Drawing from the colonial model of governance, the policy makers in
the free India designed 'state intervention' model to manage
the industrial relations system (IRS) and the labour market primarily
because of the compulsions arising out of economic planning strategy.
The 'rules' of the IRS were determined by the institutions of
the state such as compulsory adjudication, conciliation, standing
orders, labour laws and case laws and so on. It also meant regulating
the actions of labour and capital and providing judicial and
administrative solutions to labour-management conflicts and disputes.
Collective bargaining model was shelved for the future. However, state
intervention did not mean suppression of workers' rights. The
federal-democratic-pluralistic model of polity adopted in India assured
fundamental right to form unions and freedom of industrial actions
subject to legal regulation. The dominant objective of the government
during the regulation era was to maintain industrial peace. There
existed an implicit 'social pact' between unions, employers
and the state whereby unions promised industrial peace for
organizational and job securities in return and both employers and
unions accepted state regulation (Shyam Sundar 2009 c).
The failure of state regulation in the product market and IRS
became evident by then and the demands for deregulation of both became
louder (Ramaswamy 1988, Shyam Sundar 2009c). The new economic policy
announced in 1991 signalled a decisive shift in economic policies of the
government from regulation to liberalisation. The product market reform
measures have increased the bargaining power of capital vis-a-vis
labour. Capital has become more mobile and least regulated, while labour
is less mobile. Greater ease of mobility gives greater bargaining power
to capital (Bardhan 2001:470). The dominant objective of the government
shifted from 'the logic of industrial peace' to 'the
logic of competitiveness of firm and the economy'. Given the
interface between product market and labour market, pro-reformers
demanded liberalization of IRS and labour market. The employers'
demands for labour reforms included weaken union power, outlaw strikes,
individualize labour relations, privatize public enterprises,
rationalize and simplify labour laws, freedom to hire and fire and close
undertakings, freedom to hire contract labour, liberalize labour
inspection system, freedom to introduce technological changes, repeal of
legal provisions relating to bonus and so on. These demands necessitate
a radical shift from the state intervention model in IRS followed in the
regulation era. The interplay of economic, political and institutional
forces in the new economic environment, new issues, dilemmas, concerns
and strategies were thrown up and the employment relations have become
complex. We seek to provide a broad brush review of the emerging trends
in employment relations in the post-reform period.
Labour Reforms: Explicit or Implicit?
The state in the regulation era had a definite agenda, i.e. to use
all of its institutions and mechanisms to intervene in the rule making
process in the IRS. Its intervention often worked in favour of labour as
far as the economic constraints would allow. The market logic demands
that the state's policies should aid in enhancing competitiveness
of firms and attract and retain capital (which uses the threat of
re-location). While it is certain that policies need to change, how and
in which direction it will change depends on political economy
considerations. While product market and capital market reforms go
unnoticed by large number of people concerned, labour reforms belong to
'mass politics' (Varshney 1999). Radical labour reforms invite
the wrath of the working class and have political costs. Further, the
state is under pressure to not effect labour reforms concerning the
organised sector and at the same time design policies to ensure welfare
of millions of workers in the informal economy, though fiscal prudence
considerations restrain radical welfare schemes. The strategy of the
state is thus shaped by such complex forces.
The government has shied away from introducing "hard"
labour reforms, i.e. making any change in the formal framework
concerning employment security or full scale privatization save a few.
However, the central government resorted to 'soft' reforms
such as amending trade union law, disinvesting instead of privatizing,
reducing provident fund interest rates, liberalizing labour inspection
system, special concessions to units in special economic zones (SEZs)
and so on (Shyam Sundar & Venkata Ratnam 2007).
Unable to take a firm stance on 'hard' labour reform
measures, the central government has then cleverly shifted the onus of
labour reforms on to the state governments. There are reasons to use
"federal politics" on the issue of labour reforms. The state
governments are in a position to make its own labour laws on certain
matters and make amendments to central laws (owing to distribution of
powers under the Constitution of India) and are important agencies of
labour law enforcement use these powers to offer incentives such as
flexibilities in the labour sphere to attract and retain capital.
Further, labour reforms at the state level would "localize"
labour protests unlike the reforms at the national level (Shyam Sundar
& Venkata Ratnam 2007).
Various state governments have sought to introduce changes in the
labour regulatory system to attract investment into their regions. The
reform measures include relaxing labour inspection system (reducing the
frequency of inspections either by administrative directives or by
introducing self certification system, different inspection authorities
for units in SEZs, introducing prior authorization for inspections and
so on), amending labour laws to provide exemptions for emerging sectors
like shopping malls, units in SEZ, information technology and
bio-technology industries, simplifying procedures in regard to annual
returns, maintenance of registers, forms and so on, declaring units in
SEZ as "public utility services" (to make strikes more
difficult) or as doing seasonal or intermittent work (so as to remove
them from the purview of the Contract Labour (Regulation and Abolition)
Act and so on (Shyam Sundar 2008 a, 2010 b).
Neo-Liberal Judicial Trends
The general and acceptable perception was that during the
regulation era the working class could count on the judiciary as one of
their allies, though there have also been judgements that sought to curb
labour indiscipline and establish order in the shop floor. But some
significant judgements delivered during the 1990s and later relating to
contract labour, privatization, right to strike, bandhs and so on did
not support the contentions and interests of workers and trade unions.
The Supreme Court has (a) affirmed the policy independence of the
executive (i.e. the government) in the case of privatization, (b) made
critical remarks in general against the right to strike and prohibited
the right to strike of public employees, (c) imposed restraints on
public protests like bandhs and so on, (d) endorsed or asked the
government to impose the Essential Service Maintenance Act (ESMA), (e)
reversed its own order providing for automatic absorption of contract
labour upon abolition and argued that automatic absorption was not
provided for in the relevant law thus, it rewrote the positions held by
the apex Court on issues like contract labour and the right to strike
(Venkata Ratnam 2006). The position and action of the judiciary relating
to workers' actions such as strikes is an interesting instance of
change in its stance. It admitted public interest litigations
questioning the acts and deeds of the trade unions, the strikes by
public employees, the bonus payment to municipal employees in Mumbai,
and so on and passed restraining orders on unions' actions. The
central and the state governments have been to willing to invoke ESMA on
strikes and the judiciary often endorses, even encourages it (Shyam
Sundar 2009 c).
Politics-Trade Unions Nexus
The rise of enterprise unionism in important metros like Madras,
Bangalore, Bombay and even Calcutta (Davala 1994; Ramswamy 1988) was
mainly due to frustrations with and failure of the "political
unionism model". The main defect of it is that political interests
often ruled over labour organizational interests and generated splits in
the union movement and hence weakened union power. Secondly, conflicts
between the ruling political parties and their labour wings have
flourished during the reform period e.g. the spat between the BJP and
the BMS (Thengadi's scathing comments against Yashwant Sinha's
infamous inclusion of labour reform proposals in the Budget in 2001),
the growing disconnect between the CPI (M) and the CITU in West Bengal
(Bhattacherjee 2001, Shyam Sundar 2009 c), the murmurs of protest from
INTUC on some of the reform matters such as provident fund interest
rates and reform of employment security laws and so on. Thirdly, the
political parties irrespective of their ideological orientation strongly
sought to pursue labour reform measures and these angered trade unions
including the labour wings of the political parties concerned. It is
another matter that the political parties opposed labour reform measures
when in opposition, though they sought to implement them when in power
either at the centre or state level! Finally, trade union federations
have realized the futility of subordinating union organizational
politics to party politics (Shyam Sundar 2008 b). These have important
implications for trade union actions and strategies in the post-reform
Fragmentation Politics to Politics of Cooperation
The reform policies and programmes have brought together the trade
unions on an issue- based common front (Shyam Sundar 2009 c). More than
a dozen nation-wide strikes and many other forms of demonstrations and
struggles have been conducted since 1992 in protest against the
so-called neo-liberal policies of the government and many of them have
been under one common banner or the other. However, there has not been
absolute unity among the CTUOs, which are so much used to divisive
politics. The INTUC or BMS withdrew suiting their political comfort
levels from the common front which has been largely banding together of
left of the centre trade unions. Though the left-based trade unions came
together, each maintained its organizational and ideological identity
(e.g. CITU's comments cited in Shyam Sundar 2009 c). While world
over, mergers and organizational consolidations of central organizations
have been taking place, the CTUOs in India have been resisting fiercely
such moves, though AITUC and HMS attempted their merger in vain (Shyam
Sundar 2010 c).
Towards a More Inclusive Union Movement
The mainstream trade unions have neglected the informal economy for
several reasons. The ease of organizing formal sector workers (in terms
of economies of scale in organizing, high pay offs and so on) and the
high costs of organizing workers in the informal sector and the
perception or expectation that over time informal sector will be
absorbed into the formal sector were two important reasons for their
historical neglect. But two important reasons, viz. the hugeness of
informal sector and trade unions' dwindling numbers in the formal
sector caused a change in their perception and strategy regarding
informal economy workers (Shyam Sundar 2008 a, 2010 b). The mainstream
unions revived their organizational efforts concerning the informal
economy in the last decade or so. The membership count of the CTUOs rose
in 2002 (as compared to their following in 1989) primarily because of
the tremendous rise in unionization of agricultural and rural workers.
Verified membership increased from 12.27 million in 1989 to 24.88
million in 2002 and the membership of agricultural and rural workers
rose from a mere 1.75 million to 7.65 million during the same period
New Forms of Informal Economy Organizations
The stiff upper lip attitude of mainstream trade unions towards the
informal economy spurred the rise of several new forms labour and union
types of organizations among the informal economy workers. The Self
Employed Women Association (SEWA) is the most notable amongst them.
Though it was registered as a trade union it has combined the functions
of a trade union, a cooperative and a pressure group and so on. Its
significant role has not been limited to organizing the informal economy
workers. It participated actively in the creation of international
networks like WIEGO and played an important role in the adoption by ILO
of the Home Workers Convention. It was instrumental in creation of
organizations and networks like the StreetNet, the National Centre for
Labour (NCL) and the like. The National Alliance of Street Vendors of
India (NASVI), initiated by SEWA, is another organization of note. The
Government of India formulated the National Policy for Street Vendors
recently mainly due to the pressure exerted by organizations of informal
economy workers and the powerful lobbying work of NASVI and SEWA (Shyam
Sundar 2009 b). However, the interface between the conventional trade
unions (the CTUOs) and the new forms of labour organizations has not
been cordial (Shyam Sundar 2009 c).
Though the formal system has not changed, sufficient signals have
been provided for the employers to implement the changes they desire.
This has been dubbed as "labour reforms by stealth" (Bardhan
2002). The employers grabbed these opportunities with full hands and
devised several managerial strategies to achieve labour flexibility,
control over work processes and weaken labour power. Illegal closures,
prolonged lockouts (often closures in disguise), reduction in regular
workers (via voluntary retirement scheme (VRS), labour re-allocation,
transfers, multi-tasking, freeze on employment, idleness pay, etc.)
increased use of contract labour, outsourcing, subcontracting, job
freeze are some of the measures employers in both private and public
sectors have employed to circumvent the law and trade unions (Bardhan
2002, Shrouti & Nand Kumar 1995, Shyam Sundar 2008 a).
As a result of deliberate managerial strategies, the employment of
non-regular workers, especially the contract workers, has increased
considerably in the last decade or so. Primary surveys of industries in
the organized manufactured sector in Maharashtra (Deshpande et al 1998)
and in India (Dehspande et al 2004) showed that those employers who
increased employment did so by increasing the share of non-regular
workers. Shrouti and Nandkumar (1995) have documented a variety of
managerial strategies (mentioned above) that employers have adopted to
get around the labour institutions (laws or trade unions). Further, the
share of contract workers in total workers in the organized
manufacturing industry in India has increased from 14.6 per cent in
1995-96 to 26.4 per cent in 2004-05 (Goldar 2009) and its share is high
in some states like Andhra Pradesh (62 per cent), Gujarat (32 per cent),
Uttar Pradesh (25 per cent) (Pages & Roy 2006). The objectives of
these are not only to achieve labour flexibility and reduction in labour
cost but also to gain control over production process and weaken
collective labour institutions. These strategies have provoked not only
controversies but also bloody industrial conflicts.
New Trends in Collective Bargaining
Collective bargaining coverage in India is as low as 3 per cent
(Venkata Ratnam 2003). However, this low figure masks some interesting
ground realities. Collective bargaining has been one of the important
methods of rule making in IRS in many industries in India. Some major
observations regarding the developments in collective bargaining can be
made here. One, there have been strong decentralizing tendencies in
private sector where the enterprise level bargaining has become the
dominant level of bargaining even in industries like cotton, silk,
plantations in regions like Coimbatore, Mumbai, where industry-wide
bargaining has been the historical practice. Two, the character of
collective bargaining in the public sector has changed: the government
prefers a long term settlement (ten years); it has sought to link pay
with performance of both workers and the public enterprise; it has
withdrawn budgetary support for expenditure arising out of collective
agreements and so on (Shyam Sundar 2010 c). Three, the dominant
managerial objectives in collective bargaining in recent years owing to
heightened competition have been to reduce labour costs, increase
production or productivity, flexibility in work organization
(multi-skilling /multi- functioning, changes in worker grades etc.),
increase in work time, reduction in regular staff strength via VRS,
stress on quality and so on (Krishna Murthy 2006, Venkata Ratnam 2003).
Four, trade unions have shown cooperation where necessary (crisis
situations caused by external factors and not by mismanagement) and when
it is sought from them by the management. Several agreements now talk of
introducing new work measurement systems, changes in work practices,
giving production incentives, having flexi working, etc. There are
several instances where the trade unions have understood the financial
position of the company and have offered their cooperation in various
ways. Five, trade unions have been able to mobilize marginalized
sections of the workforce like contract workers and negotiate
significant benefits for them like employment security, regular
collective contracts and so on (Shyam Sundar 2009 a, 2010 a).
Rise in Labour-Management Conflicts
The economic reforms were expected to tone down industrial
conflicts owing to the shift in relative bargaining power in favour of
capital which has many weapons to employ and thus may use industrial
conflicts as a last resort (Shyam Sundar 2009 c). However, the tensions
arising out of the measures, policies and strategies of the employers
and the government have resulted in increase in the incidence of labour
management conflicts (tablel). While the number of work stoppages have
decreased, workers' participation in and volume lost due to work
stoppages have risen since the late 1990s.
Two features of workers' protests need mention here. One,
worker mobilization in strikes (measured by WI/N and the average size of
strike) has increased impressively during the post-reform period--the
average size of strikes rose from 722 in 1991-93 to 4497 in 2003-06
(Shyam Sundar 20l0 b). The rather frequent incidence of All-Lidia
strikes (more than a dozen since mid-1990s), increasing work stoppage
incidence in public sector, lockouts by larger establishments and the
'agitational connect' that the issues that emanated from
reforms and restructuring processes are some of the reasons that could
explain the rise in mobilization of workers in the work stoppages.
Two, some significant workers' protests have revolved around
issues like union existence and recognition that were thought to have
been settled long ago. They have re-appeared on the radar of employment
relations as employers are emboldened in the new economic regime to
snuff out unionism. The organizational efforts of workers in Honda
Motorcycles in Haryana in 2005 and the bloody struggles that followed
are well known (Saini 2005). In 2008, the Hyundai Motor India Limited
(HMIL) refused to recognize the free and independent union, viz. the
HMIEU, victimized the union leaders and sought to reach a collective
agreement with the workers' council (management nominated body);
these provoked workers' protests during the year. Similarly, the
Madras Rubber Factory preferred a "company union" to a free
and independent union formed by majority of the workers in its plant in
Arokkonam in Tamil Nadu and conflict in the form of strikes, lockout,
and litigation ensued (Shyam Sundar 2010 c). The flexibility and control
strategies of the management even resulted in the murder of managerial
personnel in the Italian Graziono Trasmissioni India Private Limited in
New Delhi (http://www.timeson line.co.uk/tol/news/world/asia/
article4810644.ece, accessed 10 October 2009) and Pricol Limited in
Coimbatore in Tamil Nadu (http:/www.dnaindia.com/
india/report_12-arrested-for-murder-ofpricol-v-p-near-coimbatore_1292572, accessed 10 October 2009). Thus, the conflicts have been bloody and
are probably owing to over drive of managerial and state aggression.
Employers have also been aggressive in initiating lockouts in the
post-reform period (table 2), though it is a continuation of their
earlier managerial policies.
A Few More Words
The globalisation and the new economic forces have wrought in
significant changes in the labour market and IRS. The 'actors'
of the IRS have responded to them in varying ways. The agencies of
labour and capital looked to the state for concrete action favouring
their respective interests and have exerted pressure on it to introduce
wide ranging labour reforms. The state responded in ways that would
protect its dominant political interests and adopted strategies that
sought to placate capital without hurting the fundamental interests of
labour like employment security. However, the government did not lose
sight of its economic goal of attracting investments and intervened or
refused to intervene in labour relations suiting the interests of
capital. It also redirected its attention to the hitherto neglected
masses of unorganized sector workers. Thus, the state's role is
'complex' and cannot be fitted neatly as favouring either
capital or labour. However, the conducive environment encouraged the
employers to devise both 'hard' (lockouts, closures,
anti-union measures, etc.) and 'soft' (idleness pay, VRS) ways
to achieve flexibility and weaken union power. Most trade unions on some
occasions banded together and fought united battles in the policy arena
and resisted changes at the national level. At the micro level, they
responded to the market logic and extended cooperation to employers when
consulted on issues of labour flexibility, wage restructuring, work load
and so on and fought tenacious battles when not consulted and sought to
be sidelined. They started paying more attention to the hitherto
neglected workers in the informal sector and to create a "more
inclusive" union movement.
The conflicts between divergent interests of the 'actors'
seem to have resulted in a peculiar constellation of dynamic forces in
India and thus we have a mosaic of varieties of responses soft labour
reforms, passive state in one context and active in another, new
managerial strategies, new forms of labour organizations, empowerment of
non-regular workers and so on. While the formal or legal framework of
the IRS and the labour market has remained virtually the same, some
significant changes have taken place, which seek to redefine the
parameters of the framework.
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Table 1: Indicators of Work Stoppages in
Period WS/N WI/N WDL/N
1991-93 6.07 43.82 963 21
1994-96 4.14 33 50 694 25
1997-99 3.94 42 37 778 72
2000-02 2.44 38 40 953 72
2003-05 1.86 85 13 1048 64
Note: Work stoppages include both strikes and
Table 2: Share of Lockouts in Totals of Work
Stoppages, Workers Involved and
Work Days Lost, 1991-2005
Period % Share in Totals of All Work
Count WI WDL
Memo: 1985-90 22.3 15.3 58.4
1991-93 34.86 34.84 57.46
1994-96 32.92 30.91 64.97
1997-99 39.98 29.14 60.09
2000-02 46.00 23.62 65.64
2003-06 49.82 14.67 76.80