Essay Industrial Democracy

For the book by Sidney and Beatrice Webb, see Industrial Democracy.

Industrial democracy is an arrangement which involves workers making decisions, sharing responsibility and authority in the workplace. While in participative managementorganizational designs workers are listened to and take part in the decision-making process, in organizations employing industrial democracy they also have the final decisive power (they decide about organizational design and hierarchy as well).[1]

In company law, the term generally used is co-determination, following the German word Mitbestimmung. In Germany, companies with more than 2000 employees (or more than 1000 employees in the coal and steel industries) have half of their supervisory boards of directors (which elect management) elected by the shareholders and half by the workers.

Although industrial democracy generally refers to the organization model in which workplaces are run directly by the people who work in them in place of private or state ownership of the means of production, there are also representative forms of industrial democracy. Representative industrial democracy includes decision-making structures such as the formation of committees and consultative bodies to facilitate communication between management, unions, and staff.


Advocates often point out that industrial democracy increases productivity and service delivery from a more fully engaged and happierworkforce[citation needed]. Other benefits include less industrial dispute resulting from better communication in the workplace; improved and inclusive decision-making processes resulting in qualitatively better workplace decisions, decreased stress and increased well-being, an increase in job satisfaction, a reduction in absenteeism and an improved sense of fulfillment[citation needed]. Other authors regard industrial democracy as a consequence of citizenship rights[citation needed].

Works councils and workers' participation[edit]

Main article: Works council

At the point of production, the introduction of mandatory works councils and voluntary schemes of workers' participation (e.g. semi-autonomous groups) have a long tradition in European countries.[2]


Main article: Co-determination

In a number of European countries, employees of a business take part in election of company directors. In Germany, the law is known as the Mitbestimmungsgesetz of 1976. In Britain a 1977 proposal for a similar system was named the Bullock Report.


The anarchist thinker Pierre-Joseph Proudhon used the term "industrial democracy" in the 1850s to describe the vision of workplace democracy he had first raised 1840s What is Property? Or, an Inquiry into the Principle of Right and of Government (management "must be chosen from the workers by the workers themselves, and must fulfil the conditions of eligibility.") He repeated this call in later works like General Idea of the Revolution[3]

In late nineteenth century, and at the beginning of the twentieth century, industrial democracy, along with anarcho-syndicalism and new unionism, represented one of the dominant themes in revolutionary socialism and played a prominent role in international labour movements. The term industrial democracy was also used by British socialist reformers Sidney and Beatrice Webb in their 1897 book Industrial Democracy. The Webbs used the term to refer to trade unions and the process of collective bargaining.[4]

While the influence of the movements promoting industrial democracy declined after the defeat of the anarchists in the Spanish Revolution in 1939, several unions and organizations advocating the arrangement continue to exist and are again on the rise internationally.

The Industrial Workers of the World advance an industrial unionism which would organize all the workers, regardless of skill, gender or race, into one big union divided into a series of departments corresponding to different industries. The industrial unions would be the embryonic form of future post-capitalist production. Once sufficiently organized, the industrial unions would overthrow capitalism by means of a general strike, and carry on production through worker run enterprises without bosses or the wage system. Anarcho-syndicalist unions, like the Confederación Nacional del Trabajo, are similar in their means and ends but organize workers into geographically based and federated syndicates rather than industrial unions.

The New Unionism Network also promotes workplace democracy as a means to linking production and economic democracy.

Representative industrial democracy[edit]

Modern industrial economies have adopted several aspects of industrial democracy to improve productivity and as reformist measures against industrial disputes. Often referred to as "teamworking", this form of industrial democracy has been practiced in Scandinavia, Germany, The Netherlands and the UK, as well as in several Japanese companies including Toyota, as an effective alternative to Taylorism.

The term is often used synonymously with workplace democracy, in which the traditional master-servant model of employment gives way to a participative, power-sharing model.

See also[edit]


  1. ^Rayton, D. (1972). Shop Floor Democracy in Action. Nottingham: Russell Press. 
  2. ^Joel Rogers/Wolfgang Streeck (eds.): Works Councils. Consultation, Representation, and Cooperation in Industrial Relations, The University of Chicago Press, Chicago-London 1995. - Thomas Sandberg; 'Work Organization and Autonomous Groups, LiberFörlag, Uppsala 1982.
  3. ^Property is Theft! A Pierre-Joseph Proudhon Anthology. Edinburgh/Oakland: AK Press. p. 610, p. 119, pp. 586-7
  4. ^Müller-Jentsch, Walther (December 16, 2007). "Industrial Democracy: Historical Development and Current Challenges"(PDF). Management Revue. 19 (4): 260–273. Retrieved 17 August 2010. 


  • M Poole, 'Theories of Industrial Democracy: the Emerging Synthesis' (1982) 30(2) Sociological Review 181-207
  • W Müller-Jentsch, Industrial Democracy: Historical Development and Current Challenges' (2007) 19 (4) Management Revue 260–273
  • P Blumberg, Industrial Democracy: The Sociology of Participation (1969)
  • K Boyle, The UAW and the Heyday of American Liberalism, 1945-1968 (1995)
  • M Derber, The American Idea of Industrial Democracy, 1865-1965 (1970)
  • SM Lipset, M Trow and J Coleman, Union Democracy: The Inside Politics of the International Typographical Union (1977)
  • JA McCartin, Labor's Great War: The Struggle for Industrial Democracy and the Origins of Modern American Labor Relations, 1912-1921 (1998)
  • M Poole, Industrial Relations: Origins and Patterns of National Diversity (2008)
  • M Poole, Workers' Participation in Industry (2nd edn 1978)
  • BC Roberts (ed), Towards Industrial Democracy: Europe, Japan and the United States (1979)
  • B Webb and S Webb. Industrial Democracy (1897)

External links[edit]

Industrial Relations

Industrial relations play a crucial role in establishing and maintaining industrial democracy. The establishment of good industrial relations depends on the constructive attitude on the part of both the management and the unions (Bhatia, 2002). The maintenance of good human relationships is the main theme of industrial relations, because in its absence the whole edifice of organisational structure may crumble (Mamoria et al, 1995) Industrial relation is an art of living together for the purpose of production, productive efficiency, human well-being and industrial progress. The existence of good human relations, organised labour movement, collective bargaining, fair dealing by management with the workers, joint consultation at all levels, etc. is necessary for the establishment and maintenance of harmonious industrial relations and for building up new attitudes and institutions (Sarma, 1984) Thus, no industry can flourish unless there is industrial peace and co-operation. India was first, second and third among the selected countries in the world in the year 2002 with regard to Man days lost, number of workers involved and number of disputes respectively.
Industrial relations constitute one of the most delicate and complex problems of the modern industrial society. This phenomenon of a new complex industrial set-up is directly attributable to the emergence of 'Industrial Revolution'. The pre-industrial revolution period was characterized by a simple process of manufacture, small scale investment, local markets and small number of persons employed. All this led to close proximity between the manager and the managed. Due to personal and direct relationship between the employer and the employee it was easier to secure cooperation of the latter. Any grievance or misunderstanding on the part of either party could be promptly removed. Also, there was no interference by the State in the economic activities of the people. Under such a set-up industrial relations were simple, direct and personal. This situation underwent a marked change with the advent of industrial revolution ' size of the business increased needing investment of enormous financial and human resources, there emerged a new class of professional managers causing divorce between ownership and management, and relations between the employer and the employer became interchanged and gradually antagonistic. This new set-up rendered the old philosophy of industrial relation irrelevant and gave rise to complex, indirect, and impersonal industrial relations.
Industry today is neither viewed as a venture of employers alone nor profit if considered as its sole objective. It is considered to be a venture based on purposeful cooperation between management and labour in the process of production and maximum social good is regarded as its ultimate end and both management and employees contribute in their own way towards its success. Similarly, labour today is no more an unorganized mass of ignorant works ready to obey without resentment or protest the arbitrary and discretionary dictates of management. The management has to deal with employees today as individuals but also as members of organized social groups who are very much conscious about their rights and have substantial bargaining strength. Hence, the objective of evolving and maintaining sound industrial relations is not only to find our ways and means to solve conflicts to resolve differences but also to secure the cooperation among the employees in the conduct of industry.
But maintaining smooth industrial relation is not an easy task. Almost all the industrialized countries of the world have faced the problem of establishing and maintaining good management worker relationships in their industries. Each country has sought to find our solution, depending upon its economic, social and political environment. However, industrial conflict still arises and therefore establishment and maintenance of satisfactory industrial relations forms an important plank in the personnel policies of modern organization.

The expression "Employment Relations" or" Industrial Relations" is used to express the general web of relationships between employers and employees normally obtained. But it is the narrow aspect of the term. In real sense Employment Relations refers to a dynamic and developing concept which is not limited to the complex of relations between trade unions and management but also refers to all types of relationships between all the parties in an enterprise.

In the narrow sense, it refers to all types of relationships between employer and employees, trade union and management, works and union and between workers and workers. It also includes all sorts of relationships at both formal and informal levels in the organization.
In the broad sense, industrial relations cover all such relationships that a business enterprise maintains with various sections of the society such as workers, state, customers and public who come into its contact.
The subject therefore includes Industrial Relations and joint consultations between employers and work people at their workplace, collective relations between employers and their organizations and trade unions and the part played by the state in regulating these relations. The under- written definition can explain it properly. Therefore, in indusial relations, one seeks to study how people get on together at their work, what difficulties arise between them, how their relations including wages and working conditions etc., are regulated. Industrial relations, thus, include both 'industrial relations' and 'collective relations' as well as the role of the state in regulating these relations. Such a relationship is therefore complex and multidimensional resting on economic, social, psychological, ethical, occupational, political and legal levels. There are mainly two set of factors that determine the state of industrial relations ' whether good or poor in any country. The first set of factors, described as 'institutional factors' include type of labour legislation, policy of state relating to labour and industry, extent and stage of development of trade unions and employers' organizations and the type of social institutions. The other set of factors, described as 'economic factors' include the nature of economic organization capitalist, socialist technology, the sources of demand and supply in the labour market, the nature and composition of labour force etc.
The concept of industrial relations has become a part and parcel of management science, since the emergence of the factory system in the early nineteenth century. It also receives widespread attention even in the modem industrial age, as it considers policies and activities for the betterment of personnel in the industry.
The term "industrial relations" refers to industry and relations. "Industry" means "any productive activity in which an individual is engaged" and "relations' mean "the relations that exist in the industry between the employer and his workers". The term 'industrial relations' is so broad that it is not amenable to a precise definition. But the term is used synonymously with labour relations, employee relations and union-management relations. Even the personnel management is used interchangeably with industrial relations (Scott, 1961). In its strict sense, the term "industrial relations' means "relationship between management and workmen in a unit or an industry". In its wider connotation, it means the organisation and practice of multi-pronged relationships between workers and management, unions and workers, and the unions and managements in an industry (Sarma, 1984).
According to the ILO, "Industrial relations deal with either the relationships between the State and employers' and workers' organisation or the relation between the occupational organisation themselves". The ILO uses the expression to denote such matters as "freedom of association and the protection of the right to organise and the right of collective bargaining; collective agreements, conciliation and arbitration; the machinery for co??operation between the authorities and the occupational organisations at various levels of the economy (Kumar, 1961).
The Encyclopaedia Britannica defines industrial relations as, "The concept of industrial relations has been extended to denote the relations of the State with employers, workers and their organisations. The subject, therefore, includes individual relations and joint consultation between employers and work people at their workplace; collective relations between employers and their organisations and trade unions and the part played by the State in regulating these relations (Encyclopaedia Britannica, 1961).
The concept of industrial relations is a developing and dynamic concept, and does not limit itself merely to a complex of relations between the union and the management, but also refers to the general web of relationships normally obtaining between employees a web much more complex than simple concept of labour capital conflict (Singh, 1968).
To sum up, industrial relation is the relation in the industry created by the diverse and complex attitudes and approaches of both management and workers or employers and employees in connection with the management of the industry.
Dunlop, J.T. defines industrial relations as 'the complex interrelations among managers, workers and agencies of the governments'. According to Dale Yoder 'industrial relations is the process of management dealing with one or more unions with a view to negotiate and subsequently administer collective bargaining agreement or labour contract'.
According to Richard A. Lester, "Employment Relations involve attempts workable solutions between conflicting objectives and values; between incentive and economic security; between discipline and industrial democracy; between authority and freedom; between bargaining grand co-operation".

Dunlop also defined IR in a simple way. According to him "Employment Relation system should be viewed as a sub-system of the society. "Discussing the structure of an Industrial Relations system, the author observes that IR is an Employment Relations System at any one time in its development is regarded as comprised of certain actors, certain contexts, an ideology which binds the "ERS" together and a body of rules created to govern the actors at the work place and work community.

The evolution of industry has been quite gradual. There was a time in the history of human civilisation when there used to be no industrial activity. During hunting stage, man lived all by himself. He used to go out for hunting and eat whatever he could find, even flesh, fish, fruits and roots of trees. He used tree bark, leaves and animal skins to cover his body. But he had no fixed residence. After this, man entered into pastoral stage under which he started domesticating animals to have an assured supply of milk, meat and skin. He lived near the banks of lakes and rivers because of the availability of grass and water for the animals. Gradually, man discovered a new use to which land could be put. He entered the agricultural stage. He began cultivating the land to grow food grains. Some people who did not have any work, offered to work in the fields of others. Such workers were paid in kind. The exchange of services for goods made the background for the evolution of industry. The various stages of the evolution of industry can be classified in following Stages:
1. Primitive stage
2. Agrarian economy stage
3. Handicrafts stage.
4. Guild system.
5. Putting out (or Domestic) system.
6. Industrial revolution.

The Machine age started after industrial 'revolution in England which took place between 1760 A.D. and 1820 A.D. The first three stages represent Pre-machine age. Let us look at these stages briefly:
1 Primitive Stage
The families at this stage were self-sufficient as their needs were limited. Hence, there was no problem of exchange of goods. Division of labour was restricted only to the family level. This was mainly because men devoted their time to activities like hunting, fishing and making of weapons, and women engaged themselves in cooking, bringing up the children, agriculture and domestication of animals and doing other household chores. In short, all the activities of the family were carried on either to produce or to procure products for family consumption. In this manner a family was able to satisfy its needs, and the question of exchange of goods did not arise. In the course of time, some families started keeping the animals rather than killing them. This led to domestication of animals. Animals were treated as a form of wealth, which could be exchanged for other products required by the family. This gave birth to the barter economy. This may be defined as the direct exchange of one commodity for another commodity. 'The barter economy developed because of the increase in the number of human wants and inability of a family to produce all the things required, by it. The exchange was direct and without the use of any common medium of exchange. Every person used to exchange his surplus goods with the other persons for the goods required. For instance, a farmer, who had plenty of food grains but no cloth exchanged a part of his food grains with the weaver who had surplus cloth and needed food grains. The main difficulty of the barter system was the lack of double coincidence of wants and a common measure of value. Therefore, the exchange was restricted only to the goods in which some families were surplus and other families were deficient.
2 Agrarian Economy Stage
Well by this time things changed a little. Many tribes settled down permanently at some place and began to sow seeds and rear cattle on the land, which they shared in common. Agriculture became the primary source of maintenance during this stage. These tribes were self-sufficient as they produced everything they required. The division of labour confined to the division of work between men and women of the tribe. Eventually with the rise of private ownership of property inland and cattle, the tribe split up into families. Gradually, human wants also became varied. These families were no more self-sufficient. Moreover, some families concentrated on occupations other than agriculture. This led to exchange of goods for goods to satisfy needs of various families and the establishment of village economy. The village became a unit of economic self-sufficiency. Some families also started using hired labour. Later on, traders came into existence that purchased the surplus products of different families and sold them to those requiring these products. The difference in purchase and sale price was their profit. Emergence of traders led to specialisation in different fields by different families. It was no longer necessary to produce everything a family needed for self consumption.
3 Handicrafts Stage
This is stage; artisans living in villages produced the products for the local population and got in exchange various things from customers. There was hardly any machinery. The craftsman used simple hand tools arid manual skills for producing the goods. There was no division of labour at this stage. Thus, the organisation of industry was quite simple. The craftsman was responsible for assembling various raw materials, and selling the goods produced by him.
4 Guild Stage
The 'guild stage' is the next stage under this stage two types of guilds were initiated, namely, Merchant Guild, and Craft Guild. A merchant guild was an association of merchants engaged in trade in a particular locality. The purpose of a merchant guild was to enforce equality of opportunity for the members of the guild, to protect their interest, to avoid competition among the members and also to regulate the conduct of its members by prohibiting unfair practices. A craft guild, on the other hand, was an association of the skilled artisans engaged in the same occupation. Thus, there were several guilds in a town. The craft guild regulated entry to the craft, prescribed standards of workmanship and regulated the conduct of the members. The guild system began to decline by the end of 15th century due to the narrow attitude of the guilds and the increasing rivalry among their members.

5. Putting out System.
At this stage, the intermediary between the producers and consumers of goods came to play an important role. The entrepreneur gave outwork to the artisans who worked in their homes. The artisans still owned the means of production. The entrepreneur came at regular intervals, collected the goods and paid for them to the artisans. The artisans faced difficulty when the scale of production increased and there was a need for new tools of production. The entrepreneur started providing raw materials and, tools to the artisans who produced goods and received wages on piece wage basis. That is why; this stage was called the putting out system. During the beginning of 18th century, the entrepreneur followed the practice of employing the artisans and getting work from them at their own premises. The entrepreneur procured raw-materials and equipment, assigned work to the artisans, inspected the quality of products, and found a market for his products. In other words, he was the owner and manager of the production system.
6. Industrial Revolutions
Industrial revolution during the later part of the 18th century and earlier part of the 19th century had a vital influence on the development of industry and commerce. It changed radically the techniques of production and had an important impact on the life of mankind. Industrial revolution was the result of the inventions of many English scientists during 1760 to 1820. The need for inventions arose because of the increase in the demand of products due to widening of markets followed by the geographical discoveries of the late 15th and 16th centuries. It was beyond the capacity of the industry using labour intensive techniques to meet the increasing demand. The inventors in England had set for themselves the task of finding ways and means to remove the hindrances in production faced by the producers and manufacturers. James Hargreaves made 'spinning genny' in 1764, and Richard Arkwright introduced 'water-frame' in 1779. Thereafter, many mechanical inventions came in quick succession such as 'mule spinner' by Crompton, and 'power-loom' by Cartwright. The invention of steam engine enabled man to drive the machines by power. The concept Industrial Relations largely emerged during the Industrial Revolution. Some aspects of Industrial Revolution which will help in understanding of the evolution of Industrial Relations it can be summed up as:
1. There were a series of mechanical inventions by the English scientists.
2. Production in factories started with the help of machines run by mechanical power such as steam, oil and electricity: Thus, setting up a factory required huge amount of capital. This gave birth to two classes in industry, namely, capitalist and labour.
3. Introduction of machinery led to mass scale production of standardized goods. .
4. The modern factory system provided both direct and indirect employment to a large number of people. The factories generated direct employment and trading in raw materials and factors products gave indirect employment to traders and mercantile agents.
5. Large scale employment in factories gave birth to labour problems, which necessitated some steps by employers to create good human relations in factories.

The significant changes brought about by industrial revolution are listed below:
a. Development of engineering. Engineers were required to design machinery for textiles, coal mining, etc. for making and repairing steam engines, and making tools and locomotives.
b. Revolution in iron making. The engineers, who took charge of important task connected with the industrial change, could succeed in their work only if iron was cast in large quantities and was of fairly good quality.
c. Use of power driven machines. Power driven machines were used in industry. It began with cotton spinning and weaving and, later on, spread to wool, silk etc. Rise of chemical industry. The application of power driven machines in textile mills made it necessary to develop bleaching, dyeing, finishing and printing processes to keep pace with the output of textile mills.
e. Development of coal mining. Coal was needed to refine pig iron and cast it into the form in which it was needed by the engineers. It was also needed for generation of steam power.
f. Development of means of transport. For regular supply of raw materials, etc., to industry and for the distribution of goods produced by the factories, effective transport was a must. The development of the means of transport like railways and steamships constitutes the most important impact of the industrial revolution. Above you have seen the changes brought about by the industrial revolution so now going on a little further on the same topic let us discuss the effects industrial revolution had on the economic front.
Economic Effects of Industrial Revolution
Industrial revolution brought about the following economic changes:
i. Large Scale Production. The industrial revolution made mass production of goods possible by the use of power driven machinery in place of hand tools.
ii. Change of form of Ownership. Large-scale production increased the size of industrial enterprises sole proprietorship concerns expanded into partnership firms and further developed into joint-stock companies. The evolution of joint stock companies was an important outcome of the industrial revolution.
iii. Specialization. Industrialization led to a craze for specialization in every field because of development in the means of transport and communication. Different parts of the country (and even different parts of the world) specialized in producing or manufacturing different commodities or parts. Specialization helped in reducing the cost of production.
iv. Rise of Capitalism. Cottage system of production was greatly replaced by the factory system. Under the factory system capital is the crucial factor. Large-scale production further increased the need and significance of capital. This gave birth to capitalistic economy under which there are two classes of people, namely, capitalists and workers. The workers are purely wage earners dependent for their 'living on the capitalist employers. The capitalist system also increased the importance of money as a medium of exchange, measure of value and store of value.
v. Trade Cycles. Large-scale production accompanied by capitalism gave birth to trade cycles having successive periods of inflation arid depression. During the period of prosperity, there is high level-of employment and sustained rise is prices. But during depression, there is large-scale unemployment decrease in demand and so on. Many weak firms are eliminated during the depression period.
vi. Standard of Living. Industrial revolution had a positive impact on the standard of living of the people. Factories produced goods of better quality and at cheaper rates for the consumption of the people. This improved their standard of living.
Social and Political Effects of Industrial Revolution
Industrial revolution not only affected the economy but also created certain social and political implications, which in turn created the need for organization of workers and later paved the way for trade unionism. Here let us discuss a few social and political effects of industrial revolution:
i. Urbanization. Industrial revolution led to the concentration of population in towns because factories and other establishments were located in the towns. This gave birth to the housing problem. Even now, lakhs of workers continue to live in slum areas in the industrial towns.
ii. Rise of Individualism. People from the villages came to the towns to find employment. Their close ties with the village, land and family were broken. The industrial revolution created conditions under which workers aimed at material progress by working in the factories. This led to the disintegration of joint family life.
iii. Awareness of Rights. The industrial revolution gave birth to two classes, namely capitalists and workers. There was economic inequality between the rich and the poor. Slowly and slowly class-consciousness came in the minds of workers and they organized themselves in the form of unions to fight for their economic, social and political rights.
iv. Poor Working Conditions. The workers were paid lower wages and they had to work under poor working conditions. There was no one to convince the factory owners about the need of good working conditions so long as trade unions did not protest. This was an obstruction in increasing the productivity of the workers.
v. Political Awareness. Industrial revolution increased the incomes and standard of living of the people. The earning people started spending more and more on the education of their children. Press also progressed a lot to air the grievances of the working class. These factors created political consciousness among the people. The workers demanded the right to form unions and to participate in the management of the industrial undertakings.
During the early period of industrialization, workers faced several problems in the factories. They got lower wages and worked under poor working conditions. So they organized themselves into trade unions to secure better wages and better conditions of work. The basic philosophy underlying trade unionism was through strength and collective support, the employers could be forced to listen to the workers and redress their grievances. The weapons used included strikes, slowdowns, walkouts, picketing, boycotts and sabotage. Sometimes, even physical force was used. Trade unionism influenced the personnel management in such fields of activity as the adoption of employee grievance handling systems, the acceptance of arbitration as means of resolving conflict of rights, disciplinary practices, the expansion of employee benefit programmes, the liberalization of holiday and vacation time clear definition of job duties, job rights through seniority and the installation of rational and defensible wage structures. Because of influence of trade unions, several employers in the U.S.A. appointed Welfare Secretaries and also launched schemes for workers' participation. They adopted paternalistic attitude towards the workers and invested on welfare activities for the betterment of workers. In several companies, personnel departments were set up around 1910 to look after functions like recruitment, training, motion study, record-keeping, welfare, etc.
Trade unionism in India developed quite slowly as compared to the western nations. The main reason for the delayed start of the labour movement is the difference in her economic set up from those of the United Kingdom and the U.S.A. Though the foreign trading companies helped in the spread of trade and commerce in the country during the eighteenth and the first half of the nineteenth centuries, they were also instrumental in destroying indigenous industries. They were more interested in selling goods obtained from their own country and not in setting up production centres. It was only during the 19th century, and especially during its second half, that a number of factories were set up in Calcutta and Bombay-jute mills in Calcutta and cotton textile mills in Bombay. Industrial capitalism was well established in Europe during the 18th and 19th centuries, but in India modern types of industries could be set up only during the middle of the 19th century.
Indigo plantations were the first to be started in 1831 followed by a cotton mill in Bombay in 1853, the manufacture of jute in Calcutta in 1855, and the coalfields were connected by rail to the port city of Calcutta. These developments paved the way for development of industries in India.
The first indication of industrial unrest and earliest work stoppage came to the fore in 1877 on the initiative of weavers of Empress Mills, Nagpur. Though no trade union existed, the relations between employers and workers cannot be said to be peaceful. Evidence of short-lived strikes and their frequent occurrence is found at various centres such as Bombay and Surat. 'They ended in suppression of operatives... power on one side and ignorance and mildness on the other are the basis on which the present relations and the relations are quiet, rest.' Lock-outs were completely non-existent. This reveals the unequal strength of the bargainers at that time. The powerless workers in mild disputes were intimidated, dismissed and victimized by the employers. In 1895, probably for the first time, the workers struck work at the Budge Jute Mill, as a result of which the mills suffered a loss of Rs. 18,000.
The passing of the Factories Act in 1881 awakened the working class towards a concerted approach. In 1884 about 5,000 workers presented a memorandum to the Bombay Factory Labour Commission under Shri N.M. Lokhande. In 1890, the first labour association, viz., Bombay Millhands' Association was established. However, till 1895, workers had very little class consciousness and, therefore, they lacked the power of united action. In 189':' was formed the Amalgamated Society of Railway Servants c: India-consisting of Anglo-Indians and domiciled Europeans employed on railways and acted more as a friendly society than a combination for securing concessions. In 1905, another organization was formed in Calcutta under the name of the Printers' Union. The Postal Union was formed in Bombay in 1905. These organizations formed on the lines of trade unions and may be considered as the pioneer organized labour associations in India. Thus, it may be noted that there were no strong organizations for concerted action. Whatever trade unions emerged, they were of a purely local character at the level of individual mills. The conditions of labour were severely affected by the World War I and the unions could not do much to improve the lot of workers. - Though quite a number of workers' organizations did spring up during the early years of the twentieth century, legal recognition to the movement was not forthcoming readily. The first organization-The Amalgamated Society of Railway Servants in India and Burma-formed in 1897 was registered under the Companies Act. Specific legislation for registration of trade unions was enacted only in 1926. As a matter of fact, the pressure exerted by the trade unions movement in the United Kingdom facilitated this legislation. However, Mr. B.P. Wadia initiated the process through introduction of an element of militancy in the movement in India. The Textile Workers Unions set up by him in Madras in 1918 as an immediate success and through a number of strikes; he was able to get a lot of benefits for the workers. But the employers retaliated by filing a suit for damages against Mr. Wadi, A., and other leaders and obtained court injunction restraining the union leaders from interfering with their business. This led to focusing attention to the need for legislation for protecting trade union activities.
On the other side of the country, a new experiment on the labour front was carried out. A strike was launched by the textile mill workers in Ahmedabad in 1918 whose leadership was taken over by Mahatma Gandhi who turned it into a Satyagrah. From this was born (in 1920) the famous Textile Labour Association of Ahmedabad. Enactment of the Trade Unions Act in 1926 and formation of the International Labour Organisation (I.L.O.) gave a fillip to the trade union movement in India. The immediate result of the formation of International Labour Organization was the birth of the All-India Trade Union Congress in 1920. With the formation of I.L.O., immediate necessity was felt for a forum for election of the workers' representatives to that organization or, at least, of an agency that could tender suitable advice to Government regarding selection of the workers' representatives. This necessity led to the formation of the All-India Trade Union Congress. The Trade Unions Act gave legal status to registered trade unions and conferred on them and their members a measure of immunity from civil suits and criminal prosecution. The Act gave legal status to unions and enhanced their position in the minds of employers and the general public. This Act was an important landmark in the history of trade union movement in India. The failure of the Bombay Textile Strike of 1929 and the economic depression of that period brought a lull in trade union activity. But industries faced the problem of effective handling of labour-management relations. The managements declared lock-outs to resist pressure by workers while workers resorted to strikes to pressurize managements for higher wage and better facilities. The Government also intervened in many cases to resolve the disputes between the management and workers. This is how the industrial relations system consisting of three actors, i.e., management, workers and government, evolved.

A study of modern industrial relations in India can be made in three distinct phases. The first phase can be considered to have commenced from about the middle of the nineteenth century and ended by the end of the First World War. The second phase comprises the period thereafter till the attainment of the independence in 1947, and the third phase represents the post-independence era.
First Phase: During the first phase, the British Government in India was largely interested in enforcing penalties for breach of contract and in regulating the conditions of work with a view to minimising the competitive advantages of indigenous employers against the British employers. A series of legislative measures were adopted during the latter half of the nineteenth century, which can be the beginning of industrial relations in India.
The close of the First World War gave a new twist to the labour policy, as it created certain social, economic and political conditions, which raised new hopes among people for a new social order. There was intense labour unrest because workers' earnings did not keep pace with the rising prices and with their aspirations. The establishment of ILO in 1919 greatly influenced the labour legislation and Industrial relations policy in India. The emergence of trade unions in India, particularly the formation of All India Trade Union Congress (AITUC) in 1920 was another significant event in the history of industrial relations in our country.
Second Phase: The Policy after the First World War related to improvement in the working conditions and provision of social security benefits. It was a period of boom for employers. With rising prices, their profits went up enormously. The wages of workers, however did not keep pace with this tendency. Their economic distress brought together and an organised working class movement began in the country resulting strikes or lockouts. During this period, as a result of ILO influence, various laws were enacted i.e. Workmen's Compensation Act (1923), the Trade Unions Act (1926) and the Trade Disputes Act (1917).
During the Second war, employers made enormous profits. The workers demanded a share in them. Bonus and dearness allowance were granted to them but as money wages did not increase in proportion to the rise in prices. The years immediately following the war were the most disturbed years from the point of view of the pattern of Industrial relations in India. In 1946 the Industrial Employment (Standing orders) Act and the Industrial Disputes Act, 1947 provided for the settlement of disputes.
Third Phase: Immediately after Independence, in the interests of the national economy, it was considered necessary to put a stop to strikes/ lockouts that interrupted production. A tripartite conference was, therefore convened in 1947, at which the industrial Truce Resolution was adopted, giving paramount importance to the maintenance of industrial peace. The Minimum Wages Act, The Factories Act and the Employees State Insurance Act were all enacted in 1948. When India became independent in 1947, industrial scene was subjected to considerable amount of chaos and confusion. Industrial unrest and shattered worker management relations have been prevalent everywhere. Govt. has emerged as an arbitrator between management and workers. It is in this context that the Industrial Disputes Act of 1947 deserves importance. During the second five year plan period, certain norms, mechanisms and practices were evolved which evolved which formulate the need based minimum wage, wage boards, guidelines on rationalisation, code of discipline, code of conduct, scheme for workers participation in management.

Actors in Industrial Relations
Initially, the management and the unions were considered the two main actors of industrial relations. However, the State's policy towards labour also began to influence industrial relations, particularly after independence, and, therefore, became the integral force in the industrial relations. It plays a dual role-one as the initiator of policy and the other as employer, or owner, by setting up an extremely large public sector. Again, employees have their organisations. Employers also have their associations. Thus, there are five parties involved in Industrial relations, namely, labourers, trade unions, management, employers' group and the Government (Singh, 1971). The National Commission on Labour clearly mentioned the role of the actors as "the goal of labour-management relations may be stated as maximum productivity leading to rapid economic development, adequate understanding among employers, workers and Government of each other's role in industry, commitment to industry and to the individual way of life on the part of labour as well as management, sound unionism, efficient institutionalised mechanism for handling industrial disputes and willingness among parties (Gupta, 2004).
A large number of systematic attempts have been made by the industrial sociologists and industrial relations theorists to make theoretical perspectives for analysing industrial relations. They develop their own views and ways for explaining the complex phenomenon of industrial relations. The contributions of psychology, sociology, economics, history, political science, anthropology, laws, etc. are of much significance in resolving the problem of industrial relations (Kumar, 2002). Vaidya (1970) observes that "an economist tries to interpret industrial conflict in terms of impersonal market forces and laws of supply and demand. To a politician, industrial conflict is a war of different ideologies-perhaps a class war. To a psychologist, industrial conflict means the conflicting interests, aspirations, goals, motives and perceptions of different groups of individuals operating within and reacting to a given socio??economic and political environment". Thus, the approaches of workers and the management create a wide gulf between the working class and the employer. A healthy industrial relations scene is possible only by taking suitable approaches to settle the differences between them.
(i) Systems Approach
The systems approach analyses industrial relations systems as a sub system of society' The core elements of the systems approach comprise actors, certain contexts, an ideology which binds the industrial relations system together and a body of rules created to govern the actors at the workplace. The significant aspects of the environment in which the actors interact are the technology, market constraints and relative distribution of power relations. The actors, in an environment context, establish rules for the workplace and the work community, including those governing the contracts among the actors in an industrial relations system. The network or web of rules consists of procedures for establishing rules, the substantive rules and the procedures for deciding their application to particular situations. The establishment of procedures and rules is the centre of attention in an industrial relations system. The ideas and beliefs held by actors, which help bind or integrate the industrial relations system when consensus is reached. The Dunlop's system shows a definite preoccupation with rules and rule making and thus shows a concern for order and for containment of conflict.
The systems approach views the industrial relations system as a sub-system of the society or the total social system. The society is seen as providing certain external influences and constraints but not as completely dominating industrial relations. An industrial relations system at any particular time is regarded as comprising of certain actors, certain context and ideology which bind the industrial relations system together through a body of rules created to govern the actors at the place of work and work community. The creation of rules is the central aim of the industrial relations system and
Dunlop isolates three groups of actors-Workers, Management and the Government-who take part in the rule-making process.
Thus, R= f (a,i,b)
Where R = Industrial relations system
a = actors
i = ideology
b = body of rules
Since the problem of industrial relations is multifaceted as shown in the Figure above, the first step will be to diagnose a situation in terms of the prevailing circumstance in the organization and then to adopt a strategy of effecting changes at crucial points. Conflict in industry cannot be completely wiped out, it can only be contained with reasonable limits.
(ii) Classical Approach (Marxist Model)
Karl Marx considered industrial conflict as a part of the broader social conflict between classes and used it to explain the fundamental historical process of change and-development inhuman society. He was concerned with certain macroeconomic processes and deep-rooted inequalities in society as a whole, and not with specific industries or firms. Marx divided the society into two classes: (i) capitalists, who own the means of production, and (ii) proletariat, who own nothing but their own labour power. These classes are antagonistic groups. Antagonism and conflict are of the very essence of Marx's conception of class. The reasons for this fundamental antagonism lie in the capitalist mode of production.
The main drawback of the capitalist mode of production is the exploitation inherent in the system of wage labour. Wage labour implies that labour is-a commodity which is bought and sold like any other. Labour is bought at the cheapest price possible and put to work on means of production owned by the capitalist. The worker is paid a wage which is barely sufficient for his subsistence. This gap is the surplus value which the capitalist appropriates. This appropriation of the surplus by the capitalist employer is not lessened rather increases, for the actual distribution of additional increments of revenue is determined by the power situation. Workers with no power may get nothing. There is no automatic distribution based on a sense of equity, thus the exploitation of the worker by the capitalist increases. Wage labour is, alienated because of exploitation by the capitalists. Alienation of a worker arises from the fact that he does not own the too1s with which he produces. Whatever is produced from the contribution of his labour is not exclusive creation (because of division of labour), it arises from the appropriation of the surplus; finally, it arises from himself because his labour is no longer a form of self-expression or an end itself, but a mere means to an end-the end being the wage which is necessary in order to survive.
(iii) Pluralist Approach
Job regulation through collective bargaining becomes a preoccupation. The entire thrust of this approach is oriented to the containment of conflict through institutionalisation and regulation of the structure and process of union-management relations. Fox made a distinction between 'unitary' and 'pluralist' concepts of industrial organisations the former recognising only one source of legitimate authority whereas the latter concept accepts the reality of several interest groups invested with power. Fox recognised the unusual distribution of power within and outside the enterprise because unlike the pluralist, the radical does not see collective organisation of employees into trade unions as resorting a balance of power.
The pluralistic theory is based on the premise that the enterprise contains people with a variety of interests, aims and aspirations; therefore, it is a coalition of different interests. Arthur Ross argued that an organization should view as a 'plural society containing many related but separate interests and objectives which must be maintained in some kind of equilibrium.' Given such views, conflict is not abnormal but quite natural. The capitalist is no longer a ruthless exploiter. He is willing to sit down and discuss terms with those who protest. Thus, protest has become institutionalized and has lost its bite. Given the nature and distribution of power in industry and society, both labour and management restrain each other to exercise the exclusives of power. Rather, together they construct and maintain rules and institutions for the regulation of conflict. Conflict cannot be wished away in this system. Arbitration, mediation and adjudication emerge as the major regulators of conflict, and strike becomes a weapon of last resort. Pluralism does not imply the inevitability of compromise and consensus in all situations. Fox argues that the aim of pluralism is to combine social stability with adaptability and freedom-this involves the assumption that on most occasions, conflict will be resolved by collective bargaining-the major institutional apparatus of the pluralist.
(iv) Human Relations Approach/Behavioural Approach
These theories were contributed by behavioural scientists who were concerned with the patterns of human behaviour in work situations. The human relations approach explains the behaviour of individuals and groups at work and helps in modifying or utilising such behaviour towards the achievement of organisational objectives. Their attachment to work and morale can be improved by providing motives of security and participation. The relationship between workers and managers can be improved by providing adequate measures of understanding of personality differences, irrational behaviour arising out of frustration and poor communication. This approach views industrial relations as their origin in the differences in the perceptions of management, unions and workers. These differences arise due to personalities, attitudes; motivation, leadership, group goals vs. individual goals, etc. are responsible for industrial conflicts. Human relation approach incorporates all knowledge drawn from multi-discipline areas like psychology, sociology, anthropology, economics and political science. This approach has its origin in the Hawthorne experiments conducted by Elton Mayo, Roethilsberger, Whitehead, Whyte and Homans, etc. According to this theory, conflict is an aberration and not the natural state of human society. This aberration occurs when tendency of the industrial society is to treat worker as an isolated individual, and deprive him of all control over his environment. This loss of mooring and control is a major source of conflict.
The core of human relations theory consists in the importance attributed to the small informal social groups as a source of human satisfaction. This satisfaction results from better human relations through the encouragement in creating informal social groups and better communic'1ition by providing not only downward communication but upward communication also.
The key to sound industrial relations lies in achieving better human relations in the organisation. The major criticism of this theory is that it treats the factory as if it were a self-contained and isolated social system. The sources of conflict lie as much outside the factory as within it and the argument that these entire strains can be handled by the management through better human relations within the factory is not convincing. Neo human religionists like Maslow, Herzberg and McGregor felt that workers look for satisfaction of their needs from their employment. The motivators include both economic and noneconomic rewards like appreciation of performance, knowledge of results, competition, etc.
(v) Social Action Approach
This approach is made to analyse the impact of techno-economic and socio-political changes on various actors and also to analyse the power of various components of the industrial relations environment - Government, employees, trade unions and political parties. The social action model points out the reciprocal nature of the relationship between social structure and behaviour.
The social action model has its origins in Weberian sociology. Under this model, the actors own definitions of the situations in which they are engaged and these are taken as an initial basis for the explanation of their social behaviour and relationships. This model points but the reciprocal nature of the relationship between social structure and behaviour. Social structure limits social action. Thus, a worker's ability to take strike action or an entrepreneur's ability to invest may be limited by his personal and by more general economic conditions, and this will help to determine the environment for similar decisions in future. One of the most important features of the social action models is the attitude it adopts towards social theory. The social action approach suggests that general explanations of social action are not possible simply because of the nature of the subject of social sciences-men do not react to the stimuli in the same way as matter in the natural sciences. The social action approach has been contrasted with the systems approach while the systems approach regards behaviour as a reflection of the characteristics of a social system containing a series of impersonal processes which are external to actors and constrain them, the social action approach stresses the way in which man influences the social structure and makes society
(vi) Gandhian Approach
Gandhian approach to industrial relations is based on fundamental principles of trusteeship; there is no scope for conflict of interests between the capital and the labour. Workers can use non cooperation (satyagraha) to have their grievances redressed. Gandhiji accepted the worker's right to go on strike, but they should exercise this right in a peaceful and non-violent manner. Workers should resort to strike for a just cause and after the employers fail to respond to their moral appeals. Gandhi urged the employer to show more magnanimity and an enlightened attitude towards their employees to ensure cordial employer-employee relations. He stood against exploitation of workmen, he asked workers to earn wage increases through corresponding increase in effort and production. Gandhian concept of industrial relations is much more relevant today than in the past. The earlier it is implemented the better it would be for the cause of industrial harmony and steady industrial growth.
Gandhiji's views on industrial relations are based on his fundamental principles of truth and non-violence and no possession. Out of these principles evolved the concept of trusteeship on which his philosophy of industrial relations rests. This philosophy presumes the peaceful co-existence of capital and labour, which calls for the resolution of conflict by non-violent, non-co-operation (i.e., Satyagraha), which actually amounts to peaceful strikes in ordinary parlance. Gandhiji accepted the workers' right to strike, but cautioned that this right is to be exercised in a just cause, and in a peaceful and nonviolent manner; and it should be resorted to only after employers fail to respond to their moral appeals. The principle of trusteeship propagates that the capitalist order can be transformed into an egalitarian one. It does not recognize the right to property except to the extent permitted by society for its own welfare; the individual does not have any right to hold or use wealth in disregard of the interests of society; and the character of production is to be determined by social necessity rather than by personal whims or greed. The apitalist is expected to hold industry in trust for the community; and the workers should be treated as co-trustees with the capitalist employer.
The trusteeship theory implies that there is no room for conflict of interests between the capitalist and the workers. Though wealth legally belongs to its owners, virtually it belongs to the society. If capitalists fail to pay minimum living wages to workers, workers should appeal to their conscience. If this does not work, they should resort to non-violent non-co-operation. As a pre-condition to this, two things are expected from workers: One is an awakening and other is the unity among them. By awakening among workers, Gandhiji meant developing and nurturing faith in their moral strength and their awareness of its existence which means that the workers should realize the fact that without their co-operation, capitalists cannot work and when the workers resort to non-co-operation, their exploitation by capital would stop. For putting the Gandhian concept of trusteeship into practice, the following guidelines should be followed:
a. The workers should seek redressal of reasonable demands only through collective action.
b. The workers should avoid strikes as far as possible in industries of essential services.
c. The strikes should be resorted to only as a last resort after all other legitimate measures have failed.
d. As far as possible, workers should take recourse to voluntary arbitration where efforts at direct settlement have not succeeded.
e. If they have to organize a strike, trade unions should seek authority from workers to do so, remain peaceful and use non violent methods.
(vii) Giri Approach
According to V.V. Giri, the late President of India, collective bargaining and mutual negotiations between management and labour should be used to settle industrial disputes. He suggested that there should be bipartite machinery in every industry and every unit of the industry to settle differences from time to time with active encouragement of the Government. Outside interference should not encroach upon industrial peace. Giri's stress was on voluntary efforts of the management and the trade unions to wind up their difference, through voluntary arbitration. He was against compulsory adjudication which cuts at the very root of the trade union movement. He advocated collective bargaining for securing industrial peace. The essence of this approach is internal settlement in preference to compulsion from outside and voluntary arbitration and collective bargaining rather than compulsory arbitration.

The following points illustrate the global aspects of IR:
' To safeguard the interest of labour and management by securing the highest level of mutual understanding and good-will among all those sections in the industry which participate in the process of production.
' To avoid industrial conflict or strife and develop harmonious relations, which are an essential factor in the productivity of workers and the industrial progress of a country.
' To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover and frequency absenteeism.
' To establish and promote the growth of an industrial democracy based on labour partnership in the sharing of profits and of managerial decisions, so that ban individuals personality may grow its full stature for the benefit of the industry and of the country as well.
' To eliminate or minimize the number of strikes, lockouts by providing reasonable wages, improved living and working conditions, said fringe benefits.
' To improve the economic conditions of workers in the existing state of industrial managements and political government.
' Socialization of industries by making the state itself a major employer
' Vesting of a proprietary interest of the workers in the industries in which they are employed.

Industrial relations play an important role in establishment of industrial peace, industrial discipline and industrial democracy. Good industrial relations, not only maintain a cordial atmosphere in the industry, but also facilitate production and industrial growth (Michaeil, 1979). It also safeguards the rights of the workers and the prestige and interests of the management. Mere technical efficiency, up to date machinery, good plant layout and dynamic organisation, etc. are not enough to make a business profitable; good human relations in industry play almost a decisive role in this respect (Nagaraju, 1981) Economic progress is bound up with industrial peace and industrial relations are not a matter of employees alone, but a vital concern of the community. It aims at creating a sense of belonging in the minds of the workers and a sense of patronising responsibility in the minds of the management. The strategic importance of industrial relations extends beyond the limited frontiers of union-management relationship and overlaps the future prospects of Indian democracy on the one hand, and the basic concepts and assumptions of economic development on the other (Kanaga, 1996). Therefore, it has a vital concern of all the employers, the employees, the Government and the general public as a whole (Singh, 1983).
The development of a nation generally depends upon the overall development of the industry and the overall development of the industry in turn depends upon the cordial and harmonious relations between worker and management. Thus, the goal of an industrial relations system is the maintaining conflict, achieving harmonious relations, resolving conflicts through peaceful means and establishing stable social relationships. Good industrial relations will have a positive effect on industrial production, efficiency, costs, quality, human satisfaction, discipline, technological and economic progress and finally on the welfare of the society.

The origin of the industrial relations can be traced to the origin of the industry itself. Industrial relations in an organised form started emerging in India only by the latter half of the 19th century. The original background of industrial relations in India can be classified under four periods.
(i) Ancient Period (Pre-Medieval Period)
Ancient India had witnessed cordial socio-economic relations. There will be a primitive type of socio-economic relations had existed in the various stages of ancient enterprises like hunting stage, pastoral stage, agricultural and village economy, hire stage, handicraft stage, barter economy, money economy, town economy and putting out system. The relations were not strained. Shudras (workers) placed themselves at the disposal of the superiors. They had implicit obedience to their employers. Slave system emerged in India and the relation between slave and his master was only according to commodity theory. But, the masters were kind hearted to the slaves.
(ii) Medieval Period
Kautilya's Arthashastra 3rd book provides sufficient evidence for the absence of the organisational existence of industrial relations in the beginning of the medieval period. Various guild systems, viz. artisans guild, merchants' guild and cooperative guild, caste system and slave system had not provided any scope for organised industrial relations. The relations were not bad during the period, which is evident from the statement of Ghosh & Santhoshnath (1973), "from the 4th Century B.C. till the latter half of the l0th century A.D., in spite of the foreign invasion, there is sufficient evidence to indicate that the relations between the employers and the workers were based on justice and equity.'' During the Mauryan period, there were evidences of good relations between workers and guild masters and between artisans and workers themselves. Workers were well regarded and the employer-employee relations were cordial. The bright industrial environments had ceased to exist during the Muslim Empire in India. Under the Mughal rule, the industrial environments were directly controlled by the rulers and relations in the industry were based on the whims and fancies of the rulers.
(iii) British Period
There was not much scope for industrial development in India during the early British period. Industries started springing up by the beginning of the latter half of the 19th century. Their relations had been strained, because they had to work in a subservient and deplorable condition, grossly exploited by their contractors. Many disputes had arisen during this period. The Central Government was forced to pass The Industrial Relations Act of 1860. This was the beginning of the State intervention in regulating the industrial relations in the country.
The modem industry in India owes its existence in large measure to the initiatives of Europeans. The workers were not satisfied with the conditions in which they worked and the worker-management relations were not cordial. The workers were working under very deplorable and intolerable working conditions. They formed unions to discuss the conditions under which they were working and the wages they were receiving. This forced the Government to act and The Factories Act was passed by the Government in 1881 which gave an impetus to workers' seeking after redress. The first labour association, Bombay Mill Hands' Association, was established in 1890.The First World War further resulted in the deterioration of working and living conditions of workers especially because of the greater development of industrial units. The relations between workers and employers worsened. The industrial peace was violently disturbed because of strikes and lockouts. The increasing class consciousness among the working class, influence of Gandhiji on the political and labour movement and the increasing popularity of Labour Party in England had tremendous impact on the labour movement in India. This led to a greater confident unity among the workers. The International Labour Organisation (ILO), founded in 1919, greatly influenced the labour legislations and industrial policy in India. The industrial unrest had worsened in Bengal, Bombay, and Madras presidencies in the 1920's. This ultimately resulted in the Government passing a number of legislations for providing social security at the workplaces. The Workmen Compensation Act of 1923, The Trade Union Act of 1926, and the Trade Disputes Act of 1929 are some of the laws which were passed to regulate relations between labour and management (Kumar, 2002). The Trade Dispute Act could not provide the prevention or settlement of disputes. The Royal Commission on Labour in 1931 pointed out the shortcomings of the Act. The Government of India Act 1935, which provided provincial autonomy, generated new hopes and aspirations in the minds of the working class.
The Bombay Industrial Dispute Act was passed in the year 1938. The World War II created more trouble in the industrial field. The Government made use of the Trade Dispute Act and Bombay Industrial Dispute Act to maintain peace in the industrial units. The Government evolved certain measures in the form of Defence of India Rule-8lA and the system of holding tripartite labour conferences comprising workers, employers and Government representative. All these measures failed and the number of strikes increased manifold. Then the Industrial Employment (Standing Orders) Act 1946 was passed to regulate the terms and conditions of service. Industrial Dispute Act 1947 was passed for the prevention and settlement of disputes.
(iv) Modern Period (Post-Independence)
Modern industrial relations represent a blending of old systems with innovation introduced, as society has changed through the ages. Some features of early system even now persist, while other features are the result of Industrial Revolution and, therefore, represent sharp breaks with traditionally challenging problems for the management (Mamoria, 1976). When India became independent in 1947, the industrial scene witnessed a considerable amount of chaos and confusion. Government of India has emerged out as an arbitrator between management and workers by the Industrial Disputes Act of 1947. The Industrial Truce Resolution was shortly adopted, which stressed the need for the maintenance of industrial peace. The Factories Act of 1948 has also been a strong Government step to improve the industrial relations scene. The Minimum Wages Act of 1948 and the Industrial Employee Insurance Act of 1948 were also passed. Still there was not much change in the industrial relations environment in the country. The Government of India have been contemplating effective measures for the maintenance of industrial peace, from the First Five Year Plan onwards.
The code of discipline was introduced in 1958 to restrain parties from taking unilateral action on industrial matters. Many international events impacted the course of industrial relations. The National Commission on Labour (NLC) was appointed in 1966 by the Government to look into the matters and make recommendations and it submitted its report in 1969.Some of the recommendations of the NLC were implemented and some others were never implemented.
The early 1970's witnessed considerable industrial strife and loss of a large number of Man days .The Indian Labour Conference (ILC), a tripartite body to look into industrial relations problems in India, which was active till 1971, did not meet from 1972 to 1976. In the wake of The National Emergency declared in June 1975, the National Apex Body (NAB) was set up in place of ILC in consonance with the Government's 20 Point Programme. These bodies were abolished and ILC was revived once again in May 1977. From the late 1970's to early 1980's the industrial relations in India were characterised by violence. The Government issued an ordinance to ban strikes on 26th July, 1981 to counter strife in the industrial sector. The Essential Services Maintenance Act (ESMA) empowers the Government to ban strikes, layoffs and lockouts in what it deems to be 'essential services'.
The Seventh Five Year Plan underscored reducing inter-union rivalry and strengthening industrial relations machinery. It also stressed the need for labour welfare. The Government announced the industrial policy (during the eight plan period) in 1991 and it brought about a drastic change in the organisation and working of industrial system of the country.

Maintenance of harmonious industrials relations is on vital importance for the survival and growth of the industrials enterprise. Good industrial relations result in increased efficiency and hence prosperity, reduced turnover and other tangible benefits to the organization. The significance of industrial relations can be summarized as below:
1. It establishes industrial democracy: Industrial relations means settling employee's problems through collective bargaining, mutual cooperation and mutual agreement amongst the parties i.e., management and employees' unions. This helps in establishing industrial democracy in the organization which motivates them to contribute their best to the growth and prosperity of the organization.
2. It contributes to economic growth and development: Good industrial relations lead to increased efficiency and hence higher productivity and income. This will result in economic development of the economy.
3. It improves morale of the work force: Good industrial relations, built-in mutual cooperation and common agreed approach motivate one to contribute one's best, result in higher productivity and hence income, give more job satisfaction and help improve the morale of the workers.
4. It ensures optimum use of scare resources: Good and harmonious industrial relations create a sense of belongingness and group-cohesiveness among workers, and also a congenial environment resulting in less industrial unrest, grievances and disputes. This will ensure optimum use of resources, both human and materials, eliminating all types of wastage.
5. It discourages unfair practices on the part of both management and unions: Industrial relations involve setting up machinery to solve problems confronted by management and employees through mutual agreement to which both these parties are bound. This results in banning of the unfair practices being used by employers or trade unions.
6. It prompts enactment of sound labour legislation: Industrial relations necessitate passing of certain labour laws to protect and promote the welfare of labour and safeguard interests of all the parties against unfair means or practices.
7. It facilitates change: Good industrial relations help in improvement of cooperation, team work, performance and productivity and hence in taking full advantages of modern inventions, innovations and other scientific and technological advances. It helps the work force to adjust themselves to change easily and quickly
Perhaps the main cause or source of poor industrial relations resulting in inefficiency and labour unrest is mental laziness on the part of both management and labour. Management is not sufficiently concerned to ascertain the causes of inefficiency and unrest following the laissez-faire policy, until it is faced with strikes and more serious unrest. Even with regard to methods of work, management does not bother to devise the best method but leaves it mainly to the subordinates to work it out for themselves. Contempt on the part of the employers towards the workers is another major cause. However, the following are briefly the causes of poor industrial relations:
1. Mental inertia on the part of management and labour.
2. An intolerant attitude of contempt of contempt towards the workers on the part of management.
3. Inadequate fixation of wage or wage structure;
4. Unhealthy working conditions;
5. Indiscipline;
6. Lack of human relations skill on the part of supervisors and other managers;
7. Desire on the part of the workers for higher bonus or DA and the corresponding desire of the employers to give as little as possible;
8. Inappropriate introduction of automation without providing the right climate;
9. Unduly heavy workloads;
10. Inadequate welfare facilities;
11. Dispute on sharing the gains of productivity;
12. Unfair labour practices, like victimization and undue dismissal;
13. Retrenchment, dismissals and lock-outs on the part of management and strikes on the part of the workers;
14. Inter-union rivalries; and
15. General economic and political environment, such as rising prices, strikes by others, and general indiscipline having their effect on the employees' attitudes.
1. To bring better understanding and cooperation between employers and workers.
2. To establish a proper channel of communication between workers and management.
3. To ensure constructive contribution of trade unions.
4. To avoid industrial conflicts and to maintain harmonious relations.
5. To safeguard the interest of workers and the management.
6. To work in the direction of establishing and maintaining industrial democracy.
7. To ensure workers' participation in decision-making.
8. To increase the morale and discipline of workers.
9. To ensure better working conditions, living conditions and reasonable wages.
10. To develop employees to adapt themselves for technological, social and economic changes.
11. To make positive contributions for the economic development of the country.
The scope of industrial relations includes all aspects of relationships such as bringing cordial and healthy labour management relations, creating industrial peace and developing industrial democracy.
The cordial and healthy labour management relations could be brought in-
' By safeguarding the interest of the workers;
' By fixing reasonable wages;
' By providing good working conditions;
' By providing other social security measures;
' By maintaining healthy trade unions;
' By collective bargaining.
The industrial peace could be attained '
' By setting industrial disputes through mutual understanding and agreement;
' By evolving various legal measure and setting up various machineries such as Works Committee, Boards of Conciliation, Labour Courts etc.
The industrial democracy could be achieved '
' By allowing workers to take part in management; and
' By recognition of human rights.

India adopted the path of mixed economy after independence and began giving emphasis to both public sector (Government controlled and owned enterprises) and private sector (private enterprises) industries according to the Industrial Policy announced in April 1948 (Michael, 1979). The basic motivation of the private sector is profit. It cannot be divested of this motivation without ceasing to be private sector. Public sector on the other hand, has no such essential motivation. It can and should be motivated to fulfil the objectives of State policy, and to act as an agency for the change which the State desires (Chatterjee, 1988).
In India, the public sector came into being with the adoption of the Industrial Policy Resolution of 1948, which laid down that industries of basic and strategic importance or in the nature of public utility service should be in the public sector. The public sector was viewed as an instrument for creating resources for the plan finance and development. The Government policy in the public sector is to provide maximum satisfaction to employees by improving their working and living conditions and to ensure that the wage and welfare amenities in the public sector should in no way be inferior to those in the private sector (Sarma, 1984).
Stable industrial relations are the vital prerequisite for industrial progress. Stability of industrial relations occurs when and where the problem of management and work force are discussed in a spirit of mutual trust and confidence without unnecessary delay and friction. Industrial relations in public undertakings will obviously be different from that of private sector enterprises. Profit being a major motive for private enterprise, the management is looked upon as a part and parcel of ownership and traditional labour-management conflict is inevitable because of their divergent interests. But, in the case of the private sector, the objectives of management are more often than not in conflict with the objectives of the workforce. In order to satisfy the social objectives, the public sector enterprise behaviour is to create maximum employment opportunities and also to provide enough welfare for its workforce in the form of schools, hospitals, transport, colleges, etc. Government considers this only as a developmental expenditure.
Most of the private sector enterprises being small in size, communication is much faster and the chief executive carries enough authority to take independent decisions. The public sector enterprises, on the other hand, are generally large in size, and due to a larger workforce, the problems of industrial relations will be more complex and the machinery to resolve them should also be more sophisticated. In India, there were 187.73 lakh employees (158.86 lakh male and 28.87 lakh female) in the public sector and 84.32 lakh employees (63.83 male and 20.49 female employees) in the private sector as on 31.3.2002(Ministry of Labour (DGE&T), Economic Survey, 2002).

Industrial disputes are used as an index variable for measuring the industrial relations situation in the country. An analysis of the number of industrial disputes in the public and private sector during the last decade (from 1996 to 2005 ) reveals that on an average 801 disputes took place in India every year, which consist of 181 disputes (23 per cent) in the public sector and 620 disputes(77 per cent) in the private sector. The number of disputes in the public sector ranges from a low of 49 disputes (minimum percentage, 2004) to a high of 448 disputes (maximum percentage, 1997). It shows a decline during the years from 1997 to 2004. Similar to the public sector, the number of disputes in the private sector also shows a declining trend from the year 1997 to 2005. The disputes in the private sector range from a low of 358 disputes (2005) to a high of 857 disputes (1997). The total number of disputes also shows a decreasing trend from 1997 to 2005.
Table 2.1
Number of Industrial Disputes in the Public and Private Sector in India

No. of disputes
Public sector
Private sector
1996 381 (33) 785 (67) 1166
1997 448 (34) 857 (66) 1305
1998 283 (26) 814 (74) 1097
1999 165 (18) 762 (82) 927
2000 125 (16) 646 (84) 771
2001 139 (21) 535 (79) 674
2002 63 (11) 516 (89) 579
2003 59 (11) 493 (89) 552
2004 49 (10) 428 (90) 477
2005 100 (22) 358 (78) 458
Period average 181 (23) 620 (77) 801

Source: Indian Labour Year Book (various issues), Labour Bureau, Shimla.
Note: Figures in brackets show percentage.


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