industrial relations.pdf

Paper - V: INDUSTRIAL RELATIONS (20 Marks)
Assignment 1
1-. Present the comparative analysis of IR systems in UK and USA.
Initiated in the United States at end of the 19th century, it took off as a field in conjunction with the New Deal. However, it is generally
regarded as a separate field of study only in English-speaking countries, having no direct equivalent in continental Europe. In recent times,
industrial relations has been in decline as a field, in correlation with the decline in importance of trade union and also with the increasing
preference of business schools for the human resource management paradigm.
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Protest against industrial relations legislation in Melbourne in 2005.
Industrial relations has three faces: science building, problem solving, and ethical. In the science building phase, industrial relations is part of
the social sciences, and it seeks to understand the employment relationship and its institutions through high-quality, rigorous research. In this
vein, industrial relations scholarship intersects with scholarship in labour economics, industrial sociology, labour and social history, human
resource management, political science, law, and other areas.
Industrial relations scholarship assumes that labour markets are not perfectly competitive and thus, in contrast to mainstream economic
theory, employers typically have greater bargaining power than employees. Industrial relations scholarship also assumes that there are at least
some inherent conflicts of interest between employers and employees (for example, higher wages versus higher profits) and thus, in contrast
to scholarship in human resource management and organizational behaviour, conflict is seen as a natural part of the employment relationship.
Industrial relations scholars therefore frequently study the diverse institutional arrangements that characterize and shape the employment
relationship—from norms and power structures on the shop floor, to employee voice mechanisms in the workplace, to collective
bargaining arrangements at company, regional, or national level, to various levels of public policy and labour law regimes, to varieties
of capitalism (such as corporatism, social democracy, and neoliberalism).
Industrial relations in the UK: background summary
 Trade union membership in the UK was 24.7% of the workforce on average in 2015, according to statistics published by the UK
government in May 2016. This is a slight decrease compared with the 25% recorded for 2014.
 However, union density is much higher in the public sector than the private sector (54.8% compared with 13.9% in 2015).
 There are estimated to be around 6.5 million trade union members in the UK in 2015, according to figures published in May 2016 by the
UK government. This is a small decrease of 0.6% compared with the previous year’s figures.
 Trade union membership declined sharply in the 1980s and the first half of the 1990s, due to changes in the structure of the UK economy
and workforce and higher levels of unemployment. However, since 1998, membership numbers have been decreasing at a slower rate,
largely due to increases in the proportion of employees in the public sector, where trade union membership is higher. However, it is
likely that cutbacks in the public sector will affect the size of the public sector workforce and therefore trade union membership.
 There is only one trade union confederation in the UK: the Trades Union Congress (TUC). There were a total of 163 independent trade
unions in the UK, according to a Certification Officer report published in 2014. There are only two significant trade unions, in terms of
membership, that are not affiliated to the TUC: the RCN, which organises nurses, and the BMA, which organises doctors. Around 60% of
union members in unions affiliated to the TUC belong to the UK’s three largest trade unions: Unite (1.4 million members), Unison (1.3
million members) and GMB (600,000 members).
2. Critically examine the working of workers participation in Management.
Definitions of Workers Participation In Management
 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:

 It provides scope for employees in decision-making of the organization.
 The participation may be at the shop level, departmental level or at the top level.
 The participation includes the willingness to share the responsibility of the organization by the workers.
Features of Workers Participation In Management
 Participation means mental and emotional involvement rather than mere physical presence.
 Workers participate in management not as individuals but collectively as a group through their representatives.
 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.
Levels of Workers Participation In Management
There can be 5 levels of Management Participation or WPM:
1. Information participation: It ensures that employees are able to receive information and express their views pertaining to the matter of
general economic importance.
2. 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.
3. 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.
4. 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.
5. Decisive participation: Highest level of participation where decisions are jointly taken on the matters relating to production, welfare etc.
Characteristics of Workers Participation In Management
 Participation implies practices which increase the scope for employees’ share of influence in decision-making process with the assumption of
responsibility.
 Participation presupposes willing acceptance of responsibility by workers.
 Workers participate in management not as individuals but as a group through their representatives.
 Worker’s participation in management differs from collective bargaining in the sense that while the former is based on mutual trust,
information sharing and mutual problem solving; the latter is essentially based on power play, pressure tactics, and negotiations.
 The basic rationale tor worker’s participation in management is that workers invest their labour and their fates to their place of work. Thus,
they contribute to the outcomes of organization. Hence, they have a legitimate right to share in decision-making activities of organisation.
3. Discuss the role of Employee’s Associations in the maintenance of good Industrial Relations.
Industrial relations consist of the whole range of relationships between employees and management, and between the employees. It is
managed by conflict and cooperation. It includes securing effective and willing co-operation from employees and reducing conflict between
the management and the employees and their representatives, the trade unions. The three parties involved in the industrial relations are (i)
management, (ii) employees, and (iii) statutory authorities. There are three approaches to the industrial relations. These are (i) psychological
approach, (ii) sociological approach, and (iii) human relations approach.
Industrial relations involves (i) regulations for the management of the employment, (ii) methods of defining these regulations, (iii) the parties
involved which include management, employees and their representatives (trade unions), institutional bodies, and local and statutory
authorities, and (iv) interaction processes between these parties. Harmonious and peaceful industrial relations involve (i) display of
responsible thinking towards the organization, (ii) understanding of the limitations of the parties involved, and (iii) respect for the views of
each other in spite of the different position held by the members involved in collective bargaining.

The two words which constitute the term ‘industrial relations‘ are ‘industry’ and ‘relations’. ‘Industry’ refers to any productive activity in which
the employees are engaged. ‘Relations’ refers to the relationship which exists within the industry between the management and the
employees. The management-employees relationship existing in the organization within the organizational settings is represented by the term
‘industrial relations’. Industrial relations stems directly or indirectly from management-trade union relationship.
Maintenance of harmonious industrial relations is of crucial importance for the survival and the growth of the organization. Peaceful industrial
relations result in increased efficiency, reduced manpower turnover, and various other tangible benefits to the organization. Harmonious
industrial relations have several advantages which include (i) establishing of industrial democracy, (ii) contributing to the economic growth and
development of the organization, (iii) improving of the morale of the employees, (iv) ensuring optimum use of the scare resources, (v)
discouraging unfair practices on the part of both the management and the trade unions, (vi) prompting enactment of sound regulatory
legislation, and (vii) facilitating change for alignment with the ever changing environment.
4. What is Industrial conflict? Explain the causes for conflict in Industries.
Industrial relations conflict between your small business and its employees can lead to issues such as low employee morale, poor work
performance and even legal issues if you don't handle them appropriately. Some common causes of industrial conflict range from how you
compensate, reward and discipline employees to what type of work environment and schedule you provide them. Understanding these
problem sources can help you make labor management decisions that reduce conflict and provide a better experience for your staff.
Issues With Employee Compensation
One of the most common causes of industrial dispute relates to how the company pays its employees. When employees feel that their
wages don't suffice for the work they're performing or that they don't receive regular wage increases that keep up with inflation, this can
cause disputes with the company and the need to negotiate pay. At the same time, if your company offers new employees for a warehouse
position a higher starting wage than some existing workers make after several years of service, this can create a conflict between
employees and management.
There may also be conflict if your company doesn't compensate workers for all time worked, such as when employees find the need to
work off the clock.
Disagreements on Rewards and Discipline
When employees disagree on how your company handles rewards and discipline, this can lead to industrial relations conflict that you
have to address. For example, if your company promotes someone with less experience, skills and seniority over more tenured workers,
this can lead to arguments that the decision was unfair.
The same is true when you reward and punish employees inconsistently, such as letting specific employees get away with being late or
slacking off while giving others write-ups for the same behaviors. If such issues aren't resolved, your workers may feel there's no point in
doing quality work.
Undesirable Working Hours
Working hours that significantly interfere with your employees' work-life balance or routine is another one of the causes of industrial
conflict. If your employees were hired to work a regular day shift, forcing them to begin working nights can cause issues with their family
schedule and can lead to industrial disputes.
Problems can also occur if you significantly shorten employees' work hours so that they can no longer afford to pay their bills, or you begin
requiring longer shifts and overtime that take away time from employees' families.

Lack of Staff
Not having enough employees to handle the company's demand can cause disputes with workers who feel that they are overworked or
have to perform tasks outside their job description. Such an issue may point to a problem in working conditions, job preparation or
compensation that drives existing employees away, thus causing high turnover for your company.
This cause of labor relations conflict may also be due to your company not hiring the best employees due to a need to quickly provide
staffing and not performing thorough enough screening as necessary.
Poor Work Environment
The work environment you provide for employees can cause industrial relations conflict when workers feel unsafe, unhealthy or
uncomfortable doing their jobs. If you give workers substandard office equipment, don't keep the place clean or don't control the
temperature properly, employees can become distracted and frustrated.
Other examples of a poor work environment that can cause industrial relations conflict is one where scheduling is not properly done or
employees don't get sufficient breaks, leading to fatigue and lower morale.
Handling Industrial Relations Conflict
While creating a positive work environment, offering a fair compensation and reward system and being consistent with rules are good
steps toward the prevention of industrial disputes, you can still expect disagreements to happen from time to time.
5. Explain the problems of Trade unions and suggest suitable measures for smooth functioning of Trade unions.
Problems and Weaknesses of Trade Unions in India: Trade union movement in our country suffers from the following weaknesses: 1. Uneven
Growth: Trade unions are concentrated in large scale industry sector and in big industrial centers. There is very little trade union activity in
small sector, agricultural labour and domestic sector. Trade unionism has touched only a portion of the working class in India. 2. Small Size:
Most of the unions have low membership though the number of unions and union membership are increasing, average membership is
inadequate to be effective. 3. Weak Financial Position: The average yearly income of unions is very low and inadequate. The subscription rates
are low and many members do not pay the subscription in time. Due to their financial weakness, most of the unions are not in a position to
undertake welfare programmes for workers. 4. Political Leadership: Trade unions are under the leadership and control of political parties and
outsiders. Politicians exploit unions and workers for their personal and political gains. Thus, this sort of leadership is very harmful to the trade
union movement in India. 5. Multiplicity of Unions: There exist several unions in the same establishment or industry. The existence of rival
unions with conflicting ideology is greatly responsible for unhealthy growth of trade union movement in India. In some cases, employers
encourage split in unions to undermine their bargaining power. 6. Problem of Recognition: Employers are under no obligation to give
recognition to any union. 7. Absence of Paid Office-Bearers: Most of the unions do not have paid office-bearers. Union activists working on
honorary basis devote only limited time and energy to union activities. Union officers lack adequate knowledge and skill due to lack of proper
training, weak financial position and political leadership are the main reasons for this state of affairs. 8. Apathy of Members: Majority of
workers do not take keen interest in union activities. The attendance at the general meetings of unions is very poor. 9. Opposition from
Employers: Trade unions in India have to face opposition from employers. Many employers try to intimidate or victimize labour leaders, start
rival unions and bribe union officials; thus, defeating the very objectives of their formation. 10. Inter-Union Rivalry: Multiple unions create
rivalry. Unions try to play down each other in order to gain greater influence among workers. Employers take advantage of infighting.
Interunion rivalry weakens the power of collective bargaining and reduces the effectiveness of workers in securing their legitimate rights.
The following suggestions are given for the healthy growth of trade unions in our country:
1. One Union in One Industry:
In order to remove inter-union rivalries, to promote unity in the trade unions, and to take up collective bargaining effectively, it is necessary to
observe the principle of “one union in one industry”. Without such, it is difficult for the workers to concede their legitimate demands.

2. Training and Education of Union Workers:
It is necessary to train and educate the union worker in the various areas relating to the management of trade union. They should also have
knowledge regarding the working and technicalities of the industry in which they are working. Further, such trained workers should be
appointed as full-time paid officers of the company.
3. Enlarging the Coverage:
At present, only a small percentage of workers are associated with the trade unions in the country. In order to strengthen trade unionism, it is
necessary that its coverage is enlarged as much as possible by bringing a large mass of un-organised workers within its fold.
4. Strengthening the Unions:
As the trade unions in India are not very .stable and strong, their growth is very much hindered. Hence, steps must be taken to strengthen
them by measures like, (a) encouraging the small unions to merge with the stronger units, and (b) improving the finances of trade union by
collecting the subscriptions regularly from the members.
5. Expanding and Diversifying the Activities:
Generally, the trade unions in India concern themselves only with the demands for more wages and certain other benefits to the members. In
order to make the workers get more interest in the trade unions, it is necessary for the trade unions to expand and diversify their activities.
They have to provide educational, social, cultural and welfare facilities to their members.
6. Free from the control of Political Parties:
So far, trade unions in our country are dominated by the different political parties and this is not helping for their healthy growth. Hence, they
must make efforts to establish themselves as independent organisations and also should replace the outside leadership by their own
leadership.
7. Change in the Employers’ Attitude:
The employers have to change their attitude towards trade unions. They should realize that strong trade unions can be helpful in avoiding
many disputes, inculcating a sense of discipline among the workers and in creating good atmosphere in the factory. Hence, the employers
instead of trying to weaken the trade unions must encourage their growth on sound lines and give due recognition to the representative trade
unions.
8. Change in Government’s Attitude:
Government also has to change its attitude towards trade unions. They should follow such policies that may facilitate the healthy growth of
trade unions. They should encourage collective bargaining and also the development of voluntary arbitration for resolving industrial disputes.

9. Proper Implementation of Code of Conduct:
A code of conduct was evolved in 1 958 by the representatives of the four central organisations of the country for the purpose of minimising
the inter-union rivalries and also to facilitate the healthy growth of trade unions. But they have not implemented the code properly. As the
purpose of the code is to help the unions to grow on stable and sound lines, the efforts should be made by the unions to implement the code
properly.
Assignment 2
1-. Explain the significance of good Industrial relations in Industries.
Maintenance of harmonious industrial relations is on vital importance for the survival and growth of the industrial enterprise. Good industrial
relations result in increased efficiency and hence prosperity, reduced turnover and other tangible benefits to the organization. The significance
of industrial relations can be summarized as below:
1. It establishes industrial democracy: Industrial relations means settling employees problems through collective bargaining, mutual cooperation
and mutual agreement amongst the parties i.e., management and employees unions. This helps in establishing industrial democracy in the
organization which motivates them to contribute their best to the growth and prosperity of the organization.
2. It contributes to economic growth and development: Good industrial relations lead to increased efficiency and hence higher productivity and
income. This will result in economic development of the country.
3. It improves morale of the work force: Good industrial relations, built-in mutual cooperation and common agreed approach motivate one to
contribute one’s best, result in higher productivity and hence income, give more job satisfaction and help improve the morale of the workers.
4. It ensures optimum use of scare resources: 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. This will ensure optimum use of
resources, both human and materials, eliminating all types of wastage.
5. It discourages unfair practices on the part of both management and unions: Industrial relations involve setting up a machinery to solve
problems confronted by management and employees through mutual agreement to which both these parties are bound. This results in
banning of the unfair practices being used by employers or trade unions.
6. It prompts enactment of sound labor legislation: Industrial relations necessitate passing of certain labor laws to protect and promote the
welfare of labor and safeguard interests of all the parties against unfair means or practices.
7. It facilitates change: Good industrial relations help in improvement of cooperation, team work, performance and productivity and hence in
taking full advantages of modern inventions, innovations and other scientific and technological advances. It helps the work force to adjust
themselves to change easily and quickly
2. Explain the role of ILO in maintaining good Industrial Relations.
International Labour Organisation (ILO)
The main aims of the ILO are to promote rights at work, encourage decent employment opportunities,
enhance social protection and strengthen dialogue on work-related issues. Its unique tripartite structure gives an equal voice to workers,
employers and governments to ensure that the views of the social partners are closely reflected in labour standards and in shaping policies
and programmes. The ILO was founded in 1919, in the wake of a destructive war, to pursue a vision based on the premise that universal,
lasting peace can be established only if it is based on social justice. The ILO became the first specialized agency of the UN in 1946.
 Strategic Programming and Management Department of the ILO
Private sector development (PSD) policy and strategy
The ILO promotes a people-centred and sustainable approach to enterprise development, which aligns enterprise growth and the creation of
productive employment and decent work with sustainable development objectives. It builds its approach around three mutually reinforcing
pillars:

1. Creating an enabling environment for sustainable enterprises and employment, which encourages investment and entrepreneurship;
2. Helping entrepreneurs to start and build successful enterprises;
3. Linking productivity improvements to better working conditions, good industrial relations and good environmental practices.
Based on a range of tested products and solutions applied internationally on a large scale, the ILO has consolidated its expertise in 11 distinct
areas classified according to the following five groups:
 Small and Medium Enterprises, entailing a standardised assessment tool for the Enabling Environment for Sustainable
Enterprises (EESE), an approach to help small businesses to identify and exploit market opportunities through Value Chain
Development, a set of Management and Entrepreneurial Training, a programme to foster Women’s Entrepreneurship
Development (WED), a training and in-factory counselling programme to increase SME productivity through better workplace
cooperation,Sustaining Competitive and Responsible Enterprises (SCORE);
 Multinational Companies, responsible for the promotion and follow-up of the Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy (MNE Declaration), which is the ILO’s key tool for cooperating with the corporate world;
 Cooperatives, promoting the cooperative business model with its specific regulatory and institutional requirements as well as social
enterprises, which pursue both economic and social aims and foster solidarity;
 Creation of Green Jobs, helping businesses to successfully shift towards a greener economy and adapt to economic and
environmental crisis and change.
 Social Finance, supporting efforts to extend financial services to excluded persons by promoting better employment and reducing
the vulnerability of the working poor.
Moreover, ILO’s close contact with governments, employers’ organizations and trade unions of its member countries provides unique access
to the actors in the real economy supported by a global network of enterprise specialists. Capacity development programmes are, designed
and delivered worldwide in cooperation with the ILO’s International Training Centre in Turin, Italy.
Cooperation with the private sector
Recognizing the pivotal role they play, the ILO works with individual companies and foundations and with employers and their organizations to
tackle important global labour market issues; to support sustainable enterprises and entrepreneurs; to enhance value in supply chains; to
promote social protection; and to resolve specific problems in the world of work.
3-. Explain the machinery for settlement of Industrial disputes in India.
In this connection, we may mention the vital role that the Industrial Disputes Act of 1947 (as amended from time to time) plays or
maintenance of peace in industrial units.
(1) There is a Working Committee in every industrial unit employing hundred persons or more. The Committee consists of the
representatives of both the management and the workers. Its object is to improve the employer labor relation and to secure a settlement
of industrial disputes.
(2) In every factory, there are Conciliation Officers appointed by the Government to go through the nature of dispute the arises between
the workers and the management and try to resolve the conflict. The Committee submits a report there on to the Government.
(3) Arbitration is an important method of settlement of industrial disputes in India. It may be voluntary or compulsory. Under compulsory
arbitration, the parties are bound to refer the disputes to the adjudication board the decision of which is binding upon the parties.
(4) The Government can appoint a Board of Conciliation consisting of four members to investigate any dispute and try to settle it and the
board submits a report to the Government about it.
(5) In our economy the State Governments have been empowered to set up the Labor Courts for settlement of disputes arising out of the
retrenchment workers. The government may also appoint a Court of Enquiry to find out the causes of labor unrest.
(6) There are many Industrial Tribunals in the Centre the States. Such a tribunal is presided over by a distinguished jurist for the purpose of
settlement of disputes relating to wages, bonus etc. There are also Labor Appellate Tribunals to hear appeals from employers and
employees and also the decisions of the Labor Courts, and the Board of Conciliation.
(7) The Bonus Act has been passed for the payment of bonus to laborers. There are also Wage Boards in different industrial units for the
purpose of fixation of fair wages to the industrial workers.
(8) Both at the Centre and in the States, the Industrial Relations Commissions have been instituted for adjudication of disputes of industrial
undertakings. In the several industrial units, workers are allowed to participate in the management for administrating the welfare schemes
and fixation of working hours and leave.

(9) In 1965, the Industrial Disputes Act was amended in order to enable a retrenched worker to raise a dispute without the help of the
union. Besides, casual laborers get layoff compensation which is half of their monthly wages.
(10) The amendments of 1982 and 1984 of the Industrial Dispute Act, has fixed compensation for retrenchment and has made the serving of
a notice of retrenchment, closure to the appropriate Government compulsory and have a1so forbidden any unlawful retrenchment lay off
in an industrial establishment employing not less than 100 workers without the prior permission of the appropriate Government.
(11) In some industries there exists a close co-operation between the workers and the management for avoiding the loss of man days,
encouraging the growth of workers’ unions and adjudicating disputes through mutual understanding and negotiations.
4. Write the trade union movement in USA and UK .
Labor Force and the Development of Trade Union Movement in UK and USA
The United Kingdom and the United States of America share various similarities when it
comes to trade unions and employment relations. First, the two countries continue to record a
decline in trade union membership. Notably, changes in the structure of production may have
facilitated this development (Kelly, 2015). Second, the two countries have strong employment
laws that support and govern trade unionism. However, several differences exist among these
countries that are also worth pointing out. Observably, the organizational structure of trade
unions in these countries is quite different. The UK has both horizontal and vertical structures
while the United States has trade unions that are connected to a single industry or company. It is
also evident that the social and institutional basis of trade unions in these countries is different.
The focus on the social and political basis of trade unions is not the same in the two countries.
The US uses what experts call “marked trade unionism” (Kelly, 2015).
Moreover, Fiji is a country that has had a substantial development when it comes to trade
unionism ever since the Trade Union Ordinance of 1964 was enacted. However, about two-thirds
of people working in the informal sector in Fiji still fall outside the purview of trade unions. In
response to this growing concern, the government has had to establish the Fiji Trade Union
Congress (FTUC) which is mandated with the task of advising the government on trade union
matters and ensuring that employment laws are implemented effectively.
5-. Explain the functions of National Trade Union Federations.
Functions of Trade Union
Militant Function
One set of activities performed by trade unions leads to the betterment of the position of their members in relation to their employment. The
aim of such activities is to ensure adequate wages secure better conditions of work and employment get better treatment from employers,
etc.
When the unions fail to accomplish these aims by the method of Collective bargaining and negotiations, they adopt an approach and put up a
fight with the management in the form of go-slow tactics, strike, boycott, gherao, etc.
Hence, these functions of the trade unions are known as militant or fighting functions. Thus, the militant functions of trade unions can be
summed up as:
• To achieve higher wages and better working conditions
• To raise the status of workers as a part of industry
• To protect labors against victimization and injustice
Fraternal Functions
Another set of activities performed by trade unions aims at rendering help to its members in times of need, and improving their efficiency.
Trade unions try to foster a spirit of cooperation and promote friendly industrial relations and diffuse education and culture among their
members. They take up welfare measures for improving the morale of workers and generate self confidence among them.
They also arrange for legal assistance to its members, if necessary. Besides, these, they undertake many welfare measures for their members,
e.g., school for the education of children, library, reading-rooms, indoor and out-door games, and other recreational facilities. Some trade
unions even undertake publication of some magazine or journal.
These activities, which may be called fraternal functions, depend on the availability of funds, which the unions raise by subscription from
members and donations from outsiders, and also on their competent and enlightened leadership.
Thus, the fraternal functions of trade unions can be summed up as:

• To take up welfare measures for improving the morale of workers
• To generate self confidence among workers
• To encourage sincerity and discipline among workers
• To provide opportunities for promotion and growth
• To protect women workers against discrimination
Specific Functions of Unions
 Wage & salary bargaining
 Fight for continuous improvement in employee benefits
 Improving working conditions at the workplace
 Improving welfare, healthcare & recreation facilities, and leisure at workplace
 Increasing rest periods, holidays, paid leave and time-offs
 Decreasing working hours, workload mainly manual, and hazardous working conditions
 Improving career and salary rise prospects & job security
 Protecting employees against arbitrary/unjust actions of Management
Paper- 6. 5
th
Question:
5. Examine the issues in sensitivity training.
1. Sometimes members of a group find these activities chaotic and disorganized especially at the onset
2. As sensitivity training is an informal activity, there is no superior and subordinate relationship. Sometimes the informal talks can harm
the relationship between both of them,
3. It can tamper relationship between employees also
4. Sometimes people are unable to give their true opinion as they are too aware of others and afraid of their reaction
5. Sensitivity training is based on assumptions and not on facts
6. Although sensitivity training is referred to as having a psychological impact, the meetings are unable to find a psychological reason for
the behavior.
7. Critics often have slammed sensitivity training as a method for brainwashing.
Disadvantages of Sensitivity Analysis
Following are the disadvantages of this analysis:
Based on Assumptions
Sensitivity analysis is based on historical data & management assumptions. If these assumptions itself are wrong, the whole analysis will be
wrong and the future forecast will not be accurate. For example, if management assumes that raw material prices will increase in future and
will affect the final price of the product, the company will purchase additional raw material at present prices. But if instead of rising, raw
material prices fall, then the company will be at a disadvantage in the market.
Not Relative in Nature
Sensitivity analysis considers each variable individually and tries to determine the outcome. In the real world, all variables are related to each
other. For example, both inflation as well as market interest rates, affect bond prices. Sensitivity analysis will consider how much a change in
inflation will affect bond price and how a change in market interest rate will affect bond price, but it won’t consider how a change in inflation
will affect market interest rate or vice versa. This is actually incomplete analysis. Thus, we can say this analysis gives depth to the forecast but
doesn’t consider its breadth.
Finally, we can conclude that even though sensitivity analysis is a very good analytic tool, it would be better to use it with other management
tools to get optimum forecasts.

Paper-7 5
th
question
5. Discuss the functions and working of Provident Fund organization.
Functions Of EPFO
EPFO is performing the dual functions, one as the regulator of the act to see the implementation and another one as the service provider. Its main
function includes providing retirement benefits to private as well as government employees. Overall it performs the function of settling claims,
maintaining individual accounts, and regulation of payments under pension scheme and others. In addition to this EPFO performs the below-
mentioned functions-
Functions of the Regional Committee Formed under EPFO
 To issue the annual accounts slips to members of the fund
 Performs the function of the fast settlement of claims
 Sanction the advances fastly
 Look after the progress of recovery of Provident Fund contributions
Functions of the Executive Committee Formed under EPFO
 Opening Sub-Regional offices
 Creating new regions and updating the old one
 Define work norms for all the staffs and officers of the organization
 Identifying the proposals for obtaining land and buildings etc.
How does the Scheme work – Contribution and Interest?
The contribution towards Provident Fund is made @12% of your basic salary plus dearness allowance(DA). You and your employer both
contribute 12% each out of which 12% contributed by you goes directly to the EPF account and the other 12% contributed by the employer goes
to the EPF account as well as is diverted towards Employee’s Pension Scheme. Generally, 3.67% goes to the EPF A/c and 8.33% towards
pension scheme.
All these contributions are then invested by a trust which generates an interest income at the rate which is decided by the Government. Currently
(FY 2018-19), the rate is 8.55% which decreased from an 8.65% FY 2017-18. Further, though you make contributions monthly, the interest is
calculated yearly on the amount standing to your credit as on the 1st April of that year. For the next year, the interest would be calculated on the
accumulated balance in the EPF account i.e. last balance + total contributions + last interest.
Let’s understand interest calculation from given below example :
Basic Salary + DA = Rs. 30,000/-
Rate of interest for FY 2018-19 = 8.65% per annum i.e. 8.65/12 = 0.7208% per month

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