Industrial Relations in India and Labour Trouble in new units

Industrial Relations problems occurring in any manufacturing setup today is a part of day to day life. However, when new units start facing labour trouble certain labour laws in India and trade union movements are blamed. Therefore analyzing the reasons for problems that occur in industrial labour relations in India is important;

In any new factory, during the period before commencement of manufacturing activities, the focus of the management is mainly on setting up of the unit. One one hand, purchasing machinery, installing machinery, construction of plant and building are priorities. On the other hand, negotiations with banks, procuring of working capital, funding, too are top priority. The marketing team is put to work so that once manufacturing starts, orders can be obtained and funds generated. In the process, HR activities, particularly the issue of recruitment of workers gets least attention.

The employers, without looking at factors such as educational qualification, age or experience, keep hiring workers and the employment is made from areas in close vicinity of the Unit. While considering employees for engagement, sometimes priority is given to the workers who are employed by electrical Service Providers, machinery installing Service Providers and so on. Such Service Providers engage work force with fairly good technical knowledge and are from local areas.

With regard to industrial relations in India, recruitment plays a very crucial role. A survey of factories faced with industrial labour relations problems revealed that, a factory wherein certain norms were fixed for recruitment and recruitment was systematic had almost nil labour trouble, even though it was situated in an area notorious for labour related problems.

The recruitment was planned in such a manner so as to have diverse employees. Preference was given to locals but all workers were made to appear for a written test. After elimination of candidates in the written examination, the candidates were required to undergo physical fitness tests, on elimination of candidates in the physical fitness tests the remaining candidates were called for interview. After an elaborate interview candidates were selected. After selection of the candidates and before having a medical examination, an antecedent verification was conducted on them. The focus of such antecedent verification was on police records, political affiliations and involvement in crime, financial status and social acceptance.

The workers were employed from different villages and from different communities. Workers from one particular cast/religion/village were not recruited. The educational qualifications of the workers were between eighth standard to twelfth standard. The candidates were between the age group twenty to twenty six.

The Company recruited employees from different sections of the society and from different locations. The antecedent verification, written test and the interviews helped the Company to identify the right candidates. In order to attract the right candidates the company offered payments as per law.

In comparison to this, the units where labour problems started in an initial period show that recruitment was more of a formality, certain parameters were kept but most of the time, such parameters were bypassed. The prime consideration was to employ employees quickly from close by vicinity, as recommended by local politicians and government officers. The payments were very low, even lower than what is provided under labour laws in India.

Therefore, once manufacturing process was established, the workers started demanding wages as per law, canteen with free food, transport and the list is endless. The company was made to pay wages as per Minimum Wages Act, better service conditions and Bonus was given out in the guise of ex gratia within 1 year. The workers approached the particular union through one worker who was dismissed earlier by his previous employer for union activities and subsequently recruited by the new unit.

In another unit, for a small incident the HR Manager issued a show cause notice to one worker who was in the employment for six months. In order to draft a proper reply the worker approached a Union office bearer who grabbed the opportunity to inform the Union.

In yet another unit, which was paying wages lower than minimum wages but enjoyed a good name in the industry, workers had joined with high expectations, after one year of completion, the workers started demanding a revision in wages. The wages paid were not enough to meet the expenditure of travelling and food. After deduction and meeting all the expenditure only One Thousand Rupees was left in the hands of the workers. The difference between wages paid and minimum wages was quite high. Therefore the workers kept on complaining about low wages. However, in order to keep costs under control during early stages of production, the management kept on ignoring the demand of the workers.
The workers then demanded an increase of Five Hundred Rupees, though the difference between the wages actually paid and minimum wages was close to Three Thousand Rupees. However, the management bought time and agreed to consider the demand after sometime. That time never came and workers formed a militant Union. The low wages attracted average or below average workers. The Union filed a case in local labour court and forced the Labour Department to compel to the Company to pay wages as per minimum wages along with differences.

The Company was made to pay the difference in wages as well as minimum wages and got stuck with the lot of average or below average workers forever.

Therefore one of the major reason for labour trouble in initial days of the Company is neglect in having good HR policies and faulty recruitment.

Once labour trouble arises, one of the ways of dealing with it is negotiating terms with the Trade Union/s, the process of Collective Bargaining gains relevance here. Read more about Collective Bargaining and employment laws in India here.