Participation of employees’ representatives from all or most levels of an industrial organization in its decision making process.

Industrial democracy means that the management in industrial units is by the people, of the people and for the people. Here people include all those who are concerned with the industrial unit.

Industrial democracy connotes an equilibrium between the rights of the dominant industrial hierarchy and the rights of employees with a broad social objective.

The concept of industrial democracy is a complete departure from the traditional concept of autocratic management or one man rule. Industrial democracy means the application of democratic principles in managing industrial units.

In such type of system, workers are treated as responsible partners of an enterprise and are allowed to participate in the decision making process through different methods. Workers are given the right of self-expression and an opportunity to communicate their views on policy formulation.

The salient features of industrial democracy are as follows:

(i) Workers are treated as partners in the organisation and are given an opportunity to participate in the management.

(ii) The various methods through which industrial democracy can be introduced are work committees, joint management councils, suggestion schemes etc.

(iii) Workers are generally allowed to participate indirectly i.e. through their representatives. This participation is restricted to certain aspects of management only. The participation of workers is sought only in those areas which are directly related to them.

(iv) The morale of the workers is boosted as they have an effective say in the working of the enterprise where they are working. They feel as if they have been elevated to a higher status.

Pre Requisites of Industrial Democracy:

The conditions necessary for effective implementation of industrial democracy are as follows:

1. In every organisation, there should be a strong trade union with effective leadership.

2. There should be willingness on the part of employers to treat workers as partners.

3. Industrial democracy cannot succeed unless all concerned-workers, employers, government and the public-fully realize its importance and its due place in the national life.

4. The management and the unions should have the strong and genuine desire to deal with the industrial problems peacefully and through democratic means.

Objectives of Industrial Democracy:

The objectives of industrial democracy are:

(i) The create a sense of belongingness of workers to the organisation.

(ii) To improve a sense of commitment to the organisational objectives, plans and activities among employers.

(iii) To satisfy the psychological needs of the employees.

(iv) To respect the human dignity of the employees.

Significance of Industrial Democracy:

The advantages of industrial democracy are as follows:

(i) There would be full cooperation of employees for the implementation of decisions as they participate in decision making.

(ii) Industrial harmony can be maintained as the employees feel the sense of belongingness.

(iii) Productivity can be increased.

Extension of Democracy to Industry:

The idea of extension of the principle of democracy to the industry is that labour should be associated in managerial decisions.

The important methods to associate the workers are:

1. Establishment of various schemes of workers’ participation in management like shop councils, joint councils, joint management councils, works committees etc.

2. Recognition of human rights in industry. The days of treating the workers as a commodity are gone. Humanitarian approach to labour and human relations approach have come to stay. Hence managements of various organisations should maintain human relations by recognising the human dignity and values.

3. Creation of an environment which is materially, socially and psychologically conducive.

Industrial democracy is a value which even before incorporation of Article 43-A into the Indian constitution, is embodied in the total philosophy of the constitution.

Participative management has been a hotly discussed topic in the management literature. But it has, however, generated more heat than any light. Industrial democracy in the form of workers’ participation in management has been an integral part of Indian labour policy for quite some time.

Plan documents have acknowledged the increased association of labour with management for promoting increased productivity, for giving employees a better understanding of their role in the working of the industry and of the process of production and also satisfying workers’ urge for self-expression leading to better industrial relations and increased cooperation.

Several attempts have been made in India to experiment with various forms of workers participation both through legislation and persuasion.

Industrial democracy is an arrangement which involves workers making decisions, sharing responsibility and authority in the workplace. While in participative management organizational designs workers are listened to and take part in the decision-making process, in organizations employing industrial democracy they also have the final decisive power (they decide about organizational design and hierarchy as well).

In company law, the term generally used is co-determination, following the German word Mitbestimmung. In German companies with more than 1000 employees (coal and steel industries) resp. more than 2000 employees (other industries) half of the supervisory board of directors (which elects management) is elected by the shareholders, and the other half by the workers.

Although industrial democracy generally refers to the organization model in which workplaces are run directly by the people who work in them in place of private or state ownership of the means of production, there are also representative forms of industrial democracy. Representative industrial democracy includes decision-making structures such as the formation of committees and consultative bodies to facilitate communication between management, unions, and staff.


Advocates often point out that industrial democracy increases productivity and service delivery from a more fully engaged and happier workforce. Other benefits include less industrial dispute resulting from better communication in the workplace; improved and inclusive decision-making processes resulting in qualitatively better workplace decisions, decreased stress and increased well-being, an increase in job satisfaction, a reduction in absenteeism and an improved sense of fulfillment. Other authors regard industrial democracy as a consequence of citizenship rights.

Works councils and workers’ participation

At the point of production, the introduction of mandatory works councils and voluntary schemes of workers’ participation (e.g. semi-autonomous groups) have a long tradition in European countries.


In a number of European countries, employees of a business take part in election of company directors. In Germany, the law is known as the Mitbestimmungsgesetz of 1976. In Britain a 1977 proposal for a similar system was named the Bullock Report.


The anarchist thinker Pierre-Joseph Proudhon used the term “industrial democracy” in the 1850s to describe the vision of workplace democracy he had first raised 1840’s What is Property? Or, an Inquiry into the Principle of Right and of Government (management “must be chosen from the workers by the workers themselves, and must fulfil the conditions of eligibility.”) He repeated this call in later works like General Idea of the Revolution

In late nineteenth century, and at the beginning of the twentieth century, industrial democracy, along with anarcho-syndicalism and new unionism, represented one of the dominant themes in revolutionary socialism and played a prominent role in international labour movements. The term industrial democracy was also used by British socialist reformers Sidney and Beatrice Webb in their 1897 book Industrial Democracy. The Webbs used the term to refer to trade unions and the process of collective bargaining.

While the influence of the movements promoting industrial democracy declined after the defeat of the anarchists in the Spanish Revolution in 1939, several unions and organizations advocating the arrangement continue to exist and are again on the rise internationally.

The Industrial Workers of the World advance an industrial unionism which would organize all the workers, regardless of skill, gender or race, into one big union divided into a series of departments corresponding to different industries. The industrial unions would be the embryonic form of future post-capitalist production. Once sufficiently organized, the industrial unions would overthrow capitalism by means of a general strike, and carry on production through worker run enterprises without bosses or the wage system. Anarcho-syndicalist unions, like the Confederación Nacional del Trabajo, are similar in their means and ends but organize workers into geographically based and federated syndicates rather than industrial unions.

The New Unionism Network also promotes workplace democracy as a means to linking production and economic democracy.

Representative industrial democracy

Modern industrial economies have adopted several aspects of industrial democracy to improve productivity and as reformist measures against industrial disputes. Often referred to as “teamworking”, this form of industrial democracy has been practiced in Scandinavia, Germany, The Netherlands and the UK, as well as in several Japanese companies including Toyota, as an effective alternative to Taylorism.

The term is often used synonymously with workplace democracy, in which the traditional master-servant model of employment gives way to a participative, power-sharing model.