Structure of Industrial

Labour

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 Structure of Industrial Labour

Characteristics:
Illiteracy: A large proportion of industrial workers in India are illiterates &
ignorant. So they cannot understand the problems confronting the
economy in general & industries in particular.

Lack of Discipline: There is no discipline among the industrial labours in

India. Indiscipline, absenteeism without any reasons, moving from one job
to another etc, are very common.

Migratory Characters: Industrial labour in India is migratory in character.

Most of the laborers in industries are drawn from villages & are cages to
return to their homes during their busy agricultural seasons.

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 Structure of Industrial Labour

Lack of Organisations: The industrial labour in India is not united, but is

divided & sub – divided on the basis of language, region, caste, etc. They
are unable to organize themselves. Consequent upon that most of the trade
unions are controlled by outsiders.

Low Efficiency: The efficiency of industrial labour in India is very low. Their
productivity is also very low. Lack of education, training, research medical
facilities, etc, are reasons for low productivity.

Superstitions: Most of the industrial labour in India are superstitions &

tradition – bound. They believe in fatalistic & Meta physical things.

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 Structure of Industrial Labour

Large Scale Absenteeism: They remain absent without any reason.

Ignorant of Roles & Regulations: A good proportion of our industrial

workers are ignorant of rules & regulation.

Bad Habits: The industrial labourers in India are addicted to bad habits.
They are involved in unhealthy practices. As a result, their efficiency &
mental discipline are badly affected.

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 Structure of Industrial Labour

Labour laws in India

The laws cover the right to work of one's choice, right against
discrimination, prohibition of child labour, fair and humane conditions of
work, social security, protection of wages, redress of
grievances(Complain), right to organise and form trade unions, collective
bargaining and participation in management.

India also has numerous rigid regulations such as maximum number of

employees per company in certain sectors of economy, and limitations on
employers on retrenchment and layoffs, requirement of paperwork,
bureaucratic process and government approval for change in labour in
companies even if these are because of economic conditions.

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 Structure of Industrial Labour

Indian labour laws are considered to be very highly regulated and rigid as
compared to those of other countries in the world.

The intensity of these laws have been criticised as the cause of low
employment growth, large unorganised sectors, underground economy and
low per capita income.

Workmen's Compensation Act of 1923

Compensates a workman for any injury suffered during the course of his
employment or to his dependents in the case of his death.

Trade Unions Act of 1926

Enacted the rules and protections granted to Trade Unions in India. This
law was amended in 2001.
For regulating the relation between employee and employer

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 Structure of Industrial Labour

Payment of Wages Act of 1936

Regulates by when wages shall be distributed to employees by the

employers. The law also provides the tax withholdings the employer must
deduct and pay to the central or state government before distributing the
wages.

Industrial Employment (Standing orders) Act of 1946

These orders aim to improve flexibility from the employer in terms of job,
hours, timing, leave grant, productivity measures and other matters.
The standing orders mandate that the employer classify its employees,
state the shifts, payment of wages, rules for vacation, rules for sick leave,
holidays, rules for termination amongst others.

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 Structure of Industrial Labour

Industrial Disputes Act of 1947:

Regulates how employers may address industrial disputes such as

lockouts, layoffs, retrenchment etc.  
.
Regulates what rules and conditions employers must comply before the
termination or layoff of a workman who has been in continuous service for
more than one year with the employer.

The employer is required to give notice of termination to the employee with

a copy of the notice to appropriate government office seeking government's
permission, explain valid reasons for termination, and wait for one month
before the employment can be lawfully terminated.

Employer must pay an equivalent to 15 days average pay for each

completed year of employees continuous service. 

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 Structure of Industrial Labour

Minimum Wages Act of 1948

Prescribes minimum wages in all enterprises

Industries (Regulation and Development) Act of 1951

It placed many industries under common central government regulations in
addition to whatever laws state government enact.

Employees Provident Fund and Miscellaneous Provisions Act of 1952

Ensures the financial security of the employees in an establishment by
providing for a system of compulsory savings.
The Act provides for establishments of a contributory Provident Fund in
which employees' contribution shall be at least equal to the contribution
payable by the employer. 
Minimum contribution by the employees shall be 10-12% of the wages.

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 Structure of Industrial Labour

Maternity Benefit Act of 1961

Any woman employee who worked in any establishment for a period of at
least 80 days during the 12 months immediately preceding the date of her
expected delivery, is entitled to receive maternity benefits under the Act.
The employer is required to pay maternity benefits, medical allowance,
maternity leave and nursing breaks.

Payment of Bonus Act of 1965

Applies to an enterprise employing 20 or more persons.

The Act requires employer to pay a bonus to persons on the basis of profits
or on the basis of production or productivity.

The Act was modified to require companies to pay a minimum bonus, even
if the employer suffers losses during the accounting year. This minimum is
currently 8.33 percent of the salary.

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 Structure of Industrial Labour

Payment of Gratuity Act of 1972

Applies to all establishments employing 10 or more workers

Gratuity is payable to the employee if he or she resigns or retires.

The Indian government mandates that this payment be at the rate of 15 days
salary of the employee for each completed year of service subject to a
maximum of ₹ 10,00,000.

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 Structure of Industrial Labour

India's rigid labour laws and excessive regulations assumed to protect the
labour are the cause of slow employment growth in high paying, organised
sector.

This encourages shadow economy for entrepreneurs, an economy that

prefers to employ informal labour to avoid the complicated and opaque
laws.

In particular, Indian labour legislation such as the Industrial Disputes Act of

1947 added rigid labour laws and one sided trade union laws.

Although the Act does not prohibit layoffs and retrenchments, it does
require entrepreneurs and companies to get the permission from
government officials to fire an employee for
absenteeism, retrench employees for economic reasons, or to close an
economically nonviable company.

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 Structure of Industrial Labour

A 2007 article in The Economist finds India to have the most restrictive
labour laws in any major economy of the world.

India's private sector, including its organised manufacturing sector,

employs about 10 million Indians.

Manufacturing firms need to obtain government permission to lay off

workers from factories, and permission is usually denied if they have more
than 100 staff.

This is why most Indian firms are small: 87 percent of employment in India's
organised manufacturing sector is in firms with fewer than ten employees,
compared with only 5 percent in China.

Small Indian firms cannot reap economies of scale or exploit the latest
technology, and so suffer from lower productivity than if they scaled up,
employed more people and were much bigger companies.
This cripples Indian firms ability to rapidly expand or adjust with changes in
global economy, both during early opportunity phase and during economic
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 Structure of Industrial Labour

One exception is white collar jobs, where companies have stronger lobbies
and employees are not unionized, so they have managed to operate freely
with a much larger workforce and have been able to lay off a significant
portion of their workforce without contravening labour laws.

In almost all cases white collar employees are forced to resign under threat
of negative recommendations and black-listing with industry associations.

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 Wages and problems of bonus

Bonus Pay in India: Every employee not drawing salary/wages beyond Rs.
10,000 per month who has worked for not less than 30 days in an
accounting year, shall be eligible for bonus for minimum of 8.33% of the
salary/wages

The Payment of Bonus Act applies to every factory and establishment

employing not less than 20 persons on any day during the accounting year.
The establishments covered under the Act shall continue to pay bonus
even if the number of employees fall below 20 subsequently.

Revision of wage threshold for eligibility: The wage threshold for

determining eligibility of employees has been revised from INR 10,000 to
INR 21,000 per month, covering a larger pool of employees.

Under the Bonus Act, an employer is required to pay bonus within 8 months
from the close of the accounting year. 

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