India is a country having diverse religions and cultures. It becomes necessary to harmonize industrial relations in the country with respect to such diversity. India’s trade performance during 2003–04 was influenced by a number of factors which include productivity changes in the manufacturing sector, recovery of global economy and world trade, continued trade promotion and trade facilitation efforts of the government, and an appreciating Indian Rupee against the US dollar. Hence India has a wide variety of labour laws which are essential for the smooth functioning of industrial relations in the country.

In the year 2003–04, the Indian economy appeared to be in a resilient mode in terms of growth, inflation and balance of payment. Real gross domestic product is estimated to have grown by 8.1%. As per the Monthly Economic Report, of the Ministry of Finance, Government of India, dated October 2004, the overall industrial growth during the period April–August 2004 stood at 7.9% as compared to 5.9% during the period April–August 2003; the growth in mining, manufacturing and electricity during the period April–August 2004 was 5.2%, 8.2% and 7.7% as compared to 4.1%, 6.5% and 2.5% respectively during the corresponding period in the previous year. The data available from the 945 employment exchanges in the country indicates that in February 2004, the number of job seekers registered with the employment exchanges was 4.11 crore, out of which 70% were educated (10th standard and above). The number of women job seekers registered was 1.07 crore (26% of the total number of job seekers).

Women constitute a significant proportion of the labour force. Female participation in the workforce, however, varies across rural-urban areas. According to the 58th round survey of National Sample Survey Organization (NSSO), (carried out from July to December 2004) , the female workforce participation rate in rural areas declined to 281 per 1000 compared to 299 during the period July to December 1999-2000.

Therefore it could be seen that there exists a huge workforce in India, large amount of which is in the unorganized sector and therefore needs to be integrated alongwith the organized sector.

Compliance with labour laws and standing orders

While conforming to the essentials of the laws of contracts, a contract of employment must adhere also to the provisions of labour laws and the rules contained under the Standing Orders of the establishment.

The Minimum Wages Act 1948 has classified workers as:

unskilled;

semi-skilled;

skilled; and

highly skilled.