This essay will explore and assess human resource management (HRM) in India, drawing upon the law and legislation relating to HRM and how it affects the employees and employers in India will. Further discussion regarding the education and training procedures in India and how they affect the human resources (HR) of the country, employer organisations and trade union organisations and their effect upon human resources within India will take place.
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Finally the paper will focus upon the collective bargaining structures in place and the company governance arrangements. Throughout the essay, elements of Hofstede’s framework (1980) will be discussed in relation to HRM in India. India, located in the South East of Asia is the seventh largest country in the world with a population of 1.21 billion people; 17.5 percent of the world’s population (The Times of India 2011). As a former colony of Great Britain, India gained independence in 1947 which proved a major factor in the liberalisation of the Indian economy in 1991, Koshy (1995).
Law Relating to HRM
The majority of the labour laws have arisen within the past century, significantly, the bulk of the labour laws developed after India’s independence from Great Britain. Previous to the independence, India’s labour laws were primarily in order to protect British employers and were formed in context to the British economy at that time by the British. Indian labour laws divide industry into two broad categories, firstly factory whereby all industrial establishments employing 10 or more people and engage in manufacturing activities, are regulated by the Factories Act, 1948.
This Act is enforced by the government through factory inspectors; however, each state can enforce their own rules to prevail in local conditions. By emphasising welfare and the health and safety of workers, the Factories Act 1948 has strengthened the provisions for the workers by providing safety officers, canteens and crèches in large factories. The second category is shops and commercial establishments, who are regulated by the Shops and Commercial Establishments Act (date varies for different states however between 1958-1961.
The Shops and Commercial Establishments Act is also state controlled and therefore each state provide the working hours, time and method of payment and other regulations regarding labour within the industry. The prevalent use of bureaucracy within India, which controls the HRM, is undermined by the lack of implementation of the legislation.
However the low per capita income encourages corruption in government offices where officials stand to gain from accepting bribes. India’s low masculinity culture of Hofstede’s (1980) analysis generates a soft work culture which is associated with a reluctance to make bold decisions and see them through to the end. This further helps to explains why the implementation of legislation within India is weak. Presently, the bulk of the labour laws deliberately exclude informal workers, workers who are employed in small scale unregistered establishments or those in irregular employment relationships, Hensman (2009).
Therefore regulation surrounding classification of employees provides employers with a number of ways in which to evade the employment laws. In theory informal workers are permitted to work, however the lack of legal recognition and lack of status as employees prevent the theory becoming fully recognised in reality Hensman (2009). Thus employers evading the laws gain from not declaring the workers which is supported by, although not intentionally, the government, leaving employees suffering from a lack of job security.
Workers rights in India weakened since the Independence due to the large proportion of informal employees in the labour force. Trade Union organisations developed slowly in India as a result of the caste and gender system, the hierarchy system the country is rooted in. The high level of bureaucracy and hierarchy in India was evident to Hofstede (1980), who classified India as having a high power distance and a dominant masculine dimension.
The high power distance dimension presents the less powerful members of society as accepting of the unequal distribution of power, and the masculine dominance is characterised by the high level of bureaucracy within India. India’s democracy is described as ‘grounded in a caste and gender system which puts workers at the lowest level…and women below men’ Hensman (2009 p.114). Thus resulting that fighting for worker’s equal rights is seen as opposing India’s culture as a whole, which is consciously and traditionally based upon hierarchy amongst the population. This belief changes the population of trade unions in India as it goes against traditional and cultural values. Trade Unions in India although declining in percentage terms, in absolute terms union membership is rising, playing a more co-operative role in industries.
Leading up to the independence of India from Great Britain, the large political movement from the working class around this time was due to the unstable government. The two first Trade Unions, industrial and national, both evolved in the 1920s as a result. The Textile Labour Association was the first industrial Trade Union and the All India Trade Union Congress (AITUC) was the first national Trade Union.
The Trade Union Act of 1926 was modelled on the British Trade Union Act of 1871 during the time when India was part of the British Empire, defining the rights of any registered Unions within India, including the immunity of registered union and their members from legal proceedings arising from trade disputes, Chandrashekar (1969). Nevertheless, trade unions play a significant role in the HR of India and supported by the government, benefitting from pro labour laws enhancing the benefits of which the labour laws may provide as more members join, Budwhar and Debrah (2001).
Education and Training
After the liberalisation of the economy in 1991, India emerged as an important destination for foreign direct investment as a result of the rapid growth in the economy, Holtbrügge et al (2010). It was due to the influx of the foreign firms that forced India’s human resources to reach benchmarks set by advanced western countries. The implications of the liberalisation of the economy are varied; however, the large multinational corporations (MNCs) which located to India after the noninterventionist economy have motivated domestic employers to develop their training methods and upgrade their technology to compete with other countries.
The training offered by employers benefits the company as the level of education that is delivered by universities to its students varies across the country. One of the issues affecting India today is a shortage of fully educated students for employment, ‘only 10 percent of young people are educated in the higher education system’, Tiwari. S (ed). (2005, p.245). Although this may be due to the poor structuring of the universities available in India, the distribution of the population within India and the urbanisation of the population have not enhanced matters. It is likely that India will see and improvement in its tertiary education system as urbanisation increases for the developing countries, thus increasing the need for better education as a reduction in the agricultural sector occurs.
Furthermore, the increase use of part time lecturers and teachers in the education system has affected morale in the organisations; Tiwari. S (ed). (2005), consequently, providing few incentives for the lecturers to perform and deliver the highest quality of training. Students who own degrees, even engineering degrees are still being found to be less than suitable for recruitment by MNCs, Holtbrügge et al (2010).
The use of training is helping to ‘raise the level of Indian employees to the required standards and imbue employees with the philosophy of a given MNC’ Budwhar and Varma (2010, p.347). Thus if Indian firms employ employees from other countries although they may meet the required skill level, they will also need to be trained in negotiation and conflict resolution skills within the India context. Nevertheless, companies will also have to train local staff on the new production methods, equipment and concepts to ensure they are working at the intensity level needed to compete within the market.