Industrial Relations (Chapter 1: Introduction)

Industrial Relations
Chapter: 1 (Introduction)

Introduction
Everyone who derives an income through work or who becomes
involved in the organization and management of employees at work
is immersed in the practice of industrial relations. The overall quality
of the employment relationship and changes in industrial relations
can have an important effect on the overall performance of an
organization.
Industry
The manufacturing or technically productive enterprises in a
particular field, country, region, or economy viewed collectively, or
one of these individually. A single industry is often named after
its principal product; for example, the auto industry.

Definitions
Definitions of Industrial Relations:
Broadly, the term “industrial relations” is used to denote the collective
relationships between management and the workers. The two terms, labour-
management relations and employer-employee relations are synonymously used.
Bethel and associates defined “Industrial relations is that part of management which
is concerned with the manpower of the enterprise”.
J. Henry Richardson “industrial relations is an art, the art of living together for
purposes of production”.

Historical context of Industrial Relations in Bangladesh (contd.)
The history of industrial relations system of this country can be traced back to the
Trade Union Act, 1926 introduced by British rulers. The main purpose of the Act
was to provide for the registration of trade unions and in certain respects, define
the law relating to registered trade unions. But the Act did not contain any
provision regarding strikes. In 1929 the Trade Disputes Act put restrictions on
strikes in public utility services. The Act provided for the establishment of tribunals
to adjudicate upon the labour disputes. In 1947 the Industrial Disputes Act placed
the conciliation and adjudication machinery for the settlement of industrial
disputes on a permanent footing.
In decade following partition of India, the then Pakistan government mostly adopted
the colonial legacy with regard to labour laws. However, a major development took
place in the legal framework of industrial relations in 1965 when the East Pakistan
Trade Unions Act, 1965 was enacted repealing the Trade Unions Act, 1926. But the
Act could not facilitate healthy growth of trade unions as it was more restrictive on
the freedom of association and right to organize. The period between 1947 and
1969 was thus marked by a host of repressive laws and witnessed labour agitation
and widespread industrial unrest.

Historical context of Industrial Relations in Bangladesh
Subsequently, the Labour Disputes Act, 1965 and Trade Unions Act, 1965 were integrated
into one law, namely Industrial Relations Ordinance, 1969, which made provisions for
recognition of collective bargaining agents for establishment or group of
establishments. Thus, the Ordinance was a landmark development in the evolution of
collective bargaining in Bangladesh. After the emergence of Bangladesh, development
of industrial relations was strained by imposition of martial laws, proclamation of state
of emergency at different times, and promulgation of host of other laws and policy
which inhibited the growth of sound industrial relations in Bangladesh.
Since independence of Bangladesh, no major development took place in the history of
labour legislation till the enactment of the Bangladesh Labour Act, 2006. The
Bangladesh Labour Act, 2006 is a major and comprehensive enactment regarding
industrial relation system-- partly as a response to demand of stakeholders for
improving regulatory framework on trade union and partly by demand for codification
of existing labour laws in order to avoid overlapping and inconsistencies. It brought
some significant changes in industrial relation system. However, the Act has not been
able to bring the desired changed due to its in-built weaknesses, suspension of many
labour rights under state of emergency and lack of institutional capacity to implement
the laws.

Features of Industrial Relations
Industrial relations are the relations between two parties connected with industrial /
manufacturing activity, namely employer and employees. Such relations are the
outcome of the employment relationship in Industry. Features of Industrial Relations
are explained below:
1. The concept of industrial relations is complex and multidimensional. It is also a
dynamic and developing concept.
2. In the olden days, industrial relations were cordial and peaceful. However, at present,
they are not so due to increase in the number of industrial workers, growth of trade
unions, growing demands of workers etc.
3. Industrial relations do not function in a vacuum. The attitude and approaches of
employers, employees and trade unions are directly related ‘to, industrial relations.
4. Industrial relations lead to “industrial peace” or “industrial unrest”. Both terms are
used in relation to industrial relations. Cordial industrial , relations bring industrial
peace i.e. a period when industrial disputes, strikes, lock-outs, etc. are absent and
production activity is being conducted in a regular and continuous manner.
5. Cordial industrial relations are always beneficial to all concerned parties whereas
absences of such relations are harmful to all parties and even to the national
economy.

Three partners of Industrial Relations
• Trade Union:
Trade unions try to protect interest of workers, they insist upon the development of
cultural and educational qualities of there members.
• Employers & their organizations:
They try to protect the interest of employers, to create healthy industrial
atmosphere, so that the objectives of the organization may be achieved. They try
to get full co-operation of workers for achieving this objective.
• Government:
The government plays an important role in establishing better industrial relations.
Government passes various laws to protect the interest of both employers and
employees.

Factors affecting Industrial Relations (contd.)
1. Industrial Factors:
These include items like state policy, labour laws, voluntary codes, collective
bargaining agreements, labour unions, employers organizations / federation etc.
2. Economic Factors:
These include economic organisations (socialist, communist, capitalist) type of
ownership, individual, company whether domestic or MNC, Government, co-
operative, ownership, nature and composition of work force, the source of labour
supply, labour market relative status, disparity of wages between groups, level of
unemployment etc.
3. Social Factors:
Social Factors like social group (caste system or joint family system) creed, social
values, norms, social status etc. influence industrial relations in the early stages of
industrialization.

Factors affecting Industrial Relations
4. Technological Factors:
These include methods, type of technology used, rate of technological change, R &
D activities, ability to cope up with emerging trends, etc. These factors considerably
influence the patterns of industrial relations as they are known to have direct
influence on employment status, wage level, and collective bargaining process in
an organization.
5. Psychological Factors:
Such factors include items pertaining to industrial relations like owners‟ attitude,
perception of workforce, their attitude towards work, their motivation, morale,
interest, alienation, dissatisfaction, occupational stress and boredom resulting from
man-machine interface.
6. Political Factors:
Political institutions, system of government, political philosophy, attitudes of
government, ruling elite and opposition leaders towards labour problems affect the
state of Industrial Relations. For instance, in the various communist countries, prior
to the adoption of new political system, the industrial relations environment was
very much controlled by the Government.

Theories of Industrial Relations (contd.)
I. Unitary Approach:
The employer and employee work as a harmonious unit and they work for a
common goal. Hence, there is no possibility of conflicts arising between them and
they work as a team to attain the common goal. The concept of loyalty is privileged
in the Unitary Approach because of its paternalist roots.
II. Pluralist Approach:
It was developed in the United States of America by John R Commons. He
considered society as complex due to the presence of multiple interest groups with
their own goals. Hence, conflict is inevitable in the system and there are
possibilities of compromise based on the interaction between different
stakeholders. Collective bargaining was used as a mechanism to sort out the
conflict between the employer and employees. The presence of trade union in an
organization can serve as an interest group to protect the interest of employees.

Theories of Industrial Relations (contd.)
III. Classical Approach (Marxist Model)/ Radical Approach:
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 in human society. He was concerned with certain macro
economic processes and deep-rooted inequalities in society as a whole, and not
with specific industries or firms. Marx divided the society into two classes
a. Capitalists, who own the means of production, and
b. Proletariat, who own nothing but their own labour power.
IV. Human Relations or Neo-Classical Approach:
It denotes that 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.

V. Social Action Approach:
Its origins is 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 out
the reciprocal nature of the relationship between social structure and behaviour.
One of the most important features of the social action models is the attitude it
adopts towards social theory.
VI. Systems Approach (developed by John Dunlop):
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.
VII. Gandhian Trusteeship Approach:
Gandhi’s views on industrial relations are based on his fundamental principles of
truth and non-violence and non-possession. Out of these principles evolved the
concept of trusteeship on which his philosophy of industrial relations rests.
Theories of Industrial Relations

Significance of Good Industrial Relations (contd.)
Good industrial relations refer to harmonious relations between the labour union
and the management in an organisation. In other words, in such a situation, there
is absence of industrial disputes between the two parties and presence of
understanding and cooperation between them. Thus, industrial relations in an
organization must be harmonious or cordial. Such relations will lead to the
following benefits:
1. Industrial Peace:
Cordial industrial relations bring harmony and remove causes of disputes. This
leads to industrial peace which is an ideal situation for an industrial unit to
concentrate on productivity and growth.
2. Higher Productivity:
Due to cordial industrial relations, workers take interest in their jobs and work
efficiently. This leads to higher productivity and production of the enterprise where
they are working. Thus, they will contribute to the economic growth of the nation.
3. Industrial Democracy:
Sound industrial relations are based on consultation between the workers and the
management. This assists in the establishment of industrial democracy in the
organisation which motivates employees to contribute their best to the success of
the organisation.

4. Collective Bargaining:
Cordial industrial relations are extremely helpful for entering into long-term
agreements as regards various issues between labour and management. Such collective
bargaining agreements and association of employees in decision-making process will
bring about cooperation between labour and management.
5. Fair Benefits to Workers:
The workers should get sufficient economic and non-economic benefits to lead a happy
life. It is possible when the relations between workers and management are cordial and
the productivity is high.
6. Higher Morale:
Good industrial relations imply the existence of an atmosphere of mutual co-operation,
confidence, and respect within the enterprise. In such an atmosphere, there are
common goals, which motivate all members of the organisation to contribute their best.
7. Facilitation of Change:
Sound industrial relations, by creating a climate of co-operation and confidence, make
the process of change easy. Hence, full advantage of latest inventions, innovations and
other technological advancements can be obtained.
Significance of Good Industrial Relations

Objectives of Industrial Relations (contd. )
The primary objectives of industrial relations are improving the economic
conditions of workers, increasing productivity and achieving industrial democracy
in industrial enterprises. The Labour Management Committee of the Asian Regional
Conference of the International Labour Organisation (ILO) has recognised certain
fundamental principles as objectives of social policy in governing industrial
relations with a view to establishing harmonious labour-management relations.
They are:
1. Good labour-management relations depend on employers and trade unions being
able to deal with their mutual problems freely, independently and responsibly.
2. The trade unions and employers and their organisations are desirous of resolving
their problems through collective bargaining, though in resolving such problems
the assistance of appropriate government agencies might be necessary in public
interest.
3. To check industrial conflicts and minimize the occurrence of strikes, lockouts and
gheraos.

4. To minimize labour turnover and absenteeism by providing job satisfaction to the
workers and increasing their morale.
5. To establish and develop industrial democracy based on workers partnership in
management of industry.
6. To facilitate government control over industries in regulating production and industrial
relations.
7. Provide an opportunity to the workers to participate in management and decision
making process.
8. Raise productivity in the organisation to curb the employee turnover and absenteeism.
9. Establish and nurse industrial democracy based on labour partnership in the sharing of
profits and of managerial decisions.
10. Socialize industrial activity by involving the government participation as an employer.
Objectives of Industrial Relations

Two dominant aspects of Industrial Relations
According to Douglas McGregor, conflict and cooperation are two states in the
continuum of industrial relations.
i. Cooperation:
The dynamics of cooperation lie in the recognition of a sphere of common interest.
Cooperation between union and management, the two actors in the industrial
relations drama, differing in economic power, wealth and education, depends
primarily on their ability and willingness to make contacts at points of mutual
concern.
ii. Conflict:
Generally, some degree of conflict between the management and the union is
taken to be inevitable. Conflict is essential to survival of both union and
management, and is not always bad and has certain constructive aspects also. But
a recurring conflict needs to be channelized along the least destructive lines. And
for this, conflict resolution measures – both voluntary and statutory –must be
taken for good industrial relations to prevail and industrial harmony to be achieved.

Industrial Relation System in Bangladesh (contd.)
Legal framework of trade union
The Constitution of Bangladesh provides the basic legal foundation for formation of
organizations by workers and employers. The main statutory framework for such
organizations is the Bangladesh Labour Act 2006.
Procedure of registration and cancellation of registration of trade union
The Bangladesh Labour Act 2006 provides for registration of trade unions with a
view to rendering lawful organization of labour to enable collective bargaining.
Through its registration, the trade union acquires certain benefits including legal
existence as an entity separate from its members.
New role for trade union organizations
The role of trade union is changing to meet the demands of a changing society and
labour well-being. Apart from their traditional role of intervention through
collective bargaining, the trade unions of Bangladesh are also being organized to
introduce social dialogue and framework agreement system; address social issues
in the workforce.

Trade union in EPZs
As mentioned earlier, trade unions were not allowed in EPZs until 2004 on the
ground that introducing trade unions in such areas would undermine the working
environment there. However, a limited right of trade unionism was allowed
through the enactment of the EPZ Workers Association & Industrial Relations Act,
2004, which provided that the workers in industrial units within the territorial limits
of a Zone shall have the right to form association to engage in industrial relations
from Nov 1, 2006.
Problems of trade unions in Bangladesh
Currently trade unions are beset with problems. The following are some of the reasons
I. •Politicization or political affiliation of trade unions prevents them from becoming
strong partners in collective bargaining.
II. Lack of solidarity among trade unions, provincialism, patronage of vested interest
groups and internal conflict are some of the reasons that have led to the
fragmentation of trade unions.
III. •Workers at the grass root level are not aware of their rights.

Role of employers’ organizations
Section 176(b) of the Labour Act 2006 provides that employers shall have the right
to establish and subject only to the rules of the organization concerned, to join
associations of their own choosing primarily for the purpose of regulating the
relations between employers and workers or employers and employers.
Role of the State in maintaining industrial relations
Industrial relations system in Bangladesh is characterized by the predominant role
played in it by the government. Being the single major employer and manager, the
industrial relation policies which it pursues with regard to public sector enterprises,
have a decisive effect on the state of industrial relations throughout the country.

Structure and system of labour administration in Bangladesh
There are various authorities and agencies responsible for labour administration in
Bangladesh. The Ministry of Labour and Manpower is responsible for policy
formulation and overall supervision of the departments and offices under it.
The Ministry of Labour and Manpower has under it the following implementing
agencies:
 •Department of Labour,
 •Department of Inspection for Factories and Establishments;
 •Bureau of Manpower, Employment and Training (BMET);
 •Minimum Wages Board;
 •Labour Appellate Tribunal and seven labour courts
Industrial Relation System in Bangladesh

Difference of industrial Relations between
developed and developing countries (contd.)
Subject Developing countries Developed countries
1. Level of employment 1. Level of employment is very
poor.
1. Maintain satisfactory level of
employment.
2. Family size 2. Here family size is big. 2. Here family size is small.
3. Democracy within the
society
3. Here democracy is instable. 3. Democracy is quite stable in
nature.
4. Educational qualification 4. Workers are not well
educated.
4. Workers are highly qualified.
5. Productivity 5. Here productivity is low
among the workers.
5. Here productivity is high
among the workers.
6. Profitability 6. Profit margin is less because
of low productivity.
6. Being highly productive the
profit is good.

Subject Developing countries Developed countries
7. Class-consciousness 7. Workers are not well
informed about this.
7. Workers are very much
conscious.
8. Wage level 8. Here the workers need to
struggle for it.
8. Here it is at quite satisfactory
level.
9. Training facilities 9. Don’t have adequate facilities
for it.
9. Worker get enough training
facilities.
10. Exploitation of workers 10. Workers exploitation is a
common phenomenon.
10. Workers are rarely
exploited.
11. Dual subordination 11. Workers work in more than
one job.
11. Workers are settled in a job.
Difference of industrial Relations between
developed and developing countries

Causes of poor industrial relations
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 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 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. Disregard towards labour low;
14. Inter-union rivalry;
15. Absence of responsible trade unionism;

Challenges of Industrial Relations
• Privatization: It will benefit management. But the employees have to be skilled and
efficient enough to survive in the employment war.
• Information technology: Industries need to update their information technology to
adapt with the changing situation.
• Downsizing: Companies are compelled to downsize their business because of
heavy competition.
• Reengineering: Companies need to redesign their business structure due to
globalization effect.
• Workforce diversity: Without multidimensional skill it is very difficult to survive in
the competitive market.
• Import liberalization: It may cause destruction of export-oriented industries and
increase in unemployment.
• Globalization: It necessitates economic integration and consequent removal of
other factors from the business environment.
• Change in laws: Rapid change in laws create problems for the firms to cope up with
the changing situation.

Measures for improving Industrial Relations (contd.)
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.
1. Sound personnel policies: Policies and procedures concerning the compensation,
transfer and promotion, etc. of employees should be fair and transparent.
2. Participative management: Employees should associate workers and unions in
the formulation and implementation of HR policies and practices.
3. Responsible unions: Trade unions should adopt a responsible rather than political
approach to industrial relations.
4. Employee welfare: Employers should recognize the need for the welfare of
workers. They must ensure reasonable wages, satisfactory working conditions,
and other necessary facilities for labour.
5. Grievance procedure: A well-established and properly administered system
committed to the timely and satisfactory redressal of employee’s grievances can
be very helpful in improving Industrial relations.

6. Constructive attitude: Management must recognize unions as the spokesmen
of the workers’ grievances and as custodians of their interests. The employer
should accept workers as equal partners in a joint endeavor for good
industrial relations.
7. Communication channel: Creating a proper communication channel to avoid
grievances and misunderstandings among employees.
8. Education and training: These two very important things should be imparted
to the employees for the well being of the organization.
9. Mutual trust: Both management and labor should help in the development of
an atmosphere of mutual cooperation, confidence and respect.
10. Sincere implementation of agreements: The agreements between the
management and the unions should be enforced both in letter and spirit.
11. Governments’ role: The government should make laws for the compulsory
recognition of a representative union in each industrial unit. It should
intervene to settle disputes if the management and the workers are unable to
settle their disputes.
Measures for improving Industrial Relations

Conclusion
It is evident that good industrial relations is the basis of higher production with
minimum cost and higher profits. It also results in increased efficiency of workers.
Good industrial relations reduce the industrial disputes. Industrial relations has
become one of the most delicate and complex problems of modern industrial
society. Industrial progress is impossible without cooperation of labors and
harmonious relationships. Therefore, it is in the interest of all to create and
maintain good relations between employees (labor) and employers
(management).Thus industrial relation measures followed should be given prime
emphasis which may lead to an effective relationship between management and
employees. An effective industrial relation results in the increase of the
productivity of the organization.

Industrial Relations (Chapter 1: Introduction)

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Industrial Relations (Chapter 1: Introduction)