“Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”
• “Relations” means “the relationships that exist within the industry between the employer and his workmen/ employees.”
• Basically it is the:
– Relationship between union and management
– Conducted within a legislative framework devised by Govt.,institutions
– Have implications for all including society
– All aspects of employment relationships
• Industrial relations are as old as the industry.
• During medieval period : direct interaction of employee & employer
• After industrialization inn 18tth Century, IIRR became a complex and delicate issue. IR may be defined as the complex of interrelations
among workers, managers and government.
Concept of Industrial Relations
• Broadly, the term IR denotes the collective relationships between management and the workers.
• “Industrial relations is an art,, the art of living together for purposes of productions” - J.H. Richardson
• Different parties learn this ART while working together by acquiring the skills to adjustment.
• IR plays a crucial role in establishing and maintaining industrial democracy.
• In India, it has passed through several stages.
• Pre-independence era : workers were hired and fired as per the demand and supply.
• Employer was commanding, wages were very poor.
• Till the end of First World War, there were hardly any laws to protect the interest of the workers except Employer’s and Workmen (Dispute)
• After 1st world war, workers adopted violent approach.
• As a result many lockouts, strikes occurred.Soon govt. enacted the Trade Dispute Acts, 1929.
• However, neither the Central Govt. nor the state Govts Made adequate use of this law.
• In 1938, Bombay govt. enacted the Bombay Industrial Relations (BIR) Act.
• For the first time permanent machinery, The Industrial Court was established for settling disputes.
• BIR was replaced by BIR Act, 1946 and got amended various times.
• After 2nd world war, India faced many problems like rise in cost of living, scarcity of essential commodities, high population etc.
Objectives of IR
1. To promote and develop labor management relation.
2. To regulate the production by minimizing industrial conflicts.
3. To provide opportunity to workers to involve indecision making process with management.
4. To encourage and develop trade unions in ORDER to improve the workers' strength.
Significance of IR
> Industrial Peace
> Higher Productivity
> Industrial Democracy
>> Collective Bargaining
> Fair Benefits to workers
> Higher Morale
> Facilitation of change
Actors in Employee Relations
There are 3 parties which are directly involved in the employee
• Posses certain rights vis-à-vis labour.
• Have right to hire and fire as and when required.
• Can affect workers’’ interests by exercising their right to relocate, close or merge the factory or to include technological changes.
• Seek to improve working conditions.
• Exchange views with management and voice their grievances.
• Want to share some decision making power with management.
• Workers generally unite with unions against the management and get support from these unions.
• The central and State government regulate industrial relation through laws, rules, agreements, acts..
• Also includes third parties and labour and tribunal courts.
TYPES OF STRIKE
1. Economic Strike: Under this type of strike, labors stop their work to enforce their economic demands such as wages and bonus. In
these kinds of strikes, workers ask for increase in wages, allowances like traveling allowance, house rent allowance, dearness
allowance, bonus and other facilities such as increase in privilege leave and casual leave.
2. Sympathetic Strike: When workers of one unit or industry go on strike in sympathy with workers of another unit or industry who are
already on strike, it is called a sympathetic strike. The members of other unions involve themselves in a strike to support or express
their sympathy with the members of unions who are on strike in other undertakings. The workers of sugar industry may go on strike
in sympathy with their fellow workers of the textile industry who may already be on strike. A sympathy strike is when one union
strikes in support for another involved in a dispute, even though the first union has no disagreement with the employer. It is a labor
strike that started by workers in one industry and supported by workers in a separate but related industry. Some courts have held
that a sympathy strike or walkout is not in violation of a no strike clause in an employment contract. A refusal to work by one worker
or group of workers to support the efforts of another group of strikers is a sympathy strike. Honoring a picket line is the most
common form of sympathy strike. A worker who honors a picket line at his or her primary place of employment has the same rights
as the pickets.Some legal considerations include:
A worker who honors an illegal picket line is engaged in unprotected activity and may be subject to discipline by the employer.
Workers who honor legal primary pickets at their place of employment may be replaced but not disciplined. A worker who honors a
primary, economic picket may be permanently replaced.
The rights of workers who honor "stranger" picket lines are not as clearly defined. Refusal to cross a legal picket line at a facility
other than that of the worker is recognized as protected activity by the Board and courts.
Disciplining a worker in retaliation for honoring a stranger picket line is an unfair labor practice. However, disciplinary action against
a stranger sympathy striker may be upheld if the employer establishes a legitimate or compelling business justification for taking
such disciplinary action.
Workers covered by the Taft-Hartley Act who honor a picket line of exempted workers are engaged in unprotected activity.
The right of railroad workers to honor a picket line is regulated by the Railway Labor Act, not Taft-Hartley.
In an important decision, the National Labor Relations Board ruled in 1985 that the right to engage in a sympathy strike can be
waived by a general no-strike clause in a collective bargaining agreement. After the Board's position was rejected by the Circuit
Court of Appeals for the District of Columbia, the Board adopted a case-by-case test requiring a more specific analysis of the no-
strike clause, its relationship to the contractual arbitration clause, and the past practices of the parties to determine whether the no-
strike clause protects or prohibits sympathy strikes.
3. General Strike: It means a strike by members of all or most of the unions in a region or an industry. It may be a strike of all the
workers in a particular region of industry to force demands common to all the workers. These strikes are usually intended to create
political pressure on the ruling government, rather than on any one employer. It may also be an extension of the sympathetic strike
to express generalized protest by the workers.
4. Sit down Strike: In this case, workers do not absent themselves from their place of work when they are on strike. They keep control
over production facilities. But do not work. Such a strike is also known as 'pen down' or 'tool down' strike. Workers show up to their
place of employment, but they refuse to work. They also refuse to leave, which makes it very difficult for employer to defy the union
and take the workers' places. In June 1998, all the Municipal Corporation employees in Punjab observed a pen down strike to protest
against the non-acceptance of their demands by the state government.
5. Slow Down Strike: Employees remain on their jobs under this type of strike. They do not stop work, but restrict the rate of output in
an organized manner. They adopt go-slow tactics to put pressure on the employers.
6. Sick-out (or sick-in): In this strike, all or a significant number of union members call in sick on the same day. They don’t break any
rules, because they just use their sick leave that was allotted to them on the same day. However, the sudden loss of so many
employees all on one day can show the employer just what it would be like if they really went on strike.
7. Wild cat strikes: These strikes are conducted by workers or employees without the authority and consent of unions. In 2004, a
significant number of advocated went on wildcat strike at the City Civil Court premises in Bangalore. They were protesting against
some remarks allegedly made against them by an Assistant Commissioner
includes not only negotiations between the employers and unions but also includes the process of resolving labor-management conflicts.
Thus, collective bargaining is, essentially, a recognized way of creating a system of industrial jurisprudence. It acts as a method of
introducing civil rights in the industry, that is, the management should be conducted by rules rather than arbitrary decision making. It
establishes rules which define and restrict the traditional authority exercised by the management.
importance to employees
Collective bargaining develops a sense of self respect and responsibility among the employees.
It increases the strength of the workforce, thereby, increasing their bargaining capacity as a group.
Collective bargaining increases the morale and productivity of employees.
It restricts management’s freedom for arbitrary action against the employees. Moreover, unilateral actions by the employer are
Effective collective bargaining machinery strengthens the trade unions movement.
The workers feel motivated as they can approach the management on various matters and bargain for higher benefits.
It helps in securing a prompt and fair settlement of grievances. It provides a flexible means for the adjustment of wages and
employment conditions to economic and technological changes in the industry, as a result of which the chances for conflicts are
Importance to employers
1. It becomes easier for the management to resolve issues at the bargaining level rather than taking up complaints of individual
2. Collective bargaining tends to promote a sense of job security among employees and thereby tends to reduce the cost of labor
turnover to management.
3. Collective bargaining opens up the channel of communication between the workers and the management and increases worker
participation in decision making.
4. Collective bargaining plays a vital role in settling and preventing industrial disputes.
Importance to society
1. Collective bargaining leads to industrial peace in the country
2. It results in establishment of a harmonious industrial climate which supports which helps the pace of a nation’s efforts towards
economic and social development since the obstacles to such a development can be reduced considerably.
3. The discrimination and exploitation of workers is constantly being checked.
4. It provides a method or the regulation of the conditions of employment of those who are directly concerned about them.
Ethical code of conduct
The code of discipline and conduct communicates to the employees, the expected behavior and the professional responsibilities. The
significance of code of conduct is that each employee should behave and perform in a way that preserves the company values and
commitments. The code expects employees to conduct business with integrity and honesty. Moreover, it expects the employer to be an equal
The Code of Conduct policy of a company is determined on the basis of following factors:
Honesty and integrity: The organization expects the employees to observe honesty and integrity and such
conduct should be fair and transparent. The employees should show truthfulness in actions throughout their tenure in the
Disclosure of information: The employees should not disclose the company information to third parties and other outside
organizations. However the employers should reveal the various policies of the organization to their employees and make
them aware about the code of conduct and other policies.
Harassment: The work environment should be free from all kinds of harassments, especially sexual harassments and verbal
harassments. No physical harassments like hitting or pushing are acceptable on part of employees.
Outside employment: Employees should not indulge in to any kind of concurrent employment without the prior knowledge of
Conflict of interest: An employee should not indulge into other professions or services or other interests which might conflict
with the interest of the company. This means personal interests should not overshadow organizational interests.
Confidentiality:Employees should protect company’s confidential information. The financial records and unpublished
data should be kept within the organizations and should not be spread outside the organization.
Equal opportunity employer: This factor expects the employer to be an equal opportunity, that is, no
discrimination should be done on the basis of caste, color, race, gender, religion or physical disabilities.
Misusing company resources: Employees should not misuse company resources, intellectual property, time and
other facilities. They are provided to them for business purposes and thus, should be used in a cost effective
Health and safety: An employer should provide a safe and healthy work environment to its employees. Proper
cleanliness and lightening should be provided. A health and safety committee can be set up by the employer
consisting of representatives of workers as well.
Payment and gifts: The employees should neither accept nor offer any kind of illegal payments, donations,
remuneration and gifts from outsiders.
Grievance means any type of dissatisfaction or discontentment’s arising out of factors related to an employee’s job which he thinks
are unfair. A grievance arises when an employee feels that something has happened or is happening to him which he thinks is
unfair, unjust or inequitable. In an organization, a grievance may arise due to several factors such as:
Violation of management’s responsibility such as poor working conditions
Violation of company’s rules and regulations
Violation of labor laws
Violation of natural rules of justice such as unfair treatment in promotion, etc.
Various sources of grievance may be categorized under three heads: (i) management policies, (ii) working conditions, and (iii) personal
1. Grievance resulting from management policies include:
o Wage rates ,Leave policy,Overtime,Lack of career planning,Role conflicts,Lack of regard for collective agreement,Disparity between skill
of worker and job responsibility
2. Grievance resulting from working conditions include:
o Poor safety and bad physical conditions
o Unavailability of tools and proper machinery
o Negative approach to discipline
o Unrealistic targets
3.Grievance resulting from inter-personal factors include
o Poor relationships with team members
o Autocratic leadership style of superiors
o Poor relations with seniors
o Conflicts with peers and colleagues
It is necessary to distinguish a complaint from grievance. A complaint is an indication of employee dissatisfaction that has not
been submitted in written. On the other hand, a grievance is a complaint that has been put in writing and made formal.
Grievances are symptoms of conflicts in industry. Therefore, management should be concerned with both complaints and
grievances, because both may be important indicators of potential problems within the workforce. Without a grievance
procedure, management may be unable to respond to employee concerns since managers are unaware of them. Therefore, a
formal grievance procedure is a valuable communication tool for the organization.
Compensation Management is an organized practice that involves balancing the work-employee relation by providing monetary and non-
monetary benefits to employees. Compensation includes payments such as bonuses, profit sharing, overtime pay, recognition rewards and
sales commission. Compensation can also include non-monetary perks such as a company-paid car, company-paid housing and stock options.
Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational
Importance of Compensation Management
A good compensation is must for every business organization and helps in the following way:
It tries to give proper return to the workers for their contributions to the organization.
It imparts a positive control on the efficiency of employees and encourages them to perform better and achieve the specific
It forms a basis of happiness and satisfaction for the workforce that minimizes the labour turnover and confers a stable organization.
It augments the job evaluation process which in turn helps in setting up the more realistic and achievable standards.
It is designed to comply with the various labour acts and therefore does not result in disputes between the employee union and the
management. This builds up a peaceful relationship between the employer and the employees.
It arouses an environment of morale, efficiency and cooperation among the workers and provides satisfaction to the workers.
It stimulates the employees to perform better and show their excellence.
It provides growth and advancement opportunities to the deserving employees.
Types of Compensations
Direct Compensation is typically made up of salary payments and health benefits. The creation of salary ranges and pay scales for
different positions within the company are the central responsibility of compensation management staff. Direct compensation that
is in line with industry standards provides employees with the assurance that they are getting paid fairly. This helps the employer
avoid the costly loss of trained staff to a competitor.
Indirect Compensation focuses on the personal motivations of each person to work. Although salary is important, people are most
productive in jobs where they share the company's values and priorities. These benefits can include things like free staff
development courses, subsidized day care, the opportunity for promotion or transfer within the company, public recognition, the
ability to effect change in the workplace, and service to others.
Components of Compensation
Wages and Salary: Wages represent hourly rates of pay, and salary refers to the monthly rate of pay, irrespective of the number of
hours put in by an employee. These are subject to annual increments.
Allowances: Several allowances are paid in addition to basic pay. Some of these allowance are given below:
o Dearness Allowance: This allowance is given to protect real income against inflation. Generally, dearness allowance (DA) is
paid as a percentage of basic pay.
o House Rent Allowance: Employers who do not provide living accommodation pay house rent allowance (HRA) to
employees. This allowance is calculated as a percentage of basic pay.
o City Compensatory Allowance: This allowance is paid generally to employees in metros and other big cities where cost of
living is comparatively high. City compensatory allowance (CCA) is generally a fixed amount per month (30 per cent of
basic pay in case of government employees).
o Transport Allowance/Conveyance Allowance: Some employers pay transport allowance (TA) to their employees. A fixed
sum is paid every month to cover a part of traveling charges
Incentives: Incentive compensation is performance-linked remuneration paid with a view to inspire employees to work hard and do
better. Both individual incentives and group incentives are used. Bonus, profit-sharing, commissions on sales are some examples of
Fringe Benefits/Perquisites: These include employee benefits such as provident fund, gratuity, medical care, hospitalization,
accident relief, health and group insurance, canteen, uniform, recreation and the likes.
Globalization in India has allowed companies to increase their base of operations, expand their workforce with minimal investments, and
provide new services to a broad range of consumers.
The process of globalization has been an integral part of the recent economic progress made by India. Globalization has played a major role in
export-led growth, leading to the enlargement of the job market in India.
One of the major forces of globalization in India has been in the growth of outsourced IT and business process outsourcing (BPO) services. The
last few years have seen an increase in the number of skilled professionals in India employed by both local and foreign companies to service
customers in t the US and Europe in particular. Taking advantage of India’s lower cost but educated and English-speaking work force, and
utilizing global communications technologies such as voice-over IP (VOIP), email and the internet, international enterprises have been able to
lower their cost base by establishing outsourced knowledge-worker operations in India.
As a new Indian middle class has developed around the wealth that the IT and BPO industries have brought to the country, a new consumer
base has developed. International companies are also expanding their operations in India to service this massive growth opportunity.
Notable examples of international companies that have done well in India in the recent years include Pepsi, Coca-Cola, McDonald’s, and
Kentucky Fried Chicken, whose products have been well accepted by Indians at large.
Globalization in India has been advantageous for companies that have ventured in the Indian market. By simply increasing their base of
operations, expanding their workforce with minimal investments, and providing services to a broad range of consumers, large companies
entering the Indian market have opened up many profitable opportunities.
Indian companies are rapidly gaining confidence and are themselves now major players in globalization through international expansion. From
steel to Bollywood, from cars to IT, Indian companies are setting themselves up as powerhouses of tomorrow’s global economy.
Employees’ Participation in Management
Workers’ participation in management is an essential ingredient of Industrial democracy. The concept of workers’ participation in
management is based on Human Relations approach to Management which brought about a new set of values to labour and management.
Traditionally the concept of Workers’ Participation in Management (WPM) refers to participation of non-managerial employees in the
decision-making process of the organization. Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in
management. In Germany it is known as co-determination while in Yugoslavia it is known as self-management. The International Labour
Organization has been encouraging member nations to promote the scheme of Workers’ Participation in Management.
Workers’ participation in management implies mental and emotional involvement of workers in the management of Enterprise. It is
considered as a mechanism where workers have a say in the decision-making.
Definition: According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which
encourages him to contribute to group goals and share the responsibility of achievement.
According to Walpole, Participation in Management gives the worker a sense of importance, pride and accomplishment; it gives him the
freedom of opportunity for self-expression; a feeling of belongingness with the place of work and a sense of workmanship and creativity.
The concept of workers’ participation in management encompasses the following:
ð It provides scope for employees in decision-making of the organization.
ð The participation may be at the shop level, departmental level or at the top level.
ð The participation includes the willingness to share the responsibility of the organization by the workers.
Features of WPM:
1. Participation means mental and emotional involvement rather than mere physical presence.
2. Workers participate in management not as individuals but collectively as a group through their representatives.
3. Workers’ participation in management may be formal or informal. In both the cases it is a system of communication and consultation
whereby employees express their opinions and contribute to managerial decisions.
4. There can be 5 levels of Management Participation or WPM:
a. Information participation: It ensures that employees are able to receive information and express their views pertaining to the matter of
general economic importance.
b. Consultative importance: Here workers are consulted on the matters of employee welfare such as work, safety and health. However,
final decision always rests with the top-level management, as employees’ views are only advisory in nature.
c. Associative participation: It is an extension of consultative participation as management here is under the moral obligation to accept
and implement the unanimous decisions of the employees. Under this method the managers and workers jointly take decisions.
d. Administrative participation: It ensures greater share of workers’ participation in discharge of managerial functions. Here, decisions
already taken by the management come to employees, preferably with alternatives for administration and employees have to select the best
from those for implementation.
e. Decisive participation: Highest level of participation where decisions are jointly taken on the matters relating to production, welfare etc.
Objectives of WPM:
1. To establish Industrial Democracy.
2. To build the most dynamic Human Resources.
3. To satisfy the workers’ social and esteem needs.
4. To strengthen labour-management co-operation and thus maintain Industrial peace and harmony.
5. To promote increased productivity for the advantage of the organization, workers and the society at large.
6. Its psychological objective is to secure full recognition of the workers.
Workers’ Participation in Management in India
Workers’ participation in Management in India was given importance only after Independence. Industrial Disputes Act, 1947 was the
first step in this direction, which recommended for the setting up of works committees. The joint management councils were established in
1950 which increased the labour participation in management. Since July 1975 the two-tier participation called shop councils at shop level and
Joint councils were introduced. Workers’ participation in Management Bill, 1990 was introduced in Parliament which provided scope
for upliftment of workers.
Reasons for failure of Workers participation Movement in India:
1. Employers resist the participation of workers in decision-making. This is because they feel that workers are not competent enough to
2. Workers’ representatives who participate in management have to perform the dual roles of workers’ spokesman and a co-manager.
Very few representatives are competent enough to assume the two incompatible roles.
3. Generally Trade Unions’ leaders who represent workers are also active members of various political parties. While participating in
management they tend to give priority to political interests rather than the workers’ cause.
4. Schemes of workers’ participation have been initiated and sponsored by the Government. However, there has been a lack of interest
and initiative on the part of both the trade unions and employers.
5. In India, labour laws regulate virtually all terms and conditions of employment at the workplace. Workers do not feel the urge to
participate in management, having an innate feeling that they are born to serve and not to rule.
6. The focus has always been on participation at the higher levels, lower levels have never been allowed to participate much in the
decision-making in the organizations.
7. The unwillingness of the employer to share powers with the workers’ representatives, the disinterest of the workers and the perfunctory
attitude of the government towards participation in management act as stumbling blocks in the way of promotion of participative
Measures for making Participation effective:
1. Employer should adopt a progressive outlook. They should consider the industry as a jointendeavour in which workers have an equal
say. Workers should be provided and enlightened about the benefits of their participation in the management.
2. Employers and workers should agree on the objectives of the industry. They should recognize and respect the rights of each other.
3. Workers and their representatives should be provided education and training in the philosophy and process of participative
management. Workers should be made aware of the benefits of participative management.
4. There should be effective communication between workers and management and effective consultation of workers by the management
in decisions that have an impact on them.
5. Participation should be a continuous process. To begin with, participation should start at the operating level of management.
6. A mutual co-operation and commitment to participation must be developed by both management and labour.
Modern scholars are of the mind that the old adage “a worker is a worker, a manager is a manager; never the twain shall meet” should be
replaced by “managers and workers are partners in the progress of business”
Types of employees
Most full time employees work 38 hours per week on a regular, ongoing basis. Full time employees are eligible for such entitlements as paid
annual, bereavement, parental, sick and carer’s leave, and public holidays.
Part time employees work on a regular, ongoing basis but work fewer hours than full time employees. Part time employees may work a set
number of hours on specific days. They get the same entitlements as full time employees but on a pro-rata basis according to the hours
A casual is an employee who may be hired on an hourly, daily or weekly basis. Many awards specify minimum and maximum periods of
engagement for casual workers. Generally, casual employment is short term or irregular, and there is no guarantee of ongoing work or a
requirement for the employee to be available for work. Simply being called casual does not make you a casual, many factors are taken into
consideration in determining an individual’s correct employment type.
Casual employees are eligible for long service leave, and may be eligible for parental leave. Casuals are also entitled to up to two days unpaid
carer’s leave for each occasion that a family or household member needs care. Casual employees are not entitled to paid annual leave, sick
leave or paid any public holidays.
Fixed term workers are employed to do a job for an agreed length of time. Many employers hire fixed term employees to do work on a specific
project or to fill in for employees who may be on leave.
Fixed term employees are eligible for entitlements such as paid annual, bereavement, sick and carer’s leave, and public holidays.
People whose services are paid wholly by commission are not classified as employees for the purposes of the Minimum Conditions of
Employment Act 1993.
People in this category may be paid on a ‘commission only’ basis which means they only receive money when they sell something or achieve a
specific target. A person can also be appointed on a ‘commission and retainer’ basis. In this situation, the person may be classified as an
employee and may be eligible for entitlements under relevant legislation and/or an industrial instrument.
An apprentice/trainee is employed on a fixed term contract that enables the person to become qualified in a particular trade or skill through a
combination of work and structured training.
An apprentice/trainee can be full time, part time or school based, depending on the kind of work that is being done and the training required.
The employer and the apprentice/trainee sign a training contract for a nominal term which is the expected time it should take to complete the
apprenticeship /traineeship. The training contract outlines the rights and responsibilities of the employer and the apprentice/ trainee and
must be lodged with Apprenticentre within 21 days of commencing work. There is a probation period of between one and three months from
the start date, depending on the length of the apprenticeship/traineeship.
An apprenticeship can be suspended, transferred or cancelled with approval from Apprenticentre.
The purpose of work experience is to provide students with the opportunity to gain experience in the workplace. It is unpaid work and is
organised through a school, TAFE college, university or other registered training organisation as part of the curriculum or assessment.
The purpose of a probationary period is to enable the employer to assess if a worker has the skills and experience to do the work they were
employed to perform. The length of probation is generally from one to three months and must be agreed prior to commencing work.
Employment during a probationary period is paid and the employee is eligible for such entitlements as paid annual, bereavement, parental,
sick and carer’s leave, and public holidays
Stages in Evolution of Industry
Evolution in IRLL
Primitive stage :
• Families were self sufficient
• Limited needs
• All the work was divided on family level
• Men : hunting, fishing, making weapons etc
• Women : cooking, raising children, agriculture,
domestication of animals etc.
• All the products produced or procure was for family
• Barter economy emerged
Agrarian stage :
• Agriculture became primary source of maintenance
• Tribes settled down in different places for sowing seeds and rearing cattle.
• All the work was divided between men and women of tribes.
• Gradually tribes split up into families.
• Due to varied human needs, exchange of goods started.
• Traders came into existence, stored surplus goods to sell later.
Handicrafts stage :
• Artisans living in villages produced the products for local consumption by exchanging them with various things from customers..
• No machinery was used
• All the products were handmade.
• There was no division of labour
• This industry was quite simple.
Guild stage :
a) Merchant guild :
Association of merchants engaged in trade in a particular locality.
Purpose : to enforce equality of opportunity for the members
of the guild, protect their interest,, avoid competition among members, prohibit unfair practices.
b) Crafts guild :
Association of skilled artisans engaged in same occupation.
Purpose : to regulate the entry to the craft, prescribed standards of workmanship etc. Soon the guild system began to decline by the end of
15thcentury because of narrow attitude of the guilds and increased rivalry.
Putting out system :
• Middle men came
• Played imp role between producers and consumers.
• Artisans produced goods, entrepreneurs came time to time to collect goods, paid them money.
• Due to large scale demand of the goods, problem of raw materials and tools aroused.
• Entrepreneurs provided tools of production to the artisans and paid them on piece wage basis.
• Eventually, entrepreneurs employed artisans at their places, assigned work to them, inspected the quality of products and
found a market for his products.
• Result of the inventions of many English scientists during 1760 to1820.
• There was a tremendous increase in the demand of the products because of the widening of markets in various geographical regions.
• Labour intensive industries were not capable of catering such wide demand.
• Hence, various inventions were made like ‘Spinning Jenny’ by James Hargreaves, ‘Water frame’ by Richard Arkwright, ‘Power loom’ by
• The invention of steam engine sparked the idea to drive machines by power.