Globalization and Labour-Management Relations: Dynamics of Change

Globalization and Labour-Management Relations: Dynamics of Change
By C S Venkat Ratnam
Published by Response Books, New Delhi
Price Rs 520/- (HB) Pages 342

Reviewed by Dr Srirang K Jha

The New Economic Policy launched in India in 1991facilitated the development of an unorthodox approach to Industrial Relations. The traditional role of the trade unions was relegated to the background while new paradigms of employee-employer relations emerged as a direct consequence of the globalization process. Not only has the profile of the workers changed but also the nature of work. The emerging scenario in the realm of Industrial Relations also gave rise to several pressing issues such as impact of rationalization, structural changes, erosion of social security coverage, rehabilitation of the redundant workers, decline in the number of workers in the manufacturing sector, ascendancy of employer rights, increasing vulnerability of trade unions due to technological, economic, structural and other changes, labour reforms providing upper hand to the employers in terms of recruitment, retrenchment, outsourcing etc.

In the book under review, C S Venkat Ratnam has comprehensively studied all the facets of labour-management relations in view of the globalization of Indian economy. The author has added enormous value to the book by incorporating an objective discussion on some important concerns such as judicial activism vis-à-vis protectionism and social clauses within the framework of India’s commitment to international labour standards; flexibility and workforce adjustments vis-à-vis equity, and efficiency; competitive labour policies vis-à-vis labour laws in different provinces of India.

Venkat Ratnam has evaluated the socio-economic impact of liberalization in India in the chapter on Labour Management Relations and the World in Transition, The Economic and Social Dimensions of Structural Adjustment Reforms, and Social Dialogue and Reform Process. In these chapters, he has looked at the co textual factors as well as the role of politics and governance. A major flaw in the reform process, he says, is the inadequacy of social dialogue. Majority of workers in the informal sector have been excluded in the whole process as the social dialogue has hitherto been limited to discussions between the government and the representatives of organized trade unions and employers’ organizations. Thus, an important segment of stakeholders has remained outside the ambit of public policy which is concerned with their livelihood. The author rightly observes: ‘As a result of structural changes, labour reforms have led to reduction in guarantees, including job security, minimum wages, working conditions, and social security provisions. Gradually, new systems of social security nets which provide income security without job security are evolving’.

In another chapter on Economic Development and Industrial Relations, Venkat Ratnam has discussed why and how the policies of economic development need to be aligned with industrial relations policy. He has compared the changes in the policies pursued in South East Asia during the early and advanced stages of import-substitution with those pursued during early and advanced stages of export-orientation and concluded that the emphasis should be on developing sound labour-management relations instead of merely concentrating on dispute resolution. The author suggests that efforts should be made at a synthesis of ‘efficiency’ and ‘equity’ models. In his opinion, the pure efficiency model can be faulted for its long-term suppression of labour rights, which leads to conflicts and to the destabilization of Industrial Relations because a weak trade union is unable to participate in workplace decision-making process. On the other hand, the pure equity model can be faulted for the ability of their workplaces to react flexibly to changing environment.

The critical issues of human resource obsolescence and socially responsible restructuring have been discussed in a chapter on Labour Adjustment Process. Cost-based competitiveness and value addition as the source of competitiveness are main tools of labour adjustment process. These strategies lead to human resource obsolescence. Venkat Ratnam opines that the management should take utmost care so as to minimize the intensity of obsolescence. The author has also emphasized the need of tripartite consultations for job maintenance and job creation as envisaged in the convention of International Labour Organization.

Venkat Ratnam has also underlined the need of aligning labour polices with economic polices and industrialization strategies. He observes that the content and purpose of labour policy and labour law should focus on facilitation rather than regulation, pro-action and reaction, and on the creation of harmonious relations conducive to social and economic development rather than dispute resolution. A decline in the role of the state in economic activity need not necessarily lead to a decline in its regulatory role in Industrial Relations. In fact, when the private sector becomes an engine of growth, the state may need to play a much stronger role in ensuring a balance between the rights of both the labour and the management.