Employers’ Association / Organisations
Employers’ Organisations (EOs) are “formal groups of employers set up to defend, represent or advise affiliated employers and to strengthen their position in society at large with respect to labour matters as distinct from economic matters. They may conclude collective agreements but this is not a formal rule and cannot be an element of their definition. Unlike trade unions, which are composed of individual persons, employers’ organisations are composed of enterprises. Most legal definitions of a trade union apply to them. (Oechslin, 1990). The Trade Unions Act, 1926 includes in its purview, both associations of workers as well as employers.
Employers’ Organisations are mainly concerned with matters relating to a wide range of employment issues including industrial relations. Chambers of Commerce are usually set up to defend the economic interests of employers. However, in some countries such as the U.K., Norway and Jordan, for instance, the same organisation deals with both. In India, as we shall discuss latter, the former are set up by the latter. Also, sectoral associations such as Confederation of Indian Industry (till 1991 it was a sectoral association mainly confined to engineering industry) and United Planters’ Association of south Indian perform a combined role defending the interest of employers’ in both economic and labour matters.
Employers’ Associations came into existence as a result of the formation of ILO and the growing presence of Trade Unions, especially after the First World War.The Royal Commission on Labour, 1929, recommended that the Indian employers need and some other factors which influenced the formation of unions of managers, senior executives and other officers, are nationalisation and rationalisation of pay and perquisites, and anomalies in pay arising from the recommendations of Pay Commissions and Wage Boards and their implementation.
Trade Union in British English or labor union in American English.
Objectives of Employers’ Organisations The main objectives of EOs are similar though they may vary to an extent in matter of detail. For organisations “to deal with labour problems from the employer’s point of view”. As rightly pointed out by Mr. Naval Tata, employers’ organisations are required to: Develop healthy and stable industrial relations;
Promote collective bargaining at different levels;
Bring a unified employers’ viewpoint on the issues of industrial relations to the government in a concerted manner; and
Represent in the meetings of ILC and SLC boards in conformity with tripartite approach to labour matter. Employers’ Associations are formed to promote and protect interests of employers in Trade and industry.
They are: “formal groups of employers set up to defend, represent or advise affiliated employers”. They perform several important functions:
Promote and protect the interest of employers engaged in industry, trade and commerce in India.
Study, analyse and disseminate information relating to labour policy, labour management relations, collective bargaining, etc.
Offer advice concerning various aspects of labour policy.
Liaise with Union Government and initiate steps that are representative and legislative in nature.
Train and develop staff and members.
Obtain data on wages and conditions of work in industries attached to them. Come out with surveys, research-based reports on issues of importance to both labour and management.
Take up projects for social and family welfare.
Deal with safety and health at work place and working environment.
Initiate steps to improve public image and improve public relations.
Educate the public regarding the character, scope, importance and needs of trade, industry and commerce represented by members.
Structure of Employers’ Organisations
At present EOs are organised at three levels:
a) Local Organisations:
They serve the interests of local businessmen. The Bombay Mill Owners Association, for example, has been formed to protect the local interests of manufacturing units operating within the city. Such bodies operate through the local chambers of commerce.
b) Regional Organisations:
The regional outfits such as Employers’ Federation to South India, Employers’Association, Calcutta are affiliated to central employers organisation. They offer consultancy service; take care of training, safety and welfare measures on behalf of their members. They even have special committees for specific region or industry related problems.
c) Central Organisations:
AIDE, EFI, AlMO operated as apex bodies governing the affairs of several regional, local associations. To have better coordination a super structure called the Council of Indian Employers was formed in 1956, bringing AIDE and EFI under one umbrella.
Different Employers’ Organisations in India
AlOE: The All India Organisation of Employers is a unitary type of organisation, setup in 1953; members hail from manufacturing, banking, insurance, commercial establishments; and has no sub-organisation on an industrial or geographical basis. The President is elected every year.
The Employers’ Federation of India has a federal structure formed in 1933, it has governing body executive committee and the secretariat. The governing body formulates policies, the executive committee implements policies and the secretariat with its own permanent staff is responsible for carrying out the decisions of the governing body. It had only four presidents in over 50 years. EFI was registered as a trade union in 1963 under the Indian Trade Unions Act of 1926.
International Organisation of Employers, represents the interests of employers in all social and labour matters at the international level. Founded in 1920 with headquarters in Geneva, it has a membership of Employers’ Associations from over 100 countries. The Central Council of Indian Employers is a matter of IDE.
The objectives of the Standing Conference of Public Enterprises cover a wider ambit. SCOPE looks upon its tasks as both internal and external to the public sector. Internally, it would endeavour to assist the public sector in such ways as would help improve its total performance. Externally, it would help improve its total boundary role in conveying such information and assist the public sector in such ways as would help improve its total performance and advice to the community and the Government as would generally help the public sector in its role.
The main object in setting up the Council of Indian Employers was to ensure closer co-operation and coordination between the two bodies which together represent particularly the interests of large-scale industry in India. In the year 1973, the SCOPE joined the CIE.
The CIE, with its headquarters in the office of the AlOE in Delhi, consists of equal number of representatives of the AlOE, EFI and SCOPE. Its principal functions are:
(i) to discuss generally problems confronting Indian employers, with particular reference to matters coming up before the ILO Conferences and various Industrial Committees and to formulate, from time to time, the policy and attitude of Indian employers in the matter of collaboration with employers of other countries;
(ii) to furnish and exchange information on problems relating to industrial relations with employers of other countries;
(iii) to maintain a close contact with the International Organisation of Employers (IOE) with a view to study international trends in the employer-employee relations and to keep the two parties informed of such matters; and,
(iv) to select the personnel of the Indian Employers’ Delegation to the various Conference and Committees of the ILO. The same point was emphasised differently in the list of objectives. To mention a few:
to take all steps which may be necessary to promoting, supporting or opposing legislative and other measures affecting or likely to affect directly or indirectly, industry, trade and commerce in general, or particular interest;
to take all possible steps for counteracting activities inimical to industry, trade and commerce of the country;
to promote and protect the interests of employers engaged in industry, trade and commerce in India.
The principal objectives relating to the industrial relations aspects include:
to encourage the formation of EOs and to foster cooperation between EOs in India and abroad;
to nominate delegates and advisers, etc., representing Indian employers at the International Labour Conference, International Chamber of Commerce and other Conferences and Committees affecting the interests of trade, commerce and industry, whether as employers or otherwise;
to promote and support all well considered schemes for the general uplift of the labour and to take all steps to establish harmonious relations between capital and labour;
to educate the public with regard to the character, scope, importance and needs of industry, trade and commerce represented by the Members.
The rules and regulations of the AlOE thus seem to provide for trade related activities as well, though the preoccupation of the AlOE has always been in influencing labour policy and legislation and disseminating information and news to members.
Amalgamation of Employers’ Organisations
During the pre-independence era industry, trade and employer associations were divided on the basis of Swadeshi vs. Foreign, large vs. small, and to an extend on regional basis. After independence the indigenous private industrialists bean to train their guns against public sector which had witnessed a rapid growth (at least until 1990s when privatisation is becoming the “in-thing”). The small and medium sectors have formed their own associations. There is also a plethora of sectoral associations.
Employer-Employee With the proliferation of EOs the need for their unification began to find expression.
After several initiatives and meetings, it was in 1956 that a super structure called the Council of Indian Employers (CIE), was formed to bring the AlOE and EFI, the two national level EOs together under one umbrella.
Statutory Protection of Employers’ Organisations in India
EOs could be registered in any of the following legal forms: The Trade Unions Act, 1926; the Indian Companies Act, 1956; or the Societies Act, 1860. The AlOE remained a registered body till 1969 when it was registered under the Indian Trade Unions Act. The EFI came into being in March, 1933 as a company under the Indian Unions Act. A quarter century later, it was reorganised as an unregistered Association, a position which continued till 1963 when it too was registered under the Indian Trade Unions Act.
The main reason for the AlOE opting for registration under the Trade Unions Act was to allow it to take up test cases before the courts and industrial tribunals. In the case of the EFI, the motivation was to overcome the burden of income-tax on its steadily rising income and surplus.
The SCOPE, however, continues to be registered under the Societies Act.
The Constitution grants the right to organise, and so nobody including manager and officer, can be prevented from forming or joining any organisation, if he so desires. The Trade Unions Act, 1926 and the Societies Registration Act, 1860 which provide the only legal framework for the managerial and officers unions, permit the registration of unions and associations formed by any seven workers/persons. The registered trade unions are protected, civil and criminal proceedings for bona fide trade union activities, including peaceful strike and picketing. The Trade Unions Act only provide for the right to organise, but not the right to bargain collectively, as there is no provision in the Act for the recognition of unions by the employers. Only Bombay Industrial Relations Act, 1946 which has been adopted in Rajasthan and Madhya Pradesh and is application in Maharasthra, provides for compulsory recognition of unions as bargaining agent. This is a serious lacuna in our industrial relations system, which must be removed at the earliest, if union and management relations are to be improved.
Apart from the limited protection afforded by the two enactments as mentioned above, managerial and administrative employees and other officers have no other statutory protection or benefit except what is provided by the Civil and Common Law. They have neither the job security nor the arrangement for quick recovery of their dues, which the workmen or the blue-collar workers have as provided by the Industrial Disputes Act, 1947 and the Payment of Wages Act, 1936. Most of the Indian organisations have some sort of grievance handling procedure to take care of the grievances of the workmen, but no such procedure exists for the executives or officers. Such a discriminatory treatment and the fact that revision of salaries of managerial staff has always to wait till the wages of workers are revised by collective bargaining, has compelled the former to form their own unions and agitate for improvement and security of their jobs and emoluments. It is not that the Government has never thought about the situation of the Managerial employees. On August 30, 1978 the Janata Government introduced in the Lok Sabha Bill (No.143 of 1978), called the Employment Security and Miscellaneous Provisions (Managerial Employees) Bill, to provide the security of employment to persons not covered by the Industrial Disputes Act, 1947. If this Bill had been enacted, it would have enabled a managerial employee to approach, Employment Security Tribunal for:
setting aside termination of his employment or a notice of such termination issued by his employer,
reliefs if the employer affected reduction in rank, salary or allowances, and
recovery of amounts due to him from the employer.
On behalf of the three organisations, the CIE also submits representations to the Government of India on matters involving important issues of labour policy on which a common approach is desired.
Under the Constitution of the ILO, its member countries (India is a member of the ILO since its inception in 1919) should accord recognition to the most representative organisations of unions an employers. CIE is the organisation which represents the Indian employers.
Organisation and Management of Employers’ Organisations in India Membership:
As in most countries in India too membership in EOs is voluntary. AlOE has two categories of members: individual (enterprise) and association (group of enterprises). EFI additionally has provision for honorary membership whereby individuals with special skill or experience, such as legal luminaries or professionals are coopted to serve on various committees of the federation. While the predominantly private sector EOs do not bar public sector enterprises becoming members and rather welcome their entry and indeed have a few, the SCOPE remains an EO exclusively for the public sector that too mainly the public sector enterprises in the central sphere.
648 EOs were registered in 1986 under the Trade Unions Act. Of these, however, only 98 submitted returns. Several more were registered under the Companies Act and the Societies Act whose number is not known. The definition of an EO under these three legal forms is much wider than the meaning assigned to EO in the ILO parlance and inclue industry associations, chambers of commerce, etc., at various levels including national, regional, state, local, etc.
In 1986, the AlOE and the EFI had 59 and 31 association members respectively; even the strength of individual members (enterprises) was low at 130 and 247 respectively. Some members in both the categories are common for the AlOE and the EFI. The representative character of the AlOE and the EFI. Even with regard to the large industry, is thus rather limited. The SCOPE, on the other hand, is the most representative organisation for the public enterprises in Central sphere (i.e., those established by the Union Government) with over 95 per cent of them being members of the SCOPE.
The AlOE has a unitary type of organisation. It has no suborganisation on an industrial or geographical basis. Even though there are important clusters of members in Calcutta and Bombay, there has been no attempt to create local committees or offices. The EFI, however, has federal type of organisation structure with its activities distributed over a central body and the regional committees. Both the AlOE and the EFI have a governing body, executive committee and the secretariat. The governing body is the supreme policy-making body, the executive committee is responsible for implementing the policies and objectives of the organisation and the secretariat with a permanent staff, is responsible for carrying out the decisions of the bargaining. In India this role is voluntary and at the initiative and request of the members; training and development of staff and members; safety and health at workplace and working environment; and public image and public relations.
The above list is indicative and not exhaustive. A survey of members of EOs in India (Venkata Ratnam, 1989, pp. 112-113) noted that over 70 per cent of the respondent members of EOs believe that EOs:
are active in disseminating information to members and making representations whenever an issue or problem arises; henceforth need to be proactive;
are not going as well as they should be doing in their advisory role and in providing a guidance on issues relating to collective bargaining, etc.;
should pay more attention to:
studying problems of concern to employers;
improving their interaction with members, unions and government;
concentrating on training workers and members;
strengthening advisory services;
taking up projects for social and family welfare; and
need not participate; as before, directly in enterprise level negotiations or settlement of industrial disputes at firm level.
In the course of exercise of their functions, EOs interact with the three principal actors; i.e., employers (who are their members), Government and unions. Traditionally employers are individualistic in nature and competitive consideration affect their ability to confederate as a cohesive entity. Employers want individual discretion than take a collective, unified stand for a good policy. This attitude influenced their orientation towards relations with governments. Individual office bearers would like to cultivate personalised relations with government functionaries than institutionalise the interactions. The relations with unions are typically adversarial and occasional interactions but not usually founded on the realisation of the importance of a continuous dialogue and discussion to develop rapport, mutuality, trust and confidence in each other.
EOs also interact with political parties, professional organisations and the community. Relations with political parties assume significance even if EOs choose to remain avowedly a political. The presence of professional organisations make it imperative to see whether these organisations of managers are similar or dissimilar to those of employers. In today’s context of large, modem corporations, the employers’ dependence on professional manager had increased. Likewise the professionals and professional bodies do draw their sustenance, to an extent, from employers. The EOs also need to maintain relations with the community.
Future Challenges of Employers’ Organisations
Employers are not only individualistic, but also not a homogeneous class. The conflict of Swadeshi vs. Videshi in pre-independent era, the public-private debate in post-independence era, the rivalry between ASSOCHAM and FICCI, AIMO’s dislike towards the big brother attitude of major chambers of commerce, the conflict among handloom, powerloom and mill sector in textile industry, the formal-informal sector divide and the like exemplify that employers are not necessarily a homogeneous class. EOs need to governing body. There is greater continuity in the leadership of the EFI than the AlOE.
The EFI had only four presidents in over 50 years. The AlOE which used to elect a new president every two years is now electing a new president every year. The EFI constitution provides for setting special technical committees if need arises to provide special attention on any subject.
The SCOPE has two administrative organs, the Governing Council and the Executive Board besides the Secretariat with permanent staff. The Governing council lays down policy and elects office-bearers, the Executive Board oversees implementing of policies. The chief Executive of a member enterprise/organisation shall automatically be a member of the Governing Council. Additionally it has three government representatives nominated by the Director-General, Department of Public Enterprises, as ex-officio members of the Governing Council with full voting rights.
EOs are referred to as rich men’s poor clubs. The EFI’s balance sheet for 1985-86 shoes an income of Rs.20 lakhs and that of AlOE Rs.5 lakhs approximately. Nearly half of the income of the EFI and one-fourth of the income of the AlOE are from membership subscriptions. Other incomes include interest on corpus/deposits, conferences, publications, etc. Excessive dependence on income from subscription make EOs financially vulnerable. The surest way for them to raise funds is to upgrade
the quality, relevance and usefulness of services to their members and other constituents, including the community.
EOs in India play two types of roles in representing the interests of their members: One, they are called to nominate representatives of employers in voluntary or statutory bodies set up not only to determine wages and conditions of employment of workers in a particular industry/sector, but also for consultation and cooperation on social and labour matters in national and global context. Secondly, they seek to redress the grievances arising from legislative or other measures by making submissions to concerned authorities. It is difficult to recapitulate and synthesise the role played by EOs in representing the interests of employers in the ILO, various committees/institutions, bipartite and tripartite for at the national level and on various issues such as legislation, voluntary codes, social security, bonus, etc. (For an indicative analysis, see Venkata Ratnam, 1989).
The real worth of an EO and the best justification for its support is the range of services that it provides to its members. Within the overall framework of the need to develop enlightened human resource management practices, the kind and range of services that an EO could provide should rest mainly on the needs of the members and their priorities as also the resources and competence within the leadership and secretariat of the EO. Some of the basic services very EO may be expected to provide the following: study and analysis of problems and dissemination of information advice, advocacy and dispute settlement; guidance or conduct of collective reconcile the concept of a federation with the spirit of competition among their members. EOs work may concentrate on areas where members interest converge. They need to overcome the crisis of being the rich men’s poor clubs by upgrading the quality, relevance, usefulness and cost-effectiveness of their services. They should learn to be proactive than reactive. The distinction between the reactive and proactive approaches may be described as the difference between settling disputes and taking preventive care, between raising demands and removing grievances, seeking amendments to the law and influencing the law in advance, controlling wages and providing incentive, enforcing discipline and promoting good relations.
EOs should also reflect on the emerging challenges and redefine their role in a rapidly changing scenario. For instance the spread of democracy and the transition to free market economy in most countries the world over rendered old notions of ideological class conflict less relevant today. The gradual shift towards information technology society requires reorientation in the basic philosophy of human resource management policies, technological, structural, economic and other changes which require adaption and adjustment with a “human face”. These, then, are some of the new opportunities and challenges for EOs.