Trade Unionism

UNIT 9 EMPLOYERS’ ORGANISATIONS IN

INDIA

Objectives
After going through this unit, you should be familiar with:
• the origin and growth of employers’ organisations in India;
• the structure of employers’ organisations;
• the aims and objectives of employers’ organisations ;
• the functions of employers’ organisations; and
• the role of employers’ organisations in employment relations
Structure
9.1 Introduction
9.2 Origin and Growth of Employers’ Organisations
9.3 Structure of Employers’ Organisations
9.4 Aims and Objects of Employers’ Organisations
9.5 Functions of Employers’ Organisations
9.6 Membership, Structure and Functioning of Employers’ Organisations in
India
9.7 Legal Status of Employers’ Organisations
9.8 Observations of the First National Commission on Labour on Employers’
Organisations
9.9 Summary
9.10 Self-Assessment Questions
9.11 Check Your Progress
9.12 Further Readings

9.1 INTRODUCTION
While workers get together for joint action through a union, an employer is in
many cases an organisation in himself and meets the union on equal terms. At
the same time, employers find themselves in furtherance of common objectives
of evolving attitudes to labour or approaches to national policies, as also for
standardisation of wages and other conditions of employment in an industry
within a local area (National Commission on Labour: 1969). Thus, Employers’
Organisations (EOs) are formal groups of employers set up to defend, represent
or advise affiliated employers and to strengthen their position in society at large
with respect to labour matters besides economic matters. While trade unions,
which are composed of individual persons, employers’ organisations are
composed of enterprises. Nevertheless, the Trade Unions Act, 1926 includes in
its purview both associations of workers and employers.

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 Employers’ Organisations
9.2 ORIGIN AND GROWTH OF EMPLOYERS’ in India

ORGANISATIONS
The first employers’ association in the form of the Chamber of Commerce was
established in Marseilles in France in 1599. Such chambers are voluntary
organisations of the business community established to promote the commercial,
industrial and civic interests of their members. They also function as Central
Agencies of individual firms, companies, trade and industrial associations for
protecting and promoting business interests by evolving and projecting collective
thoughts. The utility of these chambers was quickly realised in practically all
important countries of the world. It is therefore not surprising , as disclosed by
one survey, that there are nearly 10,000 chambers of commerce in all important
countries together with the underlying membership of millions of business
organisations and firms. They have also formed a body at the international level
known as International Chamber of Commerce with headquarters in Paris. The
latter has National Committees in different countries.

Developments in India
The origin, growth and development of EOs have three distinct phases: (i) the
period up to 1933; (ii) the period between 1934 and 1946; and (iii) the post-
Independence period. Each phase reveals its own structural and functional
characteristics; in each phase the organisations had to undergo changes because
of contemporary economic, social and political developments. The periods
referred to also coincide with important developments in the labour field, and
these have had a great impact on the pattern and development of employers’
organisations and their functioning.

Period up to 1933
With the withdrawal of the East India Company in 1833, the British business
interests as well as the interests of other individual businessmen had to be
represented to the Government of the day. As such, the first Chamber of
Commerce was established by the British businessmen in India based in Calcutta
in 1833, followed by establishment of Chambers of Commerce in Madras and
Bombay in 1836.

Indian businessmen did become members of these British Chambers, but in small
number. It is only after the 1880s that they started setting up an independent
organisation and engaging in a struggle with British business interests. The first
Chamber of Commerce, the native Merchant Chamber of Commerce of
Coconada, subsequently known as Godavari Chamber of Commerce, was set up
in 1885, the year of establishment of the Indian National Congress. In 1887, the
Bengal National Chamber of Commerce was established in Calcutta.
Subsequently, the British-oriented Chambers of Commerce and the giant Indian
(especially the Parsi) industrial and business interests formed a federal association,
the Associated Chamber of Commerce (ASSOCHAM), with its headquarters at
Bombay. Now, ASSOCHAM has in its fold maximum number of MNCs and
foreign companies including the British Airways, Cadbury India, Citi Bank, Coca-
cola India, Hindustan Lever, Glaxo India, Johnson & Johnson, Procter & Gamble
India, Nestle India, Pepsi Foods, Philips India, Thomas Cook India (The Hindu,
April 29, 1997).
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Trade Unionism In 1927, the Indian businessmen (supporters of Swadeshi movement) organised
a central body of the Chambers of Commerce and Trade Associations of Indian
business, known as Federation of Indian Chambers of Commerce and Industry
(FICCI). With its headquarters at Delhi, today FICCI embraces all types of trade
and industry interests. It speaks directly or indirectly for 1,00,000 business units
— small, medium and large— employing around 10 million people.
India as one of the original members of the International Labour Organisation
(set up in 1919 by the Treaty of Versailles, also known as Peace Treaty) had the
responsibility of sending a tripartite delegation to the annual meetings of the
ILO. According to the Constitution of the ILO, the Government of the each
member country, besides nominating the Government’s delegates should nominate
employers’ and workers’ delegates in agreement with their respective
organisations, which are most representative of the interests concerned.
The FICCI, whose representative was attending the annual meetings of the ILO
since 1927 to 1930, was informed by the Government of India that under the
Treaty of Versailles, the Chambers of Commerce could not be treated as
organisations of employers which could be consulted by the member-governments
in nominating employers’ delegates to the ILO meetings for discussions relating
to labour matters. It was to meet this situations that a separate central body of the
industrial employers was established by FICCI on December 12, 1932, and this
was called the All India Organisation of Industrial Employers. This name was
changed later on, and now it is known as All India Organisation of Employers
(AIOE). The headquarters of the AIOE is located in New Delhi. Following this,
another central organisation of employers – Employers’ Federation of India
(EFI)— with its headquarters at Bombay was established by ASSOCHAM in
1933. The modest objective of the EFI, like that of the AIOE, in the beginning
was to facilitate the selection of employers’ delegates for the meetings and
conferences of the ILO.

Period between 1934 to 1946

Since the AIOE and EFI began to represent mainly the large-scale industrial
employers, the need for a third limb of EOs representing the medium and small
size employers was felt. Under the inspiring leadership of M. Vishwesvarayya, a
renowned engineer, the All India Manufacturers’ Organisation (AIMO) was set
up in Bombay in 1941 to represent both the trade and labour interests of the
member firms in the medium and small sectors. However, the membership of
AIMO is not necessarily restricted to medium and small size employers. The
AIMO could secure recognition from the Government of India for representation
at the national level and in the 1980s for the International Labour Conference, as
any other employers’ organisation.
The Government of India Act, 1935 made provision for representation of
employers and labour in legislative bodies through special constituencies. The
constituents of the AIOE and the EFI thus got an opportunity to be represented
in the Central and Provincial Legislatures. Labour legislations in the thirties in
some provinces made it necessary for employers’ associations to expand their
services in the labour field. The creation of the Labour Department in the Central
Government and the constitution of tripartite bodies like Indian Labour
Conference, Standing Labour Committee and Industrial Committees during the
years of Second World War (1939-45), helped further these activities within
50 local associations and federations.
1947- Present Employers’ Organisations
in India
In the wake of the Independence of the country in 1947, a plethora of labour
laws were enacted, the industrial fabric of the country began to change with the
implementation of successive five-year plans, and the demographic profile and
aspirations of the employees also began to undergo major changes. All these
provided new opportunities and challenges for EOs.

After Independence, the indigenous private industrialists began to train their

guns against the public sector which had witnessed a rapid growth (at least until
1990s, when privatisation became the “in-thing”). The small and medium sectors
have formed their own associations. With the proliferation of EOs, the need for
their unification began to find expression. After several initiatives and meetings,
it was in 1956 that a super structure called the Council of Indian Employers
(CIE)1 was formed to bring AIOE and EFI, the two national level employers’
organisations under one umbrella.

The CIE got itself affiliated to the Geneva-based International Organisation of

Employers (IOE)2 in the same year, in place of the AIOE and EFI which till then
were affiliated to the IOE separately. The growth of public sector consequent
upon Government’s endeavour to raise it to the “commanding heights” of the
economy led eventually to the claim by the public sector to represent employer’s
interests. As a result, a representative organisation for public sector, called the
Standing Conference on Public Enterprises (SCOPE) was set up and registered
as a society on September 29, 1970. In the year 1973, the SCOPE joined the
CIE3 .

Confederation of Indian Industry (CII)

Established in the year 1895, the CII was a sectoral association till 1991 confining
mainly to the engineering industry. The head office of the CII is in Kolkota.
Since, 1991, the CII became broad based and employers belonging to other
industries are associated with it. The total number of companies that are associated
with the CII is 4,000; and 25 per cent of this membership is from IT companies,
financial services and other services like consultancy (The Hindu, November 1,
2000). The CII has 35 offices all round the world including offices in the Middle
East, UK, USA , Canada and Singapore. It performs the combined role of
defending the interests of employers in both economic and labour matters.

Commenting on the proceedings of one of the CII’s annual quality summits,

Ramaswamy (2002) observes that the proceedings “scarcely make a mention of
worker involvement or empowerment. The closest they get to workers is a fleeting
reference to Quality Circles, but no details can be had on worker or union response
to them”.

Federation of Associations of Small Industries in India (FASII)

Besides the FICCI, ASSOCHAM, and CII, another federation, the Federation of
Associations of Small Industries in India (FASII) came into existence in the
private sector in the year 1959 to protect the interests of the small industries.
FASII has its headquarters in Delhi.

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Trade Unionism
9.3 STRUCTURE OF EMPLOYERS’
ORGANISATIONS
EOs in India have a three-tier structure: local associations, industrial associations,
and all-India federations.

Local Associations
This type of associations have been formed in most of the industrial cities and
other industrial areas of the country in the form of Chambers of Commerce or
Factory Owners’ Associations. These associations cover all industries in their
respective areas. Their field of activity is not confined to industrial and commercial
matters only, but also extends to labour matters.

Industrial Associations
Industrial Associations are the general pattern of organisations of employers in
India. They are formed at the area/ regional level as also at the all-India level.
The regional industrial associations are generally associated with / affiliated to
the central organisations at the apex level (all-India level). The main reasons for
the development of industry-wise associations is the common nature of the
problems confronting each industry. Individual employers are also admitted at
the apex level. Most of the industrial associations, in turn, are affiliated to national
level federations (all-India federations) of employers’ organisations. The setting
up of industry-wise wage-boards , industrial committees at the Central and State
levels, and development of collective bargaining at the industry level in certain
regions / industries (like jute, cement, cotton, textiles, engineering, tea, sugar,
paper, and chemicals) helped the growth of these associations.

All-India Federations
They comprise representatives of both industries and geographic centres. AIOE,
EFI and AIMO are the three federations operating at the national level. They
have representation s on consultative bodies in labour matters. Unlike the AIOE
and EFI, the AIMO combines in itself both the trade and labour interests of its
members. The membership of these organisations open to individual firms or
joint stock companies engaged in any industry, and to any association / chamber
of commerce representing any industry in the country.

All the three federations have special committees to deal with specific problems.
Besides, they operate through their regional committees and maintain close links
with the national level chambers of commerce as well.

9.4 AIMS AND OBJECTS OF EMPLOYERS’

ORGANISATIONS
All India Organisation of Employers
The objects of the AIOE are inter alia:
i) To take all steps which may be necessary for promoting, supporting or
opposing legislative and other measures affecting or likely to affect directly
or indirectly, industries in general, or particular industries;
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ii) To nominate delegates and advisers, etc. to represent the employers of India Employers’ Organisations
in India
at the International Labour Conference, United Nations Organisation,
International Chamber of Commerce and other conferences and committees
affecting the interests of trade, commerce and industries, whether as
employers or otherwise;

iii) To promote and support all well-considered schemes for the general uplift
of labour and to take all possible steps to establish harmonious relations
between capital and labour”.

Employers’ Federation of India

The principal objects for which the EFI has been established are embodied in its
Constitution. These are:
i) ”to promote and protect the legitimate interests of employers engaged in
industry, trade and commerce;
ii) to maintain harmonious relations between management and labour and to
initiate and support all well considered schemes that would increase
productivity and at the same time give labour a fair share of the increased
return;
iii) to collect and disseminate information affecting employers and to advise
members on their employer-employee relations and other ancillary
problems.” These objects lie within the field of what may broadly be termed
‘industrial relations’. Although consideration of broad economic problems
is not altogether excluded, the EFI does not generally comment on
commercial questions of customs, taxation and the like which lie in the
sphere of the ASSOCHAM.

The All India Manufacturers’ Organisation

The objectives of the AIMO are:
i) ”To help bring about the rapid industrialisation of the country through sound
and progressive economic policies;
ii) To help in increasing the aggregate wealth of India;
iii) To raise the standard of living of the people of India by utilising to the
fullest possible extent all the available national resources and talent in the
country; and
iv) To play a positive role in relieving the pressure of population on land”.
The industrial relations functions of the AIMO are similar in material particulars
to those of the AIOE and EFI.

Standing Conference on Public Enterprises

The objectives of the SCOPE cover a wider ambit: SCOPE looks upon its tasks
as both internal and external to the public sector. Internally, it would endeavour
to assist the public sector in such ways as would help improve its total
performance. Externally, it would help improve its total boundary role in
conveying such information and advice to the community and the Government.
Besides improving performance of the public sector, its objective is to participate
in the policy-making process of public enterprises.
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Trade Unionism
Activity 1
Briefly describe the structure, aims and objects of employers organisations
of your own organisation or any organisation you are familiar with.
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9.5 FUNCTIONS OF EMPLOYERS’

ORGANISATIONS
The main role of an employers’ organisation is to protect and promote the interests
of its members. Its activities are designed and directed on a broader plan; labour
problems are only a part of their overall responsibilities. Economic, commercial
and fiscal matters and policies are equally or even more important for them.
Employers’ organisations find it necessary to have legislative support for the
realisation of their objectives. Their main functions in the field of labour are:

a) Communication: The employers’ associations keep their members informed

of all new labour legislations (even at the formative stage), regarding all
changes in labour policy, important court decisions on labour matters,
obligations accepted at the national level, proceedings of important tripartite
deliberations, etc.

b) Advisory Functions: They advise their affiliates on complex legal provisions,

procedures etc., when such advice is sought. Some of the employers’
organisations have built up an expert advisory service on labour matters for
their members.

c) Educational Efforts: They organise seminars, conferences and training

programmes at different levels to discuss important issues in the labour-
management relations. Important studies on collective agreements, role of
the private sector in national development, etc. have been carried out by the
Employers’ Federation of India.

d) Representational Functions: They are represented on various committees,

wage boards, etc. set up by the government from time to time and place
before these bodies the point of view of employers. They have also set up
special committees of their own to study particular problems.

e) Undertaking Social Responsibilities: They also discharge certain social

responsibilities towards the country and society by participating in national
plans for economic development, eliciting responsive cooperation from the
unions in improving levels of production and productivity, pursuing policies
that are conducive to the development of industry and the economy, adopting
neighbourhood, social development schemes, etc.

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 Employers’ Organisations
9.6 MEMBERSHIP, ORGANISATION in India

STRUCTURE AND FUNCTIONING OF

EMPLOYERS’ ORGANISATIONS IN INDIA
Membership
As in most countries in India too membership in EOs is voluntary. AIOE has two
categories of members: individual (enterprise) and association (group of
enterprises). EFI additionally has provision for honorary membership whereby
individuals with special skills or experience, such as legal luminaries or
professionals are co-opted to serve on various committees of the federation. While
the predominantly private sector EOs do not bar public sector enterprises
becoming members and rather welcome their entry and indeed have a few, the
SCOPE remains an EO exclusively for the public sector that too mainly the
public sector enterprises in the central sphere.

In the year 2002, the AIOE had 72 associate members (i.e. industrial employers
/ chambers) and 183 individual members. The EFI had 31 association members
and 247 individual members as of 1986. The SCOPE had over 95 per cent of the
CPSUs as its members as of 1986.

Organisation Structure
The AIOE has a unitary type of organisation. It has no sub-organisation on an
industrial or geographical basis. Even though there are important clusters of
members in Kolkata and Bombay, there has been no attempt to create local
committees or offices. The EFI, however, has federal type of organisation structure
with its activities distributed over a central body and the regional committees.
Both the AIOE and the EFI have a governing body, executive committee and the
secretariat. The governing body is the supreme policy-making body, the executive
committee is responsible for implementing the policies and objectives of the
organisation and the secretariat with a permanent staff, is responsible for carrying
out the decisions of the governing body.

The SCOPE has two administrative organs, the Governing Council and the
Executive Board besides the Secretariat with permanent staff. The Governing
Council lays down policy and elects office-bearers, the Executive Board oversees
implementation of policies. The Chief Executive of a member enterprise /
organisation shall automatically be a member of the Governing Council.
Additionally, it has three government representatives nominated by the Director-
General, Department of Public Enterprises as ex-officio members of the
Governing Council with full voting rights.

Finances
EOs are referred to as rich men’s poor clubs. Nearly half of the income of the
EFI and one fourth of the income of the AIOE are from membership subscriptions.
Other incomes include interest on corpus/ deposits, conferences, publications,
etc. Excessive dependence on income from subscription makes EOs financially
vulnerable. The surest way for them to raise funds is to upgrade the quality,
relevance and usefulness of services to their members and other constituents,
including the community.
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Trade Unionism Functioning
EOs in India play two types of roles in representing the interests of their members:
One, they are called to nominate representatives of employers in voluntary or
statutory bodies set up not only to determine wages and conditions of employment
of workers in a particular industry / sector, but also for consultation and
cooperation on social and labour matters in national and global context (See
Table 1 for an indicative list of representation of EOs in various tripartite fora
and public bodies / institutions ). Secondly, they seek to redress the grievances
arising from legislative or other measures by making submissions to concerned
authorities. It is difficult to recapitulate and synthesise the role played by EOs in
representing the interests of employers in the ILO, various committees /
institutions , bipartite and tripartite fora at the national level and on various
issues such as legislation, voluntary codes, social security, bonus, etc.

The real worth of an EO and the best justification for its support is the range of
services that it provides to its members. Within the overall framework of the
need to develop enlightened human resource management practices, the kind
and range of services that an EO could provide should rest mainly on the needs
of the members and their priorities as also the resources and competence within
the leadership and secretariat of the EO. Some of the basic services every EO
may be expected to provide include the following: (i) study and analysis of
problems and dissemination of information — advice, advocacy and dispute
settlement; (ii) guidance or conduct of collective bargaining. In India this role is
voluntary and at the initiative and request of the members; (iii) training and
development of staff and members; (iv) safety and health at workplace and
working environment; and (v) public image and public relations.

9.7 LEGAL STATUS OF EMPLOYERS’

ORGANISATIONS
EOs could be registered in any of the following legal forms: The Trade Union
Act, 1926; the Indian Companies Act, 1956; or the Societies Act, 1860. The
AIOE remained a registered body till 1969 when it was registered under the
Trade Unions Act. The EFI came into being in March 1933 as a company under
the Indian Companies Act. A quarter century later, it was reorganised as an
unregistered Association, a position which continued till 1963 when it too was
registered under the Trade Unions Act.
The main reason for the AIOE opting for registration under the Trade Unions
Act was to allow it to take up test cases before the courts and industrial tribunals.
In the case of the EFI, the motivation was to overcome the burden of income-tax
on its steadily rising income and surplus.
The SCOPE, however, continues to be registered under the Societies Act.

9.8 OBSERVATIONS OF THE FIRST NATIONAL

COMMISSION ON LABOUR ON EMPLOYERS’
ORGANISATIONS
The First National Commission on Labour made the following observations/
recommendations with regard to the employers’ organisations.
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1) Registration of employers’ associations should be made compulsory. Employers’ Organisations
in India
Arrangements should be made through the Industrial Relations Commissions
(proposed by the NCL) for certification of employers’ organisations at the
industry/area level for the purpose of collective bargaining.
2) Employers’ organisations should encourage collective bargaining and
voluntary arbitration and avoid third party intervention as far as possible.
3) Regular and scientific arrangements for training of supervisors and middle
management personnel in the art or handling labour should receive due
attention from the employers’ organisations.
4) From the view point of labour management relations, employers’ associations
should accept the following functions:
i) undertake promotion of collective bargaining at various levels;
ii) encourage observance and implementation by their members of
bipartite and tripartite agreements in real spirit and form;
iii) expedite implementation of wage awards by members without undue
delay and reservations;
iv) work towards elimination of unfair labour practices by employers;
v) encourage adoption by members of personnel policies conducive to
productivity and industrial peace;
vi) promote rationalisation of management or organisation to improve
productivity;
vii) arrange employers’ education (a) in the concept of labour partnership
in industry, (b) for ensuring identity of interests of labour and
management and (c) for promoting harmony between the goals of
industry and of the community; and
viii) work towards the collective welfare of its members through training,
research and communication in the field of labour-management
relations.

Activity 2
Briefly explain the legal status of employers organisations in general and
functioning of employers organisations in particular with regard to your
organisation or any organisation you are familiar with.
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Trade Unionism
9.9 SUMMARY
•In this unit we have outlined the origin and growth of employers’ organisations
in India.
• With the growth of workers’ unions, labour matters started receiving the
attention of the employers’ associations, whose main functions were to
protect and promote industrial and commercial interests of the members.
The EOs have a three-tier structure: local associations, industrial associations,
and All-India federations.
• In the private sector, four federations — ASSOCHAM, FICCI, CII and FASII
form the industrial wing.
• The CIE representing the EFI, AIOE, and the SCOPE forms the labour wing.
• The CIE nominates employers’ representatives for the annual ILO
conferences.
• CIE is affiliated to the Geneva-based IOE. The membership of the employers’
organisations are rather small, compared to the potential for coverage.
• Subscriptions being the main source of revenue, low membership coverage
affects their finances.
• The organisation structure of an EO typically consists of a general body of
members, office-bearers, and executive committee, and the Secretariat.
• The EOs provide a wide variety of services in the area of industrial/
employment relations.
• The EOs could be registered under the Trade Unions Act, 1926 or Societies
Act, 1860 or Companies Act, 1956

9.10 SELF-ASSESSMENT QUESTIONS

1) Outline the origin and growth of the employers’ organisations in India.

2) What are the aims and objectives of the employers’ organisations in India?

3) Briefly discuss the structure and functions of the employers’ organisations

in India.

4) State the first NCL’s observations on the employers’ organisations in India.

9.11 CHECK YOUR PROGRESS

State whether the following statements are True or False:
1) The Standing Conference of Public Enterprises (SCOPE) is an apex
professional organisation representing both the central and state public sector
enterprises.
2) The main role and functions of employers’ organisation is to protect and
promote the interests of workers.
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3) The main aim of employers’ organisations in India is to monitor the Employers’ Organisations
in India
performance of public and private sector undertakings and their employees.
4) The intention in covering employers’ organisations under the Trade Unions
Act, 1926 is to place both workers’ and employers’ organisations on a par in
matters of rights and responsibilities.

Answers:
1. True 2. False 3. False 4. True

9.12 FURTHER READINGS

Chatterjee, N. N. 1984. Industrial Relations in India’s Developing Economy,
Calcutta: Allied Book Agency.

Government of India, Ministry of Labour and Employment and Rehabilitation,

1969. Report of the National Commission on Labour, Delhi.

Oechslin, J.J. 1990. Employers’ Organisations, Geneva: Industrial Organisation

of Employers.

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