The decision taken by the board was perceived as being ______ leading to widespread _________ among the workers who were already disillusioned with the management.

The second part of the sentence talks about the workers being "disillusioned" by the management. Thus, the second blank will have a negative word. Thus, options A and B are rejected.

For the first blank, "iniquitous" [grossly unfair and morally wrong] is a better option than "discriminatory", as it will compliment the sentiment expressed in the second part.

Alternate: "Iniquitous" means unjust or morally wrong, which fits the context of a decision that upset the workers.

"Discontent" means dissatisfaction or unhappiness, which logically follows from an unjust decision.

Hence, the answer is option C.