Read this article to learn about the workers' participation in management in India!
Any form of management in work organisations involves interaction between employees and management. Work can be done only through such interactions. In the case of collective bargaining, groups representing different sides negotiate to find common grounds for solutions to issues of conflict.
Another means of finding solutions is through cooperation between the two. This can happen if both parties, employees and management, cooperate and jointly manage issues. When such cooperation is for managing the enterprise, it is called workers' participation in management (WPM).
An important aim of WPM is to enable both sides to come together in order to increase productivity. Another aim is that of having peaceful industrial relations.
WPM was first introduced in Britain during the First World War (WWI, 1914-18) or the Great War as it was known then. There was an urgent need for increasing production to meet the war effort. The war required greater production of industrial goods for the armed forces. The government appointed a committee headed by Lord Whitley, an expert on industrial and labour issues, to examine the matter of increasing production. He conducted extensive studies and had discussions with various people connected with industry and labour. He recommended that management must consult labour on issues relating to production.
This would lead to greater involvement and commitment of labour in promoting industrial production. He suggested that factories and other workplaces should form works committees comprising equal representatives from both sides to devise means to increase productivity through workers' participation.
Whitley's suggestions were implemented by the government and works committees were set up in all factories. Soon, Britain witnessed a rapid increase in production. Workers' participation in management therefore had scored a strong point. These works committees continued till the war was over.
After the war, production became normal as there was no need for stocking industrial goods. Managements immediately disbanded the works committees, which were successful when there was a need to increase production. In other words, management did not think it necessary to consult labour on issues that were defined as prerogatives of the management. It seemed that the workers were used by management in order to achieve its short-term goals.
After the works committees were disbanded, industrial unrest increased and the trade union movement grew stronger. However, there was no talk of consultation with the workers nor was there any move for institutional recognition of workers' participation.
The next major step was taken after the Second World War (WWII 1939-45), which was much more extensive than the earlier war as almost all nations were involved in some way or the other. The war caused havoc to the lives of people and also led to the questioning of certain traditional beliefs.
For example, when men went to war, production and factories had to be managed by someone in order to meet the increased needs caused by the war. It was then that women started manning the factories and exploring for coal and iron ore in the mines.
This gave greater confidence to women that they were competent to work in these industrial areas though the ILO had earlier passed conventions that prevented women from working in factories at night and in working underground in the mines. Similarly, workers too became a part of the movement to defend their country against the onslaught of the Nazis.
This in turn made workers feel that they played a positive role in society and were not mere cogs in the wheels of industry. These factors had important effects on the working class movement as well as the women's movement in the post-war period.
Till then, democracy in Britain was restricted to granting voting rights to a select population, usually males who had property rights. Women and those without property, which included workers, did not have the right to vote. After WWII, there were movements by women and workers demanding universal adult suffrage, i.e., voting rights for all above a particular age (either eighteen or twenty-one), which was eventually granted in Britain.
This in turn led to movements for democratising the workplace. The argument put forth was that if workers were competent to elect governments, why could they not take part in the functioning of their factories? Thus began a new phase in the movement for workers' participation in management. The new move was qualitatively different from that of the works committees proposed by Whitley. The workers now demanded the right to formulate policies along with the management.
In Germany, in the WWI period, the working class demanded that there must be equal partnership of management and labour in running industries. The trade union movement in post-war Germany assumed militant overtones and strong socialist undertones in defending and fighting for the rights of the working class.
The state had to find a middle path and 'co-determination' was introduced as a middle way between socialism and capitalism. Here, workers' committees operated at different levels in the workplace in order to enable a large number of workers to take part in decision-making.
The system of co-determination was a form of workers' participation in management practised in West Germany after 1951. Employees have the legal right to participate not just in the management of the workplace but also in that of the company as a whole. This was done through elected board representatives. This model has inspired schemes in other European countries.
Workers' participation in management in India:
In India, workers' participation is a far cry from what it encompasses in Western countries. There have been schemes for including workers but these are mainly at the peripheral levels. The first form of participation was seen in the Works Committees (WC) under the Industrial Disputes Act, 1947, Section 3 of which stated that Central and state governments have the right to declare the formation of works committees in industrial establishments that employ 100 or more workers. These WCs would have equal number of representatives from labour and management.
There would be a chairperson, vice- chairperson, secretary and a joint secretary for every committee. If the chairperson was a representative of the workers, then the vice chairperson would be from the management’s side; similarly, if the secretary was from the management's side, the joint secretary would be from the workers' side.
Though WCs were formed in some industries, there were no clear-cut rules as to what their functions were. In fact it was ironic that though the committee itself was set up by law, its functions were never defined. In the 17th Indian Labour Conference held in 1959 a tripartite committee was formed to examine the working of the WCs, and its suggestions were endorsed in the 19th Conference in 1961.
The list of items covered was:
a. Conditions of work, such as ventilation, lighting, hygiene;
b. Amenities such as drinking water, canteen, creches, medical and health facilities;
c. Safety and accident prevention: occupational diseases and Personal Protective Equipment (PPE);
d. Festivals and holidays: the committee would decide on which national events and festivals could be given as holidays;
e. Educational and recreational activities: libraries, reading rooms, sports, games, community welfare and celebrations;
f. Promotion of thrift and savings; and
g. Implementation and review of the above decisions.
It was made clear that WCs could not encroach on the functions of trade unions. Hence, they could not cover the following items:
a. Wages and allowances;
b. Bonus and profit-sharing schemes;
c. Rationalisation of work and fixing of workload;
d. Fixing of standard labour force, i.e., decision on number of workers required per shift;
e. Planning and development of work;
f. Retrenchment and layoffs;
g. Victimisation for trade union membership/ activities;
h. Provident fund, gratuity and retirement benefits;
i. Incentive schemes; and
j. Housing and transport.
In addition, decision on holidays for festivals and national events was removed from the functions of the WC and included in the list stated above.
Joint Management Councils (JMCs):
The wave of WPM had spread over Europe by the mid-1950s. In India too, this was discussed by the unions and the state. WCs committees were not fully geared to workers' participation. The Industrial Policy Resolution of 1956 stressed the need for labour being a partner in the common task of development and recommended that labour should participate in this process with enthusiasm.
The resolution mentioned that joint consultations should be held by management and workers and technicians to deal with managerial problems. The Second Five Year Plan (1956-61), which is also known as the Mahalanobis plan (after noted statistician, P. C. Mahalanobis), laid the blueprint for industrialisation in India.
Under this plan, large public sector undertakings came up in different parts of the country, mostly in backward regions. These included steel plants, heavy electrical and engineering, power generation industries, etc. The plan recognised that large-scale industrialisation which was undertaken mainly by the state in collaboration with foreign countries could not function smoothly unless all parties were involved.
The plan, hence, suggested that workers were pivotal for the growth of industry and they must be given their dues by including their suggestions in managerial activities. It therefore suggested that councils of management should be established in these industries in order to ensure smooth functioning.
Before any policies or guidelines could be drawn up about the formation and operation of JMCs, Parliament decided to appoint a committee of MPs who would visit countries in Europe to examine how they had implemented schemes of WPM. They visited Sweden, France, Belgium, West Germany and Yugoslavia as these countries had statutory models for WPM.
The committee also visited Britain, and they were warned then that a statutory approach may not be ideal as it would be legally binding for all parties through an act of parliament. Hence, if the scheme was to evolve according to the needs of the people, they should adopt a non-statutory approach. The committee returned and prepared some guidelines.
Their recommendations were placed before the 15th Indian Labour Conference (1957). It was decided that there should be JMCs comprising representatives of management and labour who would decide some of the managerial functions in the industry.
The labour representatives suggested that the government should frame legislation on this. The employers on the other hand insisted that since this was a unanimous decision, there was no need for any legislation. According to them, all three parties, namely management, labour and the state were fully convinced of the need for JMCs.
The main objectives of JMCs were to promote joint consultations between management and labour which in turn would lead to trust between the two. JMCs were also responsible for adopting productivity standards and securing welfare and other facilities. They also had a responsibility of promoting training and skill development.
On looking at these objectives carefully, the critics of JMCs pointed out that increase in labour productivity was the main underlying factor for introducing these bodies. Unlike the bodies in industrialised countries, the roles of JMCs were limited to the above-mentioned objectives. In those countries, the councils had a much wider role, which involved decision-making on production and marketing.
The composition of the JMCs was similar to those of the WCs. There would be equal representatives from both sides and if the chairperson belonged to labour, the vice-chairperson would be from the management, while if the secretary was from management, the joint secretary would be from labour.
There was also a provision of nominating outsiders (managerial experts or trade union leaders from outside), but their number had to be restricted to twenty-five per cent of the total membership. The JMCs could also set up technical committees or sub-committees to decide on specific issues. The composition of these committees and whether outsiders should be taken in as members could be decided by the JMCs.
The JMCs had three basic functions. Firstly, consultation was a must. The council could advise or be consulted by management on issues relating to administration, standing orders, new methods of production, re-deployment of workers, etc. Secondly, it would receive information and could make suggestions after due discussion.
This information could be based on the profitability of the company, the market situation, the situation in sales, the need for expansion of production, etc.; the JMCs could deliberate on these issues and give suggestions to the management. Thirdly, JMCs had to implement and monitor welfare schemes.
They could also discuss issues relating to rifts in industrial relations and how to improve them. Many of the radical trade unions felt that JMCs tried to divert the attention of the workers from their basic issues of wages, bonus, allowances, etc. However, it was clearly understood that the JMCs could not replace the functioning of the trade unions.
Diversity in WPM:
The JMCs could comprise shop councils or joint councils. Shop councils are those that exist at the shop-floor level where approximately 500 workers are employed. Large factories normally have several shops. The shop councils could be viewed as the grassroots form of representation. A large number of disputes over work and its regulation originate in the shop-floor level.
Hence this council, if given enough authority, could go a long way towards resolving problems of workers. The shop councils were to assist managements in achieving production targets and improving overall productivity. They could also identify low-productivity areas and suggest corrective steps.
Absenteeism was another issue to be dealt with at the shop- floor level. Besides these, there were issues relating to discipline, lighting, ventilation, noise, dust and reduction of fatigue (health issues concerning workers). JMCs were the larger bodies representing the industrial unit as a whole. Its composition would be the same as the others but the chairperson was the chief executive of the unit. It was expected to meet at least once a quarter and discuss issues similar to those of shop councils.
In 1970, the government introduced the scheme of Worker Director (WD) on the boards of public sector companies and nationalised banks. The government considered this scheme as a step forward as a part of workers' participation. The largest union of bank employees,
All India Bank Employees Association, refused to nominate its members on the boards. Later, it relented on condition that the WD would participate in discussions only if they involved issues relating to employees.
The issue of WDs is regarded as the weakest of all programmes for WPM .Having just one worker representative on the board does not change decisions, even if these involve employees. Moreover, the member is bound by the oath of secrecy, so she cannot disclose all issues discussed in the board.
These are issues that could help competitors if they are made public at inappropriate times. In the case of banks, where this is most widely prevalent, it is found that these directors are ineffective when it comes to putting across the employees' views to the board. In most cases, the unions have been more successful in making gains for their employees. The union the WD belongs to is usually the one that organises protests and strikes in the bank when the board takes decisions that are not in the favour of employees.
The scheme of WD can be successful only if the organisation had other schemes for WPM such as JMCs. Banks being commercial establishments and not factories, are outside the ambit of JMCs. Commercial and service establishments in the public sector were covered by WPM schemes after 1977. Having just one member to represent workers in a large establishment cannot deal with the interests of the workers.
The Indian National Trade Union Congress (INI UC) had pointed out that the scheme could be workable only if workers are given proportional representation on the board, explaining that this meant that half of the board members should be workers and the other half could represent shareholders.
There were other schemes for WPM in the 1970s. When a state of emergency was declared in June 1974, the Central government came out with a 20-point programme that was meant to form the basis of the country's development. WPM was extended to all units engaged in manufacturing or mining in the private or public sector employing 500 or more workers.
The scheme provided for establishment of shop councils at the shop/ department level and joint councils at the enterprise level. Basically, the composition of the shop council and the joint council was the same, as in the other schemes, namely equal representation from both sides.
The government stated would watch the progress of these councils for a few years and would then decide on whether it should enact legislation. This never happened. The government, however, inserted a clause in the Directive Principles of State Policy that the state has to promote workers' participation in management in all industries.
In 1989, the United Front government of opposition parties was voted into power at the Centre. Ram Vilas Paswan was minister for labour and he framed a bill called Participation of Workers in Management Bill that was introduced in the Rajya Sabha in May 1990. The bill could never become an Act because the United Front government led by V. P. Singh collapsed after BJP withdrew support from outside.
However, this was the first time that government thought of an Act to make workers' participation mandatory. The structure envisioned in the bill was different from earlier schemes because it had suggested a three-tier system instead of the two- tier system.
There would be the shop-floor council, where both workers and supervisors would be represented to deal with day-to- day problems of the workers. The next level was the establishment council comprising a few shop-floor councils. This would provide greater representation of both workers and management in different levels of the administration.
At the highest would be the board of management consisting of representatives of shop-floor and establishment level councils. Membership to all these committees would be determined by secret ballot. The labour inspector would ensure that there would be a monitoring committee to supervise the elections in an objective manner.
The Planning Commission too took a great deal of initiative in promoting WPM. The Five Year Plans, beginning with the second plan, had devoted at least one paragraph to the importance of WPM in increasing productivity. It had usually stressed that workers had to be encouraged to play a major role in the country's future.
Growth of industrialisation was important for economic and social development and one of the most effective ways of achieving greater industrialisation was by making workers partners in this process. This seems possible only when the country had a planned and protected economy, with the public sector playing a major role in the country's development. After 1985, when the first seeds of liberalisation were sown, we find that the plans hardly made a mention of WPM. In fact, the seventh plan had only half a sentence devoted to it.
WPM: An Assessment:
The issue of WPM was important for involving workers in the production process. It would also empower them to make independent decisions and be more confident about their own capabilities. Most of the schemes in the developed industrialised countries of Europe gave much more opportunities to workers to get involved in different aspects of management, including planning sales targets, marketing, and improving labour productivity. In fact, many specialists have commented that the successes of these countries were due to WPM.
WPM in India was not even half as inclusive as its European counterparts. Most of the schemes were restricted to merely helping boost productivity and maintaining discipline. Objectively, when unions and workers realised that their only contribution lay in ensuring industrial harmony and nothing else, they lost interest in these schemes.
Earlier studies conducted by the Institute of Public Enterprises in Hyderabad had found that in different participatory bodies, the worker representatives were much better prepared for the meetings, but the management representatives were casual and appeared not to take these bodies seriously.
This shows that the schemes of WPM had created a lot of enthusiasm in the working class. They saw in it a means of participating in the future of their company. Their hopes were soon belied when they found that neither government nor management gave these bodies the importance they deserved.
The fact that schemes for WPM were not statutory requirements made matters worse because it was not mandatory for employers to allow WPM. By the 1970s, it was not surprising to find that there were less than a hundred instances of WPM in the public sector. The number fell drastically after 1985.
It was said that the public sector was different from the private sector because everyone from top to bottom was an employee and not an owner. This has been reiterated by public sector managers in many forums and seminars on the subject.
At the same time, senior officials were wary of allowing workers to participate beyond issues relating to discipline and productivity. Their excuse was that many of these issues involved decisions which were confidential and should not be known to the rivals or they were too technical for workers to understand. Hence, workers could not be trusted nor did they have the competence of dealing with areas that included decision making and policy strategies.
Therefore, it should not be believed that just because people were employees, they would all be treated as equals. In the private sector, there may be a vested interest of owners who would like to keep their ownership rights intact and not share these with workers or others. At the same time, the issue is not just of ownership but more so of power.
Public sector officials who boast that they are not owners but employees are highly conscious of the power that they wield. Hence, just as families controlling private enterprises do not want to share authority with the workers and other officials, those in the top echelons of the public sector too show similar tendencies of not sharing with the workers the authority they enjoy due to their positions.
We find that the lure of power is the main issue that prevents effective WPM. This could also be because we have inherited a feudal system that refuses to accept as equal with the rest those that are defined as being in lower positions. Perhaps the influence of the caste system has a bearing on such attitudes.
The rigid hierarchy of this system that has existed for several centuries has had a long-lasting effect on our society, despite the changes taking place. The caste system believes in exclusion of the lower class because they are 'impure'; similarly, we rigidly believe that workers too need to be excluded from managerial practices because of their low status.
Multi-unionism is another factor that goes against the interests of participation. In India we have a large number of trade unions operating in a single factory or workplace. The infighting among unions can hamper WPM. Some public sector undertakings try to overcome this by having secret ballot for election to the different committees.
The union getting the highest (above fifty per cent) of votes becomes the representative. In other undertakings, such as Bharat Electronics, the top two unions are taken as representative. This does not prevent other unions from wielding their power. The Industrial Disputes Act allows any union to raise any issue relating to work. This union, even though a minority, can take up issues of workers in the labour office and the courts. We do not have a system of determining the representative union.