Employment Relations in India
MSA 618 International and Comparative Employment
Central Michigan University
Name: Uzma Masood
Introduction:
India is the second most populated country in the world with a population of 1.2 billion. The Indian industrial relations system is rooted in British common law, which reflected India’s diverse population. Major Indian labour laws were liberalised in the 1990s for high financial development in India, after a long and slow economic growth, and were the most protective labour law regimes in the world. In ten years by 2011, the growth increased by 8 percent, but slowed down to 6 percent later by 2013. Thus, there was a necessity to reform India’s labor and employment regulations to accelerate a justifiable economic growth.
Economic context of reforms:
In the last two decades, India has integrated appreciably with the global economy, but most Indians remain poor. The country has achieved unprecedented GDP growth rates since the mid-2000s and is improving its standing in global economic, competitiveness and investment-attractiveness rankings. Education levels are poor and the government is investing heavily in vocational skills and education. Most critics consider to reform labour laws, to sustain the high growth rate required to pull large segments of society out of poverty.
Some of the most significant areas for reform include the need for:
¥ less laws with better implementation
¥ well-defined policies for termination of employment
¥ skills development funds outside of direct government control
India got its independence from UK in 1947, after which India planned to choose the industrialization model to increase the economic growth. The collective bargaining model was also thought of, but was left for the future. The Indian IR system is remarkable because it signifies a combination of all three bargaining levels and a variety of union structures. In the private corporate sector, plant-level bargaining takes place with enterprise-based unions that may that are associated with political parties, and bargain with the state at the industry or national level. Central and state government employees in the services sector (transportation, postal services, banking and insurance, police and firefighters, etc.) have their politically affiliated unions bargaining at the national or regional levels. Industrial harmony was considered a necessity for state-led development.
Collective bargaining in India:
Collective bargaining is a struggle to build a democratic and civilized society. The content and scope of ‘collective bargaining’ is a process of bargaining between the employers and their workers, by which they settle their disputes. Generally, by collective bargaining we mean, an essential element of economic democracy, is a ‘two party’ procedure for arriving at a commonly agreed solution. The term is thus used to describe the procedure, whereby employers must attempt to reach agreement about wage-rates and basic conditions of labor with trade unions, instead of with individual workers. In other words, it is the process of discussion and negotiation between an employer and a union culminating in a written agreement or contract and the adjustment of problems arising under the agreement. In India, the collective bargaining takes place at three levels: Plant level, Industry level, and National level. The industry level bargaining is most common in India, where agreements are made between the labor unions and management bodies.
Collective bargaining in practice:
Some employers of the multinational companies avoid unions, and have adopted union-busting tactics which include practices like, outsourcing of work, relocating some operations to non-union sites, voluntary separation, constraining recruitment. These strategies have weakened collective institutions. The competition among industries has been increasing due to globalisation. Employers now are keen on productive bargaining, rather than collective bargaining, to stay competitive as well as have a cooperative working environment. But, unions lean towards bargaining rather than productivity due to the threat of non-recognition. Provided that the size of work force remains the same with no increase in workers’ efforts, also with the guarantee of productivity not being the only criteria of pay increases, unions are likely to accept productive bargaining.
Issues in Employment:
There is over-dependence on agriculture and low outlooks of growth in industrial. Occupation in the public sector is much less, which historically has been an engine of economic growth. There is hope for increasing employment levels in the service sector, but concerns are over the low value that is added by IT professionals compared with other countries. The contribution of the IT sector, including the software industry, towards employment is still rather small now, but its importance is growing. Availability of technologies and increased access to them in the globalizing world can be a great advantage for a developing country like India.
Conclusion:
Employment relation policy in India has been too narrowly focused on the 7% of the labour force employed in the formal/organised sector. The challenge for the government is accommodating all workers and meeting most needs in the labour market. The government is faced with the enigma of having to moderate the excessive protection for workers in the formal sector (forming 7% of the labour force), while developing protection for workers in the informal sector (forming 93% of the labour force). Improvements to education and professional skills training are needed. The labour administration lack the professional skills and accountability to match their discretionary powers, so there is a need to build a team of professionals in these areas. Amendments to the dispute resolving system also are profoundly needed. Devising policies to achieve flexibility and job security have distorted, and need to be restarted.
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