Turning The Tide of Labour Unrest in India

Rahul Kishore
Himanshu Taranekar
Second Year Student: Batch 2004-06
Sadhana Centre for Management and Leadership Development


This paper deal with the serious issue of labour unrest and its consequences. Labour issues have plagued India since Pre independence era. The paper tries to take a macro view of the evolution of trade unions, their increasing influence, and causes of their emergence and the overall effect of all these events on the firm, economy, state and nation as a whole.

The introduction to the paper deals with the objectives and the basic premises on which the paper has been written. It has been written on the proposition that labour unions are there with the aim of full employment and labour welfare, but their demands are context dependent and sometimes not valid.

In India Trade union movement was 'born in politics' and it developed with the political movement. The evolution can be broadly classified into two eras: Pre liberalization and Post Liberalization. Each phase had its own features that characterized them. The era of 1950's to mid 1960's is the period which saw increase in public sector unionism. With unions being highly centralized. The era of mid 1960's to 1979 represented massive inter-union rivalries and industrial conflicts with decreasing employment. The post liberalization era of 1980's to1991 was that of decentralized bargaining and independent unionism.

The essay in its next phase has tried to put forth the various causes and consequences of labour unrest. The causes have always been the same, since the inception of the first union only difference being the factors may vary in their intensity as per the situation. The major issues as per the current industrial scenario are contractual labour, labour in the unorganized sector, the social security and welfare measures as expected by the unions. The consequences have definitely varied, with unions becoming more and more powerful due to the political influence and increased worker awareness.

Some of the key findings of this paper are:

* Since the first stage of evolution of unionism the demands of the labour unions have not varied much though definitely some new issues such as unorganized labour, labour flexibility etc have come up.
* The number of trade unions has risen and the centralized trade unions like INTUC, AITCU are trying their best to come back to power.
* The intrusion of outside parties and negotiators only reinforces the fact that workers of the individual firms are at a disadvantage when it comes to dealing with the management.
* Many present day conflicts are totally devoid of cost-benefit consciousness on the part of the labour.
* Most of the strikes are a result of political conflict rather than industrial dispute.
* Solution to the problem does not lie in the introduction of new laws or more and more amendments, but infact, in reducing the number of laws and the benefits can be reaped only if the end consumers that is the management and the labour understand the implications of the laws.

The paper concludes by giving a few suggestions as to how this unrest has to be curtailed in the beginning itself by not allowing conditions that give rise to this unrest to come up. The labour and management have to take collaborative stand if they aim to turn the tide of labour unrest.


This paper attempts to examine the role of organized and unorganized labour in India in a structural manner, tracing the economic, political, and social effects of the trade unionisms and the manner in which it has contributed to labour unrest over time. The paper tries to examine in a unbiased manner the various strategies which the labour unions and management take and which have a impact at the level of the adequate - which is to say that the study of these matters is usually informed from several points of view" .The firm, the industry and the nation. The effect of changing economic scenario or rather a globalized scenario on the trade unions and their activities are described in largely urban labour markets keeping in mind the pre and post – liberalization era.

The paper has two main objectives: a) to present industrial relations in India, broadly understood as the changing relationships between workers, trade unions, employers, the economy and the nation; and b) to suggest possible ways of developing amicable industrial relations keeping in mind India as a developing economy. The framework on which this paper is written is based on the views of Freeman and Medoff (1984) of trade unions as "monopoly" institutions, or as the "collective voice" of workers. B

But in the current scenario the aim should be to minimize the monopoly status of the unions and maximize their status as a "body for collective voice "opining the legitimate rights of the workers.
The position taken here is "the labour unions have evolved with political commitment of full employment and labour welfare and these commitments are context dependent, sometimes even ambiguous". Consequently, it is difficult to establish mechanisms to ensure that labour institutions, such as trade unions, collective bargaining and the state, continue to play the parts assigned to them. Secondly "labour unions should be partners in development and function as foundations to the edifice of democratic industrial institutions" .Moreover there is no single approach.


3.1 Trade unionism in the Pre-liberalization Era-

For a single nation, India has the largest number of trade unions and as Prof.Myron Weiner has observed long ago that India's trade union movement is "one of the most maligned "in the world. The emergence of Indian trade unions is directly related to the emergence of the Factory System and the working class.

The Indian Trade Union Act, 1926 says that "trade unions is a combination whether permanent and temporary, formed primarily for the purpose of regulating the relations between workmen ad workmen, between employers and employers, or imposing restrictive conditions on the conduct of any trade or business and include any federation of two or more unions". The International Labour organization (ILO) was established in 1919 and the All India trade Union Congress (AITCU) was born in 1920 with the aim of sending representatives to the ILO. In 1947 was formed the Indian National Trade Union Congress(INTUC).The Communist Party of India (Marxist) have their own union called Center for Indian Trade Unions(CITU).

In the early stages unionism and strikes were not a form of protests but with the emergence of various labour unions strikes and lockouts became a regular feature. During the initial phases there was state driven industrialization and at the enterprise level, capital-labour relationship was dominated by the paternalistic belief of state knows better of the workers needs. State appropriated the various "union voices" for the "collective" purpose of rapid industrialization with minimum industrial strife With the phenomenal rise in the registered trade unions during the era of 1950-mid1960's it could be said that there was a spillover effect in the unorganized sector also .As far as unions were concerned communist led AITCU was dominating but with industrialization INTUC made its inroads. Prof.Myron Weiner had rightly observed that the loyalties of INTUC were first towards the Congress party, then to the nation and lastly to the workers.

The era of mid-1960 to 1979 saw more skilled politicians and negotiators for forwarding their cause. Also inter union rivalry was also at rise The second phase reflected an objective crisis of accumulation in industry under the state-led industrialization regime, and a subjective crisis of legitimacy of the "state pluralism" model in the existing industrial relations system. This mode of regulation caused the organized labour movement to split up. The unions of the left had alternate voices, and employers often found them easier to deal with in spite of their greater militancy. The Emergency Regime represented a failed attempt by the state to impose a Latin American-type of corporatism in labour-management relations. Dissension occurred at the end of this second phase both within capital and labour. In the growth sectors the labour-management relationship increasingly turned to an informed decentralized bargaining mode, while in the declining sectors, the government and the large centralized trade unions found themselves enmeshed in the "state pluralism" mode.

3.2 Trade Unionism Post –Liberalization

The period of 1980- 1991 is associated with Rajeev Gandhi's economic liberalization measures. The economy moved away from import substitution towards strategies that encouraged export promotion and domestic competition. This was bought about by partial deregulation, financial liberalization, exchange rate policy, taxation, and export incentives. The 1990 Gulf crisis was followed by economic recession and political turmoil. The macroeconomic changes during this phase had a profound effect on the political economy of trade unionism and labour markets, as well as on the structure of industrial relations. The famous Mumbai Textile Mills Strike, in 1982 led by Mr.Datta Samantha marked a major phase in the labour unionism in India. Of errant management, and that any alteration in the law would only add to managerial power. On 10 January 1999 the government announced the second National Labour Commission (the first NLC was set up 30 years ago). The terms of reference lay down that the commission should suggest rationalization of existing labour laws in the organized sector and recommend umbrella legislation to ensure minimum protection for unorganized workers. The commission has a two-year term and is made up of representatives from government, trade unions and industry. Trade unions feel that workers have little protection from the whims. In terms of labour market and industrial relations reforms, the continuation of economic liberalization would undoubtedly lead to more employment flexibility, greater decentralization in bargaining structures (especially in public enterprises) and hence less government intervention in the bargaining process, fewer strikes, and a possible halt to the fragmentation of the union movement. On the positive side, this could mean more employment and a more effective union voice at both micro- and macro-level, with industrial pluralism being strengthened. On the negative side, the proposed reforms could increase managerial power and accelerate the growth of the non-union sector, leading to a decline in the power of organized labour. At microeconomic level, unions of all political hues are cooperating with management in the restructuring process (often because they have no choice). However, at the macro-level, the organized labour movement is generally extremely critical of globalization and reform. From a strategic viewpoint, trade union federations of different political affiliations will have to forge a united front at the macro-level to ensure their continuing growth as "allencompassing" organizations. This means organizing non-union workers.


Trade Unions have grown from a predominately bargaining role to a specialized role, representing the voice and the interest of labour.As the transition coincided with the period of economic growth and sustained increase in worker productivity union served as a conduit for turning economic growth and prosperity into improved living standards for workers. Even though union density is very low by international standards, India loses more days every year as a result of strikes and lockouts than almost any other country. However, the number of workers involved in strikes and lockouts is considerably lower in India than in Brazil, Italy or Spain. This raises the classic question of whether conflict reflects union power or union weakness. It certainly indicates that the basic premise of industrial pluralism, the regulation of conflict, has not been achieved.

The answer to this question in India depends on whether workers resist strikes or whether employers are on the offensive during lockouts. From the 1988 onwards, the number of lockouts rose whereas the number of strikes decreased. The same applies to the number of workdays lost and the number of workers involved. Until 1989 industrial conflict occurred mainly in the private sector in terms of number of disputes, workdays and wages lost and loss in production, although the actual number of workers involved in disputes was higher in the public sector in the early 1980s. Since 1990, however, industrial disputes in both sectors have increased significantly (Venkataratnam, 1996).

Since the economic reforms of 1991, successive national governments have had to deal with considerable industrial conflict in the public sector, especially in banking, insurance, and transport. At regional level, some state governments have had to contend with continuing interunion and inter-party rivalries, leading to the disruption of public life. Of late, the government has taken a tough stand. There are significant differences between the main trade union federations on the issues of secret strike ballot, prior notice to striking and the period of notification, lay-off provisions, the role of voluntary arbitration, multiple union situations, etc. The country as a whole would gain if the union movement could arrive at a consensus and if the recommendations of the Ramanujam Committee (statutory recognition of "representative" trade unions and the creation of an independent authority to arbitrate, mediate and enforce) were implemented. The institution of arbitrations, if effective, fair and credible, will significantly improve the quality of industrial pluralism.

So, one question here can be what conflict is? As the term goes conflict means an expression of hostility, negativity, attitude, rivalry, disagreement, incompatibility, incongruence etc.It's manifested in strike,fight,collucion,struggle,a mental strife etc.Following are the main causes of the industrial dispute:-

a) Demand for more wages: rise in the cost of living forces worker to demand more wages, this brings them into conflict with their employees who never willing to pay more wages to workers.

b) Working condition: The demand of workers for better working conditions is another cause of industrial disputes. Trade unions demand better working conditions for example less working hours, more safety measures, etc but when employers refuse to fulfill their demands industrial dispute rises.

c) Bonus: The quantity of bonus as well as the method of payment of bonus has led to a number of disputes.

d) Terms of employment – Terms of employment whether permanent worker or a temporary worker on terms of contract is now heated topic of debate. With the argument that labour flexibility being advocated as of the methods to generate jobs and lead to economic progress the uncertainties linked with it has also come up.

e) Share in Profits: The demand of workers for a share in profit of industrial unit often gives rise to an industrial dispute.

f) Political factors: Political factors have also played an important role. As is known, trade unions in India are generally controlled by political parties and often workers are made to go on strikes to further the political objects of the controlling parties.

g) Personal Causes: Industrial dispute also arises due to 'personal cause'. Quite a number of strikes occur over retrenchment, suspension and dismissal of workers.

h) Leave and hours of works: The questions of leave and hours of works constitute still another cause of industrial disputes. There may be refusal of leave by the management or the hours of work may appear to the workers to be excessive. Strikes may be organized to get such grievances redressed but these strikes are usually short-lived.

i) Technical reason: These include protests against rationalization, automation, computerization, layoffs and lock outs.

j) Psychological Reasons: The psychological cause for industrial dispute and unrest is the denial of opportunity to the worker of satisfying his basic urge for self expression and creative accomplishments thus the worker is denied of his mental satisfaction which contributes to frustration in minds of workers, arising out of the unsatisfied desire for personal achievement and betterment. k) Trade unions: The employers usually hate trade unions. They don't recognize them. This brings the workers into conflict with their employers.

l) Equal pay for equal work- This is a common demand made by workers specially workers taken on a contract basis and workers in the unorganized side.
m) Other causes: other potential factors such as corruption in industry and public life, easy money, general break down, social security measures etc can be all leading causes to trade union over a wide area.


a) On employers: industrial strikes involves but economic and non economic cost to the employers. The economic loss caused by a strike is very serious. There can also be project loss along with the production loss. Take the case of HMSI; they have suffered a production loss of about 120 crores. Omax Auto, Gurgaon suffered loss of about 5 crores during the strike. Toyota Kirloskar Motors, Bangalore had to give a hike of 15% in wage to settle the labour unrest in their factory.

b) Industrial labour: The workers have to undergo several hardships in their fight with the employers. The loss of their wages is the most crucial loss to them, apart from the fear that they may loose their jobs if the strike fails. Trade unions who take the responsibility of the workers during periods of strike also have to face adverse conditions if the strike last longer than expected. The best example is the 1982 strike of Mumbai Textile Mills which is the longest strike in Indian history but in the end many workers had to go back to their village their lives shattered. Toyota Kirloskar Motors, Bangalore after the labour unrest in their factory are finding a new location to shift their plant.

c) On society: General public can be classified under three categories of people affected by industrial strikes. First of all the consumers of the product suffer. It means that more essential the product and more difficult to have its alternatives. Secondly the suppliers to the truck unit also incur losses due to strikes because they are forced to curtail their operations for the reason that the struck unit has reduced its demands for their goods and services to the striking workmen. The wage losses incurred by the workers who go on strike force them to curtail their consumption and there is other set of people who live by supplying goods and services to workers and they are compelled to reduce their activites.Even these people are adversely affected by the strike.

d) The Nation: As a developing nation the of labour unrest is going to effect the FDI flows, the image of India as a investor friendly nation. The growing difference between Indian labour scenario and that of the other nations will only widen the existing gap. In nutshell we can say society on whole is affected by the strike, hence there should be machinery or system for the settlement of industrial dispute.


When in India, trade unions started gaining importance, many a times it was felt, they were being guided by political parties to fulfill their desire of settling scores with the management. Thus we can say the basic tenet on which the trade union was formed was diluted. But still a trade union is powerful tool and is a cause of headache for the management. The government of India has taken several steps in order to avoid the conflict between the management and the workers. In this regard they came up with Industrial Disputes Act 1947 on 1st April 1947.the principle objective of the act is to promote measures for ensuring and preserving amity and good relations between the employers and workmen, investigate and settle any dispute in the industry, prevent illegal strikes and lockouts, provide relief to workmen in matter or retrenchment and for collective bargain. The industrial dispute act which replaced Trade Dispute Act 1929 is progressive measures of social legislation aiming at the amelioration of conditions of workmen in the industry.

The authorities under this act are:
a) Labour court
b) Industrial tribunals
c) National tribunals
d) Courts of enquiry
e) Boards of enquiry
f) Board of conciliation

Thus we see that although government has taken some steps for controlling the industrial dispute but still it is rampant and since it's necessary to follow the rules of the government where the operation is being carried out.

Labour reform is not just about facilitating the closure and neither is it about making hire and fire easy. The core issues of labour reforms centre on a few major points: wage policy, employment security, labour redundancy, industrial relations, labour market information and human resources development. These issues can be solved by liberalizing existing labour legislation, enacting a flexible exit policy, 'rightsizing', reforming trade unions, by continuously retraining and updating workforce skills, worker participation in management, and by good and clean corporate governance.

Some steps which could be taken:

* Two of the major impediments in bringing about desired labour reforms are the antilabour stand in the management mindset, and labour prejudices. These must be researched and corrective action taken to smoothen the road to reform.
* Good and clean corporate governance is a vital necessity if labour reform is to happen. More and better attention has to be paid to human resource development.
* Industrial bodies have to take up worker education. The worker education models adopted by the Productivity Council of India, etc need a thorough revamping.
* There is tremendous labour potential in the rural sector. This has to be tapped by industry, with a renewed focus on unorganized labour.
* The media has been covering labour reforms and related issues for long. A mediarelations strategy should be worked out to highlight issues relating to the subject.
* The plethora of labour laws has complicated the matter. Hence it is recommended that the there should be a reduction in these through repeals, mergers and consolidation.
* Reduce the number of trade unions .only trade unions with a representation of 25% of the labour force of an enterprise should be registered. But right to form unions should not be quashed.
* Allow the entry of Contract labour into non-core areas like Canteens and transportations. Tata's at Jamshedpur are now outsourcing the transportation work.
* Strikes without notice should be declared illegal the strike ballot should be supported by at least 75% of the workers in the establishment.
* The management needs to provide a welfare mechanism for the employee. Unions come into play when the management is not able to handle the grievances. If there is an inbuilt control mechanism to handle such situation for example vigilance cell or a grievance cell which has equal membership of workers, management and a external consultant things can be controlled. The cell needs to go through an audit showing number of grievances it registered and it settled successfully.
* An area of partnership should be in promoting worker mobility in terms of income, skills and employment status. This involves the design and development of training opportunities and ways of making skill acquisition affordable for workers
* In the wake of increased technological changes especially in the manufacturing sector, unions instead of criticizing the management and vice versa should take up the cause of skill enhancement at the initial stages itself. For example ITI's are a major recruiting grounds for these companies ,both the parties should take initiatives to ensure that technical and technological enhancement happens in these places itself, so that cases of workers becoming redundant does not take place.

While India is labour intensive, it also boasts top-notch intellectual capital. The country's human talent and rich economic capital investment potential make it highly suited for industrial development. What is required is objectivity in understanding the problems at hand, strong political will, and changes in the country's legal system and labour market flexibility. Neither an indifferent management approach nor trade union militancy is going to lead to labour reform
in the liberalized economy a day strike can led to loss of tune of manifold both financially as well as reputation wise so it's in the best interest of the management to avoid conflict. The best possible way should be to solve the problem at the local level without the outside influence and political influence. For this the management should try to have an open door policy where in any one having problem can approach the management for the problem readressal.This is best implemented when there is no bureaucratic setup in the company.

. A positive and careful approach is thus required to bring about painless labour reform in this country, and the mainstay has to be 'welfare economics'.



Rahul Kishore
Himanshu Taranekar
Second Year Student: Batch 2004-06
Sadhana Centre for Management and Leadership Development

Source : E-mail September 10, 2005




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