Introduction
Labor is one of the four basic factors of production. Managing human capital is not only important in improving the performance of individual organizations, but it also plays a major part in economic development of a country. For this reason, labor has always been considered as a corner stone in economic development. For the labor force to be productive there is need to address various challenges that may affect them in one way or the other. It is always important to ensure that employees work in an environment that is not harsh. Their personal and health issues should always be put into consideration to ensure that they work without any form of interference. This explains why there are laws developed to govern human resource management in countries across the world.
Different countries have different policies concerning labor relations. International Labor Organization (ILO) has set specific principles that should be observed by different countries around the world in managing human resource. However, Beik (67) notes that individual countries are expected to make legislation on how its human resource should be managed. This means that different countries around the world have specific principles of labor relations that are unique, despite some of the universal principles set by International Labor Relations. This research will focus on analyzing labor laws and challenges faced by labor force in India.
Country’s History
India has a very rich historic background. The country gained its independence from United Kingdom in 1947. It is ranked as the seventh largest country in the world by land area. It has a population of slightly over 1.2 billion people, making it the second most populous country in the world after China. India is also the largest democracy in the world, and its economy has been ranked as third largest in terms of purchasing power and eleventh by nominal GDP.
Although the country has been considered to have a healthy gross domestic product that is ranked favorably among other world nations, its human development index has remained very low. This is attributed to the fact that wealth of the country is held by a few, while majority struggle to earn a living. India has a rich culture. As Jyothi (297) notes, four world religions, which includes Buddhism, Hinduism, Sikhism, and Jainism originated from this country. However, Christianity and Islam have also found their way into the Indian society in the first millennium. This has helped create a diverse culture in this country.
According to Klatt (144), India is home to large cultural groupings. Some of them are the indigenous people, while many others migrated into the country at different times. Some of the groups were brought into this country as slaves during the colonial period. The country has had a relatively stable political leadership in the recent past. The political assassinations that was common in the early years after independence has been brought to an end.
Labor laws have also been developing with the country’s economic development. As mentioned earlier, India has the second largest human resource in the world, only after China. However, it is unfortunate that majority of this population lack technical skills that can help them be more productive in the country’s economic development. Labor unions in this country are very powerful. They have influence in the political structure of the country, and this has always forced the political class to pay attention to the need of these people.
Economic factors
India is one of the emerging economies in the world. Although the country has always been classified as a developing economy, especially due to its poor human development index, the country has the third strongest economy in terms of its purchasing power (PPP), after the United States and China. The country’s economy is ranked eleventh in terms of its gross domestic product (GDP). According to Deming (45), Indian economy has been expanding rapidly over the years, especially due to the cheaply available human resource and stable political leadership. The report by Holley (24) estimates the economy of this country to be worth $ 1.758 trillion. The service sector employs the highest number of people in India, estimated to be about 55.6%. The industrial sector comes second, employing about 26.3% of the country’s total population. Agricultural sector employs 18.1%. Other sectors employ a negligible percentage.
According to the recent survey by Kaps (29), India is one of the emerging economies in the world. Over the past two decades, the country has experienced economic growth in various sectors. The growth of this economy has been consistent, a fact that has made it surpass the previous economic giants like the United Kingdom and France. The country’s wealth is however, held by a few individuals who control the economy. The government has been keen on fighting unemployment in this country, but with little success.
Majority of poor Indians have moved to major cities like New Delhi to look for employment in some of the major industrial firms. This has led to massive growth of slums in these cities. The government has been under pressure to come up with economic stimulus plans that would increase job opportunities in the country in the formal sector (Price 41). The informal sector is not able to support the current job demands in the country. The congestion in the slums has resulted into other economic concerns such as crime, poor health, and poor waste management, which force the government to spend more in fighting them.
The Political System
As mentioned above, India is the world’s largest democracy. As Doherty (71) notes, this country has a parliamentary republic, with the federal government as the executive arm. This country has a constitution unique to itself, but conscious of other international laws. The parliament has the responsibility of enacting laws and regulations meant to govern various issues in the country. Although some of its political leaders like Indira Gandhi were politically assassinated, the country has managed to pass through these dark days to become one of the leading democracies. India has 28 states, and 7 political union territories. It has maintained positive relations with international community. It has cordial relations with Russia, France, and Israel among other nations. It has a large military, which is considered very stable.
The political leadership of this country has always supported expansion of the military as a way of ensuring that its vast population is protected from external aggression. The country has been ranked as the leading importer of firearms in the world (Antonellis 58). The relatively stable political environment has helped develop the economy of this country. The government has currently been concerned with developing legislations that are focused in ensuring that workers of this country get decent jobs, and favorable working environment. This may be attributed to the individual interest of the political class, especially during electioneering periods. However, it has helped create a better working environment for the country’s populace.
Business Management in the Country
Business environment in India has been described as very attractive to firms that have the capacity to understand the local dynamics. According to Riccucci (83), India is the second largest market in the world in terms of population. This makes it very attractive, especially to multinational corporations, which can come up with products that meet market demands. In order to tap into this massive market, business units must understand business management strategies that work in this country.
This involves understanding the needs of the market, government policies, and labor relations. The Indian market has majority of its buyers having limited purchasing power. This means that business units must find ways in which they can provide products at prices that can be afforded by this population. This means that a firm may be forced to charge low prices in order to sell more. In this strategy, a firm would be relying on economies of scale in order to maintain profitable operations.
According to Katz (37), business management in this country needs a detailed understanding of the government policies on various issues. One of the leading government regulation that business units have to understand is on labor relations. The political class has been keen on protecting the interests of employees in this sector. They have enacted laws that employers must adhere to while managing their employees. This means that the management units must be conscious of these laws in order to have successful operations in the market. The employees have unions, which protect their interests (Sharma 117). While managing a business in this country, it is necessary to understand policies set by these labor unions in order to avoid industrial actions. It is through this that a firm can have successful operations in the Indian market.
Laws and Regulations that Affect Labor
There has been a general debate on the relevance of industrial relation in the current world where firms prefer treating employees on individual basis. According to Kearney (40), the business world has become so competitive that firms are forced to find ways of becoming competitive in order to remain sustainable. Firms have come to realize that the only way to remain competitive is by having skilled labor in various sectors. Firms have also developed new approach where output of the entire firm is determined by finding the output of individual employees.
This would help in determining the most valuable employees within the firm. It also helps in identifying cases of redundancy. This way, firms are able to increase their productivity. This management approach also makes it easy to determine the areas to improve whenever there is a need for change within the firm. As Rangarajan (61) observes, this involves giving individual employee a detailed analysis in order to determine such issues as remunerations and promotions.
Industrial relations are always meant to fight for favorable working environment for employees, especially in terms of the remunerations. This goes against the new management approach. For instance, a firm may not pay its engineers the same salary as its cleaners. There is also the case of special talent of the employees. An engineer may be having a special talent within the firm.
Such an employee may not be given the same salary as other engineers with the normal knowledge of engineering in their fields. Firms are currently determined to pay their employees based on their importance to the firm. This means that industrial relation may become irrelevant in this context (Jackson 118). If the engineers, in this case, had an association, then the talented engineer would not be appropriately represented in this organization because he or she has what other lack.
However, proponents of labor unions have supported the need to have these unions, citing lack of goodwill from the employers. Krueger (88) says that industrial relations go beyond the need to have favorable salaries for employees. It also focuses on the environmental set-ups in which employees work. Some firms in India always expose their employees to various health hazards such as prolonged exposure to toxic substances, excessive heat, and extremely low temperatures.
Such employees would develop health complications that can claim their lives after a short while. These unions would work to ensure that the workplace environment is safe. Others have cited long working hours that some employers subject their employees to without an equivalent increase in their pay (Sims 87). This enslaves the workers. Given fact that that they do not have alternatives, they are forced to work under such dehumanizing environment in order to earn a living. This means that these employers must have checks that would regulate the way they manage their employees.
For this reason, the Indian government has come up with laws meant to protect employees in their respective workplaces. These laws are meant to guide the relationship between the employer and the employee. According to Harris (46), some employers have claimed that the political class is interfering with the business environment of this country by enacting laws that are unfavorable to the employers. On the other hand, labor union has accused the government of being too lenient on employers who abuse rights of their employees. It is important to note that labor laws in this country are based on the principles set by International Labor Organization.
One of the labor laws that have remained in force for a very long time in this country is ‘Trade unionism and the Trade Union Act 1926.’ This law was passed before the country gained independence to foster peaceful coexistence between the employer and the employee. Before enactment of this law, employers had their own regulations that they would implement in their firms. Most of these policies were oppressive. Cases where workers would strike, burn assets of their firm and kill people in leadership was common (Fludernik 78). The government realized the need to develop a universal law that would define how the employer would relate with the employee. The law defined minimum wage rate that each employee would get.
It also defined the working hours, and what employers would expect from employees. The Act also defined how disagreements between the employer and the employees would be arbitrated in a peaceful way. This law formed the basis on which several laws were enacted in this country to protect both the employer and the employee from unfair business practice. Minimum Wage Act was enacted in 1948 to define wages of employees. Weekly Holidays Act was enacted in 1942 to define working hours of employees. Other Acts of parliament on labor relations include Factories Act and Women Compensation Act (Randhawa 58). These laws have helped boost relationship between employers and employees in this country.
Challenges Experienced by the Labor Force
The labor force in India has faced a number of challenges that are yet to be addressed by the national government and the employers. This has affected their productivity in a negative way. Some of the challenges faced by the labor force in this country include the following.
- Poor housing facilities for employees: This is one of the major challenges faced by the employees in this country. Most of the employers do not offer housing facilities for their employees. The government has also failed to develop housing units for its rising population. This forces the labor force to stay in slums.
- Low minimum wage rate: The minimum wage rate set in this country is barely enough to support all the basic needs of the employees. This means that they cannot afford any savings, a fact that lowers their living standards.
- Poor working environment: Although many firms have made efforts to ensure that the working environment is favorable, the fact is that most industries in this country are still unsafe for employees.
- Some employees have also claimed that their employers do not respect their rights as entrenched in the Bill of Rights.
- Other employers do not provide insurance for their employees.
These and other challenges have affected the productivity of employees in this country.
Conclusion and Recommendations
It is clear from the above analysis that labor force in this country has not been able to work optimally because of the challenges they face in their operations. Most workers in this country live in absolute poverty. They go to work every day, but they have failed to see the benefits of their work. Government interventions through labor laws have helped leverage this situation. However, a lot still needs to be done in order to ensure that rights of employees are observed. The approach taken should be conscious of the rights of both the employer and the employees. It is suicidal to sacrifice the interests of the employer while fostering a good working environment for employees. This may make the local business environment in this country be considered as unfavorable by business units. The following are some of the recommendations that should be taken by the responsible stakeholders in order to address the current concerns.
- Firms should develop unions that bring together the employer or the representatives, and the employees in forums that seek to establish understanding of both teams.
- Employers should always strive to create a positive working environment for its employees as a way of enhancing productivity.
- Government should create an environment, through legislations, that would protect both the employer and the employees.
- Employees should be made to appreciate the importance of the emerging trends such as performance contract that would help compensate employees based on their output.
- There should be measures put by both the employers and the employees’ unions that would foster rapid and peaceful conflict resolutions in order to eliminate frequent industrial actions.
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