Q69 - Role of State in Industrial Relations (14 Marks)

1. Introduction

Industrial Relations (IR) is trilateral: Employers – Employees/Trade Unions – State. In Dunlop’s systems model, State provides context, rules and ideology. In developing economy like India, State is not neutral referee but active partner, protector, employer and regulator, especially after independence and under new Labour Codes 2020.

2. Why State Intervention?

• Correct power imbalance (employer stronger)
• Protect weaker sections, ensure social justice and industrial peace
• Prevent exploitation, regulate conditions (hours, safety, wages)
• Promote economic growth, control inflation, avoid man-days loss from strikes
• Constitutional mandate (Directive Principles Art 38, 39, 41-43)

3. Roles of the State – Detailed

A. State as Legislator / Law-Maker

Frames labour laws to set minimum standards. Indian framework:

• Protective: Factories Act 1948, Minimum Wages Act 1948, Payment of Wages 1936, Equal Remuneration 1976
• Regulatory: Industrial Disputes Act 1947, Trade Unions Act 1926, Industrial Relations Code 2020
• Social Security: ESI 1948, EPF 1952, Gratuity 1972, Maternity Benefit 1961, Code on Social Security 2020
• Welfare & Safety: Labour Welfare, OSH Code 2020

Example: Fixed 8-hour day, prohibition of child labour – all state legislated.

B. State as Employer (Model Employer)

• Public sector directly employs ~20 million. Expected to set example: fair wages (Pay Commission), job security, model standing orders, participative forums (Joint Management Councils)
• PSU wage settlements (SAIL, BHEL) become trend-setter for private sector

C. State as Conciliator / Mediator

• Machinery under ID Act: Conciliation Officer, Board of Conciliation, Labour Courts, Industrial Tribunals, National Tribunal
• State appoints Conciliation Officers (Sec 4 ID Act) to mediate disputes before strike/lockout becomes legal; tries to bring compromise within 14 days
• If fails → reference to adjudication

D. State as Arbitrator / Adjudicator

• Voluntary Arbitration (Sec 10A) and Compulsory Adjudication via government reference to Labour Court/Tribunal – award binding on parties
• Resolves interest and rights disputes authoritatively, prevents prolonged industrial warfare
• Judiciary interprets laws – Supreme Court guidelines (e.g., Bangalore Water Supply case widened “industry”)

E. State as Regulator & Controller

• Registers trade unions, certifies standing orders, regulates lay-off, retrenchment, closure (Chapter V-B ID Act – permission for 300→100 workers threshold under new Code)
• Inspectorates enforce compliance (factory inspectors, PF commissioners)

F. State as Protector & Promoter of Weaker Party

• Minimum wage fixation, abolition of bonded labour, unorganised workers’ social security (e-Shram)
• Promotes workers’ participation in management (Sec 3 IR Code), workers’ education (CBWE)

G. State as Economic Manager & Harmoniser

• Macro policies: Incomes policy, price controls, employment policy, skill mission
• Tripartite bodies: Indian Labour Conference (ILC), Standing Labour Committee, Wage Boards (journalists, coal), National/State Labour Advisory Boards – where government, employer associations (FICCI, CII) and central unions (INTUC, BMS, AITUC) concert policy
• Promotes collective bargaining but regulates unfair labour practices (Schedule V ID Act – now under IR Code)

4. Evolution in India

• Pre-1991: Highly interventionist, protective, adjudication-heavy → led to rigidity, pendency (~15,000 cases)
• Post-LPG 1991 & Labour Codes (2019-20): Shift to facilitator & enabler – ease of business, fixed-term employment, recognition of unions, social security for gig workers, but critics fear dilution of protection
• International influence: ILO conventions ratified, pressure to meet global labour standards

5. Critical Evaluation

Positive: Industrial peace (man-days lost fell from 33M in 1980s to <2M now), minimum standards, judicial recourse for un-unionised workers.
Criticisms: Over-regulation, inspector raj, delays in adjudication (5-10 years), multiplicity & complexity (44 laws → 4 Codes still pending implementation), bias accusation (state as employer vs regulator conflict), poor coverage of 93% informal sector.

6. Conclusion

State is umpire, player and rule-maker. In globalised era, role is moving from controller to facilitator – ensuring protective minimums, enabling bipartite negotiation, and providing social safety net, while allowing flexibility for competitiveness. Balanced IR needs less adjudication, more conciliation-mediation and effective tripartism.

For 14M diagram: Triangle Employers-Workers-State with State at top, arrows showing legislation, conciliation, adjudication, participation, protection flowing downwards; timeline 1947→1991→2020.