Factors Affecting Industrial Relations

Factors Affecting Industrial Relations

(1) Economic Factors – These factors are determined by the structure of the economy – socialist, capitalist or mixed. The demand and supply of labour, the nature and composition of workforce, and the organisation of labour would determine the economic status of the working class and also the bargaining strength influencing industrial relations.

(2) Institutional Factors – These factors include government policy, labour legislation, functioning of labour courts/industrial tribunals, trade unions, and employers’ organisations. Social and religious institutions can also greatly influence the industrial-relations scenario through a prevailing value system and by attempting to ensure conformance to the same. This is exemplified by the gender bias observed in some countries and industries.

(3) Technological Factors – Techniques of production, automation, modernisation, etc., are the technological factors. Lesser the dependency on human capital, the lesser would be the bargaining strength of employee organisations. Further advancement in “technowledge” and the upgradation of competency profiles for jobs have also created a new class of workers termed “knowledge workers” whose needs and aspirations are different.

(4) Political Factors – The political system in the country, political parties and their ideologies constitute the political factors. The growth and strength of political parties and the methods used in formulating and implementing policies affect the industrial-relations climate. Furthermore, the involvement of trade unions in the formulation of policies also plays an important role in tilting the balance towards the working class. However, if these parties find themselves to be dependent on financial support from the corporate entities, the political equation then would be completely different.

In countries where State capitalism is the main ideology, collective bargaining would not be encouraged, trade unions would just be tolerated and labour-management relations would be regulated with a fair degree of strictness.

In countries like the former U.S.S.R., where the prevailing political ideology is State socialism, trade unions are assigned well-defined roles and they function within the parameters of the overall political system.

India having adopted a mixed economy, conciliation, arbitration, workers’ participation in management, collective-bargaining are parts of labour-management relations.

(5) Social and Cultural Factors – These factors refer to prevalent social norms, values and beliefs. In countries like U.S.A., where a stable socio-political order exists, the government promotes a common ideology of free enterprise, or democratic capitalism. In such countries, “collective bargaining” is facilitated by legislation and government intervention. In places such as the Scandinavian countries and the U.K., where democratic socialism prevails, collective bargaining is the standard norm with almost no government intervention.

(6) Organisational Factors – These include issues like style of management prevailing in the enterprise, its philosophy and value system, organisational climate, organisational health, extent of competition, adaptability to change and the various human resource management policies.

(7) Global Factors – These cover international relations, global conflicts, dominant economic-political ideologies, global cultural milieu, economic and trading policies of power blocks, international trade agreements and relations, international labour agreements, role of ILO, etc.