Theory concept of Industrial Relationship/ Labor Relationship/ Employee Relationship

Industrial Relationship
Relationship among major actors i.e. employees, employers, government, trade union, employer
associations (e.g. BGMEA), and court & tribunals is called Industrial Relationship.

Causes of poor IR in Bangladesh (Garment Industry)

• Poor Compliance
• Poor Compensations & Benefits
• Poor Working Condition
• Poor level of Education of workers
• Middle Management
• Lack of job security
• Inadequate Labor Laws
• Lack of Unionization
• Communication gap
• Political Instability

Importance of IR in Bangladesh
• Protect workers' rights
• Ensure compliance
• Improve working effectiveness
• Improve communication gap

Nature of organisations
For industrial relation purposes organisations are categorised mainly as –
1. Unitary Approach: According this approach workers, managers, employers are “one single
happy family” and the workers work under single direction.
- Has a paternalistic approach
- all have a set of common values, interests and objectives
- Direction goes top to bottom
- Employees have less opportunity to give their opinions and thoughts
- Traditional way of running business
- Problems: Less expansion of organization, innovation does not create, less efficiency

2. Pluralistic organisation
• management and employees are considered to have their own rights and liabilities
• have a more united workforce
• conflicts are inevitable and managed by some procedures (Trade union, Collective
bargaining)
• employees can manage their own conflicts with management through unity
• Employees have opportunity to give their opinions and thoughts,
• Modern/ democratic way of running business
3. HRD Approach
• Earlier days employers think that employee is liabilities for the company.
• Currently organization is believed that
- employees are great assets
- employees can be developed through incentives, atmosphere & treatment.
• Proactive & collaborative
• Improve the quality of the workforce
• Relation matter most than rules

Dunlop’s Approach: How to create a batter industrial relationship

IR depends on four interrelated elements:
1. The Actors in the system
- Actors are: employees, employers, government, trade union, employer associations, and
court & tribunals.
- Good Relationship must be among these actors (Reliable, governance, ethics)
2. The Contexts of systems
- distribution of power, labor demand & supply, inflation, technological development… …
3. The Ideology of an Industrial Relations System
- norms, principles, believe systems, governance of a country of a country or society.
4. The Network or Web of Rules
- set of law, act, legislation, agreement or policies.

TRADE UNION
Trade Union is an organization of workers formed to ensure the fundamental right of the workers,
and works for the betterment of the workers.

Legal framework of trade union

• Section 176 of the Bangladesh Labour Act 2006Every worker has the freedom to form a trade
union and join any association they want.
• To become registered, a trade union must have at least 30% of the total workers in the
organization or group of organizations in which it is formed.
• section 195 of the Bangladesh Labour Act 2006 If anybody working as a manager in the
company, he can become a member of trade union but cannot become a president, general
secretary, organizing secretary of any registered trade union.

Role of trade unions (Functions)

• Collective bargaining: it’s a process of negotiating industrial disputes in an organization
with the association of all the stake holders including the workers.
• introduce social dialogue (awareness like sexual harassment)
• Ensure wellbeing of workers
• Protecting workers' rights
• Negotiating with employers
• Providing support and training
• Promoting social justice
Statistics and scenario of trade union in Bangladesh
According to the BBS, as of 2020, there were a total of 9,191 registered trade unions in Bangladesh.
Of these, 7,261 were industrial trade unions, 1,498 were non-industrial trade unions, and 432
were trade unions in the agriculture sector. According to a 2019 study by the International Labour
Organization (ILO), approximately 3 percent of workers in the RMG sector in Bangladesh are
unionized.

Procedure of formation of a trade union

According to sec. 178:
1. Submit an application for the permission to form a trade union. The application shall be
accompanied by:
a. The name, address, and head office.
b. Date of formation of union
c. the names, ages, addresses, occupations, the posts in the union of the officers, secretary,
and chairman of the trade union.
d. statement of total paid membership
e. the name of the affiliated company
f. in case of a federation of trade union, write the name, address and registration number
of the union.
2. The complete application is submitted to the director of the labor. The director of the labor
will verify and get the concern of the affiliated organization. Once it is verified the director of
the labor either can approve or decline the formation.
3. The proposed committee of the trade union is allowed to appeal against the decision of the
ministry of labor. In such case and decision is given by the labor court.

The cancellation of a trade union

According to sec. 190:
The director of labor can issue the cancellation certificate once he is satisfied with the conditions.
Normally, the application for cancellation of trade union is submitted to the director of labor and
then forwarded to labor court. The director of labor shall cancel the registration within 30 days,
from the day he receives permission from the labor court. But according sec. 191 any aggrieved
workers is allowed to appeal against this cancellation within 30 days from the day of cancellation.

TREND
1. New technology adoption vs female jobless in garments industry in Bangladesh.
According to latest BBS survey, the number of female workers in RMG sector has declined by
10.68 per cent in the span of four years. The latest BBS survey says 53.82 per cent male
workers occupy jobs in the sector while the number of female workers is only 46.18 per cent.
Earlier in 2013, the BBS survey found the percentage of male workers in the RMG sector
43.14 while the female workers 56.86 per cent. The total workers in this sector were 2.99
million at the time. Lack of training facilities, skill and proper knowledge of technology are
the main reasons for female workers to lag behind in the sector, the surveys reveal.

2. Why it is an issue?
 According BGMEA Garments industry contributed approximately 84% of Bangladesh's total
export earnings in the 2019-2020 fiscal year. In terms of GDP, the contribution is 12-13%.
According to the BBS, the total number of workers employed in the garment industry in
Bangladesh in 2020 was approximately 4.4 million. Of these, an estimated 3.2 million were
women, representing around 73% of the total workforce in the sector. After China BD
Garments in the 2nd position in Garments industry in the world. To sustain in the competition
in this 4IR there is no alternative without adopting technology. Furthermore, to maintain the
quality, to save time, to produce more effectively and efficiently there is no alternative in this
4IR era.

3. Give the way out for this issue.

1. Expand training and education programs
2. Promote gender equality
3. Incentive for educational qualification
4. Create awareness among the women workers
5. Female instructor providing training

Labor Law

4. Classification of workers
- A learner during his leering.
- A substitute: employed against a full-time worker.
- A Casual worker: hire for causal or unseen reason.
- A temporary worker: employed for limited time period.

12. Stoppage of Work: Employer can temporarily cease (Stop) the wok due to fire, machinery
broken, or epidemics. If the period is more than one day, the employee shall be paid. If the period
is more than three days, the employer will consider employee under section 16.

16. Right of lay-off (Temporary cessation): If the factory shutdown more than three days the
employees are entitled to claim certain compensation but the service length should be at least
one year. The compensation would be = ½ of the total base pay + Dearness allowance. But workers
are not entitled to claim more than 45 days in a calendar year.

19. Compensation for death: 1 lakh for death, 1.25 lakh for disable.

20. Retrenchment (Downsizing): It happens in case of surplus or excess number of workers due
to the business shutdown (as happened during covid-19). Workers also entitle to claim some
compensation (30 days wages for every year of service or, gratuity, if any, whichever is higher).

23. Retirement of worker: 60 years of his age.

29. Provident fund and gratuity: Provident Fund is a contributory fund where contribution is
made by both employees and employer. Gratuity is the last drawn basic salary times the number
of years.
Section: 34—44.
1. Who is an adolescent?
- 14< age <18
2. Nature of work i.e. what an adolescent can do or not.
- A child or adolescent can do: cleaning, swiping, carrying in subject to the training and
medical declaration.
3. Time schedule
- 5 hours a day, 30 hours per week, but including over time 36 hours per week [Factory &
Mine]
- 7 hours a day, 42 hours per week, but including over time 48 hours per week [Other than
Factory & Mine]
 CASE STUDY
The case study focuses on the HR problems faced by Bata India, Labor strife and the
management's inability to deal with it effectively has resulted in huge losses for the company.

INDUSTRIAL RELATIONS
More than half of Bata's production came from the Batanagar factory in West Bengal, a state
notorious for its militant trade unions, who derived their strength from the dominant political
parties, especially the left parties. Notwithstanding the giant conglomerate's grip on the shoe
market in India, Bata's equally large reputation for corruption within, created the perception that
Weston would have a difficult time. When the new management team weeded out irregularities
and turned the company around within a couple of years, tackling the politicized trade unions
proved to be the hardest of all tasks.

For Bata, labor had always posed major problems. Strikes seemed to be a perennial problem.
Much before the assault case, Bata's chronically restive factory at Batanagar had always plagued
by labor strife. In 1992, the factory was closed for four and a half months. In 1995, Bata entered
into a 3-year bipartite agreement with the workers, represented by the then 10,000 strong BMU,
which also had the West Bengal government as a signatory.

On July 21, 1998, Weston was severely assaulted by four-workers at the company's factory at
Batanagar, while he was attending a business meet. The incident occurred after a member of
BMU, Arup Dutta, met Weston to discuss the issue of the suspended employees. Dutta reportedly
got into a verbal duel with Weston, upon which the other workers began to shout slogans. When
Weston tried to leave the room, the workers turned violent and assaulted him. This was the
second attack on an officer after Weston took charge of the company, the first one being the
assault on the chief welfare officer in 1996.

Soon after the incident, the management dismissed the three employees who were involved in
the violence. The employees involved accepted their dismissal letters but subsequently provoked
other workers to go in for a strike to protest the management's move. Workers at Batanagar went
on a strike for two days following the incident. Commenting on the strike, Majumdar said: "The
issue of Bata was much wider than that of the dismissal of three employees on grounds of
indiscipline. Stoppage of recruitment and continuous farming out of jobs had been causing
widespread resentment among employees for a long time."

In February 1999, a lockout was declared in Bata's Faridabad Unit. Middleton commented that
the closure of the unit would not have much impact on the company’s revenues as it was catering
to lower-end products such as canvas and Hawaii chappals. The lock out lasted for eight months.
In October 1999, the unit resumed production when Bata signed a three-year wage agreement.

On March 8, 2000, a lockout was declared at Bata's Peenya factory in Bangalore, following a strike
by its employee union. The new leadership of the union had refused to abide by the wage
agreement, which was to expire in August 2001. Following the failure of its negotiations with the
union, the management decided to go for a lock out. Bata management was of the view that
though it would have to bear the cost of maintaining an idle plant (Rs. 3 million), the effect of the
closures on sales and production would be minimal as the footwear manufactured in the factory
could be shifted to the company's other factories and associate manufacturers. The factory had
300 workers on its rolls and manufactured canvas and PVC footwear.
In July 2000, Bata lifted the lockout at the Peenya factory. However, some of the workers opposed
the company's move to get an undertaking from the factory employees to resume work. The
employees demanded revocation of suspension against 20 of their fellow employees. They also
demanded that conditions such as maintaining normal production schedule, conforming to
standing orders and the settlement in force should not be insisted upon.

In September 2000, Bata was again headed for a labour dispute when the BMU asked the West
Bengal government to intervene in what it perceived to be a downsizing exercise being
undertaken by the management. BMU justified this move by alleging that the management has
increased outsourcing of products and also due to perceived declining importance of the
Batanagar unit. The union said that Bata has started outsourcing the Power range of fully
manufactured shoes from China, compared to the earlier outsourcing of only assembly and
sewing line job. The company's production of Hawai chappals at the Batanagar unit too had come
down by 58% from the weekly capacity of 0.144 million pairs. These steps had resulted in lower
income for the workers forcing them to approach the government for saving their interests.

QUESTIONS FOR DISCUSSION:

1. Identify the reasons behind the labor problems in BATA Co.
2. In September 2000, the BMU asked the West Bengal government to intervene in the alleged
downsizing exercise of the management. Was the union justified in seeking government
intervention? What do you think are the pros and cons of outsourcing for Bata in the light of
poor industrial relation conditions? Explain.
3. Maintaining good industrial relations have always been a problem for Bata. Why? How do you
think Bata can maintain sound industrial relation practices?
4. The role played by the Bata Mazdoor Union (BMU) seems to have been more of a destructive
one than constructive one in the state of affairs at Bata. Comment.
5. In 1999, the Bata management in a bid to further cut costs, announced phasing out several
welfare schemes at its Batanagar unit. Do you think it right to phase out welfare schemes to
cut costs? Give reasons for your answer.

Answer:
1. The labor problems in BATA Co. can be attributed to various reasons such as:
• The politicization of trade unions in West Bengal, where Bata's Batanagar factory is located.
• The perception of corruption within the company.
• Chronic labor unrest and strikes at the Batanagar factory.
• The assault on the company's officers in 1996 and 1998, which created further tension
between the management and the workers.
• Stoppage of recruitment and continuous farming out of jobs leading to resentment among
employees.
2. The BMU's request to the West Bengal government to intervene in the alleged downsizing
exercise of the management may have been justified in the context of poor industrial relations
conditions. Outsourcing can be a cost-effective measure for companies, but it can also lead to
job loss and resentment among employees who may perceive it as a threat to their job
security. The pros of outsourcing for Bata could be cost savings and increased efficiency, while
the cons could be job loss and deteriorating employee relations. It is important for the
company to strike a balance between cost-cutting measures and maintaining good industrial
relations.

3. Bata has always faced challenges in maintaining good industrial relations due to the
politicization of trade unions, chronic labor unrest, and strikes. To maintain sound industrial
relations practices, Bata can take the following measures:
• Engage in open and transparent communication with the workers and their
representatives to understand their grievances and address them proactively.
• Encourage employee participation and involvement in decision-making processes.
• Invest in employee training and development programs to enhance their skills and
productivity.
• Foster a culture of mutual trust, respect, and cooperation between the management and
the workers.
• Develop a fair and transparent system of rewards and recognition for employees.

4. The role played by the Bata Mazdoor Union (BMU) seems to have been more destructive than
constructive in the state of affairs at Bata. The union has been involved in frequent strikes and
unrest, which have resulted in huge losses for the company. While it is important for the
workers to have a collective voice and representation, the union should also work
constructively with the management to resolve disputes and improve industrial relations.

5. Phasing out welfare schemes to cut costs may not be the best approach, especially if it leads
to resentment among the employees. Welfare schemes can help in improving employee
morale and productivity, and their elimination can have a negative impact on the employees'
perception of the company. Instead of phasing out welfare schemes, the company could
explore other cost-cutting measures such as improving operational efficiencies, reducing
wastage, and optimizing production processes.