It has generally been recognized that the state of industrial relations in Gujarat has undergone a subtle change. Data on industrial disputes appear to support this view. It is also argued that increasing tension in labour-management relations could be traced to accelerating pace of industrial development, followed by the growth of the tertiary sector. To substantiate this hypothesis, a survey of establishments in manufacturing and non-manufacturing sectors was undertaken. Out of 100 units approached, 41 units responded to a structured questionnaire. This survey, which covered a wide cross-section of economic activity, indicates that the employers have just begun to luse systematic methods of selection and promotion of employees, that the differentials between the lowest and the highest pay is still substantial, and that these units have not experienced any considerable extent of conflict between the employers and the employees. Employers, however, feel that the employees are less than satisfied in relation to some of the personnel practices and disciplinary methods use din the organizations. Moreover, the employers do not have a negative view about the employees, but they do feel that the unions are politically inclined and their leadership is politically motivated. At the same time, there is also a feeling that the state intervention is not conducive to the development of harmonious industrial relations.