1. EMERGING WORLD TRADE REGIME:
Social clause and implications for employee
relations management

2. Agenda
 Introduction
 Social realities, culture and organizations: Global
perspective (Country perspective)
 WTO regime and the social clause
 Centre- State vs State-State pulls
 Employment security
 Labor redundancy
 Wage Policy
 Social Security
 Contract Labor
 Child Labor

3. Introduction
 Significant changes in social and corporate
world due to WTO regime
 Reforms impact upon all HR practices and
trade unions
 Intensity depended upon ownership, culture
 Indian context:
 Reforms treated with suspicion by working class
 Political parties too interfering in the process

4. New employment relationship
Employee expectations:
 Provide education, training, and skill development
opportunities
 Provide education, training, and skill development
opportunities
 Involvement in decision making / empowerment
 Open communication, mentoring
 Challenging meaningful and interesting work
 Performance based compensation

5. New employment relationship
Employer expectations:
 Assume responsibility for developing and
maintaining skills
 Produce positive results and add demonstrable
value
 Understand the nature of employers/business
 Have customer focus
 Work in teams, and take initiatives
 Flexibility and commitment

6. Social Realities, culture and organizations
Japan:
 Submissive and adaptable nature because
of agri-centred society
 Work considered source of moral culture
 Work ethics weakened in post World War II
generation
 High educational level of workers
 Non-confrontational attitude and industrial
harmony

7. Social Realities, culture and organizations
Yugoslvia:
 Socialist self-management regime
 Workers’ Council elect top managers
 Success depends on efficiency of
business enterprises

8. Social Realities, culture and organizations
Indonesia:
 Three cultural levels:
 Ethnic regional cultural level: tribal group culture
 Regional-national cultural level
 National-international cultural level: internalized western
values
 Top managers prefer paternalistic style of leadership
 Collectivistic, short-term oriented
 Need vision, less communication barriers
 Orientation towards- God, environment, and self

9. Social Realities, culture and organizations
Thailand
 Nine value orientations:
 Ego, grateful relationship, smooth interpersonal
relationship,
 Flexibility and adjustment, religio-physical
orientation
 Education and competence, interdependence
 Fun-pleasure, achievement-task
 Direct confrontations and criticism avoided
 Motivation by benevolent, paternalistic type leader

10. Social Realities, culture and organizations
Hong Kong:
 Issue of cultural adaptation an issue where
management is not indigenous
South Africa:
 Institutionalized racial discrimination part of
organizations
 Inclusion of HR planning, career pathing, continuous
learning in HR agenda
 Strategically linked HRD needed to overcome labor
market segregation based on race

11. Social Realities, culture and organizations
China:
 Respect for age and hierarchy, face and harmony,
group orientation, personal relationships
 Confucian traditions and ethos applied to
integrations of labor force
 Tradition of thoroughness in work, strict discipline,
credibility, inclusivity of expectations
 Paternalism, personalism and defensiveness - a
socio-historical legacy

12. Social Realities, culture and organizations
Taiwan
 Four distinct managerial patterns:
 The Grassroots type and Mainlander type:
typical of Chinese values
 Grassroots type include Japanese features
 The Specialist type: includes western logic
of rationalism
 The Transitional type: includes both western
and Japanese managers

13. Social Realities, culture and organizations
India
 Three types of behavioral dispositions or
ethics:
 Personal ethic of helplessness
 Organizational ethic of personalized
relationships
 Idealized family-centered work ethic

14. Social Realities, culture and organizations
India
 Draws from the authoritarian practices in family
 Reward system based on negativity and
uncertainty
 Family and religious traditionalism emphasis on past
 Joint family systems – need to meet obligatory
demands from relatives, friends etc.
 Nurturance, universalism, peer leadership
enhances member integration
 Synergic and exploitative cultures in large and
small organizations

15. WTO regime in India
 A mixed picture
 India being the founder member of the ILO, contributed
to the codification of international labor standards
 India benefitted from framing its own labor framework
on labor aspects
 Indian constitution and labor laws uphold all the
principles evolved in the eight core international labor
standards

16. Social clause & Indian legislation
Social Clause Aspects Indian constitution/legislation
Freedom of association and right to The trade union of act, 1926
collective bargaining
Abolition of forced labor in all its forms Article 23 of the constitution and the
bonded labour system (abolition) act,
1976.
Equal remuneration convention, 1951. The equal remuneration act of 1926 seeks
The four underlying bases for to provide equal remuneration for men
determination of work of equal value and women
are skills, efforts, responsibility and
working condition
Discrimination convention which The constitute upholds equality,
covers any discrimination, exclusion or denounces discrimination and
preference encourages preferential treatment to
disadvantaged groups in the society
Minimum age for employment should The child labour prohibition act, 1986.
ordinarily be 15 and 18 in dangerous
occupations

17. Centre – State vs State-State Pulls
 Significant changes in labour laws by states
i.e. trade unions act 1926
 Secret ballot for trade union recognition
 Secret ballot through tripartite social dialogue
 Simplified labour inspection laws (Rajsthan)
 Kerala extended full rights to entrepreneurs for
hiring of labor
Implementation has been the weak link

18. Wage policy
 Wage policy is main concern in the Indian context
 Dearness Allowance is based on the lowest basic wage
indexing which declines as the basic wage rises
 Bonus payment governed by the payment of bonus act,
1965
 Average real wage rate tends to decline when inflation
rate rises above certain level
 Revision of basic wages does not consider labor
productivity and profitability in organization
 Economic reforms lead to cost adjustment and wage
flexibility is an important tool

19. SAAT, 1996
 South Asia Multidisplinary Advisory Team (SAAT)
 Reported by SAAT, government should have several
objectives-
 Ensuring minimum level of living
 Creating condition for systematic growth of wages
 Sustaining appropriate wage productivity linkages
 Incorporating appropriate incentives structures
 Limiting income inequalities
 Minimum wage should be fixed at national level

20. Employement Security & labour
market flexibility
 SAAT report indicates that, Indian employment
security system is based on three premises
( Legislations : Industrial disputes Act 1947,
Industrial employment Act 1946 )
Industrial workers – potential victims of exploitation

 Protection from exploitation – must come from
government regulations
 Income security follows from employment security
 Retrenchment (except under certain conditions) in
enterprise employing 100 or more workers requires prior
permission from govt. authorities

21. Labour Redundancy
 Sizeable lot of redundant labour due to:
 Inapt handling of industrial sickness incidents
 Continuance of non-viable enterprises by the
Government for employment protection
 Over employment by public enterprises
 Introduction of reforms aimed at:
 Development of institutions for efficient redeployment
of labour from organized to unorganized sectors
 Stimulation of growth of the unorganized sector
 Commitment of large resources on the part of
Government

22. Labour Redundancy
 Measures
 Voluntary Retirement Schemes packaged
with programmes for counselling, retraining
and redeployment
 Transparency in the entire system
 Self employment: measures for
entrepreneurship training
 Unorganised Labour Market
 Reforms aimed at income security and
social security

23. Wage Policy
 Minimum wages set by Government for unorganised sector
 Variations in minimum real wage rates across states and
across occupations
 Minimum wage rates revised very infrequently
 Revised rates lower in real terms than pre-revision rates
 Statutory minimum wages below the poverty-line wages
 Actual wages below the statutory wages
 Lack of proper indexation
 Irregular revisions and weak enforcements
 Setting different wages for organized and unorganized
sector

24. Wage Policy
 Recommendations for minimum wage
 National minimum wage payable to all
unskilled workers irrespective of age and
sex
 Fully indexed and above he poverty-line
 States to derive minimum wages from
this by using appropriate price indices

25. Social Security
 Unorganized sector workers mostly covered under LIC,
General Insurance Corporation of India, National Social
Assistance Programmes and Annapurna
 Frequent change in occupations : specific occupation
based programmes rendered useless
 Schemes like Annapurna failed due to administrative
and operational problems
 Thorough evaluation of schemes in their total structure
 Social security partners need to be strengthened with
respect to finance, human resource development,
monitoring and evaluation

26. Contract Labor Act, 1970
 Provisions for
 Abolition of contract labour in perennial and
permanent jobs
 Regulating the contract labour system
 Suggested reforms
 New dispensations for the wages, safety and welfare
of contract labour
 Right to employees to go for contracting without any
restrictions
 Labourisation or workers’ financial participation as an
effective remedy

27. Child Labour
India
 11.28 million child labourers (1991 census)
 40% of the world child labour force
 Child Labour (Prohibition and Abolition) Act, 1986:
hazardous industries and activities
 Further implementation of national policy and more
advanced reforms such as creation of Child Labour Cells
in each state
 Lack effective implementation
 Social initiatives and strenghtening of inspection
measures required

28. Discussions
 Pre WTO, employees enjoyed lifetime employment,
company sponsored health programmes and
retirement pensions
 Post WTO, employees expected to work in multi
faceted teams and update their skills continuously
 Restructuring  Feeling of job insecurity

29. Recommendations
 Acceleration of reforms required
 Role of Government important due to legislative
reforms falling under their purview
 Extensive controls, large Government sector and
many Government programmes bureaucracy
leading to failure in implementation
 Monitoring of reforms by independent regulatory
bodies with greater transparency

30. Thank You