Industrial Relations in Public Sector Learning Objectives The purpose of forming state enterprises in developing countries and in India.

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1 Learning Objectives The purpose of forming state enterprises in developing countries and in India. The different types of undertakings & their roles. The scenario with regard to industrial relations, wage administration, industrial disputes, and workers participation in management. The measures suggested by the national Commission on labour to improve industrial relations of such undertakings.

2 Structure Industrial Relations in Public Sector 10.1 Introduction 10.2 Analysis 10.3 Employee Relations 10.4 Wage Administration 10.5 State Intervention 10.6 Industrial Disputes 10.7 Workers Participation 10.8 INTUC Public sector Union s Conference 10.9 Suggestions Summary

3 10.1 Introduction Most of the developing countries of the world resorted to state enterprise with a view to bring about economic development & social change at a fast rate. In free India, Industrial Policy of 1948, laid down that industries of basic & strategic nature or in the nature of public utility should be in public sector. The public sector is viewed as an instrument for creating resources for plan finance and development

4 10.1 Introduction Public sector is advocated 1] to gain control of the commanding heights of the economy; 2] to promote critical development in terms of social gain of strategic value rather than in terms of profit and 3] to provide commercial surplus for financing further economic development.

5 10.1 Introduction There cannot be two opinions about the necessity of public enterprises to operate efficiently and economically. But overall performance of public sector in India was below plan targets. It however, created a vast pool of managerial talent in the country. It also helped in bringing about reduction in disparities in income by generating employment & pushing up the wage level of the lower income group.

6 10.1 Introduction But taking the public sector enterprises as a group one has to concede that although there have been achievements, much remains to be done in areas of capital management, project implementation, marketing, personnel selection and industrial relations.

7 10.2 Analysis Basically there are three types of undertakings which fall under public sector : - {a} undertakings directly run be the government departments viz. railways, post & telegraph, telecommunications, defence production, printing presses etc. {b} undertakings run by statutory corporations registered under Companies Act.

8 10.2 Analysis Basically there are three types of undertakings which fall under public sector : - {c} Undertakings previously with private sector now nationalized viz. banks, insurance, oil companies, coal mines and units in the textile industry taken up by national Textile Corporation. The industrial sectors which have a sizable number of employees in the public sector include coal, steel, textiles, heavy engineering, medium & light engineering.

9 10.2 Analysis Over a period of years, public sector has played a vital role in the industrialization of the country by establishing the basic and heavy industries & providing for necessary infra structure facilities. It also provided inputs for bringing in Green revolution. It has also dispersed industries particularly in backward areas. In spite of its phenomenal growth in terms of number of undertakings, investment, employment & above all its monopolistic position, it failed to achieve desired results.

10 10.3 Employee Relations Industrial relations in public sector have to be discussed in relation to actors involved namely managements, unions and Government. There are no handicaps for public sector employees to form unions. Like private sector, public sector also faces problems of multiple unions and intra union rivalry. Further public sector enterprises is a fertile ground for trade unions owing allegiance to political parties.

11 10.3 Employee Relations By exploiting the concept of model employer, unions encourage excessive demands from workers. Lack of autonomy and resulting long chain of command, desirable authority and decision making powers are not available with public sector managements. while private sector manager can easily identify his actions with the sales or profit goal of the company, Public sector manager finds it difficult to determine and evaluate his goals.

12 10.3 Employee Relations The tendency, therefore, is to play safe and focus on avoidance of errors rather than initiative. Rules are paramount. There is a practice of transfer of government personnel regularly & periodically without considering the need for or consequences of such transfers. Thus managers are not interested in long term solutions to the problems.

13 10.3 Employee Relations As a consequence, we have developed in the public enterprises, mediocrity rather than initiative, conformity rather than innovativeness and procedure oriented instead of results oriented performance. Several attempts were made to bring in uniformity in standing orders but there is such diversity in the public undertakings that uniformity can be thought in the context of procedures alone.

14 10.3 Employee Relations Quality of collective bargaining techniques adopted by public sector workers is not different from those of private employees. Unions do not know with whom to negotiate as the managers themselves are the employees of the public enterprise and are themselves governed by several rules and regulations. Where wage agreements exist, preparations are started for their renewal in advance by collecting volumes of data.

15 10.3 Employee Relations The organization s prospects & financial positions are reviewed and a tentative allocation of resources for ensuing wage revision is arranged. The negotiations drag on until there is compulsion to compromise in order to settle the issues before the deadline. Linkage of wage increases with productivity is conspicuous by its absence. Normally a para indicating party s intent to improve productivity is added at the end of the agreement.

16 10.4 Wage Administration Features : - a] A wage structure has two components, basic salary & dearness allowance in all the units, & special pay allowance in a few. b] inter unit disparities exist in wage structure including fringe benefits c] time and piece rates systems of wage payment coexist in the same units d] variety of incentive schemes with different names and objectives exist within a unit & in different units

17 10.4 Wage Administration Features : - e] Annual minimum bonus is paid under the Payment of Bonus Act, 1965 unrelated to profits and up to 20% if re-allocable surplus at unit level is earned. f] There is a provision of periodic pay revisions mainly on the basis of collective bargaining, but more or less not related to production, profits or productivity. Revisions are carried normally after four years, but this interval is not uniform to all units.

18 10.5 State Intervention With regard to third party intervention in labour disputes, there is no difference in the practices followed between the public and private sectors. Trade unions allege that the enterprises under central Government receive some preferential treatment which adversely affects labour interests. Even though there is no such legal provision, state governments do not act against central government units on any breach, unless permission is received from the latter.

19 10.6 Industrial Disputes Collective bargaining is used in public sector to resolve the disputes. The bargaining is usually at the plant or corporate level only. There was a major strike that lasted 77 days in Bangaluru based Government of India undertakings like ITI, HAL, HMT, BEL & BEML. Surprising the union fought for uniformity in wage structures in these enterprises & the government was opposing it! Bureau of Public Enterprises advocates civil service type standard compensation system & work conditions for all state owned units.

20 10.7 Workers Participation The scheme of workers participation in management is working in certain public sector undertakings, especially in steel industry. Orientation programmes are arranged for the members of the works committee. The committee handles welfare based & work based issues. In most undertakings it has been found that the communication between workers & management has been not satisfactory and that machinery for joint consultations & joint councils of management had either not been organized adequately or functioning effectively.

21 10.8 INTUC Public sector Union s Conference The conference held in 1981 pleaded for further expansion of the public sector. It reiterated that the success of the public sector be measured not on profit index but on social objectives of developing backward regions, generation of employment & protection of existing employment. It complained that the sector is not managed by persons who have understood and are committed to the philosophy of public sector.

22 10.8 INTUC Public sector Union s Conference The persons heading public undertaking are drawn form administrative services [ where they treat themselves as birds of passage]; private sector [ where they import practices of private sector without understanding the need & goals of public sector] or from armed forces [where they find themselves in strange waters]. Thus there is a need for a National School for management of public sector which produces graduates that understand the philosophy and the role of public sector in growing economies.

23 10.8 INTUC Public sector Union s Conference The Bureau of Public Enterprises [BPE] needs to provide broad guidelines and assistance to the managements of in the operation of public enterprises. However, the Bureau itself is managed by bureaucrats and managements complain of their undue interference into day to day matters as well as in collective bargaining. The bureau has to be reorganized by drawing experts from different fields of disciplines including labour representatives.

24 10.8 INTUC Public sector Union s Conference There is a marked deterioration in industrial relations of public sector. Quite often it is politically motivated. Managements attempt to cover their sub standard performance by encouraging through back doors unions which advocate direct action, agitations that interrupt production. Very often strikes in public sector are politically motivated. Labour is used as a tool to fight political battles. Only strong internal unions can stop this misuse.

25 10.8 CITU public sector unions Conference Was held in It also criticized Planning Commission s recommendation to reduce the role to be played by the public sector. The conference was against the reckless drive for the modernization, mechanization, and computerization of public sector undertakings without objectively finding out their need. CITU further alleged that the Government was yielding to conditionality of IMF & the World bank and defocusing from the objective of making the economy self reliant.

26 10.8 CITU public sector unions Conference Public undertakings are relying on contractors to complete the jobs, thereby robbing workers of their rightful employment. Bureau of Public Enterprises issues idiotic fiats and adds to bungling in the public sector. The conference professed that working class of India wants the public sector to grow and work more efficiently. Workers unions have always been supporting the public sector but their assistance was resisted by the government as it preferred to rely on its bureaucrats.

27 10.8 CITU public sector unions Conference CITU further stated that working & living conditions of workers in the public sector are unsatisfactory, there exists wide disparity in wage levels in different units depending upon the strengths of their unions. There is no scientific recruitment or promotion policies in the sector and government s reservation policy is used to pit one section of workers against the other.

28 10.8 CITU public sector unions Conference CITU wants nationalization of sick units, discontinuance of contract workers, withdrawal of concessions to MNCs, ban on imports of items that can be manufactured locally, Workers participation in management to be encouraged, employment oriented projects to be developed in the public sector are other demands of the CITU Conference. It wanted the BPE in its present form to be scrapped.

29 10.9 Suggestions The National Commission on Labour has suggested the following measures to improve industrial relations in the public sector. i] responsibilities for improving industrial relations be clearly defined ii] active participation of managers in implementing labour welfare schemes & adopting practices that improve productivity of workers

30 10.9 Suggestions iii] provide training to managers & workers in industrial relations & managerial styles. iv] effective action to enforce labour laws. v] eliminate carelessness and indiscipline. vi] make appointment of managers on a permanent basis. vii] establish a separate industrial relations department in public enterprise under control of personnel manager.

31 10.9 Suggestions viii] the officer in charge of industrial relations shall have no other duties like recruitment, discipline etc. ix] labour officers appointed in the personnel department be trained in industrial relations. x] Industrial Relations Commission should be constituted at central and state level to formulate effective industrial relations policies.

32 10.10 Summary Appropriate handling of industrial relations in the public sector will always remain a challenge for managers. The responsibility for a national coordinated labour policy rests with the government. The middle level managers & supervisors be assisted & trained to exercise their functions effectively. There must be delegation of authority for speedy decisions & effective action at appropriate levels.

33 10.10 Summary An ideal method has to be developed for proper accountability leaving at the same time, enough autonomy to the enterprises to manage their own affairs. The persons in charge of the enterprise must be genuinely inspired by the economic philosophy and human approach underlying the concept of public sector. The government has to take a forward looking attitude concerning labour relations in the public sector.

34 10.10 Summary Uniform procedure for recognition of union has to be established. Existing machinery for consultation, negotiation and even joint decision is to be made effective and new systems have to be worked out for better labour management relations in the public sector. The ultimate of the relationship scenario between union & management in the sector should be creation of a climate of trust, mutual appreciation and understanding each other s functions & limitations.

35 The End! In the next session we cover chapter eleven on Employee Relations in Small & Medium Sized Enterprises ZÉÉw _âv~4