What is Industrial Relations? Definition, Nature, Concept, Significance

  • Post last modified:23 March 2023
  • Reading time:16 mins read
  • Post category:Human Resource
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What is Industrial Relations?

The term industrial relations refer to industry and relations. “Industry” means “any productive activity in which an individual is engaged” and relations” means “the relations that exist in the industry between the employer and his workmen.”

Thus, industrial relations are seen as relationships between employees and employers within the organizational settings. The field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a union.

Concept of Industrial Relations

The concept of industrial relations means the relationship between the employees and management in the day to day working of an industry. The Indian IR scenario has been rapidly changing with the opening up of the liberalized economy and the subsequent inflow of Multinational Corporations (MNCs).

This has brought a shift in the attitude towards the relationship. This entry of MNCs has shifted the focus from a labour economy to a human economy .An extensive linkage between economy, politics and history has always characterized Indian IR. The changes that are taking place are primarily due to endogenous forces embedded within India’s political economy.

There has been a major effect on the macro economic aspect on the structure of the labour market (productivity, employment and wages), also on the structure of IR (number of unions, collective bargaining, labour legislation, industrial conflict and state intervention).These transformations have brought in changes on the growth pattern of the economy.

Industrial relations have a broad as well as a narrow outlook. Originally, industrial relations were broadly defined to include the relationships and interactions between employers and employees. Industrial relations cover all aspects of the employment relationship, including human resource management, employee relations, and union management (or labor) relations.

The meaning has become more specific and restricted. Industrial relations pertains to the study and practice of collective bargaining, trade unionism, and labor management relations, while human resource management is a separate, largely distinct field that deals with nonunion employment relationships and the personnel practices and policies of employers.

Industrial Relations Definition

Industrial relations deal with either relationship between the state and employers’ and workers organizations or the relations between the occupational organizations themselves.International labor organization
Industrial Relations refers to the relationship between management and employees, or employees and their organization that arise out of employment.Dale Yoder
Industrial Relations are the composite approach of the attitudes and approaches of the employers and employees towards each other with regard to planning, Supervision, direction and unification of the activities of a set up with less friction and more co-operation with mutual effort for others well-being.Teed and Metcalfe
An industrial relations system at anyone time in its development is regarded as comprised of certain actors, certain context and ideology which binds the IR system together and a body of rules created to govern the actors at the work place and work community.Prof.John T. Dunlop (1958)
Industrial relations are broadly concerned with bargaining between employees and trade unions on wages and other terms of employment. The day to-day relations within a plant also constitute one of the important elements and impinge on the broader aspects of industrial relations.C.B. Kumar
Industrial relations are an integral aspect of social relations arising out of employer employee interaction in modern industries, which are regulates by the state in varying degrees in conjunction with organized social forces and influenced by prevailing institutions.V.B. Singh
The field of industrial relations includes the study of workers and their trade unions, management, employers’ associations and the state institutions concerned with the regulation of employment.H.A. Clegg
IR is oriented to the entertainment of conflict through the mechanisms of institutionalization and regulation.Flanders (1970)

Nature of Industrial Relations

  • IR is concerned with the relationship of management and workers.

  • To protect the interests of employees

  • Concerned with systems, rules and procedures used by unions & employees

  • Role of regulatory mechanism in resolving any industrial disputes.

  • IR is multidisciplinary in nature. The study of Industrial Relations has also drawn from the fields of psychology, sociology, communication, technology etc. and is now in the process of establishing its own field of study.

Objectives of Industrial Relations

The primary objective of industrial relations is to bring about good and healthy relations between the two partners in industry labour and management. It is around this objective that other objectives revolve.

According to Kirkland, “the state of industrial relations in a country is intimately connected with the form of its political government, and the objectives of an industrial organization may change form economic to political ends.”

He divides these objectives into four:

  • Improving the economic condition of workers in the existing state of industrial management and political government;
  • Control by the state over industries to regulate production and industrial relation;
  • Socialization or nationalization of industries by making the state itself an employer; and
  • Vesting the proprietorship of industries in the workers.

The other objectives are:

  • To maintain industrial democracy based on participation of labour in the management and gains of industry.

  • To raise productivity by reducing tendency of high labour turnover and absenteeism.

  • To ensure workers’ participation in management of the company by giving them a fair say in decision-making and framing policies.

  • To establish a proper channel of communication.

  • To safeguard the interests of the labour as well as management by securing the highest level of mutual understanding and goodwill between all sections in an industry.

  • To avoid all forms of industrial conflicts so as to ensure industrial peace by providing better living and working standards for the workers.

  • To bring about government control over such industrial units which are running at a loss for protecting the livelihood of the employees.

Significance of Industrial Relations

Significance of industrial relations are:

  1. Uninterrupted production
  2. Reduction in Industrial Disputes
  3. High morale
  4. Mental Revolution
  5. New Programmes
  6. Reduced Wastage

Uninterrupted production

The most important benefit of industrial relations is that this ensures continuity of production. This means, continuous employment for all from manager to workers. The resources are fully utilized, resulting in the maximum possible production.

There is uninterrupted flow of income for all. Smooth running of an industry is of vital importance for several other industries; to other industries if the products are intermediaries or inputs; to exporters if these are export goods; to consumers and workers, if these are goods of mass consumption.

Reduction in Industrial Disputes

Good industrial relation reduce the industrial disputes. Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations.

Strikes, lockouts, go-slow tactics, “gherao” and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. It helps promoting cooperation and increasing production.

High morale

Healthy and good industrial relations improve the morale of the employees. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same, i.e. to increase production.

Every worker feels that he is a co-owner of the gains of industry. The employer in his turn must realize that the gains of industry are not for him along but they should be shared equally and generously with his workers. In other words, complete unity of thought and action is the main achievement of industrial peace.

It increases the place of workers in the society and their ego is satisfied. It naturally affects production because mighty co-operative efforts alone can produce great results.

Mental Revolution

The main object of industrial relation is a complete mental revolution of workers and employees. The industrial peace lies ultimately in a transformed outlook on the part of both.

It is the business of leadership in the ranks of workers, employees and Government to work out a new relationship in consonance with a spirit of true democracy.

Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognized. On the other hand, workers must recognize employer’s authority.

New Programmes

New programmes for workers development are introduced in an atmosphere of peace such as training facilities, labor welfare facilities etc. It increases the efficiency of workers resulting in higher and better production at lower costs.

Reduced Wastage

Good industrial relations are maintained on the basis of cooperation and recognition of each other. It will help increase production.

Causes of Poor Industrial Relations

  • Economic Causes
  • Organizational Causes
  • Social Causes
  • Psychological Causes
  • Political Causes

Economic Causes

Poor wages and poor working conditions are the main reasons for unhealthy relations among management and labour. Unauthorized deductions from wages, lack of fringe benefits, absence of promotional opportunities, dissatisfaction with job evaluation and performance appraisal methods, faulty incentive schemes are other economic causes.

Organisational Causes

Faulty communication system, dilution of supervision and command, non-recognition of trade unions, unfair practices, violation of collective agreements and standing orders and labour laws are the organisational causes of poor relations in industry.

Social Causes

Uninteresting nature of work is the main social cause. Factory system and specialisation have made worker a subordinate to the machine. Worker has lost sense of pride and satisfaction in the job. Tensions and conflicts in society break up of joint family system, growing intolerance have also led to poor employer-employee relations. Dissatisfaction with job and personal life culminates into industrial conflicts

Psychological Causes

Lack of job security, poor organisational culture, non-recognition of merit and performance, authoritative administration and poor interpersonal relations are the psychological reasons for unsatisfactory employer-employee relations

Political Causes

The political nature of trade unions, multiple unions and inter-union rivalry weaken trade union movement. In the absence of strong and responsible trade unions, collective bargaining becomes ineffective. The union‘s status is reduced to a mere strike committee.

Effects of Poor Industrial Relations

Poor Industrial Relation produces adverse effects on the economic life of the country. We may enumerate the ill-effects of poor Industrial Relations as under:

  1. Multiplier effects: Modern industry and modern economy both are interdependent. Hence although the direct loss caused due to industrial conflict in any one plant may not be very great, the total loss caused due to its multipliers effect on the total economy is always very great.

  2. Low Morale and motivation: Poor Industrial Relations adversely affect the normal tempo of work so that work far below the optimum level. Costs build up. Absenteeism and labour turnover increase. Plants discipline breaks down and both the quality and quality of production suffer.

  3. Resistance of change: Dynamic industrial situation calls for change more or less continuously. Methods have to be improved. Economics have to be introduced. New products have to be designed, produced and put in the market. Each of these tasks involves a whole chain of changes and this is resisted bitterly if these are industrial conflict.

  4. Frustration and social cost: Every man comes to the workplace not only to earn a living. He wants to satisfy his social and egoistic needs also. When he finds difficulty in satisfying these needs he feels frustrated. Poor Industrial Relations take a heavy toll in terms of human frustration. They reduce cordiality and aggravate social tension.

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