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Introduction to Industrial Relations:
Industrial relation has become one of the most delicate and complex problems of modern industrial
society. Industrial progress is impossible without cooperation of labours and harmonious relationships.
Therefore, it is in the interest of all to create and maintain good relations between employees (Labours)
and employers (Management).
Generally, industrial relations can be viewed as all about employee – employer relationship in the work
place, the essence of which is to enhance employee satisfaction, and the furtherance of industrial peace
and organizational growth. Another dimension to industrial relation is its tripartite nature as a relationship
that exists between workers, employers and government. The position of the government is that of a
regulator and protector of the workers’ rights.
The legality of industrial relations derives from government’s recognition of employer and employees as
partners in the production of goods and services. In the same token, there is a range of government
legislation regulating their (the employer and the employees) day-to-day activities. It implies that the
position of government in industrial relations is one of acting as the watch-dog over the relationship
between the employer and employees in the workplace.
The essence of industrial relations revolves around the determination of general conditions of service,
discipline, maintaining a stable work force, maintaining an ideal level of productivity, and providing welfare
facilities for workers, among other issues in the workplace.
Concept of Industrial Relations
The term 'Industrial Relation' comprises of two terms; "Industry" and "Relations". Industry refers to any
productive activities in which an individual (or a group of individuals) is engaged. By "relation" we mean
"the relationship that exist within the industry between the employer and his employees (work person)
Industrial relations have three faces: science building, problem solving, and ethical. In the science
building face, industrial relations are part of the social sciences, and it seeks to understand the
employment relationship and its institutions through high-quality, rigorous or exact research. In this vein,
industrial relations scholarship cross with scholarship in labor economics, industrial sociology, labor and
social history, human resource management, political science, law, and other areas. In the problem
solving face, industrial relations seek to design policies and institutions to help the employment
relationship work well. In the ethical face, industrial relations contain strong normative principles about
workers and the employment relationship, especially the rejection of treating labor as a commodity in
favors of seeing workers as human beings in democratic communities entitled to human rights.
The term industrial relations explains the relationship between employees and stem directly or indirectly
from union-employer relationship. Industrial relations are the relationships between employees and
employers within the organizational settings. The field of industrial relations looks at the relationship
between management and workers, particularly groups of workers represented by a union. Industrial
relations are basically the interactions between employers, employees and the government, and the
institutions and associations through which such interactions are mediated.
The term industrial relations have a broad as well as a narrow outlook. Originally, industrial relations were
broadly defined to include the relationships and interactions between employers and employees. From
this perspective, industrial relations cover all aspects of the employment relationship, including human
resource management, employee relations, and union-management (or labour) relations.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Now its meaning has become more specific and restricted. Collective bargaining, trade unionism, worker
participation in decision making, grievance and conflict settlement and labour-management relations are
the fundamental element of industrial relation. Beside that human resource management is a separate,
largely distinct field that deals with non-union employment relationships and the personnel practices and
policies of employers.
There will be effective industrial relations in an organisation if the following conditions exit:
 Effective communication and mutual understanding between the employer (or management) and
trade unions
 Payment of wages and salaries and the implementation of all other conditions of service, which
are fair and reasonable
 High worker morale and the highest degree of workers identification with the economic objective
of the enterprise the lowest possible level of industrial grievances and trade conflict.
Evolution of Industry Relation
The term "industrial relations" came into common usage in the 1910s, particularly in 1912 upon the
appointment by President William Taft of an investigative committee titled the Commission on Industrial
Relations. The commission's charge was to investigate the causes of widespread, often violent labour
conflict and make recommendations regarding methods to promote greater cooperation and harmony
among employers and employees.
Shortly thereafter, the term gained even greater saliency in the public mind due to the wave of strikes,
labour unrest, and agitation for "industrial democracy" that accompanied the economic and political
disturbances associated with World War I. As a result, by the beginning of the 1920s universities began to
establish industrial relations centers and programs to conduct research and train students in employeremployee relations, while progressive business firms established the first "industrial relations" or
"personnel" departments to formalize and professionalize the management of labour
The field and practice of industrial relations began in the early years of the twentieth century and evolved
in numerous ways in reaction to a host of far-reaching changes in the economic, political, and social
realm/empire. It began with a broad emphasis on the employment relationship and the labor problems
that grow out of this relationship. As a result of the rise of mass unionism between 1935 and 1955, the
field became identified in the academic and practitioner worlds with, first and leading, the study and
practice of collective bargaining and labor-management relations.
Since then the unionized sector of the economy has shrink considerably, while a competitor field of
human resource management has grown and spread—a product of both new ideas and practices and the
opening up of a much-expanded unorganized sector in the labor market. Thus the term "industrial
relations" is increasingly associated with the unionized sector of the labor market. But a minority of
participants continues to view industrial relations as pertaining to the entire world of work and, in
particular, the three solutions to labor problems: personnel/human resource management, trade unionism
and collective bargaining, and government legislation.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Approaches to Industrial relation:

Under unitary approach, IR is grounded in mutual cooperation, individual treatment, teamwork and
shared goals. Workplace conflict is seen as a temporary aberration, resulting from poor management,
from employees who do not mix well with the organisations culture. Unions cooperate with the
management and the managements rights to manage is accepted because there is no "we-they" feeling.
The underline assumption is that everyone benefits when the focus is on common interest and promotion
of harmony. Conflict in the form of strikes is not regarded as necessary but destructive.
Advocates of the unitary approach emphasizes on a reactive IR strategy. They seek that negotiation with
employees. Participation of government, tribunals, and unions is not sought or are seen as been
necessary harmonious employee relations.
The unitary approach is being criticized as a tool for seducing employees away from unionism and
socialism. It is also criticized as manipulative and exploitative.
From employee point of view, unitary approach means that:

Working practices should be flexible. Individuals should be business process improvement
oriented, multi-skilled and ready to tackle with efficiency whatever tasks are required.

If a union is recognized, its role is that of a further means of communication between groups of
staff and the company.

The emphasis is on good relationships and sound terms and conditions of employment.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Employee participation in workplace decisions is enabled. This helps in empowering individuals in
their roles and emphasizes team work, innovation, creativity, discretion in problem-solving, quality
and improvement groups etc.

Employees should feel that the skills and expertise of managers supports their endeavors.

From employer point of view, unitary approach means that:

Staffing policies should try to unify effort, inspire and motivate employees.

The organization's wider objectives should be properly communicated and discussed with staff.

Reward systems should be so designed as to foster to secure loyalty and commitment.

Line managers should take ownership of their team/staffing responsibilities.

Staff-management conflicts - from the perspective of the unitary framework - are seen as arising
from lack of information, inadequate presentation of management's policies.

The personal objectives of every individual employed in the business should be discussed with
them and integrated with the organization’s needs.

The pluralistic approach totally departs from the unitary approach. The pluralistic approach perceives:
1. Organisations as coalition of competing interest, where the management’s role is to mediate amongst
the different interest groups.
2. Trade unions as legitimate representatives of employee interests.
3. Stability in IR as the product of concessions and compromises between management and unions.
Legitimacy of the management authority is not automatically accepted. Conflict between the
management and workers is understood as inevitable and in fact, is viewed as conductive for innovation
and growth. Employees join unions to protect their interest and influence decision making by the
management. Unions thus balance the power between the management and employees. In the
pluralistic approach, therefore, a strong union is not only desirable but necessary. Similarly, society's
interests are protected by state intervention through legislation and industrial tribunals which provide
orderly process for regulation and resolutions of conflict.
The theories on pluralism were evolved in the mid-sixties and early seventies when England witnessed a
resurgence of industrial conflicts. However, the recent theories of pluralism emanate from British scholars,
and in particular from Flanders and Fox. According to pluralists, industrial conflict is inevitable and it
needs to contain within the social mechanism of collective bargaining, conciliation and arbitration.

The firm should have industrial relations and personnel specialists who advise managers and
provide specialist services in respect of staffing and matters relating to union consultation and

Independent external arbitrators should be used to assist in the resolution of conflict.

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Union recognition should be encouraged and union representatives given scope to carry out their
representative duties

They should anticipate and resolve this by securing agreed procedures for settling conflict.

Marxist like the pluralistic regards conflict between employers and employees as inevitable. However,
pluralists believe that the conflict is inevitable in all organisations. Marxists see it as a product of the
capitalist society.
Adversarial relations in the workplace are simply one aspect of class conflict. The Marxist approach
focuses on the type of society in which an organisation functions. Conflict arises not just because of
competing interest within the organisation, but because of the division within society between those who
own or manage the means of production and those who have only their labour to offer. Industrial conflict
is thus seen as being synonymous with political and social unrest.
Trade unions are seen both as labour reaction to exploitation by capital, as well as a weapon to bring
about a revolutionary social change. Concern with wage related conflicts are secondary. Trade unions
focus on improving the position of workers within the capitalist system and not to overthrow. For the
Marxist, all strikes are political. Besides, Marxists regards state intervention via legislation and the
creation of industrial tribunals as supporting managements’ interest rather than insuring a balance
between the competing groups.
This view of industrial relations is a by-product of a theory of capitalist society and social change. Marx
argued that;

Weakness and contradiction inherent in the capitalist system would result in revolution and the
ascendancy or superiority of socialism over capitalism.

Capitalism would foster monopolies.

Wages (cost to the capitalist) would be minimized to a subsistence level.

Capitalists and workers would compete in controversy to win ground and establish their constant
win lose struggles would be evident.

The System Approach
The system approach was developed by J. P. Dunlop of Harvard University in 1958. According
to this approach, individuals are part of an ongoing but independent social system. The behavior,
actions and role of the individuals are shaped by the cultures of the society. The three elements
of the system approach are input, process and output. Society provides the cue (signal) to the
individuals about how one should act in a situation. The institutions, the value system and other
characteristics of the society influence the process and determine the outcome or response of
the individuals. The basis of this theory is that group cohesiveness is provided by the common
ideology shaped by the societal factors.
According to Dunlop, the industrial relations system comprises certain actors, certain contexts,

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

and an ideology, which binds them together and a body of rules created to govern the actors at
the workplace and work community. The actors in the system are the managers, the workers
and their representatives, and the government agencies. The rules in the system are classified
into two categories:
Substantive rules and Procedural rules:
The substantive rules determine the conditions under which people are employed. Such rules are
normally derived from the implied terms and conditions of employment, legislations, agreements,
practices and managerial policies and directives.
The procedural rules govern how substantive rules are to be made and understood. Ultimately, the
introduction of new rules and regulations and revisions of the existing rules for improving the industrial
relations are the major outputs of the industrial relations system. These may be substantive rules as well
as procedural rules." The context in the system approach refers to the environment of the system which is
normally determined by the technological nature of the organization, the financial and other constraints
that restrict the actors of industrial relations, and the nature of power sharing in the macro environment,
namely, the society.

Unit II
Concept of Trade Unions:
Trade unions are associations of workers or organization formed together by labour, workers or
employees to achieve their demands for better conditions at their work atmosphere. In the United States,
trade unions go by the name labor unions. A labor union, or trade union, is an organization of workers
who have joined together to achieve goals in areas such as wages and working conditions. The union
negotiates contracts and conditions with employers, keeping employee satisfaction high and protecting
workers from unsafe or unfair working conditions.
These unions exist to deal with problems faced by laborers, these problems may be of any nature such as
those concerning the pay, unfair work rules, timings and so on. All the workers working under one
particular employer is represented by the worker's union. All the communication that happens in between
the employer and the workforce generally takes place through the union. All of the above trade unions are
also liable and responsible for maintaining discipline and among the workers, core purpose is to see that
proper relations or being maintained in between management and workers and trade union may take
disciplinary action against the workers who ever misbehaves, disturbed peace and harmony in the
workplace and maintenance indiscipline.
Trade unions or labour unions are governed by the different law in different countries; they should follow
the procedure and mode of registration for formation of the trade union according to the law of the
country. Trade union formed in accordance with the law of their country shall have the privileges given by
the law of trade union. With privileges or rights of the trade union, it should perform certain duties with
respect to workers.
The Primary purpose of a trade union is collective bargaining. Every registered trade union according to
the law of trade union shall have certain functions for achievement of certain objectives which are
mentioned in details further. The primary object you of the trade union is to protect the interests of the
workers and exploitation against him by Management or employer. In addition to this, it is the
responsibility and duty of every trade union to support management for its functioning and contribute to
organisation or company by way of encouraging workers in a positive way for the improvement of overall
efficiency of organisation.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Definition of trade union:
According to Webbs, a trade union is a continuous association of wage earners for the purpose of
maintaining and improving the conditions of their working lives. The term is defined as “any combination,
whether temporary or permanent, formed primarily for the purpose of regulating the relations between
workers and employers, or for imposing restrictive conditions on the condition of any trade or business
and includes any federation of two or more unions”. Let us examine the definition in parts.

Trade union is an association either of employees or employers or of independent workers.

It is a relatively permanent formation of workers. It is not a temporary or casual combination of

It is formed for securing certain economic (like better wages, better working and living conditions),
social (such as educational, recreational, medical, respect for individual) benefits to members.
Collective strength offers a sort of insurance cover to members to fight against irrational, arbitrary
and illegal actions of employers. Members can share their feelings, exchange notes and fight the
employer quite effectively whenever he goes off the track.

Objectives of trade union:
a. Wages and Salaries: The subject which drew the major attention of the trade unions is wages and
salaries. Of course, this item may be related to policy matters. However, differences may arise in the
process of their implementation. In the case of unorganized sector the trade union plays a crucial role in
bargaining the pay scales.
b. Working Conditions: Trade unions with a view to safeguard the health of workers’ demands the
management to provide all the basic facilities such as, lighting and ventilation, sanitation, rest rooms,
safety equipment while discharging hazardous duties, drinking, refreshment, minimum working hours,
leave and rest, holidays with pay, job satisfaction, social security benefits and other welfare measures.
c. Discipline: Trade unions not only conduct negotiations in respect of the items with which their working
conditions may be improved but also protect the workers from the clutches of management whenever
workers become the victims of management’s unilateral acts and disciplinary policies. This victimization
may take the form of penal transfers, suspensions, dismissals, etc. In such a situation the separated
worker who is left in a helpless condition may approach the trade union. Ultimately the problem may be
brought to the notice of management by the trade union and it explains about the injustice met out to an
individual worker and fights the management for justice. Thus, the victimized worker may be protected by
the trade union.
d. Personnel Policies: Trade unions may fight against improper implementation of personnel policies in
respect of recruitment, selection, promotions, transfers, training, etc.
e. Welfare: As stated earlier, trade unions are meant for the welfare of workers. Trade union works as a
guide, consulting authority and cooperates in overcoming the personnel problems of workers. It may bring
to the notice of management, through collective bargaining meetings, the difficulties of workers in respect
of sanitation, hospitals, quarters, schools and colleges for their children’s cultural and social problems.
f. Employee-employer relation: Harmonious relations between the employees and employer are a sine
quo non for industrial peace. A trade union always strives for achieving this objective. However, the
bureaucratic attitude and unilateral thinking of management may lead to conflicts in the organisation

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

which ultimately disrupt the relations between the workers and management. Trade union, being the
representative of all the workers, may carry out continuous negotiations with the management with a view
to promote industrial peace.
g. Negotiating machinery: Negotiations include the proposals made by one party and the counter
proposals of the other party. This process continues until the parties reach an agreement. Thus,
negotiations are based on ‘give and take’ principle. Trade union being a party for negotiations protects the
interests of workers through collective bargaining. Thus, the trade union works as the negotiating
h. Safeguarding organizational health and the interest of the industry: Organizational health can be
diagnosed by methods evolved for grievance redressed and techniques adopted to reduce the rate of
absenteeism and labour turnover and to improve the employee relations. Trade unions by their effective
working may achieve employee satisfaction. Thus, trade unions help in reducing the rate of absenteeism,
labour turnover and developing systematic grievance settlement procedures leading to harmonious
industrial relations. Trade unions can thus contribute to the improvements in level of production and
productivity, discipline and improve quality of work life.

Function of trade union:
Broadly speaking, trade unions perform two types of functions that is Militant and Fraternal Functions.
Militant Function
One set of activities performed by trade unions leads to the betterment of the position of their members in
relation to their employment. The aim of such activities is to ensure adequate wages secure better
conditions of work and employment get better treatment from employers, etc. When the unions fail to
accomplish these aims by the method of collective bargaining and negotiations, they adopt an approach
and put up a fight with the management in the form of so-slow, strike, boycott,, etc. Hence, these
functions of the trade unions are known as militant or fighting functions.
Fraternal Functions
Another set of activities performed by trade unions aims at rendering help to its members in times of
need, and improving their efficiency. Trade unions try to foster a spirit of cooperation and promote friendly
relations and diffuse education and culture among their members. They also arrange for legal assistance
to its members, if necessary. Besides, these, they undertake many welfare measures for their members,
e.g., school for the education of children, library, reading-rooms, in-door and out-door games, and other
recreational facilities. Some trade unions even undertake publication of some magazine or journal. These
activities, which may be called fraternal functions, depend on the availability of funds, which the unions
raise by subscription from members and donations from outsiders, and also on their competent and
enlightened leadership.
Other functions are as follows:
 To secure for workers better wages
 To safeguard security of tenure and improve conditions of service
 To increase opportunities for promotion and training
 To improve working and living condition
 To provide for educational cultural and recreational facilities

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

 To promote identity of interests of the workers
 To offer improved level of production and productivity discipline and high standard of quality
 To promote individual and collective welfare

Trade Union in Nepal:
The history of trade union movement in Nepal is of recent origin. There were no trade unions in Nepal
before 1945 as the country was under the family rule of Ranas. Nepal had followed closed-door economy
having almost no relations with the outside world. In 1946 All Nepal Trade Union Congress (ANTUC) was
formed. In 1947, Biratnagar Workers Union (BWU) was set up. In March 1947 the first workers’ movement
took place at Biratnagar for the establishment of democracy.
From the Democracy innovation to Panchayat System (1951 to 1961)
In 1951 ANTUC and BWU became united and formed the first trade union federation in Nepal. The World
Federation of Trade Unions (WFTU) in 1953 granted membership to ANTUC. After the democratic change
of 1950, the freedom of association allowed the opportunities to many voluntary organisations in the
country and the workers, too, felt the need to be united under one umbrella to fight against the
exploitation of the management and the government. The unions existed at that time were:
Biratnagar Workers’ Union, Cotton Mills Workers’ Union, All Nepal Trade Union Congress, Independent
Workers’ Union, Biratnagar Mills Workers’ Association, All Nepal United Workers’ Union, All Nepal Trade
Union Organisation and Nepal Labour Union. But these unions were merely instruments of the political
parties without the capacity of free collective bargaining. This is clear from the fact that Girija Prasad
Koirala, now, the president of Nepali Congress Party and late Mana Mohan Adhikari, former president of
the United Marxist-Leninist Party, were active both in trade unions and their respective parties. After the
success of democratic struggle against 104 years of Rana family rule in 1950 freedom of expression and
organisation became part of political life. During the Panchayat System 1962 onwards.
The Nepalese political history took a new turn in 1960 when the King staged a putsch, banned the
political parties and trade unions and established a party less Panchayat system in 1962. This system
limited the freedom of expression and association but envisioned creating exploitation-free society
through the harmonization and co-ordination of the interests of different classes. For this, six different
class organisations including Nepal Labour organisation were created. As this organisation was controlled
by the system and also that the central body was heavily politicized, the objective of ensuring the labour
welfare remained unfulfilled. Still, some of the noticeable achievements were also made during this period
in the field of labour administration, such as, establishment of a separate labour ministry, department and
some labour offices and the admission of Nepal into the International Labour Organisation (ILO) as a
After restoring the Multiparty Democracy, 1990
Multi-party democracy was restored in the spring of 1990 in the country after the success of people's
movement, in which many professional organisations, including workers had actively participated. The
Constitution of the Kingdom of Nepal 1990 guaranteed multi-party parliamentary system, human rights,
constitutional monarchy and the sovereignty of people. It also granted the freedom of expression and
association, which inspired the formation of trade unions. At an early stage, there was mushrooming
growth of trade unions. They were heavily divided in the line of political ideologies. Each party has its own
unions, if not general federation. With the passage of time, most of these unions could not exist and some
of the unions were merged.
Three major federations existing in the country are
Nepal Trade Union Congress (NTUC),

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Democratic Confederation of Nepalese Trade Unions (DECONT) and
General Federation of Nepalese Trade Unions (GEFONT)
Nepal Trade Union Congress (NTUC) was established in 1947 with the objectives of promoting workers
rights. The labour movement in Nepal started on March 4, 1947 in Biratnagar against the hereditary Rana
rule for the establishment of democracy and advancement of workers’ rights. The ideology of NTUC was
based on democracy, nationalism and socialism. After the establishment of democracy in the country in
1950, NTUC became active in the promotion of workers rights to organise, express and struggle for their
collective welfare. In 1960 with the dissolution of multi-party democracy in Nepal, trade unions were
banned along with political parties for almost 30 years of Panchayat system. With the overthrow of
Panchayat polity in 1990 following popular movement for the restoration of democracy, freedom of
expression and organization became a part of national life. Nepal Trade Union Congress also revived its
organization in 1990 and now works closely to ruling Nepali Congress party in general and current prime
minister Girija Prasad Koirala in particular.
Democratic Confederation of Nepalese Trade Unions (DECONT) is established on May 1, 1997 after it
broke away from NTUC. It is not affiliated to Nepali Congress party but works closely with former Prime
ministers Krishna Prasad Bhattarai- Sher Bahadur Deuba group in particular. This division extends to the
grassroots level on factional lines of the political party.
General Federation of Nepalese Trade Unions (GEFONT) was established in July 20, 1989 with four
founder federations: Nepal Independent Workers Union (NIWU), Independent Transport Workers’
Association of Nepal (ITWAN),Nepal Independent Workers’ Union (NIHWU) and Trekking Workers’
Association of Nepal (TWAN). It is affiliated to Communist Party of Nepal Unified Marxist-Leninist party
(CPN-UML). A small faction splinted from GEFONT formed Independent Confederation of Nepalese
Trade Unions (ICONT) on March 14, 1998. ICONT is affiliated to CPN Marxist-Leninist party (CPN-ML).
Trade Union Federations, Their Affiliates and Areas Covered by Them
Nepal Trade Union Congress (NTUC) central committee consists of 21 persons--five executives and
sixteen members--all elected by workers’ Congress in every four years. Chairpersons of the national
affiliate unions are additional members. The meeting of National Council takes place every year. National
affiliate union also elects its executive in every four years. The National Committee of NTUC comprises
nine sub-committees and five departments. Out of 75 districts of Nepal NTUC have district committees in
57 districts.
NTUC Affiliated Unions
Nepal Factory Labor Congress
Nepal Tourism and Hotel Workers' Union
Nepal Press Union
Nepal Tea Garden Worker's Union
Nepal Garment Workers' Union
Nepal Carpet Workers' Union
Financial Employees' Union of Nepal
Nepal Inter-Corporation Employees Union
Nepal Teachers' Association
Nepal Labor Union (Informal Sector Union)
Nepal Transport Workers' Union

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Nepal Health Professional Association
Nepal National Barbers' Union
Nepal Leather and Leather Show Workers' Union
Nepal Small Hotel and Restaurant Worker's Union
Nepal Wood Workers' Union
Nepal Electric Workers' Union
Nepal Rickshaw Drivers' Union
Nepal Building and Construction Workers' Union
Nepal Shop Workers'
General Federation of Nepalese Trade Unions(GEFONT)
The central committee of GEFONT consists of 37 persons. The National Congress proportionally elects
delegates from the National Affiliates and sends to National Council. National Council consists of
proportionally elected members from each of the affiliates, full time activists, advisors and experts but not
more than 25 percent of the total elected members. National Committee is composed of chairman (Mr.
Mukund Neupane), Secretary-General (Mr. Bishnu Rimal), and Treasurer (Mr. Binod Shrestha) 3 regional
co-ordinators, 6 Chiefs of Central Departments, 10 Chairpersons of Zonal Committees, and 15 Elected
Members of National Affiliates. Election takes place every four years.
GEFONT Affiliated Trade Unions
NIWU-Nepal Independent Workers Union
TGWUN-Independent Textile & Garment Workers' Union of Nepal
ITWAN-Independent Transport Workers' Association of Nepal
NICWU-Nepal Independent Carpet Workers' Union
NIHWU-Nepal Independent Hotel Workers' Union
UNITRAV- Union of Trekking, Travel & Rafting Workers - Nepal
ITPWUN-Independent Tea Plantation Workers' Union of Nepal
IPWUN - Independent Press Workers' Union of Nepal
NATU- Nepal Auto - Mechanics Trade Union
CUPPEC - Central Union of Painters, Plumbers, Electro & construction
Workers- Nepal
IGCUN- Independent Garbage Cleaners' Union of Nepal
NIFBWU - Nepal Independent Food & Beverage Workers' Union
NICIWU - Nepal Independent Chemical & Iron Workers' Union
NRPU- Nepal Rikshaw-Pullers' Union
FAWN - Federation of Agricultural Workers, Nepal
(CWWD) Central Women Workers' Department
Democratic Confederation of Nepalese Trade Unions (DECONT)
Central Committee comprises 29 elected members and two nominated by the President in every four
years. There are five regional vice-presidents from five Development Regions, which includes one woman
as additional one. All the presidents of National Affiliates are members to Central Committee. Then there
are district and unit committees at enterprise levels.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

DECONT Affiliated Trade Unions
Nepal Carpet Workers' Union
Construction and Allied Workers' Union of Nepal (CAWUN)
Agricultural Workers' Union of Nepal
Nepal Transport Workers' Sabha
Nepal Hotel Workers' Union
Garment Workers' Union of Nepal
Nepal Custom and Airport Workers' Union
Nepal Film Workers' Union
Barbers' Union of Nepal
Nepal Commercial Workers' Union
Nepal Rickshaw and Cart Workers' Union
Nepal Small Hotel and Restaurant Workers' Union
Nepal Printing Press Workers' Union
Nepal Factory Workers' Union
Nepal Automobile Workers' Union
Democratic Employees' Union of Banking and Financial Institutes of Nepal
Democratic Health Workers' Union of Nepal
Democratic Press Union-Nepal
Besides these three confederations, there are other trade unions affiliated to smaller political parties but
not registered with the Department of Labor. These Unions are:
1. All Nepal Trade Union Congress (ANTUC) affiliated to CPN-Unity Centre.
2. Nepal Trade Union Federation (NTUF) affiliated to CPN-Democratic.
3. All Nepal Trade Union Congress (ANTUC) affiliated to CPN-Mashal of Mohan Bikram Singh.
4. Nepal Trade Union Centre (NTUC) affiliated to CPN-Marxist.
5. All Nepal Democratic Free Trade Union (ANDFTU) affiliated to Rastriya Prajatantra Party (RPP).
6. Nepal Revolutionary Workers’ Union (NRWU) affiliated to Nepal Workers and Peasants party of
Comrade Rohit.

Unit III
Labour ACT
Although the labour laws in Nepal have been formulated and enacted recently, our socio-economic
backwardness is reflected in it in the sense that various essential & progressive provisions are still not

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included therein. Effort has been cantered to formulate a labour law to include workers of all sectors, but,
in reality, it is incomplete for every sector. The Labour Act 1992 is formulated keeping in view only the
formal sector workers and hence the huge workforce of the country in unorganized informal sector has
been excluded & neglected. Moreover, the weak labour administration & government mechanism has
been found ineffective in the implementation and enforcement of a number of provisions of the law. Even
the minimum wages determined by the tripartite Minimum Wage Fixation Committee have not been
enforced widely & effectively. Clear & complete provisions are still lacking in connection with methods &
mechanism for the enforcement of decisions and of collective agreements reached under the law. In the
absence of systematic, concrete and dynamic labour policy, labour legislation in Nepal has not been able
to address the problems and issues in this regard. Therefore urgent need is to formulate, amend and
extend the coverage of the labour laws in a simple, adequate and comprehensive manner.
Because of the increasing speed of liberalization in our country, threat to the interests of the working
masses has increased manifold. The job-security & employment-security are heavily endangered. Formal
sector, too, is being in formalized through the subcontracting of work and subcontracting of labour. In the
name of gaining competitiveness, cost minimization and comparative advantage in international trade, the
responsibility of sacrifice and the entire burden is hastily being shifted to the workers. Unfortunately, the
government is facilitating the employers and the market instead of shouldering its social responsibility for
the working masses. This tendency is mainly visualized in carpet and garment industries, the major export
sector in Nepal. But legal provisions do not protect workers in this condition.
With the blind and haphazard privatization of Public Enterprises, both the production and employment
have been adversely affected. Though there is no mass retrenchment, slow group retrenchments have
been observed. From Privatized public enterprises, 19.8 per cent of the workers have already lost their
job and many others are waiting for the same. The extent of permanent workers is gradually going down
and the number in contract & casualization is sharply increasing. The vast majority of workers is in
informal sector which is unprotected and neglected by the labour laws. Only 10 per cent of the work force
under the wage employment is in formal while 90 per cent is in unorganized sectors of the economy. With
offensive policies of globalization, this low proportion of the formal sector is endangered to further
deterioration pushing new entrants of the labour market to informal sector. The conditions in informal
sector are miserable and danger is of further & additional misery. The long working hours, low payment,
the widespread use of child labour, existence of bonded labour in the form of Kamaiya system, gender
discrimination in wages & terms of employment, no minimum wages in unorganized sectors and nonexistence of any social security measures are the basic characteristics existing at present in informal
Therefore, the need is to protect formal sector workers from being in formalized and to minimize the
adversities of the informal sector workers to the possible extent. This requires strong national resistance
movement against the adversities of globalization in favour of the entire working population of the country.
The building up of the movement is not possible without proper mobilization of informal sector workers,
mainly the vast majority of the rural and agricultural workers. Thus, unionization of informal sector with
more emphasis to rural and agricultural wage earners simultaneously with the policy intervention by trade
union confederation for labour law revision may give favourable result in this regard.
Social security: existing scenario
In countries like Nepal, where mass poverty has become a common phenomenon, active state
intervention is necessary. Without strong, well-determined and committed state intervention, returns of the

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

economic growth & increased productivity never go to the weaker sections of the society. State protection
of workers both in formal & informal sectors through labour law, strict enforcement and other socio
economic measures is inevitable in Nepal. The most important is the social security system in this
connection. Through social security measures and wide network & coverage, government can play vital
role in this regard. But the scenario in this respect in Nepal is quite frustrating and while over viewing the
situation, we may encounter a gloomy picture.
In Nepal, wage structure is very weak and limited. Incentive earnings are very few and limited to a few
enterprises. Fringe benefits like residence facility or allowance, Medicare, educational facilities for the
children, transportation, ration, child care centres, entertainment, life insurance, credit facilities etc. are
limited to a few establishments and are far from the access of the workers of most of the industries and
services. In short, additional to the basic wage/salary are negligible. Wage indexation is also a dream like
element in our realities. Therefore, social security system has become more relevant and urgent in our
case. A combination of social welfare and social security covering the whole working population can
combat the problems created by acute poverty in our country. While reviewing the statistics from 1977 to
1996, we find that poverty is increasing. It was 36.2 per cent in 1977, 42.5 in 1984-85, 40 in 1990 and 45
per cent in 1996. Comparing the situation with our south Asian neighbours, the percentage of poverty is in
a declining trend in Bangladesh, India and Pakistan, but not in our case.

Labour Legislation in Nepal:

At least 7 members should be present for an application
It should in a prescribed form ,fees and should be registered under the Registrar of Trade Unions
Should be accompanied by a copy of the Rules of TU
Certificate of Registration is issued as soon as TU has been duly registered under the Act

Minimum wage Legislation:
’Remuneration’ means the remuneration or wage to be received in cash or kind from the Enterprise by the
worker or employee for the works performed in the Enterprise and this expression also includes any
amount to be received in cash or kind for the works done under piece-rate or contract.
Workers' minimum monthly salary fixed at Rs. 8,000
The committee formed to fix the minimum wage has increased the minimum monthly salary and daily
wages of the workers to Rs. 8,000 per month and Rs. 318 respectively.
The tripartite committee including three members each from the trade unions, employers and the
government on Monday decided to hike the monthly salary of the workers to Rs. 8,000 including a basic
salary of Rs. 5,100 per month and dearness allowance of Rs. 2,900.
Previously, the minimum monthly salary and daily wages of the workers was fixed at Rs. 6,200 and Rs.
231 respectively. Now the workers' monthly minimum salary has increased by 29 percent and the daily
wages by 37.66 percent.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Unit IV
A strike is a very powerful weapon used by trade unions and other labor associations to get their
demands accepted. It generally involves quitting of work by a group of workers for the purpose of bringing
the pressure on their employer so that their demands get accepted. When workers collectively cease to
work in a particular industry, they are said to be on strike. A cessation of work by a body of persons
employed in an industry acting in combination; or a concerted refusal of any number of persons who are
or have been so employed to continue to work or to accept employment; or a refusal under a common
understanding of any number of such persons to continue to work or to accept employment ‖. This
definition throws light on a few aspects of a strike. Firstly, a strike is a referred to as stoppage of work by a
group of workers employed in a particular industry. Secondly, it also includes the refusal of a number of
employees to continue work under their employer.
In a strike, a group of workers agree to stop working to protest against something they think is unfair
where they work. Labors withhold their services in order to pressurize their employment or government to
meet their demands. Demands made by strikers can range from asking for higher wages or better
benefits to seeking changes in the workplace environment. Strikes sometimes occur so that employers
listen more carefully to the workers and address their problems
Causes of strikes:
Strikes can occur because of the following reasons:
 Dissatisfaction with company policy
 Salary and incentive problems
 Increment not up to the mark
 Wrongful discharge or dismissal of workmen
 Withdrawal of any concession or privilege
 Einstein College of Engineering
 Hours of work and rest intervals
 Leaves with wages and holidays
 Bonus, profit sharing, Provident fund and gratuity
 Retrenchment of workmen and closure of establishment
 Dispute connected with minimum wages
1. Economic Strike: Under this type of strike, labors stop their work to enforce their economic demands
such as wages and bonus. In these kinds of strikes, workers ask for increase in wages, allowances like
traveling allowance, house rent allowance, dearness allowance, bonus and other facilities such as
increase in privilege leave and casual leave.
2. Sympathetic Strike: When workers of one unit or industry go on strike in sympathy with workers of
another unit or industry who are already on strike, it is called a sympathetic strike. The members of other
unions involve themselves in a strike to support or express their sympathy with the members of unions
who are on strike in other undertakings. The workers of sugar industry may go on strike in sympathy with
their fellow workers of the textile industry who may already be on strike.
3. General Strike: It means a strike by members of all or most of the unions in a region or an industry. It
may be a strike of all the workers in a particular region of industry to force demands common to all the
workers. These strikes are usually intended to create political pressure on the ruling government, rather
than on any one employer. It may also be an extension of the sympathetic strike to express generalized
protest by the workers.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

4. Sit down Strike: In this case, workers do not absent themselves from their place of work when they are
on strike. They keep control over production facilities. But do not work. Such a strike is also known as
'pen down' or 'tool down' strike. Workers show up to their place of employment, but they refuse to work.
They also refuse to leave, which makes it very difficult for employer to defy the union and take the
workers' places.

Industrial Conflict:
An industrial conflict is a clash or difference in opinion between the management and workers of a
corporation or industry as a whole. A trade union, which acts as the representative of workers, plays an
important part in initiating as well as resolving an industrial conflict. Certain factors that lead to industrial
conflict are wages, working conditions and working hours. Both management and workers use various
tools and techniques to pressurize each other. For instance, while the management may opt for lockouts,
workers resort to strikes and gheraos. Similarly, various methods are adopted to ease the tension in the
employee-employer relationship; important among them.
It is three party relationships. These parties participate in reaching a consensus or peace pertaining to the
matters of industrial conflict. The three participants are the trade union, employer and the government,
which conduct meetings to review all aspects of a situation, advice one another and try reaching a
The government plays the most important part in this process; it initiates in bringing the management and
representatives of workers on the same platform. The Annual Labor Conference is the chief instrument for
it. It initiated proposals like worker participation in management, worker education and minimum wages
Causes of Industrial Conflict
The causes of industrial conflict can be broadly classified into two categories: economic and noneconomic causes. The economic causes will include issues relating to compensation like wages, bonus,
allowances, and conditions for work, working hours, leave and holidays without pay, unjust layoffs and
retrenchments. The non-economic factors will include victimization of workers, ill treatment by staff
members, sympathetic strikes, political factors, indiscipline etc.
Economic causes:
The most common causes of industrial conflict are economic causes. These are follows:
Demand for higher Wages: Raise in the cost of living forces the workers to demand more wages to meet
the rising cost of living index and to increase their standards of living. This brings them into conflict with
their employers who are never willing to pay more wages to workers.
Demand for Allowances and Bonus: Increase in cost of living was the main cause of the demand of
certain allowance such as; dearness, house, medical, night shift, transportation allowance etc.; by the
workers to equate their wages with the rise of prices. Bonus also plays an important role as a cause of
industrial conflict. Both the amount and the method of bonus payment have led to a number of conflicts.
High Industrial Profits: In the changing world, concept of labour has changed considerably. At the
present, employers consider themselves as a partner of the industry and demand their share in the
Over Time Payment: The employees demand over-time payment as prescribed in the factory act. But
the employer either does not make any payment or makes under-payment. This causes frustration among
employees and they resort to agitations.
Non- Economic Causes:

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Working Conditions and Working Hours: The working conditions in Nepal industries are not hygienic.
There is not ample provision of water, heating, lighting, safety etc. On the other hand, working hours are
also greater. The demand of palatable working conditions and shorter hours of work led to labour conflict
Modernization and Automation of Plant and Machinery: The attempt at modernization and
introduction of automatic machinery to replace labour has been the major cause of conflict.Workers goes
on strike, off and on, to resist such rationalization.
Demand for proper leave Rules: The employers want that leave rules and working hours should as laid
down in factory act. No worker should be forced to work more than 48 hours or more in a week. However,
generally employers ignore these rules which results in industrial conflict.
Punishment to Workers: Sometimes, the employer adopts dictational policy and victimises the
employers by suspending or dismissing them from services. In order to get the victimization redressed the
employees resort to agitation approach. This disturbs the industrial peace.
Mass retrenchment & undue promotions: One major cause of industrial conflict is the mass
retrenchment and undue promotions of the employees. The employees start agitation to show their
resentment against the callous or heartless attitude of the management.
Insecurity of Service: In Nepal, the employment opportunities are very fixed. The employees want
security of service. If the employer does not meet with their demand they adopt agitational approach.
Wrong policy or decision: Sometimes, the policy or decision taken by the management is determined to
the interests of employees. This causes frustration among the employees and they went to agitational
approach in bid to put pressure on the management to withdraw the wrong decision.
Bad Behavior: The pre-requisite of industrial peace is the cordial relations between the employer and
employees. If the behavior of the management is bad towards the employees, good will disappears and
conflict arises.
None addressed of grievances: The employees place their grievances before the management time
and again. If their genuine grievances are not removed or properly attended, it gives rise to frustration and
ultimately a conflict.
Personnel Causes: Sometime industrial conflict arise because of personnel problems like dismissal,
retrenchment/reduction of expenditure, layoff, transfer, and promotion etc.
Political Causes: Various political parties control trade unions in Nepal. In many cases, their leadership
vests in hands of persons who are more interested in achieving their political interests rather than the
interests of the workers.
Indiscipline: Industrial conflict also takes place because of indiscipline and violation on part of the
workforce. The managements to curb indiscipline and violence resort to lockouts
Non-reorganization of trade unions: The employers usually do not like the interference by trade unions.
They do not recognize them. This brings the workers into conflict with their employers.
Weakness of Trade Unions: Weaknesses of trade unions encourages the management to deny certain
basic needs of the workers such as medical, education and housing facilities etc. This led to resentment
on the part of workers who resorted to direct action.
Miscellaneous causes: Behavior of supervisors, Lack of proper communication between management
and workers, rumors or gossip spread out by trade union, Inter-trade union rivalry or competition etc.; are
the other causes that cause conflict between management and employers.

Prevention and Resolution of industrial conflict:
Resolution (Settlement) of industrial conflict:
MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

1. Collective Bargaining:
“Collective Bargaining” is the process of negotiating terms of employment and other conditions of work
between the representatives of management and organised labour. When it is free of intimidation and
coercion and is conducted in good faith, collective bargaining culminates in a workable contract i.e.,
labour contract.
A labour contract is a collective agreement between the representatives of labour and management for
the sale of labour services at designated wage rates, hours of work, and other terms of employment and
conditions of work for a stated period of time. The contract usually calls for joint enforcement and
administration of the agreement. Responsible labour leaders and employers are increasingly settling their
differences around the conference table rather than through industrial warfare. The process of bargaining
the settlement of conflict is often facilitated through outside assistance in the form of conciliation,
mediation, or arbitration.
From the point of view of the employer, an industrial conflict resulting in stoppage of work means a
stoppage of production. This results in increase in the average cost of production since fixed expenses
continue to be incurred. It also leads to a fall in sales and the rate of turnover, leading to a fall in profits.
The employer may also be liable to compensate his customers with whom he may have contracted for
regular supply. Apart from the immediate economic effects, loss of prestige and credit, alienation of the
labor force, and other non-economic, psychological and social consequences may also arise. Loss due to
destruction of property, personal injury and physical intimidation or inconvenience also arises

2. Mediation:
Mediation is an attempt to settle conflict with the help of an outsider who attempts to stimulate labour and
management to reach some type of agreement. The mediator, unlike an arbitrator, cannot decide the
issue. He listens, suggests, communicates and persuades. He does not give any award.
3. Conciliation:
Conciliation refers to the process by which representatives of employees and employers are brought
together before a third party with a view to discuss, reconcile their differences and arrive at an agreement
through mutual consent. The third party acts as a facilitator in this process. Conciliation is a type of state
intervention in settling the Industrial Conflict. The Industrial Conflict Act empowers the Central & State
governments to appoint conciliation officers and a Board of Conciliation as and when the situation
Conciliation Officer: The appropriate government may, by notification in the official gazette, appoint such
number of persons as it thinks fit to be the conciliation officer. The duties of a conciliation officer are:
To hold conciliation proceedings with a view to arrive at amicable settlement between the
parties concerned.
To investigate the conflict in order to bring about the settlement between the parties
To send a report and memorandum of settlement to the appropriate government.
To send a report to the government stating forth the steps taken by him in case no
settlement has been reached at.
4. Arbitration: A process in which a neutral third party listens to the disputing parties, gathers information
about the conflict, and then takes a decision which is binding on both the parties. The conciliator simply

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

assists the parties to come to a settlement, whereas the arbitrator listens to both the parties and then
gives his judgement.
Prevention of Industrial conflict:
The consequences of an Industrial conflict will be harmful to the owners of industries, workers, economy
and the nation as a whole, which results in loss of productivity, profits, market share and even closure of
the plant. Hence, Industrial conflict needs to be averted by all means.
Prevention of Industrial conflict is a pro-active approach in which an organisation undertakes various
actions through which the occurrence of Industrial conflict is prevented. Like the old saying goes,
“prevention is better than cures”.

1. Model Standing Orders: Standing orders define and regulate terms and conditions of employment
and bring about uniformity in them. They also specify the duties and responsibilities of both employers
and employees thereby regulating standards of their behavior. Therefore, standing orders can be a good
basis for maintaining harmonious relations between employees and employers. Every factory employing
100 workers or more is required to frame standing orders in consultation with the workers. These orders
must be certified and displayed properly by the employer for the information of the workers.
2. Code of Industrial discipline: The code of Industrial discipline defines duties and responsibilities of
employers and workers. The objectives of the code are:

To secure settlement of conflict by negotiation, conciliation and voluntary arbitration.

To eliminate all forms of coercion, intimidation and violence.

To maintain discipline in the industry.

To avoid work stoppage.

To promote constructive co-operation between the parties concerned at all levels.
3. Works Committee: Every industrial undertaking employing 100 or more workers is under an obligation
to set up a works committee consisting equal number of representatives of employer and employees. The
main purpose of such committees is to promote industrial relations. According to Indian Labour
Conference work committees are concerned with:
Administration of welfare & fine funds.

Educational and recreational activities.

Safety and accident prevention

Occupational diseases and protective equipment.

Conditions of work such as ventilation, lightening, temperature & sanitation including latrines and

Amenities such as drinking water canteen, dining rooms, medical & health services.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

The following items are excluded from the preview of the work committees.

Wages and allowances
Profit sharing and bonus
Programs of planning and development
Retirement benefits
PF and gratuity
Housing and transport schemes
Incentive schemes
Retirement and layoff

4. Joint Management Councils: Just to make a start in labour participation in management, the govt:
suggested in its Industrial Resolution 1956 to set up joint management councils. It consists of equal
numbers of workers and employers (minimum 6 & maximum 12) decisions of the JMC should be
unanimous and should be implemented without any delay. JMC members should be given proper training.
JMC should look after 3 main areas:1.
information sharing

6. Joint Councils: Joint Councils are set up for the whole unit and deals with matters relating optimum
production and efficiency and the fixation of productivity norms for man and machine for the as a whole. in
every industrial unit employing 500 and more workers there should be a Joint Council for the whole unit.

Members of the council must be actually engaged in the unit.
The chief executive of the unit will be the chairman of the council and vice chairman will be
nominated by worker members.
Term of the council will be two years.
JC shall meet at once in a quarter.
Decision of the council will be based on consensus and not on voting.


Optimum use of raw materials and quality of finished products
Optimum production, efficiency and function of productivity norms of man and machine as a
Preparation of schedules of working hours and of holidays.
Adequate facilitates for training.
Rewards for valuable and creative suggestions received from workers.

7. Collective Bargaining: Collective Bargaining is a process in which the representatives of the
employer and of the employees meet and attempt to negotiate a contract governing the employeremployee-union relationships. Collective Bargaining involves discussion and negotiation between two
groups as to the terms and conditions of employment.
8. Labour welfare officer: The factories Act, 1948 provides for the appointment of a labour welfare
officer in every factory employing 500 or more workers. The officer looks after all facilities in the factory

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

provided for the health, safety and welfare of workers. He maintains liaison with both the employer and
the workers, thereby serving as a communication link and contributing towards healthy industrial relations
through proper administration of standing orders, grievance procedure etc.
9. Tripartite bodies: Several tripartite bodies have been constituted at central, national and state levels.
The India labour conference, standing labour committees, Wage Boards and Industries Committees
operate at the central level. At the state level, State Labour Advisory Boards have been set up. All these
bodies play an important role in reaching agreements on various labour-related issues. The
recommendations given by these bodies are however advisory in nature and not statutory.

Unit V
Worker’s participation:
The concept of workers’ participation in management is considered as a mechanism where workers have
a say in the decision making process of an enterprise. Participation basically means sharing the decisionmaking power with the lower ranks of the organization in an appropriate manner. It is depending on the
socio-political environment and cultural conditions, the scope and contents of participation change.
It encourage for achieving social justice. From the point of view of social scientists, participative
management is one of the tools of management where the emphasis is on the utility of a one of the tools
of human approach. The experiments of Blake, Mayo, Lewin and Likert popularized the belief that if
workers are given opportunities to participate in the management process there could be positive gains to
the organization’s effectiveness and morale.
According to International Institute of Labour Studies: Worker's Participation in Management (WPM) is the
participation resulting from the practices which increase the scope for employees’ share of influence in
decision-making at different tiers of organizational hierarch with concomitant/associated asumption of
Similarly, International Labour Organization (ILO) define that, Workers’ participation may broadly be taken
to cover all terms of association of workers and their representatives with the decision-making process,
ranging from exchange of information, consultations, decisions and negotiations, to more institutionalized
forms such as the presence of workers’ member on management or supervisory boards or even
management by workers themselves.
Basically, there are three groups of managerial decisions affecting the workers of any industrial
establishment. They are;
A. Economic decisions: Methods of manufacturing, automation, shutdown, lay-offs, and mergers.
B. Personnel decisions: Recruitment and selection, promotions, demotions, transfers, grievance
settlement, work distribution
C. Social decisions: Hours of work, welfare measures, questions affecting work rules and conduct of
individual worker’s safety, health, and sanitation and noise control.
Objectives and Important:
Following of the fundamental objectives and important of WPM;

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

• An instrument for increasing the efficiency of enterprises and establishing harmonious relations;
• A device for developing social education for promoting solidarity among workers and for tapping
human talents;
• A means for achieving industrial peace and harmony which leads to higher productivity and
increased production;
• A humanitarian act, elevating the status of a worker in the society;
• An ideological way of developing self-management and promoting industrial democracy,
• To improve the quality of working life by allowing the workers greater influence and involvement in
work and satisfaction obtained from work;
• To secure the mutual co-operation of employees and employers in achieving industrial peace;
greater efficiency and productivity in the interest of the enterprise, the workers, the consumers
and the nation.
• Unique motivational power and a great psychological value.
• Peace and harmony between workers and management.
• Workers get to see how their actions would contribute to the overall growth of the company.
• They tend to view the decisions as `their own’ and are more enthusiastic in their implementation.
• Participation makes them more responsible.
• They become more willing to take initiative and come out with cost-saving suggestions and
growth-oriented ideas.
Significance of Workers Participation:
1. Higher Productivity: The increased productivity is possible only when there will fullest co-operation
between labour and management. It has been found that poor labour management relations do not
encourage the workers to contribute anything more than the minimum desirable to retain their jobs.
2. Greater Commitment: An important prerequisite for forge greater individual commitment is the
individual’s involvement and opportunity to express him. Participation allows individuals to express
themselves at the work place rather than being absorbed into a complex system of rules, procedures
and systems. If an individual knows that he can express his opinion and ideas, a personal sense of
gratification and involvement takes place within him.
3. Reduced Industrial Unrest. Industrial conflict is a struggle between two organized groups, which are
motivated by the belief that their respective interests are rare by the self-interested behaviour of the
other. Participation cuts at the very root of industrial conflict. It tries to remove or at least minimize the
diverse and conflicting interests between the parties, by substituting it with cooperation, homogeneity
and common interests. Both sides are integrated and decision arrived at are mutual rather than
4. Improved Decisions. Communication is never a one way process. Participation tends to break down
the barriers, and makes the information available to managers. To the extent such information
changes the decisions; the quality of decisions is improved.
5. Human Resource Development. Participation provides education to workers in the management of
industry. It fosters initiative and creativity among them. It develops a sense of responsibility. Informal
leaders get an opportunity to reinforce their position and status by playing an active role in decisionmaking and by inducing the members of the group to abide by them.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

6. Reduced Resistance to Change. Generally, changes are arbitrarily introduced from above without
explanation. Subordinates tend to feel insecure and take counter measures aimed at disruption of
changes. But when they have participated in the decision making process, they have had an
opportunity to be heard. They know what to expect and why. Their resistance to change is reduced.
Form of participation:
Workers’ participation in management falls into several categories. It depend on the various socio-legal,
political, economic environment. There is some form of participation. They are;
A. Informative: Participation there is a sharing of information- for instance the information regarding
production figures, the balance sheet of the company, economic condition etc.
B. Consultative: Participation of workers’ representatives is consulted on matter relating to wale fare
facilities by the management.
C. Associative: Participation management accepts the suggestion of the council for solving a
problem on hand.
D. Administrative: Participation management the decision is already taken and councils have the
right to choose the method of implementing it.
E. Decisive participation. Finally decisive participation is the highest form of participation where all
matters, economic, financial and administrative are brought under the security of the council and
the decision are taken jointly.
Beside the above mentioned form of participation, following are the practice in the field of industrial
relation to participation.

Board level participation
Ownership participation
Complete control
Staff or work councils
Joint councils and committees
Collective Bargaining
Job enlargement and enrichment
Suggestion schemes
Quality circles
Financial participation

Board level Participation: This is highest form of industrial democracy. The workers’ representative on
the Board can play a useful role in safeguarding the interests of workers. He or she can serve as a guide
and a control element. He or she can prevail upon top management not to take measures that would be
unpopular with the employees. He or she can guide the Board members on matters of investment in
employee benefit schemes like housing, and so forth.
Ownership Participation: This involves making the workers’ shareholders of the company by inducing
them to buy equity shares. In many cases, advances and financial assistance in the form of easy
repayment options are extended to enable employees to buy equity shares.
Participation through complete control: Workers acquire complete control of the management through
elected boards. It is a system of self-management. Self-management gives complete control to workers to
manage directly all aspects of industries through their representatives.
Participation through Staff and Works Councils: Staff councils or works councils are bodies on which
the representation is entirely of the employees. There may be one council for the entire organization or a
hierarchy of councils. The employees of the respective sections elect the members of the councils. Such
councils play a varied role. Their role ranges from seeking information on the management’s intentions to

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

a full share in decision-making. Such councils have not enjoyed too much of success because trade union
leaders fear the wearing down of their power and prestige if such workers’ bodies were to prevail.
Participation through Joint Councils and Committees: Joint councils are bodies comprising
representatives of employers and employees. This method sees a very loose form of participation, as
these councils are mostly consultative bodies. Work committees are a legal requirement in industrial
establishments. Such committees discuss a wide range of topics connected to labour welfare.
Participation through Collective Bargaining: Through the process of CB, management and workers
may reach collective agreement regarding rules for the formulation and termination of the contract of
employment, as well as conditions of service in an establishment. Even though these agreements are not
legally binding, they do have some force. But in practice, while bargaining, each party tries to take
advantage of the other.
Participation through Job Enlargement and Job Enrichment: Excessive job specialization that is seen
as a by-product of mass production in industries, leads to associated problems in employees. Two
methods of job designing – job enlargement and job enrichment– are seen as methods of addressing the
problems. Job enlargement means expanding the job content – adding task elements horizontally.
Job enrichment means adding `motivators’ to the job to make it more rewarding. This is WPM in that it
offers freedom and scope to the workers to use their judgment. But this form of participation is very basic
as it provides only limited freedom to a worker concerning the method of performing his/her job.
The worker has no say in other vital issues of concern to him – issues such as job and income security,
welfare schemes and other policy decisions.
Participation through Suggestion Schemes: Employees’ views are invited and reward is given for the
best suggestion. With this scheme, the employees’ interest in the problems of the organization is aroused
and maintained. The ideas could range from changes in inspection procedures to design changes,
process simplification, paper-work reduction and the like.
Participation through Quality Circles: Concept originated in Japan in the early 1960s and has now
spread all over the world. A QC consists of seven to ten people from the same work area who meet
regularly to define, analyze, and solve quality and related problems in their area. Training in problemsolving techniques is provided to the members. QCs are said to provide quick, concrete, and impressive
results when correctly implemented.
Financial Participation: This method involves less consultations or even joint decisions. Performance of
the organization is linked to the performance of the employee. The logic behind this is that if an employee
has a financial stake in the organization, he/she is likely to be more positively motivated and involved.
Some schemes of financial participation are as follows;
 Profit-linked pay
 Profit sharing and Employees’ Stock Option schemes
 Pension-fund participation

Scenario of worker's participation in management in Nepal: problems, prospects, legal provisions
and present status:
Industrial development and economic prosperity of the country is essential to secure harmonious
relationship between worker and management. Worker’s participation in management is the fundamental
things for sustainability of industrial sector. The philosophy of worker’s participation is based on the social
justice and as such attempts to symbolize collectively feeling, aspiration, emotion, imagination, own
feeling, etc. worker’s participation in management (WPM) permitting to workers to keep their views in the
various managerial aspects prior to making decision.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

In our context, industries were gradually begun to establish from 1936 but there were not single statutory
provision. Our industrial environment was operated by the Indian Factory Act. Still we are facing various
problems regarding industrial relation among the management and workers due to lack of proper statutory
measures. First of all we have to know that Nepalese attitude and development of industrial environment
in Nepal. Fundamentally, lack of statutory provision, role of labour organization, management and workers
attitude regarding WPM, worker ability, management interest, socio economic, geographical and political
system of the country are the responsible for the WPM.
Socio economic background of the worker and ability of the worker plays vital role to participate in
management. Previously we had three large industries namely Biratnagar Jute Mills, Sugar Mills and
Cotton Mills. After analysis the situation of these industries we can find out some points which were the
obstacle for WPM. The points were as follows;
 Most of the workers were rural migrants
 No previous work experience and most of the agricultural worker
 Highly Illiterate
 Majority of the worker was male
 Large number of worker was non Nepalese
 Skilled and highly skilled human resource was non Nepalese
 Large of segment of management were non Nepalese
Above mentioned reality shows the scenario of the WPM in our context. In Nepal, Factory and Factory
Workers Act, 1959 make obligations to form works committee. It called joint committee. It fails to fulfil the
present demand of Nepalese industrial community. Lack of specific objectives, limited scope, advisory
nature of participatory forum, role conflict between works committee and trade union etc. were
responsible factors which can hardly be eradicated in the present structure of joint consultation. Still so
many unnecessary things need to be changed. Now a days we have labour law, trade union act but these
are not perfect.
Lack of plant level labour union, absence of legislative measures for collective bargaining, imperfect
implementation of labour legislation, poor institutional framework of works committee, non-participative
attitude of management, non-consideration of workers etc. are key problems of WPM in Nepalese
industries. Illiteracy, lack of education and training, absence of knowledge, unrecognized labour force and
negative attitude towards management etc. are poor characteristics of Nepalese workers, which are the
root causes of small performance of statutory participative forum.
At the present perspective to drive industrial ventures in right direction it is necessary to offer a
comprehensive labour law considering the political, economic and socio cultural realities of the nation.
The scheme of workers participation developed on these realities of the country will make fullest
contribution towards developing harmonious relation between the management and the workers.

Unit VI
MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Concept of labour welfare:
Organization provides welfare facilities to their employees to keep their motivation level high. Welfare
means the comfort and improvement of employees and is provided over and above the wages. Welfare
keeps the morale and motivation of the employees high so as to retain the employees for longer duration.
It is not necessary that the welfare measures to be in monetary terms but in any kind/forms. Employee
welfare includes monitoring of - working conditions, creation of industrial harmony through infrastructure
for health, industrial relations and insurance against disease, accident and unemployment for the workers
and their families. Labour welfare entails all those activities of employer which are directed towards
providing the employees with certain facilities and services in addition to wages of salaries.

Labour Welfare has the following objectives:
1) Labour welfare provides social comfort to employees.
2) It provides intellectual improvement of employees.
3) To develop sense of responsibility and belongingness among employees.
4) To ensures that the working conditions for employees are of higher standard.
5) To build stable work force.
6) To reduce absenteeism and labour turnover.
7) To make employees lives good and worth living.
8) To boost productivity and efficiency at the workplace.
9) To provide healthy and proper working conditions.
10) To ensure wellbeing of employees and families.
The purpose is to provide them better life and to make them happy. The important benefit of welfare
services are given below:
1) Welfare facilities provide scope for better physical and mental health to the workers.
2) Labour welfare brings industrial peace and cordial relations between labour and management.
3) The social evil in the labour force such as gambling, drinking etc. are reduced.
4) Employer gets stable labour force due to provision of welfare facilities.
5) Workers take active interest in their jobs.
6) Employer secures the benefits of high efficiency and low labour absenteeism and minimum
employee turnover. Facilities like housing, medical benefits and education facilities help to increase
productivity of workers

Types of labour welfare program:
Welfare program can be largely categorized into two types:

Intramural program: These are provided within the establishment such as rest centers
canteen, uniforms.

Extramural program: These are activities which are undertaken outside the establishment
such as child welfare, transport facility etc.

Examples of Welfare program:

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Intramural Facilities

Drinking water

Washing & bathing facilities

Rest shelters


Protective clothing

Recreating facilities

Subsidized food
Medical aid

Extramural Facilities


Education facilities

Maternity benefits


Sports facilities

Leave travel

Vocational training

Holiday homes

Cooperative stores

Fair price shops

Social insurance

Types of Welfare Activities:
Organizations provide welfare facilities to their employees to keep their motivation levels.
high. The employee welfare schemes can be classified into two categories. Statutory and
non-statutory welfare schemes. The statutory schemes are those schemes that are.
Compulsory to provide by an organization as agreement to the laws governing employee.
health and safety. The non-statutory schemes are not compulsory and differ from.
organization to organization and from industry to industry.
Statutory Welfare Schemes:
The statutory welfare schemes include the following provisions:
1. Drinking Water: At all the working places safe hygienic drinking water should be provided.
2. Facilities for sitting: In every organization, especially factories, suitable seating arrangements are to be
3. First aid appliances: First aid appliances are to be provided and should be readily assessable so that in
case of any minor accident initial medication can be provided.
4. Latrines and Urinals: Sufficient number of latrines and urinals are to be provided in the office and
factory premises and are also to be maintained in a neat and clean.
5. Canteen facilities: Canteens are to be provided for hygienic and nutritious food.
6. Spittoons: In every work place, such as ware houses, store places, in the dock area and office
premises spittoons are to be provided in convenient places and same are to be maintained in a hygienic

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

7. Lighting: Proper and sufficient lights are to be provided for employees to work safely during the night
8. Washing places: Adequate washing places such as bathrooms, wash basins with tap and tap on the
stand pipe are provided in the port area in the vicinity of the work places.
9. Changing rooms: Sufficient changing rooms are to be provided for workers to change their cloth in the
factory area and office premises. Enough lockers are also provided to the workers to keep their clothes
and belongings.
10. Rest rooms: Adequate numbers of restrooms are provided to the workers with provisions of water
supply, wash basins, toilets, bathrooms, etc.
Non Statutory Welfare Schemes:
Many non-statutory welfare schemes may include the following schemes:
1. Regular medical check-ups: Some of the companies provide the facility for general health check-up.
2. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with
flexible working schedules. Flexible work schedules are initiated by employees and approved by
management to meet business commitments while supporting employee personal life needs.
3. Employee Assistance Programs: Various assistant programs are arranged like external counseling
service so that employees or members of their immediate family can get counseling on various matters.
4. Harassment Policy: To protect an employee from harassments, guidelines are provided for proper
action and also for protecting the aggrieved employee.
5. Maternity & Adoption Leave – Employees can avail maternity or adoption leaves. Paternity leave
policies have also been introduced by various companies.
6. Medic-claim Insurance Scheme: This insurance scheme provides adequate insurance coverage of
employees for expenses related to hospitalization due to illness, disease or injury or pregnancy.
7. Employee Referral Scheme: Referral scheme is implemented to encourage employees to refer friends
and relatives for employment in the organization.

Benefits of labor Welfare:

They provide better physical and mental health to workers and thus promote a healthy work

Facilities like housing schemes, medical benefits, and education and recreation facilities for
worker's families help in raising their standards of living. This makes workers to pay more attention
towards work and thus increases their productivity.

Employers get stable labor force by providing welfare facilities. Workers take active interest in
their jobs and work with a feeling of involvement and participation.

Employee welfare measures increase the productivity of organization and promote healthy
industrial relations thereby maintaining industrial peace.

The social evils prevalent among the labors such as substance abuse, etc. are reduced to a
greater extent by the welfare policies.

Concept of social security:
Social security is primarily a social insurance program providing social protection, or protection against

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

socially recognized conditions, including poverty, old age, disability, unemployment and others. Social
security may refer to:
Social insurance, where people receive benefits or services in recognition of contributions to an insurance
scheme. These services typically include provision for retirement pensions, disability insurance, survivor
benefits and unemployment insurance.
Income maintenance—mainly the distribution of cash in the event of interruption of employment, including
retirement, disability and unemployment
In different countries social security may include medical care, aspects of social work and even industrial
More rarely, the term is also used to refer to basic security, a term roughly equivalent to access to basic
necessities - things such as food, clothing, shelter, education, money, and medical care.
Social Security is a public provision for the economic security and social welfare of individuals and their
families, especially in the case of income losses due to unemployment, work injury, maternity, sickness,
old age, and death. The term social security encompasses not only social insurance but also health and
welfare services and various income maintenance programs designed to improve the recipient's welfare
through public services.
Some of the first organized cooperative efforts to provide for the economic security of individuals were
instituted by workingmen's associations, mutual-benefit societies, and labor unions; social security was
not widely established by law until the 19th and 20th centuries, Almost all developed nations now have
social security programs that provide benefits or services through several major approaches such as
social insurance and social assistance, a needs-based program that pays benefits only to the poor.

Method of social security:
Social insurance:
Social insurance is a government-sponsored insurance program that is defined by statute, serves a
defined population, and is funded through premiums or taxes paid by or on behalf of participants.
Participation is either compulsory or the program is subsidized heavily enough that most eligible
individuals choose to participate. Medicare, retirement program, unemployment insurance programs and
others are the examples of social insurance.
Income maintenance (Unemployment benefits)
Income maintenance or unemployment benefits policy is usually applied through various programs
designed to provide a population with income at times when they are unable to care for themselves.
Income maintenance is based in a combination of five main types of program:
Means-tested benefits. Means-tested benefits is financial assistance provided for those who are unable to
cover basic needs, such as food, clothing and housing, due to poverty or lack of income because of
unemployment, sickness, disability, or caring for children. While assistance is often in the form of financial
payments, those eligible for social welfare can usually access health and educational services free of

Non-contributory benefits: Several countries have special schemes, administered with no requirement for
contributions and no means test, for people in certain categories of need - for example, veterans of armed
forces, people with disabilities and very old people.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Discretionary benefits: Some schemes are based on the discretion of an official, such as a social worker.
Social protection
Social protection refers to a set of benefits available (or not available) from the state, market, civil society
and households, or through a combination of these agencies, to the individual/households to reduce
multi-dimensional deprivation. This multi-dimensional deprivation could be affecting less active poor
persons (e.g. the elderly, disabled) and active poor persons (e.g. unemployed). This broad framework
makes this concept more acceptable in developing countries than the concept of social security. Social
security is more applicable in the conditions, where large numbers of citizens depend on the formal
economy for their livelihood. Through a defined contribution, this social security may be managed.
However, in the context of widespread informal economy, formal social security arrangements are almost
absent for the vast majority of the working population. In addition, in developing countries, the state's
capacity to reach the vast majority of the poor people may be limited because of its limited resources. In
such a context, multiple agencies, that could provide for social protection is important for policy
consideration. The framework of social protection is thus capable of holding the state responsible to
provide for the poorest sections by regulating non-state agencies.

Social security system in Nepal:
Wage structure in Nepal, in comparison to developed countries, is weak and limited. Limited incentive
earnings are in place for workers. Enterprises, both state owned and privately run, provide meager
benefits to workers in terms of residence facility or allowance, Medicare, educational facilities for the
children, transportation, ration, child care, entertainment, life insurance, credit facilities and others.
Provisions of social security benefits have been included in the Labor Act. The Act provides grounds for
benefits such as, sick leave, maternity leave, workers compensation, provident fund and gratuity as the
old age benefit. Besides, the law also has the provisions for canteen at the premises of enterprises.
Placement of a welfare officer, for taking care of the welfare of the workers, is another mandatory
Both the Labor Act and Labor Rules are applicable to those organizations established as per Nepali laws
where more than ten workers are employed. This law is not applicable to those companies with less than
ten workers. In addition, it is not applicable to the entire informal sector. Social security applies only to
workers with permanent status, in organized sectors.
Social security benefits: There is no comprehensive social security system under the Nepali labor law.
Employees are entitled to receive following benefits as part of social security under the Labor Act and
• Provident fund: Provident fund is a contributory old age benefit under the labor law. According to the
provision, the employer should deduct 10 percent of basic salary of the employees and add 10 percent to
it, and deposit the amount in any commercial banks or Karmachari Sanchaya Kosh, the autonomous
provident fund authority in Nepal.
• Gratuity: Gratuity is also part of an old age benefit. It is also known as a severance pay. As per the
provision of the Labor Rules, the employees serving for three years or more and retiring from the service
are entitled to get gratuity.
• Treatment Expenses: Under the provision of Labor Rules, the employer has to bear entire treatment
expenses to an employee who suffers physical injury while on duty.
• Salary during treatment: During the period of treatment, employer should pay full salary for the period of
their stay in hospital or half of their salary if they have undergone treatment at home. However, if the

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

period of such treatment exceeds a year, the employer is not obliged to pay the salary after one year.
• Disability compensation: If an employee is physically disabled as a result of an accident while on duty,
the employer must pay a lump sum amount equivalent to the salary of five years of the last drawn salary
in case of complete disability. In case of partial disability, the amount of compensation shall be calculated
according to the percentage of disability.
• Compensation in case of death: In case of death of an employee instantly or in the course of treatment
as a result of an accident while on duty, the employer should pay an amount equivalent to three years'
salary calculated at the last drawn salary rate to the nearest heir as compensation. However, in case an
employee dies or becomes physically disabled as a result of a natural calamity, the employee or his/her
legal heir shall not be entitled to any compensation.
• Insurance and compensation: If an employee is entitled to receive compensation, he/she is entitled to
compensation as mentioned above or the compensation under the insurance whichever is higher.
• Termination on health ground: In case any employee sustains physical injuries while on duty and does
not recover even after a year-long treatment or becomes physically disabled, he/she may be terminated
from the service provided that a physician recognized by the government certifies that he/she is incapable
of working. In such a case, the employer should pay gratuity and treatment compensation before such
• Housing Fund: Under the Labor Act, 5 percent of the gross annual profit of an enterprise should be
deposited as a housing fund and operated by a joint committee called Labor Relations Committee.
However, this provision is almost non-existent in practice.
• Welfare Fund: As per the Bonus Act, 1974, 10 percent of net profit should be deposited for bonus
distribution to workers. The Act stipulates the maximum upper limit of bonuses to be paid. The amount
that is left after bonus distribution will be deposited by the enterprise in the Welfare Fund. Of the amount
deposited in the Welfare Fund, 70 percent goes into Local Welfare Fund and 30 percent into National
Welfare Fund.
• Pension: Pension is limited to government employees in civil services, police and armed forces,
including some of public corporations, university and school teachers/employees.
• Retrenchment: If the employer desires to close the whole or part of an organization, he/she should
obtain approval from the government before the retrenchment of the employees. In such a case, the
employer should provide one-month notice with reasons for retrenchment or pay the salary of one month
in lieu of such a notice. Similarly, the employer should pay retrenchment compensation in lump sum
equivalent to the amount of thirty days multiplied by the total number of years in service.
• Sick Leaves: All workers or employees who have completed one year of continuous service in the
establishment shall be granted a sick leave with half-pay for not more than 15 days in a year.
• Maternity Leaves: Pregnant women workers or employees are granted a maternity leave with full pay for
52 days before or after delivery. Such a leave may be obtained not more than twice during the entire
period of service. However, in the event of the death of two children of a woman employee, who has
already utilized the maternity leave twice, she may be entitled to a maternity leave for two more times.
Nepal is yet to go for a wide range of social security system. Though non-governmental sector is
increasingly making bigger place as employer, state is still the major provider of employments to its
citizens in Nepal. Legal frameworks for guaranteed social security are inadequate. The Labor Act is the
main legal framework that provides ground for various types of social security to workers. However, these
cover only government employees, including Army, Policy and Civil servants. Workers in informal sector
are largely deprived of these social protection benefits.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Unemployment benefits are yet to be considered in Nepal. For a better security of the workers, there is a
need of a flexible legislation in line with the introduction of better basic social security arrangements that
consider vulnerable populations’ ability to cope with threats to income and livelihood.

Unit VII
Governing principles of ILO:

1– Businesses should support and respect the protection of internationally proclaimed human
rights, and


2 – Make sure that they are not complicit in human rights abuse.


3 – Businesses should uphold the freedom of association and the effective recognition of the
right to collective bargaining.


4 – The elimination of all forms of forced and compulsory labor


5 – The effective abolition of child labor, and


6 – The elimination of discrimination in respect of employment and occupation


7 – Businesses should support precautionary approach to environmental challenges


8 – Undertake initiatives to promote great environmental responsibility, and


9 – Encourage the development of environmental friendly technologies


10 – Businesses should work against corruption in all its forms, including extortion and

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

ILO is a specialized agency of the United Nations system which seeks the promotion of social justice and
internationally recognized human and labour rights.
Mission of ILO:

To promote opportunities for men and women to obtain decent and productive work, in
conditions of freedom, equity, security and human dignity, which is summed up by the
expression “Decent work as a global goal”.

What the ILO is and what it does

The ILO formulates international labour standards. These standards take the form of
Conventions and Recommendations, which set minimum standards in the field of fundamental
labour rights: freedom of association, the right to organize, the right to collective bargaining, the
abolition of forced labour, equality of opportunity and treatment, as well as other standards
addressing conditions spanning across the entire spectrum of work-related issues .Established
in 1919 as a part of league of nations.
Only international body that survived even after 2 nd world war.
Becomes specialized agency of U.N.’s in 1946.
Aims at world peace through social justice.
India became original signatory member in 1919.
Draws attention on various problems like: working conditions, unemployment, industrial accidents,
diseases, problem of women & young persons, children etc.
It is tripartite body: representative of employer, labour & govt.
Till now 183 nations are member of ILO

Fundamental principles:
 Labor is not a commodity
 Freedom of expression & association is essential
 Poverty act as a danger for prosperity
 War against want requires to be carried on. Workers & employers should enjoy equal status in
free discussion

Function and activities of ILO:

Full employment & raising standard of living
Ensure employment, in which workers are in should get satisfaction
Facilities for training & transfer of labor-migration for employment & settlement
Policies with wages, hours & condition of work
Effective recognition of the right of collective bargaining
Protection of life & health of workers
Provision for child welfare & maternity protection
Provision for adequate nutrition, housing
Assurance of equality of education & vocational opportunity.
Manpower organization & Vocational training
Migrant workers
Women workers
Child workers
Social security
Conditions of work
Health, safety & welfare
Other activities- Promotion of handicraft & small industries, worker’s education programs.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Structure of ILO:


Policy making/ legislative wing of ILO
Holds session once in a year
ILC elect governing body
Meetings/sessions are attended by 4 delegates
- 2 from govt. (Generally Cabinet Ministers)
- 1 representative of employee
- 1 representative of employer
Each delegate is accompanied by advisor not exceeding 2 in number

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Non- govt. delegates are chosen by govt.

Governing Body:

It is executive wing of ILO
It is a political body
Implements decisions of ILC with the help of International labour office
It consist of 56 titular members
- 28 govt.
-14 employers
-14 employees
Further, it consist of 66 deputy members
-28 govt.
-19 employers
-19 employees
10 of the titular govt. seats are permanently held by states of chief industrial importance (Brazil,
China, France, Germany, India, Italy, Japan, U.K.,U.S., The Russian Federation)
Generally it meets thrice in a year (March, June, November)
Members are elected by ILC every 3 years

International labour Office:

It is a focal point for activities of International Labour Organization under the supervision of
Governing Body
It is headed by Director-General
Its headquarter is at Geneva
Office employs 2700 officials from over 150 nations
Office also contains a research & documentation center
It is responsible to collect & distribute information of labour & social problems

Labour Standard:

ILS are legal instruments drawn up by the ILO’s constituents (governments, employers and
workers) setting out basic principles and rights at work.
ILS take two forms:
• conventions, which are legally binding international treaties that may be ratified by
member states,
• Recommendations, which serve as non-binding guidelines.
International Labour Standards (both conventions and recommendations) are drawn up by
representatives of governments, employers and workers and are adopted at the ILO’s annual
International Labour Conference.
Once adopted, a standard have to be submitted by the member states to their competent
authority (normally the parliament) for consideration.

ILO and Nepal:
Activities of ILO in Nepal
 Sustainable Elimination of Bonded Labour in Nepal
 Combating Child Trafficking for Labour and Sexual Exploitation
 Extending Social Protection to Workers in the Informal Economy
 Community Action for the Elimination of Child (bonded) Labour from Exploitative
and Hazardous Work Type of assistance and programming
Geographical Presence:

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

It works on issue basis all over the Nepal.
Additional Information:
Type of Assistance and Programming:
The ILO formulates international labour standards in the form of Conventions and Recommendations
setting minimum standards of basic labour rights: freedom of association, the right to organize, collective
bargaining, abolition of forced labour, equality of opportunity and treatment, and other standards
regulating conditions across the entire spectrum of work related issues. It provides technical assistance
primarily in the fields of vocational training and vocational rehabilitation; employment policy; labour
administration; labour law and industrial relations; working conditions; management development; cooperatives; social security; labour statistics and occupational safety and health. It promotes the
development of independent employers' and workers' organizations and provides training and advisory
services to those organizations. Within the UN system, the ILO has a unique tripartite structure with
workers and employers participating as equal partners with governments in the work of its governing

Labor relations strategies vary greatly from country to country—the strategy used in one country is
sometimes irrelevant or of limited value in another.
A number of factors can account for this:
• Economic development of the country
• Entry strategies must often be modified
• Changes in the political environment
• Strike activity
• Other differences are more regional
In developing and emerging economies such as China, India, and Southeast Asia:
• Labor is less powerful
• Unions are less prevalent
• Workers are often compelled to accept conditions of work set by management

Labor costs in the United States are lower in recent years than in most other major industrial
Thanks to union–management cooperation, U.S. companies have been able to introduce
high-tech, efficient machinery.
Much of this outcome is a result of effective labor relations strategies.

Great Britain
• A labor agreement in Great Britain is not a legally binding contract
• Violations of the agreement by the union or by management carry no legal penalties
• British unions are relatively powerful and strikes are more prevalent than in the United
• British union membership has declined in recent years
• British labor agreements do not usually include provisions for arbitration of disagreements
or grievances
• Social custom dictates no confrontational union–management behavior
• Provisions in Japanese labor agreements are usually general and vague, although they
are legally enforceable
• Agreement disputes are settled in an amicable manner though sometimes resolved by
third-party mediators or arbitrators
• Labor commissions have been established by law
• Japanese unions remain relatively weak.

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

Another major area of consideration in formulating an international labor relations strategy is labor
 Wages paid in one country often differ considerably from those paid in other countries for the
same job
 Workers are grossly exploited in some countries – toiling for long hours, in unsafe
conditions, for minimum pay.
 Labor costs some countries’ are extremely high – as in German In manufacturing
where hourly rates in have been substantially greater than those paid elsewhere
 By holding down weekly hours, unions have been able to increase the hourly pay of
their members
 While real wages have increased, research shows that a growing number of high-paid
workers have found themselves priced out of the market
 Businesses are finding it easier to transfer work to other geographic locales than to
pay these high prices

MBA 3 rd Semester 2070 8Th Batch (Spring Fall)

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