Unit I: Industrial Relations –

Definition and Main Aspect

Concept and Definition of Industrial

Relations, Approaches to Industrial
Relations.
 Industrial Relations
• Employees, employers, their respective associations, government and judiciary
are the parties which have stakes in labour relations.
• Employees perceives LR as a method to improve their conditions of
employment, to voice any grievances, to exchange views and ideas with
management and to share in decision making.
• Trade unions look to LR in order to secure improved terms and conditions of
employment and to obtain improved status for the workers in their work.
• Employers have economic power in their hands and use it to affect workers’
destiny. They understand LR as a means to motivate workers and to sustain their
commitment to work.
• The role of employers’ association is relevant inasmuch as they represent
employers in collective bargaining and develop machinery for avoidance or
settlement of disputes.
• The government seeks to protect the interest of both employers as wee as
employees. Constitute wage boards, labour courts, tribunals, and enacted a series
of labour acts and policies.
• The judiciary is relevant as it has the authority to settle any dispute and to
review any legislation, particularly
• when it is against the constitutional provisions.
 Industrial Relations
 Labor relations are the complex of interrelations among workers,
managers and government.
- John T. Dunlop
 Labor relation is defined as the interrelationship between workers,
employers, government and other social authorities.
 In other words, it is a common ground to harmonize the discrepancies
between workers, employees and government.
• Employees, employers, their respective associations, government and
judiciary are the parties which have stakes in labour relations.
• Labor relations are concerned with managing interrelationships among
workers, employers and the government.
• Harmonizing the divergent and conflicting interests and goals of workers,
employers and government is the essence of labour relations.
 Purpose of Industrial Relations
a. Institutionalization of relationship: The major objective of labor
relation is to develop harmonious relation under legal framework. Labor
relation generates the understanding of rules and regulation and helps
all parties to act or work accordingly. E.g. the trade union- Act
describes the role and responsibility of union members, the Labor Act
makes provision for the welfare and right of the employees for
collective bargaining.
b. Industrial peace: Labor relation ensures industrial peace through
collective bargaining. Any problem created or generated is handled
effectively through negotiation and discussion that helps on fostering
peace in an organization.
c. Open communication: Labor relation encourages open communication
between concerned parties i.e. labor union, management and
government etc. Open communication clarified the issues and
grievances of labor, which is helpful in solving them constructively.
 Purpose of Industrial Relations
d. Change management: Change management is only
possible when there is acceptance of change by labors. Labor
relation encourages innovation and imagination, to make a
firm competitive in the local as well as global scenario, which
is how change management is possible.
e. Productivity: Effective coordination and cooperation are
necessary for enhancing productivity in an organization. So,
to improve efficiency of both employees and organization,
labor relation plays vital roles
f. The scope of LR covers unionism, collective bargaining,
resolution of industrial dispute, handling grievances,
maintaining discipline and labor legislation.
 Actors of Industrial Relations
 Workers and Unions: Workers are the people who sell their
physical and intellectual skills and abilities to the organization.
Without them organization cannot imagine of any
implementation of their plans and activities. So, in developing a
sound industrial relation they play a direct role. And any issues
of the workers if not addressed effectively may leads to strike,
lockout etc.
o The representative body which negotiates with the employers for
the mutual interest of workers is called unions. The workers
problems are vocal by unions. It is an organization of workers
which inform, warn and pressurize the employers to address the
workers problems constructively. Along with the workers the
union also play vital role in creating the sound industrial
relation.
 Actors of Industrial Relations
 Employers and Employers’ association: Employers are
the people who buy the physical and intellectual skills
and abilities of workers. They are the job creators. They
are the entrepreneur, innovator, mangers etc. determined
to achieve their mission by collectively utilizing the effort
of workers. So, in generating a sound labor relation, their
role is vital.
o Employers are represented by employers’ association.
They vocal on the welfare of employers and involve in
negotiating with labor unions for mutual benefits. Thus,
along with the employers this association also play
important role in creating a sound labor relation system.
 Actors of Industrial Relations
 Government: Government includes both government and
other pressure groups. Government formulates rules and
regulation, monitors the activities of both labors and
employers, and enforces the compliances of law in labor
relation. It plays vital role in institutionalizing the labor
relation.
o Other actor in labor relation system is pressure groups
.These are the special interest group like Human Right
Commission, Civic Society, Environmentalist ,media etc.
They lobby and pressurize government to protect the
interest of labor and employers.
Approaches to Industrial Relations
 Marxist Approach
• This view of industrial relations is a by product of a theory of capitalist society and social change.
Marxists argue that industrial relation is a relation of clashes of class interest between capital and
labor. Employer (capital) tries to maximize profit by holding surplus value and underpaying workers
remuneration. Workers clash for his share in the outcome of wealth because he is the human
means of production, so the most important factor of production. Industrial relation is a
continuous process of clash of interest between capitalist and labor. This clash will finish in the
socialist society only, where capital is controlled by labor class.
 Marxist Perspective of Industrial Relation argue that:
• Weakness and contradiction inherent in the capitalist system would result in revolution and the
ascendancy of socialism over capitalism.
• Capitalism would foster monopolies.
• Wages (costs to the capitalist) would be minimized to a subsistence level.
• Capitalists and workers would compete/be in contention to win ground and establish their
constant win-lose struggles would be evident.
 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.
Approaches to Industrial Relations
 System Approach
• In its most basic terms, the Dunlop Systems Theory in Industrial Relations is about
the structure and development of relationships among the three integral
members of labor relations (labor, management, government) and about
resolving labor-management problems based upon agreement on a common set
of facts that affect or are affected by labor, management and government.
• Dunlop's definition and system identified what he called a "web of rules" that are
the elementary components that govern industrial labor relationships.
He identified the institutions and norms that constitute the framework within
which industrial relations are carried out and which govern the outcomes of these
relationships.
• Dunlop identified the "actors" he referred to in his system as:
• managers,
• workers and their labor union representatives,
• government institutions that oversee labor-industrial relations.
• According to Dunlop, these actors are active in what he identified as the three
"contexts" of industry: (1) technologies, (2) industry markets and (3) power
distribution (e.g., labor unions and corporate organization).
• Finally, Dunlop posits an "ideology" that "binds" an industrial relations system
together, binding them with a common set of beliefs about society, human worth,
and government oversight.
 Approaches to Industrial Relations
 Pluralist Approach
• The pluralist industrial relations paradigm analyzes work and the employment
relationship from a theoretical perspective rooted in an inherent conflict of
interest between employers and employees interacting in imperfect labor
markets.
• The employment relationship is viewed as a bargaining problem between
stakeholders with competing interests; employment outcomes depend on the
varied elements of the environment that determine each stakeholder’s
bargaining power.
• Modeling the employment relationship as a bargaining problem raises central
questions about the distribution of resources and the rules governing
interactions between employers and employees.
• As a result, corporations, labor unions, public policies, and dispute resolution
procedures are important institutions (broadly-defined) and research subjects
in pluralist industrial relations.
• Moreover, individual employees, managers, owners, and union leaders are
viewed as human agents rather than purely economic, rational agents.
• Behavioral elements of individual decision-making are therefore important—
cognitive limitations, emotions, social or cultural norms and values, habits,
intrinsic as well as extrinsic motivators, and concern for others, fairness, and
justice.
 Approaches to Industrial Relations
 Psychological Approach:
• According to psychologists, differences in the perceptions of employers and workers give rise
to problems of employer-employee relations. The two parties view and interpret situations
and issues involved in employer-employee conflict in different ways.
• Employer and employee consider each other less appreciative of the other’s position and less
dependable than himself Similarly, the perceptions of trade unions are different from those
of employers’ associations. In addition, dissatisfaction with pay, working conditions, nature
of job, etc. cause frustration and aggression on the part of workers.
• These in turn lead to strikes, gherao, boycott, and works to rule, etc. Similarly, employers
resort to lockout and other forms of protest on account of frustration over market
conditions, government policies and other constraints.
 Sociological Approach:
• Industry is a part of society and it is a community made up of individuals and groups with
different family background, educational level, personalities, emotions, likes and dislike, etc.
These differences in individual attitudes and behavior create problems of conflict and
cooperation in industry.
• The value systems, customs, status symbols and institutions of the society in which industry
functions affect relations between the parties involved. Urbanization, housing and transport
problems in industrial areas, disintegration of joint family system, and other social problems
cause stress and strains along workers. The social and cultural changes shape behavior
patterns and cause adjustments in employer-employee relations. There cannot be harmony
and peace in industry when the society is in turmoil.
Approaches to Industrial Relations
 Human Relations Approach:
• Industry consists of living human beings who want freedom of thought and expression and
control over their lives. When employers treat workers as inanimate objects and encroach
upon their interests and desires, conflicts and disputes arise.
• Workers want security of service, good pay and working conditions, recognition for job well
done, opportunity to participate in decision-making. Employers must understand the needs,
attitudes and aspirations of workers.
• Human relations approach explains the behavior of individuals and groups at work and helps
in modifying or utilizing such behavior towards the achievement of organizational objectives.
If management and labor both understand and apply human relations approach to their
mutual relations industrial conflict can be minimized. Human relations approach is inter-
disciplinary in nature because knowledge drawn from several disciplines like psychology,
sociology, anthropology, economics and political science is used in it.
 Gandhian Approach:
• Gandhian approach to employer-employee relations is based on the fundamental principles
of truth, non-violence and non-possession. If the employers follow the principle of
trusteeship, there is no scope for conflict of interests between them and labor.
• Workers can use non-cooperation (Satyagraha) to have their grievances redressed. Gandhi
accepted the workers’ right to go on strike but they should exercise this right in a peaceful
and non-violent manner. Workers should resort to strike for just cause and after the
employers fail to respond to their moral appeals.
 References
• Katuwal, Shyam Bahadur, Management of Industrial
Relations; Molung Foundation, Nepal
• Kubendram, V. and Kodeeswari, K., Industrial Relations
and Labor Laws, Himalaya Publishing House, India
• Mamoria, C.B., S. Mamoria and S.V. Gankar, Dynamics
of Industrial Relations, Mumbai; Himalayan Publishing
House
• Monappa, Arun, Industrial Relations, Tata McGraw Hill
• Shrestha, Bishweshor Man, Industrial Relations
Management (Theory and Practice), Akshalok
Prakashan, Kathmandu, Nepal