The Indian Industrial Relations System: Struggling to Address the Dynamics of a Globalizing Economy

Abstract

The industrial relations system in India has been under pressure for decades and new problems are emerging as the country becomes more integrated into the global economy. The main architecture of the system was established prior to Independence and remains mostly unchanged. The system is highly centralized and the state is the main mediator between capital and labour. Unions have historically enjoyed a close relationship with the state through party-based federations, but this has undermined their success developing a robust grassroots constituency and experience in collective bargaining. This essay provides a broad overview of the evolution of the Indian system of industrial relations and the labour market reform debate that has arisen in the context of economic change. The structure of the Indian labour market, the overwhelming size of the informal or `unorganized' workforce, and its location outside the industrial system is the fundamental challenge facing Indian industrial relations. There is an urgent need to develop a system that embraces all workers especially given India's demographic profile and the expected increase in the number of working age people over the next decade. The experience of women workers and the failure of both the industrial system and the union movement to understand and accommodate their needs is also an important challenge for industrial relations in India.