The problem of industrial unrest has been existing in India in almost all stages of its social and economic development. But it got importance only in 20th century when large scale industries were started. As an answer to working conditions and wages problems, workers in mere self defense were forced to combine and trade unions were formed.
Reasons in today’s time:
Changing work environment: The country has transformed structurally—agriculture has declined and services forms the most dominant sector in the economy. Even industrial places are no longer the same. New employment is far and few and at the same time demands far more skills. What this also does is create segregation among workers and creates the possibility of class action.
Contract labour: Companies too have reordered their pattern of employment. They do not prefer tenured workers and are beginning to outsource a lot of their work to outside agencies.
Other factors: Adverse turn is result of nearly three years of double-digit inflation, jobless growth and a visible rise in inequalities—patience is at a premium.
Effect on economy:
Labour Bureau data reveals that the first five months of 2012 have recorded 108 industrial disputes, marking a 12 per cent rise from 2011, when 97 disputes were registered between January and May. So far, this labour unrest has cost the country a total of 9,60,089 mandays.
Increasing intolerance/ violence resulting killing too
In some cases, threats of violence have led to actual killing. Last year, Lalit Kishore Chaudhary, CEO of Graziano Transmissioni India, the Indian unit of an Italian auto component maker and recently Maruti Suzuki's general manager Avneesh Kumar Dev were killed during worker unrest.
This tarnish India’s image of growing economic power and results in lose in FDI.
Changing scenario after LPG / downfall of labour unions
India saw militant trade unionism in the 1970s and 1980s. This class struggle was clearly reflects in movies of that time. The business environment has changed dramatically since those days. Liberalization introduced competition, and managements can no longer afford to involve in unproductive labour strikes.
The rise of the IT industry and the emergence of knowledge workers contributed further to a decline in trade unionism. Though there have been efforts to unionize IT employees -- the Bangalore-based UNITES (Union for Information & Technology Enabled Services), for example -- they have not much successful.
However the situation has not been altered completely. Recent strikes of Air India, King Fisher airline, Maruti are just few examples, which continue to hit our GDP.
Increasingly, the interests of the labor and the union leaders have diverged. Unions seek to block any change just to maintain their importance. Many of the changes, though initiated by management, help labor as well. This attitude has to be changed by persuasion.
Some of the current labor laws are archaic. Everybody recognizes that India's labor laws encourage the substitution of people with machines and promote unorganized employment. But policymakers are not able to deal with the challenge of labor reform where people have begun to view labor reforms as anti-poor while they actually are the opposite.
Labor reforms are a pillar of the overall reforms that needs significant action.
Some Appreciation Please!