Institutional Framework of Industrial Relations in India: Still & Muddy Waters

By ShyamSundar, K. R. | Indian Journal of Industrial Relations, October 2014 | Go to article overview

Institutional Framework of Industrial Relations in India: Still & Muddy Waters


ShyamSundar, K. R., Indian Journal of Industrial Relations


The institutional framework of the industrial relations system (IRS) in independent India drawing from the colonial model of industrial relations (VenkataRatnam, 1996) has been defined largely by four major labor laws, viz. the Trade Unions Act (1926) (TU Act), Industrial Employment (Standing Orders) Act (1946) and the Industrial Disputes Act (1947) (ID Act). The policy-makers, toying between the two models of governance of the IRS viz. the "state regulation model" and the "voluntarism model", preferred the former to the latter (Ramaswamy, 1984). The failures of the IR bills in 1947 and 1950 and the resignation of V.V. Giri over the retention of compulsory adjudication model reflected the policy moods of the regime then.

State regulation of IRS was a part of the larger strategy to regulate the product market which comprised various methods of regulation such as industrial licensing, location policy and so on (ShyamSundar, 2009b). The state regulation model consisted in determination of "rules" of the IRS through labor laws and regulations (government orders), compulsory adjudication and the associated judicial processes, a strong labor administration, and so on. The state's grip over the IRS was further strengthened by two processes. Firstly, the state dominated the social dialogue forums such as the tripartite Indian Labor Conference (ILC) and used them not only for consultations with the social actors (i.e. trade unions and the employers' organizations) but also to drive home its agenda. It was in this sense a "corporatist" institution (Rudoph & Rudolph, 1987). Secondly, thanks to the colonial inheritance of a politics-led-trade union movement, the ruling party could maintain controls over the trade union movement. The Congress Party used this dynamics to quell the Communist trade unions' threat in the IRS. Later, this became handy even for the regional governments like the DMK Party in the 1970s and so on (Ramaswamy, 1984). The hangovers of the freedom struggle and the development dynamics led some like Ashok Mehta in 1957 to argue for restraint over consumptionist tendencies in the working class. The management of the IRS was to aid faster economic growth through industrial peace, capital formation and price stability via restraints over real wages and high savings especially by the capitalistic class. In exchange the state assured labor welfare via legislation and trade union rights which would be regulated by both political class and the law. To counter the criticisms of "over doses of legalism and regulation" moral instruments such as the Code of Discipline and Conduct (VenkataRatnam, 1992) were framed both as a complement and sometimes as an "alternative" to state regulation; in the case of trade union recognition the Code served as an "alternative".

Command Economy IR Reform Argument

The critics of state-regulation-model of IRS and the social partners in varying manner argued for four key reforms. One, collective bargaining has been perceived to be a better institutional framework for governance of IRS as opposed to the state-regulation characterized by compulsory adjudication system (VenkataRatnam, 2003). Compulsory adjudication and state regulation has been argued to entice the trade unions and the employers to rely on them unduly (legalism and narcotic effects) which weakens self-governance mechanisms like collective bargaining. The concrete demand of replacement of compulsory adjudication and conciliation with collective bargaining system has wider implications. Two, for a stronger growth of self-governance basic conditions such as recognition of trade unions and the obligation to collectively bargain are necessary which, as "basic legal conditions", could be legislated by the state. These conditions do not prevail in the central Trade Unions Act, 1926 and obtain in some states like Maharashtra, Madhya Pradesh and so on. Three, the trade unions have been demanding a national minimum wages incorporation of the principles of minimum wages as delineated by the Indian Labor Conference in 1958 in the Pay Commissions and also re-defining of the concept of minimum wages along those lines (Sharma, 1982). …

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