.”
2. In the second Asian Regional Conference of ILO, it was stated that
workers’ welfare may be understood to mean “such services, facilities
and amenities which may be established in or in the vicinity of
undertakings to enable the persons employed in them to perform their
work in healthy and peaceful surroundings and to avail of facilities
which improve their health and high morale.”
3. According to Balfour committee, “Labour welfare refers to the efforts
made by the employers to improve the working and living conditions
over and above the wages paid to them. In its widest sense i t comprises
all matters affecting the health, safety, comfort, and general welfare of
the workmen, and includes provision for education, recreation, thrift
schemes, convalescent homes”. It covers almost fields of activities of
workers e.g., social, economi c, industrial, and educational.
4. According to Labour Investigation Committee. “Anything done for the
intellectual, physical, moral and economic betterment of the workers,
whether by the employers, by the government or by other agencies
over and above what i s laid down by law or what is normally expected
on the part of the contractual benefits for which worker may have
bargained.”
5. According to N.M. Joshi, “welfare work covers all the efforts which
employers take for the benefit of their employees over and abo ve the
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92 and over and above the provisions of the social legislation providing
against accident, old age, unemployment and sickness”.
According to Industrial Labour Organisation (ILO), “Labou r welfare may
be understood and including such services facilities and amenities which
may be established in vicinity of undertaking to perform their work in
healthy and congenial environment and to avail of facilities which
improve their health and bring high morale.”
In the Encyclopedia of Social Sciences, welfare is defined as – “the
voluntary efforts of the employers to establish, within the existing
industrial system working and sometimes living and a cultural condition of
the employees beyond what is required by law, the customs of the industry
and the conditions of die market.”
According to Arthur James Todd, “Labour welfare means anything done
for the comfort and improvement, intellectual and social, of the employees
over and above the wages paid which is not a necessity of the Industry.”
S.T. Edwards (1953) - “One can buy a man’s time, his physical presence at
a particular space, even a few muscular movements, but enthusiasm,
initiative, loyalty, and devotion to duty cannot be bought. They will have
to be created through right employer -employee relations, provision of
constructive opportunities for satisfying the major motivating desires of
human action.”
7. 3 THEORIES OF LABOUR WELFARE
1. The Policing Theory of Labour Welfare:
The policing theory is based on assumption that Human Being is so much
selfish and always tries for own benefits whether on the cost of others
welfare. Any of the employers will not work for the welfare of employees
until he is forced to do so. This theory is based on the content ion that a
minimum standard of welfare is necessary for workers.
The assumption on which the theory is based is the without compulsion,
supervision and fear of punishment, no employer will provide even the
barest minimum of welfare facilities for workers this theory is based on
the assumption that man is selfish and self-centered, and always tries to
achieve his own ends, even at the cost of the welfare of others. This is
based on the contention that a minimum standard of welfare is necessary
for labourers. Here the assumption is that without policing, that is, without
compulsion, employers do not provide even the minimum facilities for
workers.
According to this theory, owners and managers of industrial undertakings
get many opportunities for exploitation of labour. Hence, the state has to
intervene to provide minimum standard of welfare to the working class.

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93 2. The Religious Theory of Labour Welfare:
This is based on the concept that man is essentially “a religious animal.”
Even today, many acts of man are related to religious sentiments and
beliefs. These religious feelings sometimes prompt an employer to take up
welfare activities in the expectation of future emancipation either in this
life or after it. The theory views were an essentially religious. Religious
feelings are what sometimes prompt employers to take up welfare
activities in the belief of benefits either in his life or in support after life.
Any good work is considered an investment, because both the benefactor
and the beneficiary are benefit ed by the good work done by the
benefactor. This theory does not take into consideration that the workers
are not beneficiaries but rightful claimants to a part of the gains derived by
their labour.
3. The Philanthropic Theory of Labour Welfare:
Philanthro py is the inclination to do or practice of doing well to one’s
fellow men. Man is basically self- centered and acts of these kinds stem
from personal motivation, when some employers take compassion on their
fellowmen, they may undertake labor welfare measu res for their workers.
This theory is based on man’s love for mankind. Philanthropy means
“Loving mankind.” Man is believed to have an instinctive urge by which
he strives to remove the suffering of others and promote their well-being.
In fact, the labour welfare movement began in the early years of the
industrial revolution with the support of philanthropists.
4. The Paternalistic or Trusteeship Theory of Labour Welfare:
In this theory it is held that the industrialists or employers hold the total
industri al estate, properties and profits accruing form them in trust for the
workmen, for him, and for society. It assumes that the workmen are like
minors and are not able to look after their own interests that they are
ignorant because of lack of education. Emp loyers therefore have the moral
responsibility to look after the interests of their wards, who are the
workers.
In other words, the employer should hold the industrial assets for himself,
for the benefit of his workers, and also for society. The main empha sis of
this theory is that employers should provide funds on an ongoing basis for
the well-being of their employees.
5. The Placating Theory of Labour Welfare:
As labour groups are becoming better organized and are becoming
demanding and militant, being more conscious of their rights and
privileges that even before, their demand for higher wages and better
standards increases. The placing theory advocates timely and periodical
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94 This theory is based on the fact that the labour groups are becoming
demanding and militant and are more conscious of their rights and
privileges than ever before. Their demand for higher wages and better
standards of living cannot be ignored. According to this theory, timely and
periodica l acts of labour welfare can appease the workers. They are some
kind of pacifiers which come with a friendly gesture
6. The Public Relations Theory of Labour Welfare:
This theory provides the basis for an atmosphere of goodwill between
labour and managemen t, and also between management and the public,
labour welfare programmes under this theory, work as a sort of an
advertisement and help an organization to project its good image and build
up and promote good and healthy public relations.
The labour welfare movements may be utilized to improve relations
between management and labour. An advertisement or an exhibition of a
labour welfare programme may help the management projects a good
image of the company.
7. The Functional Theory of Labour Welfare:
The concept behind this theory is that a happy and healthy person is a
better, more productive worker. Here, welfare is used as a means to
secure, preserve and develop the efficiency and productivity of labour.
The approach to any solutions, especially as that as between the workers
and the management should be dialogue and an understanding of one
another’s viewpoint. Once agreement has been reached, compliance by
both parties can be assured to a very great extent. This also called the
efficiency theory.
This theory is a reflection of contemporary support for labour welfare. It
can work well if both the parties have an identical aim in view; that is,
higher production through better welfare. This will encourage labour’s
participation in welfare programmes.
7.4 PRIN CIPLES OF LABOUR WELFARE
(a) Principle of Integration or Coordination – Welfare programmes
cannot be segregated. They cannot be taken up part -by-part. It is a whole
programme. For example, health and welfare should cover up all the
aspects of health and h ygiene, physical, social, and moral hygiene.
(b) Principle of Association – Any welfare programme meant for the
development of workers’ community should associate workers with the
planning and execution of the programme. Workers should be associated
for co nducting activities.
(c) Principle of Responsibility – Workers should be incorporated and
they should be hold responsible for the activities aiming at workers’
welfare. For example, workers participate in safety committees, sports
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95 (d) Principle of Accountability – Every programme, every person and
every activity should be answerable. Welfare programme are socially
audited and evaluated. Successful programme are retained Weaker
programme are straightened.
(e) Principle of Timeliness – Timely help is a valuable help. A stick in
time saves nine. When a worker needs economic assistance for trading a
sick child or for building a house, there should be reasonable lapse of time
but beyond a limit he cannot wait. Appropriate acti on begins taken for
welfare might serve the purpose. In certain circumstances of emergency,
delay in assistance means denial of human value and justice.
7.5 LABOUR WELFARE AGENCIES
The miserable conditions of labour are responsi ble for their low
efficienc y. The Indian workers are proverbially inefficient compared to
their counterparts in the industrially developed coun tries. The lack of
proper efficiency of labour in India is mainly due to the absence of welfare
meas ures as are obtainable in the advance d countries.
The conditions of Indian workers were utterly deplorable. Since
independence, an awakening about the welfare of workers is being
noticed. The reasons are not far to seek. Ours is a developing country;
rapid industrialization of the country is of paramount importance.
It has been recognised on all fronts to give due consideration to labour as a
factor of production to increase industrial produc tivity. Workers
themselves are now more united. So, an atmosphere and environment is
now preval ent in India which is conducive to providing various facilities
to workers.
It is now an admitted fact that unless workers are given due attention and
provided with all amenities, the country is sure to pay a high price for it –
the pace of industrialization has to suffer a set-back. So, the need for
labour welfare is now accepted and measures are adopted by different
agencies such as Govern ments, employers, trade unions to better off the
lot of the workers through various physical ameni ties and legislative
measures.
1. Central Government:
Ours is a welfare state wedded to the policy of doing welfare to the people
of the country. For the economic rejuvenation of the country, the toiling
masses must be taken care of, their lots must be improved. In this regard,
the Government has an active role to play.
The Government has to come forward to bring about intellectual, physical,
moral and economic betterment of the workers, so that their whole -hearted
and willing co-operation may be readily available for the econ omic
upliftment of the country. In our plan objectives, workers have been
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96 The Central Government has paid its attention to improve the conditions
of workers. Various enactments have been promulgated to safeguard the
interests of workers, to extend to them economic benefits and social
security. The Factories Act, for example, is a bold attempt to extend
various facilities to factory workers – their housing facilities, economic
benefits, social securities and physical safety etc.
The Mines Act is another piece of legis lation that aims at providing
welfare to mine workers. So far as mines are concerned, Coal Mines
Labour Welfare Fund has been instituted to boost the morale of coal mine
workers under the Coal Mines Labour Welfare Fund Act. Similarly, Mica
Mines Labour Welfare Fund and Iron Ore Mines Labour Welfare Fund
have been created by specif ic Acts of the Central Government. Again, we
find Plantatio n Labour Act for the welfare of planta tion workers.
Besides the various Acts passed for the welfare of labour in mines,
plantations and factories, the Central Government has kept its Labour
Ministry alive to the conditions of workers. Measures have now been
adopted to provide medical aid, legal and financial aid to workers under
various schemes.
To ensure industrial safety, various precautionary measures have also been
enforced. Prevention of the possibility of accidents has been one of the
objectives of the Government’s welfare measures and actually the
incidence of accident has come down. The Government of India has in-
troduced an industrial housing scheme for the accommodation of
industrial workers. Social Securi ty legislations such as The Workmen’s
Compensation Act, Maternity Benefit Act and The Employees’ State
Insurance Act have been in force.
2. State Governments:
The State Governments in India were more or less indifferent to labour
welfare prior to independence. But now various State Governments are
very alive to the conditions of labour and are up and doing for the
upliftment of the lots of the workers. There are popular governments in
some states where workers are adequately taken care of.
Labour fronts of different political parties are now sufficiently strong to
press the demands of workers to the Government and the link between the
State Governments and the labour wings of political parties is so close that
various facilities are now being made avail able to the workers through the
State Government’s machinery.
3. Employers:
Employers in India today have started realising that they should identify
their interest with those of the employees. No prudent management can
now ignore the interests of their workers and expect to reap the benefits of
higher labour productivity. So, for their own interest, employers are being
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97 There are only a few employers in India who have been sympathetic to la-
bour welfare but others are extending various bene fits to workers only
under compulsion. Several industries such as cotton, jute, textile,
engineering, sugar, cement, glass, chemical etc., have been brought under
legislative measures to give facili ties to the workers.
Without specifying the facili ties provided by different industries either
under legal compulsion or under union pressure, we can say that
employers in India with their profession al training background are
becoming more and more conscious about the workers whom they now
consider the most essential tool to gear up their organisational activities.
Employers who are still maintaining a negative attitude or an indifferent
attitude towards workers are surely to pay for their foolishness. Days have
changed. All over the world is the slogan for workers to unite. Moreover,
employers who fail to understand the potentialities of the labour force, the
fullest utilisation of which can bring miraculous results for the or-
ganisation, are sure to suffer.
4. Trade Unions:
Last but not the least impor tant agent for the welfare of workers is the
‘Work ers’ union. Conflicts between labour and capital existed since
industrialisation, they still exist and will continue to exist. The complete
harmony and amity between the two opposite -interest groups cannot be
achieved.
Not only in India but nowhere in the world has industrial peace been
ensured? Here is the role for the Trade Union to play in the matter of
bargaining. Various facilities of differ ent nature – economic, social, and
cultural – are made available to workers by Trade Unions.
The Indian Trade Unions have not yet been able to do much to ameliorate
the lot of their members. Their participation in this sphere has been main ly
through their association with the Labour Welfare Advisory Committees
constitu ted by the Governments. It is worthwhile to mention that trade
unions in the textile industry (Textile Labour Association) and the
Mazdoor Sabha have made provisions for various welfare facilities to the
workers.
Educational and cultural upliftments throug h trade unions have been made
possible. With the change in the attitude of the employers (many of whom
are governments themselves), the nature of trade unions in India – from
militancy to conciliatory – is now noticeable. Various welfare services are
now made available to the workers through Trade Unions after the trade
union leaders’ direct discussions and deliberations with the employers
across the table.
However, trade unions should take some measures for the welfare of
workers. They should come forward to assist the employers and the
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98 find out the needs of the workers and to bring them to the notice of the
employers should also come under the purview of trade union activities.
A modern Trade Union has to educate its members, organise for them
various inexpensive programmes and to act as a watch -dog of workers’
interests. Trade Unions have, as a matter of fact, a great role to play for the
welfare of the workers.
e) Social Service Institu tions:
Like the western countries, in India too, some social service organizations
have started taking interest in the field of labor welfare. Which social
service organizations are working in the field of labor welfare in various
industrial centers in Ind ia? Organizations like Bombay Social Service
League, SevasadanSanstha, Young Men's Christian Association, Rotary
Club, Lions Club are doing important work in the field of labor welfare,
conducting night classes in labor slums, conducting primary schools. T he
work of this organization is to arrange libraries and libraries.
Along with social service organizations in the country, various social
service organizations in the country can create the necessary environment
in the country through their work so that t he various responsibilities that
are imposed on the service providers in terms of labor welfare by various
laws should be fulfilled by the service providers.
7.6 LABOUR WELFARE OFFICER
The Factories Act, 1948 requires the appointment of a Labor Welfare
Officer in factories employing 500 or more workers. To implement the
schemes of labor welfare, to make efforts to maximize the benefits of
these schemes to the workers,
To understand the problems of the workers and try to solve them, because
this type of work is done through this officer, the working class remains
happy and industrial strife does not arise.
A) QUALIFICATION OF WELFARE OFFICER:
A welfare officer to be appointed should possess - (i) a university degree;
(ii) degree or diploma in social sciences, social work or social welfare
from any recognised institution; and (iii) adequate knowledge of the
language spoken by the majority of the workers in the area where the
factories, mines and plantations are situated.
The National Commission on Labour has stated that, “laws were made to
ensure that the managements appointed a person exclusively to look after
the welfare of their workers and help them in discharging their statutory
obligations in respect of welfare measures. Welfare Officers should form
part of the administration in order to discharge their responsibilities
effectively. Therefore, the eligibility of a Welfare Officer must be ensured
before his appointment. The Welfare Officer should not be called upon to
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99 The Committee on Labour Welfare, after going through the views
expressed by the State Governments, public sector undertakings, private
employers’ organisations, workers’ organisations and eminent persons in
the field of relations and on the role and status of welfare officer,
recommended that-
“The management should designate one of the existing officers to their
personnel department as welfare officer to fulfill the purpose of the law.
The management should ensure that only such officers of the personnel
department are designated to look after the welfare activities as are
properly qualified to hold these posts and have aptitude for welfare work.”
B) FUNCTIONS OF LABOUR WELFARE OFFICERS:
(a) Supervision of:
(i) Safety, health, and welfare programm es; housing, recreation, and
sanitation services;
(ii) Looking after the working of the joint committee;
(iii) Grant of leave with wages; and
(iv) Redressal of workers’ grievances.
(b) Counselling Workers on:
(i) Personal and family problems;
(ii) Adjustin g to work environment; and
(iii) Understanding rights and privileges.
(c) Advising the Management on Matters of:
(i) Formulating welfare policies;
(ii) Apprenticeship training programmes;
(iii) Meeting statutory obligations to workers;
(iv) Developing fringe benefits; and
(v) Workers’ education and use of communication media.
(d) Establishing Liaison with Workers to:
(i) Understand the various limitations under which they work;
(ii) Appreciate the need of harmonious industrial relations in the plant;
(iii) Interpret company policies to workers; and
(iv) Persuade workers to come to a settlement in the event of a dispute.
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100 (e) Establishing Liaison with the Management to:
(i) Appreciate the workers’ viewpoint on various matters;
(ii) Intervene on behalf of the workers in matters under the consideration
of the management;
(iii) Help different department heads to meet their obligations;
(iv) Maintain harmonious industrial relations in the plant; and
(v) Suggest measures for the promotion of the general well-being of
workers.
(f) Working with the Management and Workers to:
(i) Maintain harmonious industrial relations in the plant;
(ii) Arrange a prompt redressal of grievances and speedy settlement; and
(iii) Improve the productivity and productive efficiency of the enterprise.
(g) Working with the Public to:
(i) Secure a proper enforcement of the various provisions of the Acts as
applicable to the plant by establishing contact with factory inspectors,
medical officers and other inspectors;
(ii) To help workers to make use of community services.
It is obvious that the duties and functions entrusted to a Welfare Officer
range from assisting the management in policy formulation and
implementation to supervising welfare programme, establishing contacts
with workers and the public, solving workers’ problems and grievances.
The National Commission on Labour has stated, “the care of workers in
all matters affecting their well-being, both at the place of work and
outside, puts a special responsibility on the welfare officer. He should be a
‘maintenance engineer on human side.’ In many cases, he also handles
grievances and complaints of workers relating to terms and conditions of
service and domestic and other matters which lie in the domain of
personnel management. There is, thus, virtually, no demarcation between
personnel management functions and welfare functions.”
The Commission recommended that “in order to reduce the hierarchical
hiatus in the status of these two officers, there should be an interchange to
encourage profes sional functional mobility and to eliminate the functional
monopoly as well the hierarchical status problems.”
A Welfare Officer in India is a “multi -purpose personnel officer.” He is a
mainly concerned with welfare of the staff with a role of staff advise r or
specialist. He is expected to act as an adviser counsellor, mediator and a
liaison -man between the management and labour, i.e., to act as a
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101 The Central Model Rules, 1957, define the duties of welfare officers so
widely (Rule 7) as to comprise:
(1) Helping maintain harmonious relation between factory management
and workers.
(2) Redressal of workers’ grievances.
(3) Providing feedback to management regarding labours’ point of view
“to shape and formulate labour policies and to interpret these policies
to the workers.”
(4) To watch industrial relations and settle disputes by “persuasive
efforts.”
(5) To advise management on the implementation of health and safety
programmes.
(6) To promote productive efficiency.
(7) Amelioration of the workin g conditions and helping workers to adjust
and adapt themselves to the working environment, and
(8) Personnel counselling — advising workers on individual personal
problems, etc.
It will, thus, be observed that practically the whole gamut of personnel
manageme nt, except disciplinary action, recruitment, and promotion seem
to be comprised in this formulation. Based on these Central Model Rules
we give below the duties authority and responsibilities of Labour Welfare
Officer in India.In the United Kingdom, these duties are performed by
personnel officers. It may, therefore, be said that the government has
unconsciously attempted to develop the institution of personnel
management through the appointment of welfare officers in industries.
However, in the USA and the UK, the personnel manager is an integral
part of the top level management and is on a par with the manufacturing
and marketing managers. He is clearly defined “staff’ and not “line”
function. He is in touch with all personnel, enjoys the trust, confidence
and respect of all ranks, a position which enables him to advise both
management and labour.
In that sense the personnel manager is the most powerful bridge
connecting the management with labour. He is the central figure in any
productivity programme. Contrary to this, the personnel function in India
has not made rapid advances. This may be attributed to the impediments in
its way.
7.7 SUMMARY
Labour and their welfare are very legitimate concerns for any Government
of any country whether developed, undevel oped, underdevel oped or
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102 the status quo of the economic development of any country can be con-
ceived of without thinking about the workers of the country.
In India, the colonial economy had prevailed for about two centuries. With
the attainment of Independence, the planned economy as been started, one
of the objectives of which is the rapid industrialisation of the country. The
National Government could not remain a passive onlooker of what had
been happening in the industrial world.
The human resource in industrial organisations received attention of the
Government. The National Commission on Labour (1969) was formed and
its recommendations were based on the findings of the committee on
labour welfare. The Com mittee felt that the statutory welfare activities had
not been properly and adequately provided, except in units managed by
progressive employers.
The compliance with statutory welfare provisions had also been half-
hearted and inadequate. The Committee made a large number of
recommenda tions which included, amongst others, the provi sion for
crèches, canteens, periodical medical examination, creation of the General
Mines’ Welfare Fund, extension of the coverage of Plantations Labour
Act, extension of welfare benefits to contract labour, opening of more fair
price shops for work ers, setting up of consumers’ cooperative societies,
statutory and tripartite welfare boards etc.
The provisions in the various legislations for the welfar e of the workers
should be translated into action with all sincerity. The provisions in the
Factories Act, for instance, must be scrupulous ly implemented. A National
Museum of Industrial Health, Safety and Welfare is of great signifi cance.
A larger numbe r of labour welfare centres should be set up.
The Welfare Officers should have direct link with workers. Arrangements
should be made to collect information on occupa tional diseases and steps
should be taken to keep the workers free from these diseases or cure the
diseases without delay. More Welfare Funds should also be set up and,
finally, trade unions should play a role truly in the interest of the workers.
By depriving labour of their legitimate rights and their rights to live like
human beings, no state can aspire to be a Welfare State.
7.8 QUESTION S
1. Explain the concept of labor welfare.
2. Briefly explain the theory of labor welfare.
3. Explain the principles of labor welfare.
4. Briefly explain the agencies of labor welfare.
5. Write a note to Labo r Welfare Officer.
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103 7.9 REFERENCE S
1) Dast, G (1996) Bargaining Power, Wages and Employmet: Analysis of
Agricultural Labor Markets in India, Sage Publications and New
Delhi.
2) H. B. and T. N. Srinivasan, (Eds.), The Handbook of Development
Economics, North -Holland, New York
3) Hajela, P.D. (1998), Labor Restricting in India: A Critique of the New
Economic Policies, Commonwealth Publishers, New Delhi.
4) Jhabvala, R. And R. K. Subrahmanya (Eds.) (2000), The Unorganized
Sector: Works Security and Social Protection, Sage Publications, New
Delhi.
5) Lester, R. A. (1964), Economics of Labour, (2nd Edition), Macmillan,
New York.
6) McConnell, C. R. and S. L. Brue (1986), Contemporary Labor
Economics, McGraw Hill, New York.
7) Papola, T. 5., P. P. Ghosh and A. N. Sharma (Eds. (1993), Labor
Employment and Industrial Relations in India, B. R. Publishing
Corporation, New Delhi.



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104 8
SOCIAL SECURITY
Unit Structure:
8.0 Objectives
8.1 Introduction
8.2 Concept of Social Security
8.2.1 Social Security Definition
8.3 Social Assistance and Social Insurance
8.4 Social Security in India
8.5 Indian Labor Act
8.6 Summary
8.7 Questio ns
8.0 OBJECTIVES
 To explain the concept of social security.
 To Understand Social Assistance and Social Insurance.
 To Understand Social Security in India.
 To Understand Indian Labor Law.
8.1 INTRODUCTION
Social security is mentioned in ancient literature. Social security i s more
important concept of labour economics. Concept of social security and its
evolution, difference between social assistance and social insurance,
government policy regarding social security can be understood.
The concept of social se curity is based o n ideas of human dignity and
social justice. The underlying idea behind social security measures is that
a citizen who has contributed or is likely to con tribute to his/her country’s
welfare should be given protection against certain haza rds. Uncertain ties
on account of unemployment, illness, disability, death and old age are
experienced by all the people across the world. These inevitable facets of
life are said to be threats to one’s economic security. In a society, the
livelihood of an individual is made up of very diverse elements which
taken together constitute the physical, social, cultural, and political
universe where he lives. Whenever an individual who lives in a society
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105 minimum livelihood, he need s some help from the society, may it be the
family, or any government or private institutions. The term social
security” refers to any programme that aims to help individuals faced with
such situations. Such people include the poor, the elderly, anybody w ho is
physically disabled, and the mentally challenged.
8.2 CONCEPT OF SOCIAL SECURITY
Social security is a key feature of modern industrial society. Industrial
development and urbanization have created a very large class of laborers.
This class is consid ered as an important element in the production system.
As the organizer of production and the laborer are human beings, it is
important to look after their interests. When examining the historical
background and cont ext of social security in India, it is fo und that some
provisions have been made in Kautilya's Arthashastra, Shukrasmriti, etc.,
and the references are also provided to foreigners. From this the ancient
Indian social system was created in such a way that t he social security of
the laborers and the common man was easily achieved.
The term social security has been defined differently by authorities and,
thus, there is no commonly accepted definition of the term. There are
mainly two streams of thought on this issue, one represented by the ILO
that li mits the scope of social security to maintenance of one’s income
against loss or diminu tion. Another view perceives social security in a
broader sense; in this sense, it is a set of policies and institutions desig ned
to enable a person to attainand maintai n a decent standard of life. This is
described as a preventive or promotional form of social security.
8.2.1 DEFINITIONS
Social security is defined as the security that the society furnishes through
appropriate o rganizations against certain risks to whic h its members are
exposed.
In the historical perspective, the term social security was coined for the
first time when the United States Social Security Act, 1935, came into
existence. Subsequently, the term became popular in other western nations
of the wo rld.
The ILO has defined social security as ‘the surety that society furnishes,
through appropriate organization, against certain risks to which the
members are exposed. These risks are essentially contin gencies a gainst
which the individuals of small mean s and meagre resources cannot
effectively provide by their own ability or pre -sight or even in private
combination with their fellow workers —these risks being sickness,
maternity, invalidity, old age, and death. It is the characteristics of these
contingen cies that they imperil the ability of the working class to support
itself and it is dependent in health and decency’.
According to Lexicon Universal Encyclopedia, the term social security has
been defined as “cons isting of public programmes intended to pr otect
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106 illness, unemployment, or death. The term sometimes is also used to
include a broad system of support for all those who, for whateve r reasons,
are unable to maintain themselve s”.
According to Lord Beveridge, “social security, is an attack on five giants’
viz., want, disease, ignorance, squalor and idleness.” This concept is
related to social justice and equality. ILO defines social sec urity as, “the
security that society furnis hes, through appropriate organisation against
certain risks to which its members are exposed. Social security is designed
to prevent and cure disease, to support when people are unable to earn and
restore to gainf ul employment.”
The International Labour Or ganisation (ILO) defines Social Security as
the security that society provides through appropriate organisation
against certain risks to which its members are perennially exposed”. These
risks are essentially con tingencies against which an individual cannot
effectively provide by his own ability or foresight alone or even in private
combination with his fellows.
In India the National Commission on Labour has endorsed the ILO
definition of Social Security and obser ved; “Social Security envisages that
the members of a community should be protected by collective action
against social risks causing undue hardship and privatization to individuals
whose prime resource can seldom be adequate to meet that”.
EVOLUTION OF SO CIAL SECURITY :
In the post -industrial revolution, the lives of individuals in all soci eties
have become more complex and problematic than before. In modern
times, the number of sudden crises faced by individuals is increasing. This
is what started the soci al security program in western countries. In 1935,
the term Social Security was coined in the United States after it was first
enacted into law for experimental office use. Although social security
programs were started in pre -independence India, the progr am was limited
in nature. This program gained momentum in the post -independence
period .
The seeds of social security can be found in ancient Indian scriptures.
Manusmriti , Sukraniti , Kautilya's Arthashastra etc. Social security is
mentioned in ancient lite rature. It is mentioned that the king and the
government should provide social assistance t o the elderly, widows, and
orphans, blind and disabled people. In earlier times, the public was
benefited by such assistance. He used to get royal shelter. Welfare s tate
was established in India after independence. Accordingly, many welfare
works were done in the field of social security. Recent insecurities are
more pronounced than earlier social insecurities. In the present situation,
due to the influence of industr ial development, western education,
economic self -reliance of women, individualistic and ma terialistic
attitudes, social movements, modern laws, globalization, privatization,
etc., labor has become socially vulnerable. Social insecurity is increasing
due t o lack of exchange of ideas and division of responsibilities due to the
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107 systems. Changes in labor laws due to globalization, privatization have
made workers more vulnerable. At the g lobal level, the situation is
changing at a fast pace everywhere today. The nature and inte nsity of
insecurity is increasing. So social security has become a mandatory part. It
is the duty of the government to help the laborers in times of crisis through
various government schemes. Not only this, the economic and social
progress of the country i s measured in terms of the social security system.
That is why social security is considered a major feature of modern
society. In a welfare state, the government is responsible for providing
social security to the citizens of the country, mainly the poor and the
weaker sections.
MAIN CHARACTERISTICS OF SOCIAL SECURITY :
(1) Social Security Schemes are providing social assistance and social
insurance to employees who have to face challenges of life without
regular earning due to some contingencies in their lif e.
(2) These Schemes are implemented by enactments of law of the country.
(3) They generally are relief providers to employees who are exposed to
the risks of economic and so cial security. This protection is provided
to them by members of the society of which he i s a part.
(4) These Schemes have a broad perspective. They not only provide
immediate relief to the employees who have suffered on account of
contingencies, but also prov ide psychological security to oth ers who
may face the same problems in times to come.
THE IMPORTANCE OF SOCIAL SECURITY :
(a) Social Security is the main instrument of bringing about social and
economic justice and equality in the society.
(b) Social Security is a imed at protecting employees in the event of
contingencies. This support makes the employ ees feel psychologi cally
secured. This enhances their ability to work.
(c) Money spent on social security is the best investment which yields
good harvest. The workforce maintenance is very essential not only
for the organization but also for the country at l arge.
(d) In a welfare state, social security is an important part of public policy.
In countries where social security is not given adequate consideration
in public polic y, the government remains unsuc cessful in maintaining
equality and justice.
MEASURES OF SOCIAL SECURITY :
Ensuring social security measures for the citizens of a country is the
fundamental responsibility of the government. India being a welfare state,
the Constitution of India has described it as a democratic and socialist
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108 The claus es that define fundamental rights and for mulate the directive
principles of State policy in our Constitution leave no doubt about the
concern and commitment of the gov ernment to the rights of citizens to
enjoy social security. Ours is a democratic country based on the premise
of equality and accountability.
We are also a so cialist state which accepts the responsibility for providing
and ensuring Social Security to all its citizens without any discrimination.
Broadly speaking, the idea of Social Security i s that, the Centre and the
State government shall make itself responsible for ensuring a minimum
standard of material welfare to all its citizens on a basis wide enoug h to
cover all contingencies of life. There is perhaps no country in the world
which does not take care of the Social Security measures. But the types of
Social Security measures provided by the various governments dif fer from
country to coun try.
8.3 SOCI AL ASSISTANCE AND SOCIAL INSURANCE
SOCIAL INSURANCE
The use of compulsory insurance as a mechanism to provide medical
benefits and cash benefits in the case of sickness, disability, widowhood,
and old age became acceptable to legis lative bodies fearful of accepting
extended state intervention that would require higher taxes to finance
pensions or other benefits. In societies where self -help
by voluntary insurance had been widely supported, the further step of
compulsory insurance was seen as a means of making workers “good” by
legislation. Because the schemes were financed by contribut ions levied on
both employers and employees with, in some cases, modest state
subsidies, unacceptable levels of national taxation were avoided; indeed,
as such schemes reduced the need for social assi stance or poor relief , the
burdens on local taxation were reduced.
Compulsory insurance contributions are essentially a tax on earned
income. Employers try —and probably succeed in most circumsta nces—to
shift the burden of their share of the contribution either to consumers in
higher prices or more probably, in the long run, to their employees by
paying them less in cash. Thus, employers’ contributions are in most cases
not paid at the expense of profits. However, the fact that the worker is told
that the employer has to pay a proporti on of the total contribution helps to
make such schemes acceptable to employees, quite apart from the clearly
defined benefits that flow from paying their share. Comp ared with the
complexities of an income tax , a social insurance tax is a simple one to
collect. But if the level of contributions is h igh, it creates incentives for
workers to become self -employed in what has come to be call ed the
“black,” or “underground,” economy and for employers to avoid
contribution liability by employing contract labour rather than full -time
staff.
In terms of meeting social needs or reducing poverty the social insurance
method of provision has a number of disadvantages. Over the years many
countries have tried to find means of countering these. First, munotes.in

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109 the analogy with private insurance, which made such schemes politically
salable, carries with it the social disadvantage that benefits sho uld be paid
to those who have contributed. Thus such schemes cannot provide benefits
to pe rsons who have never worked, for example, persons who have
become disabled before reaching the age to enter employment, those
incurring risks very soon after entering employment, and women (or men)
who do not enter the labour force because of family responsibilities.
Second, the expectation that benefits should be related to the amount paid
in discrimi nates against individuals, usually women, who because of
family responsibilities have fewe r years in paid employment. Moreover,
workers with dependent spouses and children have greater needs than
single persons, though the assumption of marital responsibil ities—or the
converse assumption of marital dependency —is not strictly speaking an
insurab le risk. Third, where contributions are related to earnings, the
benefit will be low for low earners, thus failing to protect them from
poverty. The alternative approach, which some countries have adopted, of
flat-rate contributions and flat -rate benefits can impose heavy burdens on
low earne rs with family responsibilities. Fourth, it is difficult to bring the
self-employed and th ose working for small employers (e.g., agriculture or
domestic work) into such a scheme.
Over the years many countries that started with a purist insurance
approach h ave modified their schemes to try to overcome many of these
disadvantages. For example, ex tra benefits have been provided to persons
with dependents. Contributions have been credited to persons outside the
labour force for reasons of family responsibility, sickness, or disability.
Minimum benefits have been introduced above those strictly warra nted by
low earnings -related contributions, or the benefit formula has been
weighted in favour of lower earners. And some countries have made
contributions earnings -related or integrated them with income tax while
still paying flat -rate benefits.
Social insurance is one of the devices to prevent an individual from falling
to the depths of poverty and t o help him in times of emergencies.
Insurance involves the setting aside of sums of money in order to provide
compensation against loss, resulting from particular emergencies.
The elimination of the risk of the individual is the basic idea of insurance.
It is primarily the effort of the social group, in place of the individual
effort, to lessen the incidence of loss on the individual.
social insurance as “a co-operative device, which aims at granting
adequate benefits to the insured on the compulsory basis, in times of
unemployment, sickness and other emergencies, with a view to ensure a
minimum standard of living, out of a fund created out of the tripartite
contributions of the workers, employers and the State, and without any
means test, and as a matter of right of the insured” .
In the words of Sir William Beveridge, social insurance can be des cribed
as the giving in return for contribution, benefits upto subsistence level, as
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110 FEAT URES OF SOCIAL INSURANCE:
(1) It involves the establishment of a common monetary fund out of
which all the benefits in cash or kind are paid, and which is generally
built up of the contribution of the workers, employers and the State.
(2) The contribution of the w orkers is merely nominal and is kept at a low
level so as not to exceed their paying capac ity, whereas the employers
and the State provide the major portion of the finances. This means
that there is no close correspondence between workers’ own
contribution , and the benefits granted to them.
(3) Benefits are granted as a matter of right and without any means test,
so as not to touch the beneficiaries’ sense of self -respect.
(4) Social insurance is now provided on a compulsory basis so that its
benefits might reach a ll the needy persons of the society who are
sought to be covered.
(5) The benefits are kept wi thin fixed limits, so as to ensure the
maintenance of a minimum standard of living of the beneficiaries
during the period of partial or total loss of income.
(6) It has t o be borne in mind that social insurance alleviates the
sufferings of the individual from the particular event, but, it does not
prevent it. As a matter of fact, when prevention is impossible, or
nearly so, that insurance has its greatest appeal.
CHARACTER ISTICS OF SOCIAL INSURANCE :
1. A common fund is established by employer, State and the worke rs out
of which all the benefits in cash or kind are paid.
2. The contribution of the workers is nominal which generally does not
exceed their paying capacity, whereas th e employers and the State
provide the major portion of the finances.
3. The object of the be nefits is to ensure the maintenance of a minimum
standard of living to the beneficiaries during the period of partial or
total loss of income.
4. Benefits are granted as a matter of right and without any means test,
thus, they do not touch the self -respect of the beneficiaries.
5. It is provided on compulsory basis so that its benefit might reach to all
the needy persons of the society who are sought to be covered by the
scheme.
6. Lastly, social insurance reduces the sufferings arising out of the
contingencies face d by individual contingencies which he cannot
prevent.
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111 SOCIAL ASSISTANCE
Social assistance refers to the assistance rendered by the society to the
poor and needy pers ons voluntarily without placing any obligation on
them to make any contribution to be ent itled to relief such as workmen’s
compensation, maternity benefit and old age pension etc. Thus, one may
say that a social assistance scheme provides benefits for pers ons of small
means granted as of right in amount sufficient to meet a minimum
standard of need and financed from taxation.
Social assistance represents the unilateral obligations of the community
towards its dependent group. It is provided by the society o r
the government to the poor and needy individual.
The principal feature of social assistance are
(1) The whole cost of the Programme is met by the State and local units of
Government
(2) Benefits are paid as of legal right in prescribed categories of need
(3) In assessing need, a person’s other income and resources are taken into
account certain resources such as a reasonable level of personal
savings are disregarded and
(4) The benefit grant is designed to bring a person’s total income upto a
community determin ed maximum taking into account other factors
such as family size and unavoidable fixed obligations such as rent
grants are not related to applicant’s previous earnings or customary
standard of living.
SOCIAL INSURANCE AND SOCIAL ASSISTANCE :
The differen ce between social insurance and social assistance are as
follows:
Social assistance is purely a government affair while social insurance is
partly financed by the Stat e.Social assistance is given gratis while social
insurance is granted to those persons w ho pay a contribution.
Besides, a social insurance does not insist upon a means test upon a means
test and benefits are granted without it while social assistance is gr anted
only if certain conditions prescribed by the Government are fulfilled.
India is a Welfare State as envisaged in her constitution. Article 41 of the
Indian Constitution lays down, “The State shall within the limits of its
economic capacity and develop ment make effective provision securing the
right to work, to education and to public ass istance in case of
unemployment, old age, sickness, and disablement and other cases of
unserved wants.”
Thus, social security constitutes an important step towards the goal of
Welfare State, by improving living and working conditions and affording
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112 Social security benefits are provided in India through legislations.
Workmen’s Compensation Act, 1923 enforces the emplo yer to provide
compensation to a workman for any personal injury caused by an accident,
for loss of earnings etc. The Employees’ State Insurance Act, 1948
enforces the employers to provide sickness benefits, maternity benefit to
women employees, disablemen t benefit, dependent’s benefit, funeral
benefit and medical benefits.
The Employees Prov ident Fund and Miscellaneous Provisions Act, 1952
enforces the employer to provide provident fund, deposit -linked insurance
etc. The Maternity Benefit Act, 1961 provide s for medical benefits,
maternity leave etc. The Payment of Gratuity Act, 1952 provides for the
payment of gratuity at the time of retirement.
Social security legislations in India suffer from the defects like
duplication. For example. Employees’ State Ins urance Act and Maternity
Benefit Act provide for maternity benefits. In addition, differ ent
administrative authorities implement the law, resulting from overlapping.
Hence, the Study Group (1957 -58) appointed by the Government of India
suggested an integra ted social security scheme in India.
This integrated social security scheme should provi de for medical care,
insurance against sickness, maternity benefits unemployment insurance,
employment injury, and old age pension. This scheme should be enforced
by a single agency in order to avoid overlapping and duplication. India is a
welfare state and social security is an essential component of government
policy.
Social insurance is also somewhat different from social assistance. A
social assistance scheme is a de vice according to which benefits are given
as a legal right to workers, fulfilling prescr ibed conditions, by the State out
of its own resources. Thus, social assistance is supplemental rather than
substitutive to social insurance.
Both go side by side. But the difference is that social assistance is purely a
Government affair s, while social ins urance is only partly financed by the
State. Social insurance is granted to those who pay a contribution, whereas
social assistance is given gratis.
Social insurance does not insist upon a means test and benefits are granted
without it, whereas social assi stance is given only if certain prescribed
conditions are satisfied. Then, the word insurance, in the term ‘Social
insurance’, implies the preservation of the contrib utory principle which is
absent in the assistance. Similarly, we can say that the word soc ial makes
a difference from commercial insurance.
8.4 SOCIAL SECURITY MEASURES IN INDIA
Social security measures have a dual importance for every developing
country. First, social security is an important step towards the goal of a
welfare state. In which people's living and working conditions are
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113 strengthen the industrialization process. It enables work ers to become
more efficient and reduces wastage caused by industrial disputes, lack of
social security hinders production and prevents the formation of a stable
and efficient labor force. So social security is a wise investment that pays
good dividends in the long run. In India, the central government has taken
the following social security me asures to protect industrial workers.
1. Workmen's Compensation Act, 1923 :
The first step towards social insurance was taken by the Government of
India in 1923 by p assing the Workmen's Compensation Act. This Act
imposes an obligation on employers to comp ensate workers for accidents
occurring in the course of employment, resulting in death or total or partial
disability. This Act applies to all categories of workers e mployed for the
purposes of the employer's trade or business. If the injury does not cause
death. So due to worker's mistake e.g. willful disobedience of an order,
etc. results in death. No compensation is payable in such cases.
Compensation is payable in case of workers suffering from occupational
diseases.
2. Employees' State Insurance Act, 1 94:
The Employees' State Insurance Act of 1948 is another step towards social
insurance in India. The Act provides certain benefits to employees in case
of sickness, maternity and employment injury and applies to all factories
which are operated by Vizier and do not employ more than 10 persons but
employ more than 20 persons. The Act does not apply to seasonal
factories and workers whose wages exceed Rs. It includes w orkers not
exceeding 4000/ -. This Act is administered by the Employees/State
Insurance Cor poration.
3. Coal Mines Bonus Scheme and Provident Fund Act, 1948 :
This Act is applicable to all coal mines in the country except Jammu and
Kashmir. There are four C oal Mines Bonus Schemes in operation in states
having coal mines. These schemes encourage workers to have more
regular attendance and thereby provide a stable labor force in the coal
mining industry. To reduce absenteeism a quarterly bonus is provided for
those workers who attend for a certain number of days in a quarter and do
not participate in illegal strikes. The scheme is applicable to all coal mine
employees whose monthly basic income does not exceed Rs.730.
4. The Dock Workers (Regulation and Employm ent) Act, 1948 :
The safety, health and welfare of dock workers is covered by the Indian
Dock Workers Regulations, 1948. This Act is in operation in the major
ports of Mumbai, Calcutta, Madras, Visakhapatnam, Cochin, Mormugaon
and Kandla. Workers are broad ly divided into monthly and reserve
workers. Monthly workers are regular workers and enjoy security of
employment. Other categories of workers are registered and appointed by
the Dock Labor Board. Dock workers are given at least eight paid holidays
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114 5. The Assam Tea Plantation Provident Fund Act, 1955:
The Act covers all categories of te a plantation workers in Assam.
Employee contribution is 8% of salary with matching contribution by
employers. In 1963, a group insurance scheme was introduced for
provident fund members. Under the plan, blackout policy was taken by the
board for all. Male members in Provident Fund aged 18 -40 get Rs. 500
women members Rs. 250 and employees Rs. 1000 are included. Insurance
is deducted from the provident fund of the membe rs by the respective
board. Under the National Agreement, since 1956 every worker employed
on a plantation in Assam was paid Rs. 135 is payable as bonus. Pension
Fund Scheme was started in 1967. The scheme provides pension benefits
to plantation workers in addition to provident fund. Pension is paid out of
uncollected interest amount of provide nt fund.
6. The Simmons Provident Fund Act, 1966:
The problems of seamen working on ships for short periods are of a
special nature and hence the Seamen's Provident F und Act was passed in
1966. Under the Merchant Shipping Act, 1958, every seaman working or
employed as a member of a ship's crew, but certain grades of officers and
other employees were covered under the scheme. Every employer covered
under the Act is requ ired to contribute to the fund 6% of the wages paid
for the period July, 1964 to July, 196 8 and thereafter 8% in respect of each
seaman employed by him.
7. Maternity Benefit Act, 1961:
To resolve the differences regarding maternity provision under the vari ous
Maternity Benefit Acts of the Central and State Governments, the Central
Government pa ssed a new Act called the Maternity Benefit Act, 1961.
This Act is applicable to those establishments which not applicable under
the Employees State Insurance Act, 19 95 amendments to the Act provided
six weeks leave with pay to female employees in case of medical
termination of pregnancy, two weeks leave with pay to female employees
undergoing tuberculosis surgery and a maximum of one month leave with
pay in case of il lness arising from medical termination of pregnancy or
tubectomy.
8. Employees Provident Fund and Miscellaneous Provisions Act,
1952:
The Act provides for establishment of Compulsory Provident Fund for
employees in factories and other establishments. The purpose of this Act is
to provide social security to his dependents in case of death after
retirement or early. The rate of contribution payable by the employer and
employee under the Act is 8.33% of wages. The Central Government has
revised this rate to 0 % in case of establishments employing 50 or more
persons. Under the scheme, employers are required to maintain a
contribution card for each employee and these cards are subject to
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115 interest o n the amount deposited in the fund. In case of death of a member,
the amount in his accoun t has to be paid to his nominee,
The scheme provides financial assistance to members by allowing them to
make partial withdrawals on account of sickness and other rea sons and
provides them with funds to meet their social obligations such as marriage
of sis ter brother daughter/son or higher education of a child or
construction of a house,
9. Employees' Deposit Linked Insurance Scheme, 1976 :
The Workers' Provident Fund Laws (Amendment) Ordinance 1976 was
enacted to provide insurance cover to the members of t he Coal Mines
Provident Fund and to introduce a new social security scheme known as
the Deposit -Linked Insurance Scheme without employees' provident fund.
The Ordinan ce provides that in the event of the death of an employee who
subscribed to a provident fu nd covered under the Employees Provident
Fund Act, 1952, the employee entitled to receive the money of his
provident fund shall also be entitled to an additional paym ent equal to the
average balance. Employer and Central Government i.e. have to contribute
at the rate of 0.5% and 0.25% of the employee's monthly wage bill
respectively along with the provident fund of the deceased in the last
twelve months. The Government also introduced a Pension Scheme for
Provident Fund Members Act.
10. Employees Family Pen sion Scheme, 1995 :
The Employees' Provident Fund Act, 1952 was amended to provide for
introduction of Employees' Family Pension Scheme in 1971. The scheme
provides l ong-term protection to the family of a worker who dies
prematurely in service. It is manda torily applicable to all members of the
Employees Provident Fund Scheme. Family pension, life insurance
benefits and withdrawal benefits including retirement are avai lable under
the scheme. In 1995, the scheme was further amended and renamed as
"Employee P ension Scheme 1995". The new scheme aims to provide
financial support to the member and his family in old age. 8.33% of
employers' contribution is credited to the pen sion fund. .16 per cent.The
scheme is compulsory for all persons who are members of the Fa mily
Pension Scheme, 1971 and for all those who have become members of the
Employees' Provident Fund from 16 November 1995, the date of
implementation of the new sche me.
11. Payment of Gratuity Act 1972 :
This Act is applicable throughout the country. It applies to every factory,
mine, oil field, port and railway company shop or establishment and other
establishments in the State employing ten or more persons. The Act covers
all employees employed to perform any skilled, semi -skilled or unskilled,
manual, supervisory technical or clerical work. This Act does not apply to
a person holding office under the Central or State Government and
governed by any other law or by a ny rule providing for the payment of
matuity. The Act was amended in 1994 to remove the wa ge ceiling of munotes.in

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116 3500/ -. An employee covered under this Act is entitled to gratuity on his
retirement, resignation, death, or termination of employment. An
employee shou ld have completed more than 5 years of uninterrupted
service barring death or disability to be eligible for gratuity. The amount
of maturity payable to the employee is should not exceed Rs. 1000000/ -.
An employee has the right to obtain better terms of gra tuity under any
award, contract or agreement with the employer available under this Act.
All the above schemes are included in the social security component.
8.5 INDIAN LABOR REGULATORY LAWS
1. Trade Union Act, 1926 :
The Indian Trade Union Act of 1926 de fines a trade union as "Any
combination, whether temporary or permanent, primarily works an d any
trade or business designed for the purpose of regulating or imposing
restrictive conditions on relations between employers and workers and any
federation of tw o or more trade unions. The objectives of this Act are: to
provide for the registration of trade unions, to give legal and corporate
status to registered trade unions and to provide immunity to its officers
and members from civil and criminal liability in respect of legitimate trade
union activity,
2. Industrial Disputes Act, 1947:
According to Section 2 (c) of the Industrial Disputes Act, 1947, 'Industrial
dispute means any dispute or difference between an employer and an
employer, or between an employer a nd a workman or between a workman
and a workman relating to the terms of employment or non -employment
or to the conditions of labor of any person . Section 2 (a) of the Industrial
Disputes Act, 1947 has been amended to empower the individual
workman to rais e industrial disputes relating to his removal from service,
dismissal.
3. The Industrial Employment (Standing Orders) Act, 1946 :
The purpose of this Act is to require employers in industrial
establishments to define with sufficient precision the condition s of
employment under them and to inform the workers employed by them of
those conditions . The Act was enacted to bring about uniformity in the
terms and conditions of employment, to reduce industrial conflicts, to
promote better relations between employer s and employees and to give
statutory sanctity and significance to standing orders. The A ct is
applicable to the whole of India and to every industrial establishment
employing 100 or more workers.
4. Social Security Act :
In India the following social sec urity measures were taken by the Central
Government to protect industrial workers: Workme n's Compensation Act,
1923: Employees' State Insurance Act, 1948: Coal Mines Bonus Scheme
and Provident Fund Act, 1948: Dock Workers (Regulation and munotes.in

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117 Employment) Act, 1 948 : Employment of Workers Act 1951: Employees
Provident Fund Act 1952: Assam Tea Planta tion Act 1955 Maternity
Benefit Act 1961: Family Pension Scheme 1964: Siemens Provident Fund
Act 1964: Employees Provident Fund Act 1961: Old Age Pension Scheme
1981: Payment of Gratuity Act 1972 and Employees' Deposit Linked
Insurance Scheme 1976: Importa nt laws under this category are briefly
explained below.
5. Workmen's Compensation Act, 1923 :
This Act obligates employers to compensate workers for accidents
occurri ng during employment. Compensation is payable in case of death
or total disability or par tial disability of workers. This Act applies to all
categories of workers employed for the purposes of the employer's trade or
business. If the injury does not result in death, no compensation is payable
if it is caused by the fault of the worker eg under the influence of drink,
drugs, willful disobedience of an order, etc. Compensation is payable in
case of worker suffering from occupational disease. Compensation is
payable for death, permanent total disability, partial disability and
temporary disability. This Act is administered by State Governments
through Commissioners for Workmen's Compensation. This Act does not
apply in areas where the Employees' State Insurance Act is in force.
6. The Employees' State Insurance Act, 1948 :
Another step towards socia l insurance in India is the Employees' State
Insurance Act, 1948. The Act provides certain benefits to employees in
case of sickness, maternity and occupational injury and applies to all
factories operated by electricity and employing more than 10 persons or
factories without electricity but employing more than 20 persons. This Act
does not apply to seasonal factories. This Act is administered by the
Employees/State Ins urance Corporation.The insurance scheme is financed
by the Employees' State Insurance Fun d which is raised through
contributions from employers and employees and through grants,
donations, and gifts from the Central and State Governments, local
authorities or any other person or institution. Employers contribute four
percent of covered employee pay, and employees contribute 1.5 percent of
their wages. State governments contribute at least 12.5 per cent towards
the cost of medical care. This Kaya provides tw o types of benefits in the
form of medical care and cash.
7. The Dock Workers (Regulation and Employment) Act, 1948 :
The safety, health and welfare of dock workers is covered by the Indian
Dock Workers Regulations, 1948. This Act Mumbai, Calcutta, Madras,
Visakhapatnam. Operating in major ports of Cochin, Morgaon and
Kandla. Workers are divide d into monthly and reserve workers. Monthly
workers are regular workers and enjoy security of employment. Workers
etc.
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118 8. Maternity Benefit Act, 1961:
To resolve the differences regarding maternity provision under various
Maternity Benefit Acts of Central and State Governments, the Center
passed a new Act called Maternity Benefit Act, 1961. This Act is
applicable to establishments which are not covered by the Employee s'
State Insurance Act. A 1995 amendment to the Act provided six weeks'
leave with pay to pregnant female employees, two weeks' leave with pay
to female employees undergoing tubectomy operations, and a maximum of
one month's leave with pay in case of illne ss caused by medical
termination of pregnancy or tubectomy. The Maternity Benefit
(Amendme nt) Act, 1995 came into force on 01 February 1996. This Act
provides for payment of cash maternity benefit for a certain period. A
female employee is eligible for mat ernity benefits if she has worked for at
least 160 days in the twelve months preceding her expected date of
delivery.
9. Employees Provident Fund and Miscellaneous Provisions
Act, 1952 :
The Act provides for establishment of Compulsory Providen t Fund for
employees in factories and other establishments. The purpose of this act is
to provide social security to his dependents in case of retirement or early
death. The rate of contribution payable by employers and employees under
the Act is 8.33% of wages. The central government has revised this rate to
10% in case of establishments emplo ying 50 or more persons. Under the
scheme employers are required to maintain a contribution card for each
employee and these cards are subject to inspection by the EP F
Commissioner. Every employee is entitled to interest on the amount
deposited in the fund . In case of death of a member, the amount in his
account has to be paid to his heirs,
10. Employee Deposit Linked Insurance Scheme , 1976 :
The Workers' Provident Fun d Laws (Amendment) Ordinance 1976 was
enacted to provide insurance cover to the members of the Coal Mines
Provident Fund and to introduce a new social security scheme known as
the Deposit -Linked Insurance Scheme without employees' provident fund.
The Ordin ance provides that in case of death of an employee who has
subscribed to a provident fund covered under the Employees Provident
Fund Act, 1952, the employee entitled to receive his provident fund shall
also be entitled to an additional payment equal to the average balance.
Employer and Central Government i.e. employees are required to
contribut e at the rate of 0.5% and 0.25% respectively of the monthly wage
bill of the employees along with the provident fund of the deceased in the
last twelve months. The go vernment also introduced a pension scheme for
the benefit of provident fund members.

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119 11. Employees' Family Pension Scheme, 1995 :
The Employees' Provident Fund Act, 1952 was amended in 1971 to
introduce the Employees' Family Pension Scheme. The scheme pr ovides
long-term protection to the family of a worker who dies prematurely in
service. It is mandatorily applicable to all members of the Employees
Provident Fund Scheme. Withdrawal benefits including family pension,
life insurance benefits and retirement are available under this scheme. The
scheme was further amended in 1995 and renamed as Emp loyees’ Pension
Scheme 1995, the new scheme aims to provide financial assistance to the
member and his family in old age. The central government's contribution
to the wages of employees is 1.16 percent. The scheme is compulsory for
all persons who are memb ers of the Family Pension Scheme, 1971 and for
all those who have become members of the Employees' Provident Fund
from November 16, 1995, the date of implementation o f the new scheme.
12. Payment of Gratuity Act, 1972 :
This Act is applicable to the entire country. It applies to every factory,
mine, oil field, port and railway company shop establishment and other
establishment in the State employing ten or more persons .
The Act covers all employees employed to perform any skilled, semi -
skilled or unskilled, manual, supervisory technical or clerical work. This
Act does not apply to a person holding office under the Central or State
Government and who is governed by any r ules provided for payment of
gratuity by any other law. The Act was amended in 1994 to rem ove the
wage ceiling of 3500/ -. An employee covered under this Act on his
retirement. Entitled to maturity on termination of employment on
resignation, death or berea vement. An employee should have completed
more than 5 years of continuous service excludin g death and child to be
eligible for gratuity. The amount of maturity payable to the employee is
should not exceed Rs 10, 00,000/.
An employee has the right to receiv e better terms of accrual under any
award, contract or agreement with the employer availab le under this Act.
8.5.1 PROTECTIVE LABOR LAWS IN INDIA :
Protective laws in India include Factories Act 1948, Mines Act 1952, and
Labor Act 1951. Motor Transport Labo r Act 1961. Important Acts like
Shops and Establishments Act 1946, Payment of Wages Act 1 936,
Minimum Wages Act 1948. Child Labor (Prevention and Regulation) Act
1986. And the Contract Labor (Regulation and Abolition) Act, 1970 are
briefly discussed here.
1. Factories Act, 1948 :
The Factories Act of 1948 applies to all factories as defined in the Act.
Section 5 of the Factories Act deals with labor welfare. Sections 11 to 20
of the Act deal with the health of workers. Sections 21 to 41 deal with
safety of workers and Sections 42 to 50 deal with welfare of workers. The munotes.in

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Industrial and Labour
Economics - II
120 main objectives of the Ac t are to protect factory workers from health
hazards, ensure their safety, improve physical working conditions,
regulate working hours and provide employment, faciliti es and working
environment to young persons and women.
2. Payment of Wages Act, 1936 :
It is made in prescribed manner to ensure regularity of wages, to prevent
arbitrary deductions, to restrict the employer's right to impose fines and to
provide remedies to workers. This Act prescribes wage periods to
employers at the end of which they are li able to pay wages. The law
makes employers legally liable to pay wages in a prescribed manner. It
provides an authorized deduction and restricts the employers' right t o any
other deduction. The Act provides for an inspector to prevent and take
action again st employers for violating the provisions of the Act and
denying workers their dues.
3. Minimum Wages Act, 1948 :
Statutory minimum wages are fixed under the Minimum W ages Act, 1948.
The Act has been approved by the Government of India pursuant to the
॥LO Convention passed in 1921. It is the employer's obligation to pay
wages after the minimum rates of wages have been fixed in accordance
with the procedure prescribed by law in accordance with the procedure
prescribed by the Schedule to the Act applicable to the employment
covered by this Act and the employer's obligation to pay wages.
4. Child Labor (Prevention and Regulation) Act, 1986 :
The act allowed children to work in many occupations like lifting
cylinders, cleaning ash pits, building construction, ca tering, carpet
weaving, cement production, textile printing, dyeing and weaving,
matchmaking, explosives, firecrackers, cutting, splitting and cleaning
wool.
The Gove rnment of India had established 124 special schools for out -of-
work children and under th e National Policy on Child Labor 1987 had
undertaken child labor administration projects in several industries where
child labor was prevalent. In 1990, a Child Labor Cell was established in
the National Labor Organization to study child labour.
5. The Con tract Labor (Regulation and Abolition) Act, 1970 :
Working conditions, health and safety for the welfare of contract workers.
The Act provides for regulation of wages and other facilities. The
contractor shall provide canteen, lavatories, toilets, urinals, drinking water,
and first aid kits for the use of contract workers.
If the contractor fails to provide facilities or pay wages, the principal
employer shall be respon sible for providing facilities or wages to the
contract workers and the principal employe r may recover such expenses
from the contractor. The purpose of this Act is to prohibit the employment
of contract labor and, where prohibition is not possible, it see ks to improve munotes.in

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Social Security
121 the working conditions of the contract labor. The Act applies to every
establishment employing twenty or more workers as contract workers and
to every contractor employing twenty or more workers. The Act
empowers the Central and State Governm ents to apply the provisions of
the Act to any establishment or contractor employing less than twenty
workers.
The central government has banned daily contract labor in coal, iron ore,
limestone, dolomite, manganese, chromite, magnesite, gypsum, mica and
combustible earth mines, construction industry and railways. Central Food
Corporation godo wns and contract workers in Badra are in recession.
8.6 SUMMARY
This chapter reviews social security, the concept of social security and its
evolution, the difference between social assistance and social insurance,
the situation in India with regard to soc ial security. Social security is a key
feature of modern industrial society. Industrial development and
urbanization have created a very large class of laborers. This class is
considered as an important element in the production system. But various
laws ha ve been consulted here as a solution to its many problems.
8.7 QUESTION S
1) Explain the concept of social security.

2) Explain the difference between social assistance and social insurance.

3) Explain Social Security in India.

4) Discuss Indian Labor Law.
8.8 REFERE NCES
1) Govt of India Report of Committee on Labour Welfare. (1969)
2) Kangle RP (1963)TheKautilyaArthasastra.
3) Beveridge W (1912) Report of Social Insurance and Allied Ser ies.
4) Gramlich EM (1996) Different Approaches for Dealing with Social
Security. The American Economic Review. pp: 358 -362.
5) ShivajiRao G (2003) the Report of the Second Indian National Labour
Commission -2002: An Overview.
6) Mishra I (1962) Economy andLabour.
7) Singhal ML (1991) Civil Court Manual.
8) Monappa, Arun, Industrial Relations, Tata McGraw Hill, New Delhi,
2005. (Module 4) munotes.in

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Industrial and Labour
Economics - II
122 9) Pencavel, John, Labour Markets under Trade Unionism: Employment,
Wages and Hours, Basil Blackwell, Cambridge, Massachusetts, 1991
(Module 1)
10) Ramaswamy, E.A. and Uma Ramaswamy, Industry and Labour,
Oxford University Press, Bombay 1981 (Module 3)
11) Rees, Alber t, The Economics of Trade Unions, University of Chicago
Press, Chicago, 1973
12) (3rd Edition) (Module 1)



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Question Paper Pattern (For IDOL Students Only)
TYB A SE M V I (Economics) – for all Six papers


Time: Three Hours Total Marks: 100 Marks

Please Check whether you have got the right question paper.
N.B. 1) All questions are compulsory. Attempt Sub question (A) or (B) of Question no. 5
2) Figures to the right indicate marks.
3) Draw neat diagrams wherever necessary.


Q1. Answer any TWO questions of the following. 2 0
a.
b.
c.

Q2. Answer any TWO questions of the following. 2 0
a.
b.
c.

Q3. Answer any TWO questions of the following. 2 0
a.
b.
c.

Q4. Answer any TWO questions of the following. 2 0
a.
b.
c.

Q5. (A) Write short notes on any TWO of the following. 20
a.
b.
c.
d.
OR
(B) Multiple choice questions, select an appropriate option (20 MCQs) 20

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