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Question: Evaluate and explain the

role of collective bargaining in the

Indian Sub-continent?

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Table of Contents

01. India
1.1 Evolution of the Indian Industrial Relations System 5
1.2 The Indian Labour market 5
1.3 The Indian Labour market flexibility 6
1.4 The Indian Trade Union 6
1.5 Number of Trade Union in India 6
1.6 Collective bargaining in India 7
1.7 Labour Legislation in India 7

02. Pakistan
2.1 Evolution of the Industrial Relations System in Pakistan (RFP, IRJ, 2000) 7
2.2 Trade Union in Pakistan 8
2.3 Scope of Collective Bargaining in Pakistan 8
2.4 Government and Employment Relations in Pakistan 8
2.5 Labour Legislation in Pakistan 9
2.5.1 The Industrial Relations Ordinance 1969 (IRO) 9

03. Bangladesh
3.1 Evolution of the Industrial Relations System in Bangladesh 9
3.2 Practice of Collective Bargaining in Bangladesh 10
3.3 Labour and Employment Legislation in Bangladesh 10
3.4 Structure of trade Union 11
3.5 Registered Trade Union in Bangladesh 11

Conclusion 12
References 13

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Indian Sub-Continent was a British Colony which was called British India and now
three independent countries, India, Pakistan and Bangladesh. It’s located in South
Asia and it was a part of British India until 1947. It became a separate province of
Pakistan in 1947, when the sub-continent was separated into two independent
sovereign, India and Pakistan. Bangladesh was broke away from Pakistan and became
an independent country in 1971.

The purpose of this report is to examine that the Evaluate and explain the role of
collective bargaining in the Indian Sub-continent. According to history, every society
has to face the fundamental economic problem and the planning of their organization.
Without central planning of organization, workers and their employers determine their
relationship through a series of independent decisions. It doesn’t mean the workers
are always happy with their job and or rates of pay. But it does mean that employee
and employers have a great deal of freedom in deciding to begin, change or end their
relationship. So, this report will explain that the system of employment relations in
the Indian sub-continent.

01. India

1.1 Evolution of the Indian Industrial Relations System

The colonial legacy and a centralized post-Independence economic development
model have given rise to a system of industrial relations that is highly regulated and
state centric. Since Independence centralized economic planning based around a
series of Five Year Plans has sought to build a strong, independent, industrial
economy. Initially, Indian development was based upon state-led industrialization and
import substitution. This economic model led to the creation of a very large public
sector, and with it the establishment of thousands of public sector unions. Between
1950–1 and 1961–2 the number of registered unions increased from 4623 to 11,614
(Bhattacherjee, 2001). In a bid to smooth the process of economic development the
state established itself as the chief mediator of capital–labour relations. State power
over labour was achieved through the Industrial Disputes Act 1947, the Indian Trade
Union Act at Serials Department on March 7, 2011

Hill: Indian Industrial Relations System

1.2 The Indian Labour market

In 1999-2000, the total workforce in India was 336.75 million of which only 27.96
million (i.e. 8.30 per cent) was employed in the ‘organized’ sector while the rest,
308.79 million (91.70 per cent), was employed in the ‘unorganized’ sector. Public
sector accounted for 69.10 per cent of the total organized sector employed while the
share of private sector was only about 30 per cent. Unemployed increased from 5.99
per cent in 1993-94 to 7.32 per cent in 1999-00 (source: Economic and Political
Weekly, March 26, 2005).

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1.3 The Indian Labour market flexibility
The National Labour Commission (NCL) has addressed the issue of labour market
flexibility for firms with respect down-sizing through lay-offs and retrenchments. The
Commission recommends that ‘prior permission (of state authorities) is not necessary
in respect of lay off and retrenchment in an establishment of any employment size’. It
is sufficient if workers are given two months notice. The commission recommends
that the rate of compensation should be higher in running and profitable organization
(with 300 or more workers) compared with those that are closing down or continually
incurring losses for at least three financial years. For instance, a loss-making firm
should pay thirty days of wages per completed year of employment if the firm is
being closed down and forty-five days of wages if the firm is shedding labour to
become financially viable and continue trading. It also recommends that a profit
making firm should pay retrenchment compensation at the rate of sixty days of wages
per completed year of service. Lower rates are recommended for firms employing less
than 100 workers (NCL 2002: 44). However, some analysts have argued that the NCL
is silent about retrenchment compensation rates workers employed in firms with 100-
300 workers and this potential legislative gap needs rethinking (Datt 2003: 128).

1.4 The Indian Trade Union

The Indian trade union is over a century old and it has a long history. The ILO
summarises that the trade union situation in India ‘’Indian unions are so fragmented.
In many work places has several trade union which is organizes by employer. It is
very difficult to say that how many trade unions operate at the national level since
many are not affiliated to any all – Indian federation. The early splits in Indian trade
unionism tented to be on ideological grounds each linked to a particular political

Unfortunately, the trade union of India suffers from a variety a problems such as
politicisation of the unions, multiplicity of unions, inter-union rivalry, uneconomic
size, financial inability and dependence on outside leadership.

1.5 Number of Trade Union in India

At present there are twelve Central Trade Union Organizations in India are as

 Bharatiya Mazdoor Sangh (BMS)

 All India Trade union Congress (AITUC)
 Centre of Trade Unions (CTU)
 Hind Mazdoor Kisan Panchayat (HMKP)
 Hind Mazdoor Sabha (HMS)
 Indian Federation of Trade Union (IFTU)
 Indian National Trade Union Congress (INTUC)
 National Front of Indian Trade Union (NFITU)
 National Labour Organization (NLO)
 Trade Union CO-ordination Centre (TUCC)
 United Trade Union Congress (UTUC) and

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 United Trade Union Congress – Lenin Sarani (UTUC-LS)

1.6 Collective bargaining in India

Collective bargaining in India is deeply entrenched in the vast array of labour laws
and institutions that regulate both procedural and substantive aspects of labour-
management relations. Another feature of the Indian industrial relations system is the
high levels of state intervention. This, it is argued, is a legacy of the British Colonial
past. During the colonial rule and particularly in the wake of the Second World War,
the British government passed legislations to control industrial conflict. In the post-
independence period the Indian government retained these legislations to ensure a
speedy economic recovery and to protect the interest of labour which was perceived
to be weaker. Thus, the highly interventionist role of the state established by the
colonial rulers continued in the post-independence period (Sen Gupta and Sett 2000:

1.7 Labour Legislation in India:

There are three important legislations that have played a crucial role in shaping the IR
system in India and these are as follows:

1.7.i The Trade Union Act (1926)

1.7.ii The Industrial Employment Standing Orders Act (IEA 1946) and
1.7.iii The Industrial Dispute Act (IDA 1947)

1.7.i. The Trade Union Act (1926): The Trade Union Act (1926) provides for
registration of unions but does not entitle the union to recognition by the employer for
the purpose of collective bargaining. ‘Labour’ is on the concurrent list of the Indian
Constitution which means both the State and Central Governments can legislate on
this matter. Some state government have passed laws that enable trade unions to gain
recognition through secret ballot or majority membership verification by the local
authority, which in most cases is the labour Commission of the State Government
(Kuruvilla and Hiers 2000; Venkat Ratnam 2000). Registration of unions is fairly
straight forward under the Trade Union Act (1926). It is argued that labour law
reforms should stipulate a minimum membership of say 10 per cent of the bargaining
unit for a union to be eligible to register.

02. Pakistan
2.1 Evolution of the Industrial Relations System in Pakistan (RFP, IRJ, 2000)
In 1875, the history of Labour Legislation in the Indian sub-continent, when the
Government of Bombay appointed a Factory Commission. Based on its
recommendations, the first ever Factories Act in the year 1881 was further amended
in 1892 which among other things defined the factory, its registration, prohibited
employment of children below 9 years of age and limited the working hours for
children and women etc. As a result of the recommendations of this Commission,
Indian Factories Act of 1922 was enforced which was further amended in 1923, 1926

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and 1931. The Trade Union Act 1926 and Trade Dispute Act 1929 were promulgated

In may be recalled that after the First World War in 1918, labour became an
international concern which led to the foundation of International Labour
Organization in 1919. The Declaration of Philadelphia proclaimed ‘’ Poverty any
where is a danger to prosperity every where’’.

In the period after 1st World War, the labour felt the need to improve their wages and
working led to strikes. Particularly a Royal Commission on labour was established
under the chairmanship of Rt. Honourable J.II which was submitted in 1931and a
number of labour laws was amended.

2.2 Role of Trade Union in Pakistan

The Industrial relations Ordinance, 1969 as amended regulates the registration and
other matters of trade union in Pakistan.
The main objectives of trade unions are:
 To promote good industrial relations between workmen and employers
 To improve the working conditions of workmen or enhance their economic
and social status
 To achieve the raising productivity for the benefit of workmen, and employers

2.3 Scope of Collective Bargaining in Pakistan

Collective Bargaining in Pakistan typically cover in a wider range of issues than the
simply issues of wage rates. Among the issues generally included are other pecuniary
terms of employment like non-statutory allowances and benefits; as well as non-
pecuniary conditions of employment, including job security provisions (such as
seniority rules) and working conditions. These terms so bargained are over and above
the minimum fixed by the Government and the difference between the two levels of
these symbolizes the effect collective bargaining is making on wages, terms of
employment and conditions of work. In addition to voluntary improvements by
employers and collective bargaining court decisions and awards/wage commission
also result in improved wages, terms of service and conditions of works.

2.4 Government and Employment Relations in Pakistan

The Government has always played an active role in the employment relations system
in Pakistan.

The Pakistani Employment Relations is governed by a set of employments law such

as the Employment Act, Industrial Relations Act and the Trade Union Act. All laws
are created and administrated by the government.

In the context of employment relations, there are three broad areas of intervention by
the government to ensure a peaceful workplace:

 Administrating employment laws by the Ministry of Manpower

 Assisting in the settlement of disputes

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 Participating in the tripartite

2.5 Labour Legislation in Pakistan

The labour legislation in Pakistan today, covers almost all subjects and areas of the
employment relationship like terms of employment, conditions of works, welfares of
workers and their dependents, wages, social security and old-age benefits etc (EFP,

There is some important legislation that has played a crucial role in shaping the IR
system in Pakistan and these are as follows:

 The Factories Act 1934

 The Industrial Relations Ordinance 1969 (IRO)
 The Employment Act
 The Workmen’s Compensations Act
 The Central Provident Fund Act

The Industrial Relations Ordinance 1969 (IRO): The Industrial Relations

Ordinance 1969 was established on 3rd February, 1969.

The Industrial Relations Ordinance, 1969 provides four tiers of workers participation
in the management to solve the problems in industrial relations within an industry
which are as follows:

 The Shop Steward

 The Works Council
 Jon Management Committee and
 Join Management Board

03. Bangladesh

3.1 Evolution of the Industrial Relations System in Bangladesh

After liberation in 1971, Bangladesh adopted labour laws and policies that prevailed
during colonial era and the Pakistan period. However, the new government came in
1972 and declared the labour policy. In 1973, the right to strike and lockout, as
granted by IRO, 1969 was withdrawn.

The military regime of 1975 imposed restrictions on the rights of collective

bargaining and striking through Industrial Relations Ordinance (IRO), 1975. The
Industrial Relations (Amendment) Ordinance (IR(A)O), 1977 liberalized the Rights of
Freedom of Association to some extend. Another improvement was 1980, which
restored the right to freedom of association to a considerable extend. The situation
was going down again in 1982 when the military came and then the government was
suspended trade union activities, strikes and the right of freedom of association. The
scenario was improved in 1990, when the military government fall and the full trade
union was active in 1991by the democratic government.

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The great achievement was came in 2001to 2006, with a huge consultation process on
labour law reform to enact an updated, consolidated and unified version of labour
laws. These was implemented in October 2006,. After proclamation of Emergency on
January 11, 2007, political and trade union was active and demonstration was banned
again. During the Emergency period (23 months), the trade union and collective
bargaining were banned again. Thus, frequent interference by government and
military regimes on different occasions has curtailed the development of a healthy and
congenial atmosphere of industrial relations system in Bangladesh.

3.2 Practice of Collective Bargaining in Bangladesh

The Bangladesh Employers’ Association (BEA) which represents more than 90 per
cent of the industries in the private sector and a majority of factories in the public
sector does not directly take part in Collecting Bargaining. In EPZs (Export
Processing Zone), there is no practice of Collective Bargaining. As far as public
enterprises are concerned, plant level management is primarily responsible for settling
all disputes with the local CBA union. At the industry level, corporations and other
relevant authorities take active part in Collective Bargaining with the representatives
of different industrial federations.

Collective Bargaining has been very rarely resorted to in the last decade due to the
unwillingness of the employers and to some extent of the CBA leaders. The workers
represented by collective bargaining are usually employed by state-owned and large
private sector employers. The collective bargaining agreements cover resolving
disputes relating to wage, leave and other benefits of workers. Interviews with
stakeholders also reveal that collective bargaining agreements were fairly enforced.

The collective bargaining practice in Bangladesh is very week. There are many
reasons for week the bargaining position in Bangladesh. A weak industrial base and
the absence of real democratic practices in Bangladesh make room for easy
persecution of the workers and their leaders by the management.
Dr. M. A. Taher .. State and Industrial Relations-Bangladesh as a Case In the Post-Colonial Third World Context, Unpublished
Ph.D. Thesis, University of Chittagong, Bangladesh, pp 190-1994

3.3 Labour and Employment Legislation in Bangladesh

The Labour Law of Bangladesh is a complex and curious mix of different legislations,
regulations and ordinances. Before the adaptation of Labour Act of 2006, there were
about 46 laws in force in Bangladesh encompassing labour and industrial sector. After
the enactment of the Labour Act, twenty five of the prevailing enactments stood
repealed and were amalgamated with the new Code. At present there are 21 labours
Labour Policy 1972. Ministry of Law and Social Welfare, Government of Bangladesh..
Md. Abu Taher, Legal Environment for Industrial Relations in Bangladesh: A Critical Evaluation’, the Chittagong University
Journal of Law, Vol. 2, 1997, pp. 124-126.

and industrial laws in operations which established the framework for industrial
relations. Some of them are as follows:

 The Mines Act, 1923

 The Cotton Industry Act, 1926

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 The Dock Workers’ Act, 1934
 The Chittagong Hill-Tracts (Labour Laws) Regulations, 1954
 The Trade Organizations Ordinance, 1961
 The Bangladesh Industrial Development Corporation Order, 1972
 The Foreign Private Investment (Promotion & Protection) Act, 1980
 The Agriculture Labour (Minimum Wages) Ordinance, 1984
 The Bangladesh Private Export Processing Zone Act, 1994The Bangladesh
Labour Act, 2006

3.4 Structure of trade Union

Industrial Relations Ordinance, 1969 is intended to regulation trade union activities
permits workers to organize themselves into trade unions. The trade union is required
to be registered with the Register of Trade Unions. The trade union structure of
Bangladesh is divided into three categories and these are as follows:

 Basic Trade Union- a primary organization of workers at their working place.

 Industrial or Trade Federation – a number of basic trade unions related to the
same type of industry, such as Jute Workers Federations, Garments Workers
Federations etc.
 National Trade Unions - irrespective of job categories, such as Bangladesh
Railway Union or Biman Cabin Crew Union.

3.5 Registered Trade Union in Bangladesh

At present there are twenty two registered Trade Union Federations in Bangladesh are
as follows:

Table: Total number of registered trade union in Bangladesh up to June, 2007

Total Number of Union/ Total Number of Members

1.National Federation 32 1263665
2.Industrial Federation 108 640221
3.garments Federation 15 50154
4.Basic Union 5242 2069614

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This report indicated that the present employment relations system in the Indian sub-
continent is not satisfactory but still they are improving. This report emphasised that
the role of collective bargaining, industrial relations system, labour and employment
legislations and structure of trade union which is most important of all Indian sub-
continent countries. Their trade union is always controlled by the central political
government which is individual company based but not industry based. The
promotion of independent trade unions and collective bargaining can contribute to
political and social stability. The trade unions have an important role to play in
settling disputes between workers and management over wages by way of collective

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Datta, R.C. (2001), "Economic Reforms, Redundancy and National Renewal Fund:
Human Face or Human Mask?", The Indian Journal of Labour Economics, 44(4):

Dunlop, J. (1993), “Industrial relations System, ravished ed., Harvard Business

School Press’’, Boston, Massachusetts (first published in 1958 by H. Holt and Co.,
New York).

EFP (2000), “Industrial Relations and Enterprise Development in pakistan’’,

“Industrial Relations Journal’’ Vol. XVII No. 1 Jan-Feb 2000. Karachi, Pakistan.

EFP (1999), Research report, Employers Federation in Pakistan

International Labour Office (ILO). 1960. Collective bargaining (Geneva).

Khan A. Badiudd, (1980), “Trade Unionizm and Industrial Relations in Pakistan’’,

Qureshi Art Press, Karachi

Morley J. Michael et al. (2006), Global Industrial Relations, Abingdon & New
York, Routledge.

Ministry of Labour, Manpower and Overseas Pakistanis, Labour Laws, 2001-2002.

Economic and Political Weekly, March 26, 2005).

Renolds Morgan O. (1986), “Trade Unions in the Productions Process

Reconsidered’’, Journal of Political Economy Vol. 94 No.2 April, 1986.

Taher, M. A. 1994. Industrial Relations (Chittagong – Dhaka Mik House).

Taher, M. A. 1997. “Legal Environment for Industrial Relations in Bangladesh: A

Critical Evaluations’’, in The Chittagong University Journal of Law, Vol. 2, , pp. 124-

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