This comparative study is organised in the context of an explanation plan by Wal-Mart as it intends to expand its business to India. This report covers a comparative study of the industrial and labour relation between United States of America and India. The report is expected to give better results, because it will help planning the expansion program more efficiently.
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Industrial relations may be defined as “employer-employee relationships covered specifically under collective bargaining and industrial relation laws” (Definition, n. d.). Industrial relation in an international context or in international business is different from industrial relations in domestic business.
The country difference has a great significant influence on the labour management and industrial relation. The issue that a company face in international context include language difference, cultural difference…etc. (Dowling, 2008, p.250).
For any business organization, to step in to or to make an entry to the international market it requires a deep knowledge and awareness of the concerned economy.
There are different modes of entry when expanding business to international level. They are export/import, license, franchise, and joint venture…etc. Among these franchise mode is the better option for Wal-Mart for its expansion plan in India.
Today the industrial relation is very important and a widely discussed subject and has a great significance in the growth of industries. It can be seen that many problems related to the human resource management is happened due to lack of proper industrial relations in the organizations. Proper industrial relation existing in an organisation means, there is an efficient and effective human resource management system.
The terms labour relation and industrial relation are interchangeably used (Introduction to Industrial relation, n. d.). In India the labour relations practices are giving much significance to the employees and their grievances are easily solved. However, the situation in the United States is not like that in India. There the organisations have very dominant power than the employees.
A good industrial relation has a significant role in the success of international expansion of any kind of business. Disputes are common at work places. If there is a better labour relation this disputes can be minimized. If an employer is interacting with the employees in a better way it can increase the loyalty of the employees, thereby increasing the productivity of the organisation.
Increasing the productivity is one of the main things to be done to ensure the survival of any organisation. The better labour relation practices by the organisation can make the employees more committed to the organisation and achievement of its goal.
Industrial/labour relation in United States and Wal-Mart
In the United States labour union and industrial relations has a long history. The labour unions in the Unites States tries their level best to ensure a better industrial relation thereby protecting the interest of poor workers who are suppressed by all means. Wal-Mart was always against unionizing the Wal-Mart and they are successful to some extent to prevent unionization of Wal-Mart Stores, but later on their management was forced to allow unionisation in the Wal-Mart stores.
The increased pressure form the labour unions was the one of the causes of acceptance of unions in the Wal-Mart stores. Another reason was the continuous campaigning of employees of the Wal-Mart by labour unions in such a way that they felt that they need to be unionized. The employees also started to work for the unionization of the Wal-Mart and in this situation Wal-Mart could do nothing.
Labor unions always tried to change the attitude of Wal-Mart employees and introducing union in the firm. They conducted awareness programs like Wake-up Wal-Mart (which was organized by United Food and Commercial Workers Union). It always criticized Wal-Mart for not giving reasonable compensation, poor working conditions and lack of proper health measures for the workers.
According to a significant study, a large number of Wal-Mart employees are in the below poverty line category and therefore, facing difficulty to provide a reasonable standard of living to their families. There is a Law in United States namely Fair Labor Standards Act (FLSA), 1938 b which is applicable to the workers producing goods for inter state trading.
But later with an amendment the Law included, government employees and other employees who were not covered earlier by the Act in its jurisdiction. The Act involves some strict guidelines regarding the minimum amount of wages to be paid to the workers, overtime work compensation, employing minors…etc.
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As per the Act “nonexempt workers are entitled to a minimum wage of not less than $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009 (Compliance Assistance – Fair Labor Standards Act, n. d.). The Act also provides that the workers who work for time should be given a higher rate as specified in the Act.
Industrial/labour relation in India
The Indian economy started to change from 1991 onwards. The Indian industry which was working in a confined setting started to face tough global competition. This necessitated the organizations to make change in their organizational structure and operations. Organizations’ main attention was to reduce the cost of operation and become one of the competitive powers in the industry.
These all influenced the conditions of the labour in the country in such a way that unemployment rate has increased, resulting in careless treatment of the employees by employers. This forced the labour unions to demand for providing better working conditions and making the employment terms more flexible.
In India the employment growth rate is not as expected and which was a shocking news for those who seeking employees. It can be seen that some laws existing in the country acting as obstacle in developing an efficient work force. Industrial Disputes Act, 1947 provides guidelines for handling disputes in the work place (Introduction, n. d.).
Contract Labour (Regulation and Abolition) Act, 1970 provides a clear cut provisions for ensuring the safety and welfare of the contract labours (Preliminary, 1970). The Indian constitution ensures the safety and protection to the employees in the unorganised sectors of the employment.
From the above discussions it can be seen that there exists a tight rule in the country which ensures a better labour relation in the country. Expansion strategy for Wal-Mart focuses on the industrial and labour conditions in India and United States. The labour position of labour relation in India is different from that of the United States of America.
Therefore, the proposed plan of Wal-Mart to expand its operations to India is a challenging task for the management team of Wal-Mart. The reason is that they have to change their strategies according to the industrial relation and the employment conditions exist within the country. If Wal-Mart does not take into consideration this change in labour relation situation between these two countries, the success of expansion plan would be difficult.
It is not wise to think that a business organisation can implement same labour management systems and procedures in a foreign country. It is clear that the power of labour unions in India is higher than the power of labour unions in the United States for in matters of influencing the business operations of the organisations.
If any business organisation go ahead with its decisions which are opposed by the employees, the labour union will intervene the situation may create problems in the smooth functioning of the organisation. As the labour unions are strong in India, a better and employee friendly industrial relations need to be followed, otherwise the Wal-Mart may not get the result expected by the expansion program.
Compliance Assistance – Fair Labor Standards Act (No date.), Wage and Hour Division, United States Department of Labor, dol.gov Web.
Definition (n. d.), industrial relations, Businessdistionary.com Web.
Dowling, J. Peter, Marion Festing, Allen D. Engle (2008), International human resource management: managing people in a multinational context, 5th Edition, Cengage Learning EMEA.
Introduction, (No date), The Industrial Disputes Act, 1947, labour.delhigovt.nic.in. Web.
Introduction to Industrial relation (No date), Industrial Relations, naukrihub.com Web.
Preliminary (1970) The Contract Labour (Regulation and Abolition) Act, 1970, pblabour.gov.in Web.