October 24, 2012

MU0012 [Employee Relations Management] Set2 Q4

Q4) Describe the main actors involved in industrial relations. 

Ans: 


INDUSTRIAL RELATIONS

Industrial relations is used to denote the collective relationships between management and the workers. Traditionally , the term industrial relations is used to cover such aspects of industrial life as trade unionism, collective bargaining, workers’ participation in management, discipline and grievance handling, industrial disputes and interpretation of labor laws and rules and code of conduct. 

In the words of Lester, "Industrial relations involve attempts at arriving at solutions between the conflicting objectives and values; between the profit motive and social gain; between discipline and freedom, between authority and industrial democracy; between bargaining and co-operation; and between conflicting interests of the individual, the group and the community”. 

The National Commission on Labor (NCL) also emphasize on the same concept. According to NCL, industrial relations affect not merely the interests of the two participants- labor and management, but also the economic and social goals to which the State addresses itself. To regulate these relations in socially desirable channels is a function, which the State is in the best position to perform. 

In fact, industrial relation encompasses all such factors that influence behavior of people at work. A few such important factors are below: 

Institution: It includes government, employers, trade unions, union federations or associations, government bodies, labor courts, tribunals and other organizations which have direct or indirect impact on the industrial relations systems. 

Characters: It aims to study the role of workers unions and employers’ federations officials, shop stewards, industrial relations officers/ manager, mediator/conciliators / arbitrator, judges of labor court, tribunal etc. 

Methods: Methods focus on collective bargaining, workers’ participation in the industrial relations schemes, discipline procedure, grievance redressal machinery, dispute settlements machinery working of closed shops, union reorganization, organizations of protests through methods like revisions of existing rules, regulations, policies, procedures, hearing of labor courts, tribunals etc. 

Contents: It includes matter pertaining to employment conditions like pay, hours of works, leave with wages, health, and safety disciplinary actions, lay-off, dismissals retirements etc., laws relating to such activities, regulations governing labor welfare, social security, industrial relations, issues concerning with workers’ participation in management, collective bargaining, etc.

Industrial relations has become one of the most delicate and complex problems of modern industrial society. Industrial progress is impossible without cooperation of labors and harmonious relationships. Therefore, it is in the interest of all to create and maintain good relations between employees (labor) and employers (management).

The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen.”

The term industrial relations explain the relationship between employees and management which stem directly or indirectly from union-employer relationship. 

Industrial relations are the relationships between employees and employers within the organizational settings. The field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a union. Industrial relations are basically the interactions between employers, employees and the government, and the institutions and associations through which such interactions are mediated. 

The term industrial relations have a broad as well as a narrow outlook. Originally, industrial relations were broadly defined to include the relationships and interactions between employers and employees. From this perspective, industrial relations cover all aspects of the employment relationship, including human resource management, employee relations, and union-management (or labor) relations. Now its meaning has become more specific and restricted. Accordingly, industrial relations pertains to the study and practice of collective bargaining, trade unionism, and labor-management relations, while human resource management is a separate, largely distinct field that deals with nonunion employment relationships and the personnel practices and policies of employers. 

The relationships which arise at and out of the workplace generally include the relationships between individual workers, the relationships between workers and their employer, the relationships between employers, the relationships employers and workers have with the organizations formed to promote their respective interests, and the relations between those organizations, at all levels. Industrial relations also includes the processes through which these relationships are expressed (such as, collective bargaining, workers’ participation in decision-making, and grievance and dispute settlement), and the management of conflict between employers, workers and trade unions, when it arises.

For better understanding of industrial relations, various terms need to be defined here: 

Industry:

Industrial Disputes Act 1947 defines an industry as any systematic activity carried on by co-operation between an employer and his workmen for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes whether or not any capital has been invested for the purpose of carrying on such activity; or such activity is carried on with a motive to make any gain or profit. Thus, an industry is a whole gamut of activities that are carried on by an employer with the help of his employees and labors for production and distribution of goods to earn profits.

Employers:
An employer can be defined from different perspectives as:-
A person or business that pays a wage or fixed payment to other person(s) in exchange for the services of such persons. 
A person who directly engages a worker/employee in employment. 
Any person who employs, whether directly or through another person or agency, one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed.
As per Industrial Disputes Act 1947 an employer means:-
in relation to an industry carried on by or under the authority of any department of [the Central Government or a State Government], the authority prescribed in this behalf, or where no authority is prescribed, the head of the department; 
in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority; 

Employee:
Employee is a person who is hired by another person or business for a wage or fixed payment in exchange for personal services and who does not provide the services as part of an independent business. 
An employee is any individual employed by an employer. 
A person who works for a public or private employer and receives remuneration in wages or salary by his employer while working on a commission basis, piece-rates or time rate. 
Employee, as per Employee State Insurance Act 1948, is any person employed for wages in or in connection with work of a factory or establishment to which the act applies. 
In order to qualify to be an employee, under ESI Act, a person should belong to any of the categories: 
o Those who are directly employed for wages by the principal employer within the premises or outside in connection with work of the factory or establishment. 
o those employed for wages by or through an immediate employer in the premises of the factory or establishment in connection with the work thereof 
o Those employed for wages by or through an immediate employer in connection with the factory or establishment outside the premises of such factory or establishment under the supervision and control of the principal employer or his agent. 
o Employees whose services are temporarily lent or let on hire to the principal employer by an immediate employer under a contract of service (employees of security contractors, labor contractors, house keeping contractors etc. come under this category). 

Labor market: The market in which workers compete for jobs and employers compete for workers. It acts as the external source from which organizations attract employees. These markets occur because different conditions characterize different geographical areas, industries, occupations, and professions at any given time.

The Actors in the Relationship
The following are the main actors, who are directly involved in Industrial Relations:
• Employers: Are those who engage a worker and pay the worker a fixed salary on return for services rendered. Employers have the right to employ and fire employees. Their decisions like relocation, introduction of new technologies, mergers and acquisitions affects their employees. 
• Employee: Is an individual who is hired by a person or a business and is remunerated for the services rendered. Employees need a good working environment. They have a right to voice their opinions and convey their grievances. Employees generally form a union in order to obtain their rights from the management. Employees expect the union to support them on all issues.
• Government: They influence employee relations by means of laws, rules, regulations, and policies. The government establishes the legal framework for management-trade union interaction. The government also helps in settlement of industrial disputes. They also regulate incomes and establish minimum wages. For example, in Australia, the Commonwealth has enabled employers under their jurisdiction, to bypass unions and negotiate directly with individual employees. But the individual states have reaffirmed the collective bargaining process and the role of unions.
• Trade Unions: They promote and protect employee interests. Trade unions help in making decisions by following the process of collective bargaining and negotiations, with the management. Good trade unions improve communication between the management and the employees. Trade unions also help in settling of industrial disputes. For example, the United States has low levels of unions compared to the European Union. Hence, the companies in the United States hire and fire employees at will, while their European counterparts have to consult the trade unions.
• Employer Associations: They help in enhancing the performance of enterprises. Employer Associations represent employers in collective bargaining, depose before tribunals and courts, and engage in public and media relations. They also provide a forum for discussions and debates on specialised subjects. Employer Associations advise, educate, and assist members in industrial disputes. They also lobby with the government for industrial reforms.
• Courts and Tribunals: These help in resolving industrial disputes. Labour courts examine the legality of orders passed by the employers, the discharge of employees, withdrawal of concessions or privileges, matters relating to lock-outs and strikes. Industrial tribunals deal with matters related to wages, compensations and other allowances, bonuses, rules of discipline, retrenchment, and closure of organisations. For example, the Australian Industrial Relations gives great importance to courts. The courts give quick binding decisions thus, minimises economic losses.

Figure below represents all the above actors who form a major component of Industrial Relations.

Figure : Actors Involved in an Industrial Relations System

The influence of each actor varies in different industrial systems. In some systems, the government dominates the relationships and in some others, it only plays a minor role. Some industrial systems emphasise employee interests while others emphasise employer interests. Employees usually interact with their employers through representative unions. Some countries facilitate these trade unions, whereas some countries discourage them. Hence, the goals and actions of the trade unions vary from country to country. 

SCOPE
The concept of industrial relations has a very wide meaning and connotation. In the narrow sense, it means that the employer, employee relationship confines itself to the relationship that emerges out of the day to day association of the management and the labor. In its wider sense, industrial relations include the relationship between an employee and an employer in the course of the running of an industry and may project it to spheres, which may transgress to the areas of quality control, marketing, price fixation and disposition of profits among others.

The scope or industrial relations are quite vast. The main issues involved here include the following:
1. Collective bargaining
2. Machinery for settlement of industrial disputes
3. Standing orders
4. Workers participation in management
5. Unfair labor practices

Importance of Industrial Relations
The healthy industrial relations are key to the progress and success. Their significance may be-
• Uninterrupted production 
• Reduction in Industrial Disputes 
• High morale 
• Mental Revolution 
• Reduced Wastage. 

Objectives of Industrial Relations
The main objectives of industrial relations system are:-
1. To safeguard the interest of labor and management by securing the highest level of mutual understanding and good-will among all those sections in the industry which participate in the process of production. 
2. To avoid industrial conflict or strife and develop harmonious relations, which are an essential factor in the productivity of workers and the industrial progress of a country. 
3. To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover and frequency absenteeism.
4. To establish and promote the growth of an industrial democracy based on labor partnership in the sharing of profits and of managerial decisions, so that ban individuals personality may grow its full stature for the benefit of the industry and gheraos by providing and of the country as well.
5. To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages, improved living and working conditions, said fringe benefits. 
6. To improve the economic conditions of workers in the existing state of industrial managements and political government. 
7. Socialization of industries by making the state itself a major employer vesting of a proprietary interest of the workers in the industries in which they are employed.


Dunlop’s Contribution to IR System

One of the significant theories of industrial labor relations was put forth by John Dunlop in the 1950s. According to Dunlop industrial relations system consists of three agents – management organizations, workers and formal/informal ways they are organized and government agencies. These actors and their organizations are located within an environment – defined in terms of technology, labor and product markets, and the distribution of power in wider society as it impacts upon individuals and workplace. Within this environment, actors interact with each other, negotiate and use economic/political power in process of determining rules that constitute the output of the industrial relations system. He proposed that three parties—employers, labor unions, and government-- are the key actors in a modern industrial relations system. He also argued that none of these institutions could act in an autonomous or independent fashion. Instead they were shaped, at least to some extent, by their market, technological and political contexts.

Key actors in a modern industrial relations system. He also argued that none of these institutions could act in an autonomous or independent fashion. Instead they were shaped, at least to some extent, by their market, technological and political contexts.

Thus it can be said that industrial relations is a social sub system subject to three environmental constraints- the markets, distribution of power in society and technology.

Dunlop's model identifies three key factors to be considered in conducting an analysis of the management-labor relationship: 
1. Environmental or external economic, technological, political, legal and social forces that impact employment relationships. 
2. Characteristics and interaction of the key actors in the employment relationship: labor, management, and government. 
3. Rules that are derived from these interactions that govern the employment relationship. 

Dunlop emphasizes the core idea of systems by saying that the arrangements in the field of industrial relations may be regarded as a system in the sense that each of them more or less intimately affects each of the others so that they constitute a group of arrangements for dealing with certain matters and are collectively responsible for certain results”.

In effect - Industrial relations is the system which produces the rules of the workplace. Such rules are the product of interaction between three key “actors” – workers/unions, employers and associated organizations and government

The Dunlop’s model gives great significance to external or environmental forces. In other words, management, labor, and the government possess a shared ideology that defines their roles within the relationship and provides stability to the system. 

Approaches to Industrial Relations

The industrial relations scenario and factors affecting it, has been perceived differently by different practitioner and theorist. Some have viewed it in terns of class conflict; some have viewed it in terms of mutuality of interest of different groups; some have viewed it as a consequence of interaction of various factors both within an organization and outside it. Based on these orientations, several approaches have been developed to explain the dynamics of IR.

UNITARY APPROACH
PLURALISTIC APPROACH
RADICAL APPROACH

This perspective focuses on the fundamental division of interest between capital and labor, and sees workplace relations against this background. It is concerned with the structure and nature of society and assumes that the conflict in employment relationship is reflective of the structure of the society. Conflict is therefore seen as inevitable and trade unions are a natural response of workers to their exploitation by capital.

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