Final Impact of Globalization on Employement
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Transcript of Final Impact of Globalization on Employement
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INDEX
Sr. No. Subjects Covered Pages
1. INTRODUCTION 3-13
2 REVIEW OF LITERATUER 14-19
3 Impact of Globalization 20-27
4 IMPACT OF GLOBALIZATION ON
EMPLOYMENT IN INDIA
28-33
5 GLOBALIZATION AND THE INDIAN LABOUR 34-41
CONCLUSIONS AND SUGGESTIONS
BIBLIOGRAPHY
42-43
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Chapter.1Globalization
Globalisation means free movement of capital, good, technology, ideas andpeople. Any globalization that omits the last one is partial and not sustainable.
1.1 Introduction:
Globalisation is the new buzzword that has come to dominate the world since the
nineties of the last century with the end of the cold war and the break-up of the
former Soviet Union and the global trend towards the rolling ball. The frontiers of
the state with increased reliance on the market economy and renewed faith in the
private capital and resources, a process of structural adjustment spurred by the
studies and influences of the World Bank and other International organisations have
started in many of the developing countries. Also Globalisation has brought in new
opportunities to developing countries. Greater access to developed country markets
and technology transfer hold out promise improved productivity and higher living
standard. But globalisation has also thrown up new challenges like growing
inequality across and within nations, volatility in financial market and
environmental deteriorations. Another negative aspect of globalisation is that a great
majority of developing countries remain removed from the process. Till the nineties
the process of globalisation of the Indian economy was constrained by the barriers
to trade and investment liberalisation of trade, investment and financial flows
initiated in the nineties has progressively lowered the barriers to competition and
hastened the pace of globalisation
The term globalization has, four parameters:
Reduction of trade barriers to permit free flow of goods and services among
nation-states;
Creation of environment in which free flow of capital can take place among
nation-states;
Creation of environment, permitting free flow of technology; and
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Last but not the least, from the point of view of developing countries,
creation of environment in which free movement of labour can take place in
different countries of the world.
1.2 Basics of Globalisation
The World Bank defines globalisation as Freedom and ability of individuals and
firms to initiate voluntary economic transactions with residents of other countries.
The International Monetary Fund (IMF) defines as the growing economic
interdependence of countries worldwide through increasing volume and variety of
cross-border transactions in goods and services, freer international capital flows, and
more rapid and widespread diffusion of technology. According to Stieglitz
Globalization is the closer integration of the countries and peoples of the World
which has been brought about by the enormous reduction of costs of transportation
and communications, and the breaking down of artificial barriers to the flow of
goods and services, capital knowledge and (in a lesser extent) people across
borders. In the words of Jagdish Bhagwati Economic Globalization constitutes
integration of national economies into the international economy through trade,
direct foreign investment (by corporations and multi-nationals), short term capital
flows, international flows of workers and humanity generally, and In a broad sense,
the term globalisation refers to integration of economies and societies through
cross country flows of information, ideas, technologies, goods, services, capital,
finance and people. The cross-border integration or connectivity aspect of
globalisation has several dimensions such as social, economic, cultural,
environmental and political. Needless to state that globalisation is a deliberately
adopted economic strategy that stands on trade and technology (2 Ts). But, theeffects of globalisation are not just economic; they are social, cultural,
environmental and political. While social or cultural or political integration is
inevitable in the process of economic globalisation, they are to be treated as the
effects and not the cause. The elements such as trade in goods and services,
movement of capital, flow of finance and movement of people ensure the
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historically speaking, globalisation is not a new concept. integration across
countries through several forms and flows of goods and services, transfer of capital
and technology, and migration of people. The 18th and 19th century evidences are
more There are several evidences of of imperialist nations efforts towards the
colonies and they laid their base on military or political power. The present form of
globalisation is basically trade and technology based and driven by market power.
In fact, globalisation perceives the economy and politics i.e. market and state, as
autonomous units and the nation-state as a minimalist entity. And therefore, the
process of globalisation envisages liberalisation, privatization, minimizing
economic regulations, rolling back welfare, reducing expenditures on public goods,
tightening fiscal discipline, favoring free flows of capital, strict controls on
organized labour, tax reductions and unrestricted currency repatriation. In this
process, as nations come together some sacrifice of sovereignty is inevitable, but it
need not lead to surrender of nations objectives and individuality. The players of
globalisation could be broadly grouped as pro-globalisation and anti-globalisation
players. The pro-globalisation players include international organizations such as
World Trade Organization, World Bank, International Monetary Fund, The World
Economic Forum, United Nations Conference on Trade and Development,
Organization for Economic Development and Cooperation; public affairs
organizations like World Growth, Institute of Economic Affairs, International
Policy Network, Competitive Enterprise Institute and World Business Council for
Sustainable Development; and countries, institutions and individuals receiving
benefits due to globalisation. The anti-globalisation players include anti-free trade
NGOs, Environmentalists, Cultural Nationalists, Business Groups threatened by
international competition and left critics of The supporters of globalisation argue
that globalisation as the engine of growth, technical advancement, access to
international resources and their optimal use, raising productivity, enlarging
employment, increasing choice on commodities, lowering of costs, improving
standard of living, and bringing out poverty reduction along with modernization.
Where as, the critics argue that the causality is more and severe, widens the gap
within and between nations, exploitation of resources, decay of environment and
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loss of national sovereignty. It is the challenge of every nation to take efforts
towards maximizing the benefits of globalization and mininising the evils of
globalisation. To achieve the goals of globalisation, countries are forced to orient
their policies towards exports and outward oriented growth. Several agreements are
signed between countries and efforts are initiated to fulfill the accepted terms and
conditions. The Stabilization and Structural Adjustment Programmes introduced in
India and the subsequent Economic Reform initiatives indicate the efforts of Indian
Government towards this direction.
1.3 Some of the merits & Dmerits:
Imported goods are available. The country can produce what it produces best and
import the rest. There is a feeling of an international economy. The local industries
work hard to compete with international firms. Raw material is available. The
standard of life becomes better. More jobs are created. There is security from
famine, disease, etc as international firms intervene. Demerits : Local industries get
dislodged. In times of war, there is a problem. There is political interference and
conflicts arise. The balance of payments is badly affected. Under developed
countries are exploited The impact of globalisation on employment in India is more
of warning signals. The unorganized workers would expand further due to
globalisation. Under the present deprived conditions of unorganized sector, thiswould lead to imbalance in the labour market leading to more supply of labors, low
wages and low level of income. This situation would affect the social and economic
conditions of the unorganized working population. The unorganized workers will be
in the highly disadvantageous position as there would be a shift in the technology
from labour to capital intensive and use of unskilled to skilled workers. To
conclude, it can be argued that the benefits of economic reforms on the Indian
economy would get achieved, only if the negative impacts on employment aresettled or neutralized. Hence, along with globalisation and restructuring the
economy, efforts should be initiated to absorb the potential labour force and provide
required security for work, income and life so that they would also benefit in that
processon the one hand, and on the other, contribute towards the success of
globalization new trust on international business has emerged recently although
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business transcending national boundaries has always been there in the past .Of late,
there has been a growing realization among countries of the significance of
economics of markets and international competition .India is no exception. It
has also embraced globalisation. Globalisation broadly implies free movement of
goods and services and people across the countries. The global corporations of
today conduct their operations world-wide as if the whole world were a single
entity. Globalisation has thrown certain opportunities for India like it can raise
capital from the world market, it can become a premier production centre and it can
attract foreign investors etc .after globalisation, India is beginning to shed its
insularity and trying to become a global giant. There are many international
organization which have facilitated the process of globalisation .chief among them
are the IMF, the IBRD, and the WTO.
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1.4 Globalization: Its Present Status
Globalization has come to mean an integration and democratization of the worlds
culture, economy, and infrastructure through transnational investment, rapid
proliferation of communication and information technologies, and the impacts of
free- market forces on local, regional and national economics. The term
globalization also refers to the increasing interconnectedness of nations and
peoples around the world through trade, investment, travel, popular culture, and
other forms of interaction. Many historians have identified globalization as a 20th
century phenomenon connected to the rise of Western- dominated international
economy. However, there are evidences that several ideologies of Indian origin have
played a significant role in this era of economic. One characteristic of globalization
ion the modern age has been expanding commerce between countries around the
world. The roots of this phenomenon reach far back in history. Long-distance trade
routes grew out of the transportation systems that developed out of the need to move
resources by land and sea. In turn, trade and expansion led to increased contact
between different civilization and societies. Todays globalized world has been
characterized by a brain drain, or exodus of talented people from various continents
to Europe and North America. Business activities are becoming increasingly global
as numerous firms expand their operations into overseas ma rakes. Many U.S.
Firms, for example attempt to tap emerging markets by pursuing business in China,
India, Brazil, and Russia and other Eastern European Countries. Multinational
corporations (MNCs) which operate in more than one country at once, typically
move operations to wherever they can find the least expensive labor pool able to do
the work well. Production jobs requiring only basic or repetitive skills- such as
sewing or etching computer chip - are usually the first to be move abroad. MNCs
can pay these workers a fraction of what they would have to pay in a domestic
division, and often work them longer and harde Most U.S. Multinational businesses
keep the majority of their upper- level management, marketing, finance, and human
resources divisions within the United States. They employ some lower- level
managers and a vast number of their production workers in offices, factories, and
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warehouses in developing countries. MNCs based in the United States have moved
many of their production operations to countries in Central and south America,
China, India, and nations of Southeast Asia. The BPO industry has further outlaid
this phenomenon and has given rise to several issues of development, employment
and economy. Mergers and acquisitions are also becoming more common than in
the past. In spite of their economic benefits to the organizations, these trends have
raised serous issues of social and ethical considerations; the present project will
discuss this impact too in the context of the organization under study.
1.5 Impact on India:
India opened up the economy in the early nineties following a major crisis that led
by a foreign exchange crunch that dragged the economy close to defaulting on
loans. The response was a slew of Domestic and external sector policy measures
partly prompted by the immediate needs and partly by the demand of the
multilateral organisations. The new policy regime radically pushed forward in
favour of amore open and market oriented economy.
Major measures initiated as a part of the liberalisation and globalisation strategy in
the early nineties included scrapping of the industrial licensing regime, reduction in
the number of areas reserved for the public sector, amendment of the monopolies
and the restrictive trade practices act, start of the privatisation programme, reduction
in tariff rates and change over to market determined exchange rates.
Over the years there has been a steady liberalisation of the current account
transactions, more and more sectors opened up for foreign direct investments and
portfolio investments facilitating entry of foreign investors in telecom, roads, ports,
airports, insurance and other major sectors.
The Indian tariff rates reduced sharply over the decade from a weighted
average of 72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly
in the late nineties it touched 35.1% in 2001-02. India is committed to reduced tariff
rates. Peak tariff rates are to be reduced to be reduced to the minimum with a peak
rate of 20%, in another 2 years most non-tariff barriers have been dismantled by
March 2002, including almost all quantitative restrictions.
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India is Global:
The liberalisation of the domestic economy and the increasing integration of India
with the global economy have helped step up GDP growth rates, which picked up
from 5.6% in 1990-91 to a peak level of 77.8% in 1996-97. Growth rates have
slowed down since the country has still bee able to achieve 5-6% growth rate in
three of the last six years. Though growth rates has slumped to the lowest level
4.3% in 2002-03 mainly because of the worst droughts in two decades the growth
rates are expected to go up close to 70% in 2003-04. A Global comparison shows
that India is now the fastest growing just after China.
This is major improvement given that India is growth rate in the 1970's was very
low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico
was more than twice that of India. Though India's average annual growth rate almost
doubled in the eighties to 5.9% it was still lower than the growth rate in China,
Korea and Indonesia. The pick up in GDP growth has helped improve India's global
position. Consequently India's position in the global economy has improved from
the 8th position in 1991 to 4th place in 2001. When GDP is calculated on a
purchasing power parity basis.
Globalisation and Poverty:
Globalisation in the form of increased integration though trade and investment is an
important reason why much progress has been made in reducingpoverty and global
inequality over recent decades. But it is not the only reason for this often
unrecognised progress, good national polices , sound institutions and domestic
political stability also matter.
Despite this progress, poverty remains one of the most serious international
challenges we face up to 1.2 billion of the developing world 4.8 billion people still
live in extreme poverty.
But the proportion of the world population living in poverty has been steadily
declining and since 1980 the absolute number of poor people has stopped rising and
appears to have fallen in recent years despite strong population growth in poor
countries. If the proportion living in poverty had not fallen since 1987 alone a
further 215million people would be living in extreme poverty today.
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India has to concentrate on five important areas or things to follow to achieve this
goal. The areas like technological entrepreneurship, new business openings for
small and medium enterprises, importance of quality management, new prospects in
rural areas and privatisation of financial institutions. The manufacturing of
technology and management of technology are two different significant areas in the
country.
There will be new prospects in rural India. The growth of Indian economy very
much depends upon rural participation in the global race. After implementing the
new economic policy the role of villages got its own significance because of its
unique outlook and branding methods. For example food processing and packaging
are the one of the area where new entrepreneurs can enter into a big way. It may be
organised in a collective way with the help of co-operatives to meet the global
demand.
Understanding the current status of globalisation is necessary for setting course for
future. For all nations to reap the full benefits of globalisation it is essential to create
a level playing field. President Bush's recent proposal to eliminate all tariffs on all
manufactured goods by 2015 will do it. In fact it may exacerbate the prevalent
inequalities. According to this proposal, tariffs of 5% or less on all manufactured
goods will be eliminated by 2005 and higher than 5% will be lowered to 8%.
Starting 2010 the 8% tariffs will be lowered each year until they are eliminated by
2015.
GDP Growth rate:
The Indian economy is passing through a difficult phase caused by several
unfavourable domestic and external developments; Domestic output and Demand
conditions were adversely affected by poor performance in agriculture in the past
two years. The global economy experienced an overall deceleration and recorded an
output growth of 2.4% during the past year growth in real GDP in 2001-02 was
5.4% as per the Economic Survey in 2000-01. The performance in the first quarter
of the financial year is5.8% and second quarter is 6.1%.
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Export and Import:
India's Export and Import in the year 2001-02 was to the extent of 32,572 and
38,362 million respectively. Many Indian companies have started becoming
respectable players in the International scene. Agriculture exports account for about
13 to 18% of total annual of annual export of the country. In 2000-01 Agricultural
products valued at more than US $ 6million were exported from the country 23% of
which was contributed by the marine products alone. Marine products in recent
years have emerged as the single largest contributor to the total agricultural export
from the country accounting for over one fifth of the total agricultural exports.
Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the
other prominent products each of which accounts fro nearly 5 to 10% of the
countries total agricultural exports.
Where does Indian stand in terms of Global Integration?
India clearly lags in globalisation. Numbers of countries have a clear lead among
them China, large part of east and far east Asia and Eastern Europe. Lets look at a
few indicators how much we lag.
Over the past decade FDI flows into India have averaged around 0.5%
of GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows
into China now exceeds US $ 50 billion annually. It is only US $
4billion in the case of India
Consider global trade - India's share of world merchandise exports
increased from .05% to .07% over the pat 20 years. Over the same
period China's share has tripled to almost 4%.
India's share of global trade is similar to that of the Philippines an
economy 6 times smaller according to IMF estimates. India under
trades by 70-80% given its size, proximity to markets and labour cost
advantages.
It is interesting to note the remark made last year by Mr. Bimal Jalan,
Governor of RBI. Despite all the talk, we are now where ever close
being globalised in terms of any commonly used indicator of
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globalisation. In fact we are one of the least globalised among the
major countries - however we look at it.
As Amartya Sen and many other have pointed out that India, as a
geographical, politico-cultural entity has been interacting with the
outside world throughout history and still continue to do so. It has to
adapt, assimilate and contribute. This goes without saying even as we
move into what is called a globalised world which is distinguished
from previous eras from by faster travel and communication, greater
trade linkages, denting of political and economic sovereignty and
greater acceptance of democracy as a way of life.
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2. Review of Literature
Saturday, June 25, 2011
Public Sector Employment
As I showed earlier this month here, our elected leaders caused heavy lay-offs in the
public sector. This comes about despite the mantra of Jobs, Jobs, Jobsbecause
coherent, rational policies are shredding and blowing away in the wind. Budgets
must be cut everywhere because tax increases have become the ultimate sin in
politics. Therefore the first task in Job One, which our elected officials think is JobCreation is, in fact, Job Destruction at the local levelwhich is where most of the
public jobs actually are. Anecdotal evidence, in the form of news reports, has since
amply documented the statistical evidence I presented on June 4. Yesterday the
papers announced huge layoffs and salary cuts in the Detroit Public School System.
TodaysNew York Times projects the likely loss of 7,500 public jobs in Connecticut
because the unions there decided not to disembowel themselves to please the tax
cutters. Another story, also page one, announces that in New York state and
elsewhere, schools are sacrificing librarians to stay within their shrinking budgets. I
expect more red lines when next I produce my chart on Junes employment situation
by sector. The facts are that the bulk of the much-derided public sector is (1) local
and (2) consists of educational services. As of May 2011, all told we had 22.1
million public employees, representing 17 percent of all employment. Of these 22.1
million 64 percent work at the local leveland 56 percent of them are in education.
Of the 22.1 million workers in the public sector, nearly half, 10.9 million, work in
education or in the postal system. If we look at the state and local employment only,
10.3 million of 19.3 million (53%) work in education. And if we look closely at the
9 million who are not in education, we discover that most of them work in such
useful and necessary functions as law enforcement, water and sewage systems, and
other jobs at least as valuable as manufacturing soups or cell phones.Education
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represents 47 percent of all public sector employmentand if we add in postal
services, the percent rises to 49. Topsy-turvy. Teachers, librarians, janitors working
at schools, school bus drivers, special education experts, are paying for the sins of
speculators, hedge-fund traders, and other lords of the universe whoinstead of
going on pilgrimage to Rome in sackcloth are, based on other anecdotal evidence,
once more pulling down monstrous bonuses. It is said that the public employment
created during the Depression by FDR did not really turn things around. World War
II, however, did. We have huge expenditures on war today, of course, but these wars
are not having the same effect. Why? We are not taxing the public to pay for them
and instead of signaling hope with publicly funded jobs, we are radicalizing
those sectors of the working world that attract the socially-motivated, our real
patriots.
Understanding Indias service sector growth in the post liberalization period:
BY BHAVANI ARABANDI
Indias current growth rate of 8 percent has been attributed to the successful
implementation of economic liberalization policies in 1991 that opened the
economy to global corporations seeking to do business in India. These policies
encouraged the formation of partnerships between domestic firms and global
corporations, as well as the entry of Indian firms into the global market. These
developments not only gave a much needed boost to an economy that had been
growing sluggishly, but also seeded broader changes including rising consumerism,
a growing private sector, the increasing presence of multinational corporations and
expanding employment opportunities in India. At present, discussion and debate
over the impact of globalization on the service sector have mainly dealt with
Western concerns about outsourcing, off-shoring and the exodus of service sector
jobs from the West. Conversely, the flip side, the impact of globalization on the
service sector in developing economies such as India, has received little attention.
While the popular media has highlighted the growing consumerism of the Indian
middle class, not much research has been done on the new workplace that is
emerging amidst the shifts in the economy. My research demonstrates that the new
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workplace is emerging for at least two reasons: First, transnational corporations are
moving to post-Fordist systems of production that favor a flexible workforce,
technological innovation and competitiveness. When these corporations move their
services to other nations, they bring with them different, and therefore new, styles of
management. Second, local businesses in India have not been static. The push from
Rajiv Gandhis government towards dismantling the license-permit raj1 and
deregulation in the mid-1980s has helped revive the failing local Indian private
sector. Since then, India has emerged as a competitor in both local and global
markets, and remained viable by adopting elements of global business standards
such as a flexible system of production. Today, in the post-liberalization climate
new private enterprises have come into being, and older enterprises have started to
invest in research and development and on becoming more productive and
competitive. Some larger private corporations, such as Tata Steel, have started to
acquire businesses outside of India, and have made the Fortune Global 500 index of
the largest private enterprises in the world.
Interestingly, the restructured workplace in the private sector (both local and global)
in India has more features in common with the workplace in the West than with the
public sector in India. Within this context of economic expansion and growth in
India, both employees and businesses, whether local or global, find that they have to
adapt to changing market conditions. Businesses struggle to find a common
corporate culture (in various locations), introduce new styles of management to
improve efficiency, accommodate working hours that depend on different time
zones, and manage a professionally educated and highly motivated workforce.
Employees have to adjust to new market conditions where the emphasis seems to be
shifting to individual responsibility and ownership of work, telecommuting,
working in teams, continual training, and shifting boundaries between work and
home. Unlike the public sector in India, rewards in the private sector are given to
employees who are most productive and creative regardless of age and rank. But
since the organization can downsize anyone at anytime, there is also competition
and insecurity among even the best workers.
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Employees in both local and global private enterprises in the Indian services
sector2discuss their work in similar terms. In IT, software services are provided to
customers primarily based outside India, whereas in financial services, customers
can be local, regional and/or international. The organizational structure is generally
flat or horizontal with few hierarchies. This cultivates a culture of informality in
which the work environment is relaxed and employees can approach their
superiors directly. Employees often socialize with their colleagues in celebrating the
successful completion of a project, or participate in Happy Hours after work. The
focus, however, is on getting the work done in the most efficient and timely manner.
To that end, only the most qualified individuals with professional degrees in fields
such as finance, management, marketing, sciences, engineering, and information
technology are selected after careful screening at multiple levels. These individuals
are then given extensive training to fit in not only with the corporate culture, but
also, more importantly, to understand the centrality of service and customer
satisfaction. Most of the work is project and team based. Teams, with expertise in
varied areas from various places inside and outside the corporation, are assembled
to work on projects. Upon successful completion of the project, teams are
disassembled and reassembled for other projects. Employees in these private sector
enterprises (particularly IT and financial services) see themselves as having higher
occupational status than others in the public sector or those in other services such as
Call Centers or national banks.
Despite growing opportunities and the open structure of the new workplace there
are many risks and uncertainties. Businesses no longer have large numbers of
permanent employees. Instead they retain a small number of key individuals in
higher positions such as Managers and Team Leads, and the rest of the team
members are temporary and hired for the duration of the project, often for three to
six months. Further, individuals have to upgrade their skills on a continual basis or
become out-dated quite quickly. Those who cannot keep up with the demands of
work, or do not take the initiative are not a fit with this new workplace and are
terminated. Current attrition rates in the IT industry are between 30-35 percent and
20-25 percent in the financial sector according to National Association of Software
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and Service Companies. Contrary to claims of employee empowerment, work in the
new workplace has led to frequent scrutiny of productivity and employees use of
time and resources. While such processes benefit the organization by cutting costs
and improving efficiency, over time they lead to a loss of skills for the workers,
routinization, and decline in individual initiative and creativity. Finally, the
emphasis on long working hours, nightshifts, frequent changing of jobs, and
individual ownership of work and productivity is leading to an erosion of the
collective identity of the employees in the new workplace. Still, despite these
disadvantages in the restructured workplace in the private sector, there are many
hopefuls waiting in the wings to get a chance to live the Indian dream.
In the pre-liberalization period, the Indian middle class dream was a cushy job in the
Indian civil services or a management position in one of the few remaining British
firms in India with benefits such as access to privileged housing, membership in
selective clubs, a government or company provided vehicle, personal attendants, etc.
This dream, while highly coveted, was within reach to few as it was subject to
reservations or affirmative action policies, limited opportunities, and having the
right connections. In contrast, the Indian dream today, a job in the private sector
with a high salary and benefits such as travel abroad, seems much more attainable
because it is based on merit and performance. Also, unlike the public sector, it does
not have quotas for backward castes and classes (although the Indian government is
attempting to change this). The shift in economic policies and growing opportunities
in the private sector have led to concomitant changes in gender relations, caste and
status orientations in Indian society which in turn have, according to many
observers, led to changes in middle class life in
India. For instance, increasing female labor force participation has brought about
changes to family life. There is a reappearance of extended families in urban areas
where grandparents help with childcare while their parents are at work. Women are
not only contributing significantly to the household income, but are also involved in
decision-making within the family, especially in setting financial goals.
Successfully employed women are able to negotiate with parents about putting off
marriage for a few more years, and have more to say about to whom they get
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married. These women serve as role models to two generations simultaneously, i.e.,
to younger siblings and to parents who now invest in education for girls. However,
it is important to note that while these have been significant changes in terms of
gender relations, they are limited to middle class women employed in the service
sector and their families. Overall, the status of women in India is still very low.
While middle class Indians are participating in the global economy, they remain
traditional as far as caste and status orientations are concerned. For instance,
despite increasing interaction of the sexes in the workplace, marriages are still
overwhelmingly arranged by the parents and are endogamous, i.e., within the caste.
Indian traditions are filtered via consumerism: weddings are very elaborate and
lavish, and dowry, far from declining in modern India, has given rise to demands for
luxury goods and services that are plentiful in the liberalized market. Additionally,
while the middle class boasts a large number of castes, those employed in the
private sector are overwhelmingly upper-caste.
In sum, whether one is employed in a local or a global private corporation, the
workplace in both contexts is being restructured in India. While transnational
corporations are bringing global business standards and new styles of management
from the West, local enterprises are not remaining static. In order to compete in the
global market, these local businesses are rapidly adopting Western business
practices.
Accompanying the structural changes are increased opportunities, risks and
uncertainties for individuals working in the private sector. At this time, restructuring
of the workplace and labor market has not resulted in a political backlash against
globalization or liberalization; however, it is becoming clear that the new workplace
has set into motion transformations in the wider culture, and traditional gender,
status, and caste orientations are being recast and reinvented to blend with
globalization and modernity.
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Chapter.3 Impact of Globalization
The impact of globalization extends from human and social or ethical perspective to
the strategic or technological perspective. Thus it has a wide scope and the present
work attempts to highlight this impact as consequences of globalization and
liberalization. Due to liberalization of economy, several organizations have taken a
number of steps to improve operational efficiency. This includes the introduction of
quality management system, identification of NPAs and finding ways and means to
transform organizations into strategic business units or profit centers. Another step
that was taken in the wake of globalization or in the post-New economic policy
1991 era was the governments decision to disinvest their stake in the equities of
leading public sector undertakings. Eventually many business houses have begun
consolidating their businesses and large number of acquisitions and mergers have
started taking place. With large mergers and the development of new free markets
around the world, major corporations now wield economic and political power then
the governments under which they operate. In response, public pressure has
increased for businesses to take on more social responsibility and operate according
to higher levels of ethics. Firms in developed nations now promote- and are often
required by law to observe- nondiscriminatory policies for the hiring, treatment, and
pay of all employees. Some companies are also now more aware of the economic
and social benefits of being active in local communities by sponsoring events and
encouraging employees to serve on civic committees. Businesses will continue to
adjust their operations according the competing goals of earning profits and
responding to public pressures for them to behave in ways that benefit society.
Among the employment benefits that are prevalent are VRS, ESOP and other fringe
benefits. However, on the recruitment front, as globalization evolves from being a
mere corporate buzzword to basic economic reality, more and more organizations
are realizing that they need managers and workers with skills that conform to the
international standards. The CEOs and senior recruitment consultants have to talk
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about why selecting and developing global managers. Hence organizations are keen
to take care of expatriation and repatriation issues or meeting relocation costs to
keep their employees motivated and to retain the best performers and keep building
a global talent pool. In this era of globalization, it is also necessary to study
corporate governance, a concept that is multi dimensional. It includes the very
fundamental issues like how organizations function in day- to-day dealing with
customers, trade unions, suppliers, shareholders, government and the public. Owing
to so many forces, corporate governance requires more internal discipline over
external accountability. The internal discipline implies that the quality of corporate
governance must be of high order and that workers- management relations are
conceived to achieve industrial harmony. Another astonishing fact in this era of
globalization is the interaction between technological changes, primarily micro
electronic technology, and industrial relations, while looking at the consequences it
is felt that technological changes provide unprecedented opportunities for employers
to gain control over the workforce and workers
3.1 Employment generation and the internal market
From the broader economic perspective, the most important consequence of this
style of economic management has been the neglect of domestic demand. On the
one hand, the attempt to integrate hurriedly with the world market for goods and
services through labour productivity growth results in insufficient employment
generation. On the other hand, the attempt to integrate with the world financial
system, through crippling government spending, has constrained pro-poor social and
economical Sub regional Office for South Asia, New Delhi expenditure, especially
rural employment generation activities. In a mutually reinforcing process of
cumulative causation, India's non-inclusive growth causes and is caused by
inadequate growth in employment, especially for the poorer sections of the
population. It is not always recognized that in a large sized economy like India,
which has a relatively small foreign trade sector, the disadvantage of slower growth
in domestic market size easily outweighs quantitatively even a relatively rapid
expansion of the export market. With expenditure on domestic consumption and
investment goods as the determinants of the internal market from the expenditure
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side of national income, the quantitative importance or the statistical weight of
consumption expenditure far outweighs that of the external market in India, roughly
defined as export minus import. For instance, on a rough estimate, a 1 per cent
decrease in total consumption expenditure in India might require a 12-fold increase
in exports to compensate for the fall in demand (other things held constant) for
maintaining the same level of aggregate demand. The message from such arithmetic
is unambiguous. In the case of India, it would be unwise to depend exclusively on
the expansion of exports for maintaining adequate aggregate demand, and great
caution should be exercised in stimulating export at the cost of domestic
consumption demand. Employment and pro-poor growth would begin to be
complementary once we begin to focus on expanding the size of the domestic
market. Globalization and emphasis on the external market predispose us to look
upon increases in labour productivity as a mere cost-cutting measure. The cost
reduction is important for corporations to increase their market share and their profit
margin. The same logic applies if economic policy makers focus only on the
external market for increasing our share of the global market, but not if the
emphasis is on the internal market. However, once we recognize the importance of
the domestic market, this corporate logic of management for increasing labour
productivity no longer applies. It is easy to see the inherent fallacy of composition
in this corporate view of management. Suppose all corporations in the economy
downsize their labour force by half and the total employment drops to half. If wage
remains the same, labour cost also reduces by half because each person produces
double the amount, but gets the same wage as before. With employment reduced by
half, the total wage bill of the economy also reduces to half. As a result, domestic
purchasing power and the size of the domestic market are reduced. As already
pointed out, in most cases, because of sheer differences in statistical weights,
exports are unlikely to rise to compensate for the loss in consumption expenditure
and maintain the same level of aggregate demand. The problem that the
corporations would now face is the lack of a market to sell their products. Therefore,
even if their profit margin per unit is higher due to the lowering of labour costs, they
might well end up failing to sell a large part of their production and making less,
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rather than more, total profit. This has been described as the consumption or wage-
led 'stagnations regime', particularly in view of the fact that weak expansion of
domestic demand due to a weak acceleration-like effect on investment
Would not stimulate private investment adequately (Bhaduri and Marglin, 1990).
The downsizing of the labour force is only one example of how the microeconomic
logic of cost reduction encouraged by corporate management differs from the
macroeconomic logic of managing the whole economy. The difference between the
microeconomic and macroeconomic logic is not merely10 ILO Sub regional Office
for South Asia, New Delhi a matter of change of scale. The essential economic logic
becomes different due to a possible 'fallacy of composition', which arises from the
failure to take into account the impact on aggregate demand of the various micro
measures intended to cut costs and raise the micro-efficiency of corporations. It
warns us that one part like a single corporation or household is not the same as the
whole of the economy. There are many important examples of such fallacies arising
precisely on this account. A reduction in the wage rate by one individual firm might
benefit it, but when many firms take recourse to the same route of cutting wages, it
leads to a lowering of total demand in the domestic market with adverse
consequences for sales and profits of all the firms. Similarly, more advertisement
might help a firm to increase its market share, provided others do not follow suit.
Therefore, in formulating economic policies for the government, it is essential to
avoid confusing corporate or household management with that of the economy. This
confusion stems basically from the failure to see that major macroeconomic
variables such as labour productivity and wage invariably play two-sided roles in
the economy. They affect both supply through cost, and demand. Through cost
reductions, they tend to affect positively the size of the external market, but at the
same time, through demand reduction, they affect negatively the size of the internal
market. For employment expansion not to degenerate into a self-defeating strategy
of simply transferring income from the state, two mutually reinforcing conditions
have to be satisfied. On the supply side, income generation must be productive for
the society, and in this sense, it has to differ from the pure Keynesian demand
management view of 'digging holes in the ground to fill them up'. This is especially
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important in India because any such pro-poor strategy of growth will become
unsustainable over time without the productive use of unemployed labour. The issue
is not keeping the fiscal deficit down, but ensuring that spending is decentralized in
a way that it helps to create locally useful productive assets. On the demand side,
employment generation has to expand the domestic market sufficiently without
large leaks into imports. This would be more feasible if expansion of employment
were biased heavily towards the poorest sections of the rural population, as
intended, for example, in the National Rural Employment Guarantee Scheme. An
expanding domestic market for the poor is likely to stimulate a pattern of private
investments through the 'acceleration effect', which is more suited in terms of the
composition of goods produced for the less privileged population in the country. It
is from this perspective that an employment oriented growth strategy needs to be
attempted. Merely chasing the target of a high rate of economic growth without
considering simultaneously its employment and distributive implications can turn
out to be counter-productive. Focusing on the domestic market will also enable us to
look at labour productivity from a very different angle. Instead of the exclusive
obsession with cutting costs and restraining wages to improve our international
competitiveness and efficiency through higher productivity, we face the problem of
how to create an expanding domestic market involving the poor and the
economically marginalized. In this context, we must recognize the most obvious
thing, which we seem to have lost sight of in the name of international
competitiveness. Higher labour productivity is desirable, not merely to cut the unit
cost
of production, but because higher labour productivity will provide us with more
goods and services forILO Sub regional Office for South Asia, New Delhi a better
standard of living. This can happen only if higher productivity goes hand in hand
with more employment, but not at the cost of employment growth. Employment
guaranteed at a reasonably satisfactory wage will provide a larger domestic market
for the expansion of employment and productivity. This should indeed be the central
focus of an alternative design of economic policies.
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3.2 Various schemes to reduces unemployment and under-employment
Government took following measures to provide employment and alleviate under-
employment.
Rural work programme: The emphasis on the programme was on the construction of
civil works of a perment nature as would contribute to the mitigation, if not the total
eradication, of the scarcity condition in the area concerned.
Marginal farmers and agricultural labourers:
Under the scheme, families were to be assisted with subsidized credit support for
agriculture and subsidiary occupations like dairy, poultry, fishery, piggery-rearing,
horticultural operation,etc.
Small farmer development agencies: the object of the scheme was to make available
to small farmers credit to enable them to make use of the latest technology to
practice intensive agriculture and diversify their activities.
Integrated dry land agricultural development : under the scheme, permanent work
like soil conservation, land development and water harnessing were undertaken.
These programmes were labour-intensive and were expected to generate
considerable employment opportunities.
Agro-service centers: the schemes provided for assistance for self-employment to
the unemployment graduates and diploma-holders in mechanical, agricultural and
electrical engineering and allied filed and graduates in agriculture and science with
experience in industry or agriculture. It aimed to help in establishing work-shops,
organizing agricultural machinery, repairing and hiring facilities and other technical
services like supply of spare parts, input, etc.
Area development schemes: these schemes releted to the development of adequate
infrastructure facilities like road, market complexs, etc. in area commanded by ten
major irrigation projects.
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Employment gurantee scheme of Maharashtra:
Maharashtra government introduced the employment guarantee scheme (egs) in
1972-73. The scheme was a first to the right to wprk enshrined in the constitution.
The main objectives of the scheme were as under:
To provide gainful and productive employment to an
individual in approved rural work which raise the productivity
of the economy
The work under taken should produce durable community
asset in area.
Productive work of labour-intensive nature like minor
irrigation, water and soil conservation, nall bunding , canal
excavation, land development, a forestation, etc. should be
undertaken.
The work should be implemented departmentaly and to
contractor so that at least 60% of the work expenditure is
incurred ion wages to work and 40% in the form of materials,
equipment, supervisory experts and administrative services.
The scheme was intended to provide employment gurantee
only in rural area. The gurantee was restricted to the
provision of unskilled manual work and was limited to adults,
i.e.; men and women over 18 years of age.
The scheme was particularly designed to help the
economically weaker section of rural society. It is this
potential group which would demand employment under the
employment guarantee scheme.
Jawahar rozgar yojana:
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Prime Minister Rajiv Gandhi announced on 28 th april, 1989 the launching of the
Jawahar rozgar yojana (jry). All the existing rural wages employment programmes
were merged into jry.
Main feature of the scheme
The main emphasis of Jawahar Gram Samridhi Yojana (JGSY) is to create
rural infrastructure at the village level.
Implementation of the Jawahar Gram Samridhi Yojana entirely by the
Village Panchayat
Direct release of funds to the Village Panchayats by District Rural
Development Agencies (DRDAs) Zilla Parishads (ZPs).
Village Panchayats is the sole authority for preparation of Annual Action
Plan and its implementation with the approval of Gram Sabha.
Empowerment to the Gram Sabha for approval of schemes/works.
Village Panchayats can execute works/schemes up to Rs. 50,000/- without
technical/ administrative approval. However, Gram Sabha's approval is
must.
22.5% of JGSY funds have been earmarked for individual beneficiary
schemes of SCs/STs.
3 per cent of annual allocation would be utilized for creation of barrier free
infrastructure for the disabled.
Wages under JGSY will either be the minimum wages notified by the States
or higher wages fixed by States through the prescribed procedure.
Panchayats can suitably relax 60:40 wage material ratios for building up
demand driven rural infrastructure.
15 per cent of funds can be spent on maintenance of assets.
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Social Audit by the Gram Sabha.
Village level Monitoring & Vigilance Committee to oversee and supervise
the work/schemes undertaken.
DRDA/ZP is responsible for overall guidance, coordination, supervision,
monitoring and periodical reporting
Chapter .4 IMPACT OF GLOBALIZATION ON EMPLOYMENT
IN INDIA
Globalization has played an important role in the generation of employment in
India. Since the economic liberalization policies in the 1990s, the employment
scenario in the country has significantly improved. An analysis of the impact of
globalization on employment in India will bring out a number of factors in this
regard.
The wake of globalization was felt in India in the early 1990s when the then Finance
Minister Manmohan Singh initiated the open market policies. This led to a
significant improvement in the gross domestic product of the country and the
exports increased considerably. There was significant rise in the customer base and
it slowly gave rise to the consumer market where the market changes were
dependant on the demand supply chains. In fact, the growth in demand brought a
favorable change and the supply too started increasing. As, supply is directly
involved with employment, more supply led to more production which led to more
employment over the years
Growth of new segments in the market:
Due to globalization and the growth of the consumer market, a number of segments
in various sectors of the industry have grown over the years. This has led to the
significant rise in the rate of demand and supply. In the recent years, a number of
industry segments such as information technology, agro products, personal and
beauty care, health care and other sectors have come into the market. Experts say
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that the introduction of a wide range of sectors have led to the favorable growth of
the economy in the country. With more and more industry segments coming up,
there has been a high demand for quality workforce. As such, lots of young people
are taking jobs in all these segments in order to start a good career.
In the unorganized sector as well, there has been an increase in various sectors
which has improved the rate of employment in the country. As per the recent
surveys, there has been a significant increase in the number of people working in the
unorganized and allied sectors. The pay package in all these unorganized sectors
have also increased to a great extent.
Improvement in the standard of living:
As globalization has put a favorable impact in the economy of the country, there has
been an improvement in the standard of living of the people. The favorable
economic growth has led to the development of infrastructure, health care facilities
and services, per capita income and other factors which have really led to the high
growth rate. It has been expected that the economy in India will grow by around 6-
7% yearly. This growth rate is expected to improve the overall employment
situation more and the per capita income will also increase significantly.
Development of other sectors
Globalization has positively affected the growth of various sectors in India. These
have opened up new employment opportunities for the people. The service industry
has a share of around 54% of the yearly Gross Domestic Product (GDP). From this
figure itself, it is understood that the service industries are doing very well in the
market and as such, plenty of employment opportunities are taking place. In the
other sectors such as industry and agriculture, the rate of employment has gone up.
The industrial sector contributes around 29 % while the agricultural sector
contributes around 17 % to the gross domestic product. Some of the well known
exports of the country consist of tea, cotton, jute, wheat, sugarcane and so on. Due
to the growth of customer base in all these sectors, more and more employment
opportunities are opening up. In fact even young people and freshers are getting
jobs in all these sectors. In the manufacturing sector, there has been a growth of
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around 12% while the communication and storage sector has also grown up by
around 16.64%
Government Initiatives:
To keep pace with the favorable effects of globalization, the government has taken a
number of initiatives. A number of employment opportunities such as Prime
Minister Rojgar Yojana and the CM Rojgar Yojana have been initiated to improve
the employment situation in the rural areas. The Minimum Wages scheme has also
been successfully implemented. In order to improve the quality of the workforce,
effort is also being given to impact education to various sectors of the rural areas.
Under these schemes, new schools are being opened up and attention is also being
given to the welfare of the students. Likewise in the urban sector too, more and
more employment opportunities are being opened up for the youth in a number of
government sectors, banks and so on In order to foster communication and
migration of workforce to various parts of the country to cater to the needs, the
government has also developed infrastructure to a great extent. New roads and
highways are being constructed to increase connectivity.
4.1 MACRO CHANGES
Though the process of globalization has touched every section of society, the impact
on the working class has been more direct and intense. It is evident, considering the
drastic reduction in number of strikes and lockouts from 1201 to 489 over a period
of last ten years, i.e. 1994 to 2003. The most-affected were: West Bengal, Tamil
Nadu, Andhra Pradesh and Gujarat, who together form a category of progressive
states. The number of units affecting closure has also decreased to 88 in 2003 as
compared to 213 in 2002, and consequently the workers affected due to it also
declined to 6978 in 2003 from 10025 in 2002.
4.2 ARRESTING RISING UNEMPLOYMENT LEVELS
According to the recent round of the national surveys, the unemployment rate in
India is 7.2 per cent. This is despite the fact that about 55 per cent of the people are
self-employed. But still there is a strong feeling that these figures are grossly
under-reported, because the poor never get themselves into the registers. According
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to the latest World Bank report, the poverty in India is about 32 per cent, which
implies that the employment is not adequately remunerative. The clashes in Assam
and elsewhere in the country on the issue of Railway
Recruitment is a glaring example showing the acuteness of the problem. According
to a report, railway officials had received about 74 lakh applications for 2000
vacancies. Another startling fact that came to fore is that though the qualification
required for these posts were Class VIII, yet graduates and postgraduates including
20,000 engineers and 3,000 MBA degree holders applied for the vacancies.
4.3 DE-INDUSTRIALISATION RESULTING INTO UNEMPLOYMENT
The major reasons for escalating unemployment are the de-industrialization
process swaying throughout the country, and the reduction of jobs on account of
cutting costs at a feverish pitch as globalisation is underway. Because of
liberalisation policies, Indian markets have been flooded with MNC products.
Unable to face the competition from the MNCs many small-scale industries, which
were a source of employment to many, are closing down. It is estimated that during
the last few years over six lakh units have closed down, and millions of people have
been thrown out of their jobs. Even the report of National Commission on Labor
(NCL), 2002 which avowedly supported the globalisation process (suggested anti-
labour policies) could not ignore the stark reality - A large number of workers have
lost their jobs due to VRS, retrenchments and closures both in organised and
unorganised sector.22 Cutting down the wage bill has become the thrust area for
several organizations. All the technological improvements and mechanisation are
revolving around the concept of jobless growth, i.e. increasing production, but
reducing workforce. The new industries established by foreign capital have not been
able to create enough jobs to absorb those who lost jobs due to de-industrialization.
4.4 OUTSOURCING A NEW TREND
The new trend in industrial production is outsourcing. Outsourcing or job
contracting is a process to get certain activities beyond a companys expertise
through contractors. This not only reduces the managements burden but also
becomes economical. Though outsourcing is an age-old practice in the
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manufacturing industries, now it has become an important phenomenon to reduce
the cost of production. Since the contractors mostly employ casual workers who are
generally unorganised and dont have any job protection or wage protection, they
become a most vulnerable section of the working class.
4.5 CASUALISATION OF WORKFORCE
It is another important feature in the current production process. Most of the firms
are taking casual workers in place of regular employees. Even for regular and
continuous production work they are using temporary workers. With a large reserve
army of unemployed, it is not difficult for the industrialists to find a continuous
inflow of temporary workers. Using contractors for supplying labour is another
important method of getting casual labour. The casual labour is denied benefits like
minimum wages, compensation, insurance, medical, provident fund, etc. Their right
to form unions to protect their interests is also undermined. In this way workers are
the direct victims of Globalisation.
4.6 MULTI-SKILLING OF WORKERS
Another trend in the present day production system is using multi-skilled workers.
This has considerably increased the work pressure on workers and saved money for
the company. In modern management terminology this is also called as functional
flexibility. As a result of bringing so-called labour flexibility and the international
competition through increased emphasis on reducing labour costs, labour saw the
erosion of many benefits? It has lead to further segmentation of the labour market
and the expansion of low-income informal sectors in the economy. This process has
been accompanied by increase in Casualisation, contract labour, subcontracting and
lengthening of working hours, etc.
4.7 WOMEN AND WORK
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The impact of globalisation is more severe on women. Many supporters of
globalisation claim that it is creating more employment opportunities but the fact is
that woman employment has increased only marginally. However, the work23
Participation rate continued to be substantially less for females than for males.
Majority of women workers continued to be employed in the rural areas. Amongst
rural women workers, 87 per cent were employed in agriculture as labourers and
cultivators. While amongst women workers in urban areas, about 80 per cent were
employed in unorganised sectors like household industries, petty trades and services
and construction, etc.
4.8 USE OF NEW TECHNOLOGY
New technologies are supposed to trigger economic growth by bringing about
increased level of productivity, efficiency and profitability. From the management
point of view the speed of operation, cost cutting, accuracy, job flexibility, quality
assurance and reliability, are the most distinguishing characteristics of new
technologies. Yet major undesirable side effects of the new technologies are related
to its negative impact on quality of employment: The gap between remuneration to
skilled and highly skilled as against low skilled is increasing sharply. The
downsizing of industrial units on account of adoption of new technologies is part of
the changing industrial scenario in the postglobalisation era.
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5. Globalisation and the Indian Labour
Employment Growth and Elasticity:
The globalisation process turns out to have performed a double-edged sword for the
Indian labour. In terms of current daily status estimates brought out by the
National Sample Survey Organisation, there has been a significant deceleration in
labour force participation rate to 1.3 per cent per annum during 1993-2000 from 2.4
per cent during 1983-1994. Notwithstanding a higher GDP growth in the latter
phase, employment growth declined to 1.1 per cent from 2.7 per cent in the
backdrop of decline in employment elasticity to 0.16 from 0.52 over the same
period. The sharp deceleration in employment growth has raised fears that economic
growth in the 1990s has been a jobless variety. Besides, there is evidence of
increasing capital intensity almost in all sectors including small un-organised ones
and services particularly in the latter half of the 1990s.
Unemployment Rate:
The significant reduction in labour force participation rate during 1993-2000 has
been mainly on account of lower workforce participation by women particularly in
rural areas. In fact, the number of unemployed stood at nearly 27 million in 1999-
2000 as compared to about 20 million in 1993-94, taking the unemployment rate to
7.3 per cent of labour force from 6.0 per cent. 5In evaluating the state of
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unemployment, it is important to recognize that some degree of unemployment is
normal in any labour market. Even full employment is conventionally defined not as
zero unemployment but as that level of employment when unemployment falls to
the irreducible minimum. However, such level of unemployment has not been
defined so far in the Indian context. Nevertheless, a cross-country comparison
indicates that Indias current unemployment rate remains significantly lower than
several countries like Australia, Philippines, Pakistan and Sri Lanka and is
comparable to Indonesia. However, it remains higher than the rate for China and
Bangladesh (ILOs World Development Report 2000). Nevertheless, one
encouraging development has been the noticeable decline in educated
unemployment rate across rural and urban sectors either among the technically
educated as well as those having secondary education or above.
State-wise Unemployment and Maharashtra:
State-wise, while the highest unemployment rate was observed in Kerala (21 per
cent), the lowest unemployment rate was noticed in Himachal Pradesh (3 per cent)
with hardly any change in ranking of the states between 1993-94 and 1999-2000.
However, the coefficient of variation across states increased significantly in the
1990s. The unemployment rate for Maharashtra, which is albeit lower than the all
India average, increased sharply to 7 per cent from 5 per cent during the period.
For Maharashtra, the key observations about unemployment situation are outlined
below: the rural unemployment rate among the male youth (at 11.3 per cent) was
marginally higher in Maharashtra than the all India average (of 11.1 per cent). For
the female youth, the rural unemployment rate (at 9 per cent) turned out to be lower
than the all-India average (11 per cent). 6 On the whole, rural unemployment rate
among the youth at 10.4 per cent stood lower in Maharashtra than the all India
average of 11 per cent. On the other hand, urban unemployment rate among the
youth (male, female, and the average) was found to be higher in Maharashtra than
the all
India average as also its own rural unemployment rate. :
This underscores the need for proactive policies to generate employment in the
urban sector and especially among the youth, educated and skilled, particularly
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when the organised activity, which dominates the urban sector is suffering from a
near jobless growth.
Sectoral Employment:
While the commodity producing sectors have uniformly indicated decline in
employment elasticity during 1993-2000 over 1983-1994, certain services sectors,
viz., transport, storage and communication and financing, insurance, real estate
and business services have bucked the declining trend substantially. Moreover,
annual employment growth in manufacturing, construction, trade, hotels and
restaurants, transport, storage and communication and financing, insurance, real
estate and business services turned out higher in the latter period. Although, the
absolute level of employment in agriculture remained almost unchanged at 190
million, its share in overall employment declined in the latter period while those of
industry and services indicated sustained improvement. This has been in keeping
with the experience of the rest of the world.
Casualisation and Quality of Employment :
Casualisation of labour, often feared in certain circles in the aftermath of
globalisation, witnessed only one per cent increase in 1999-2000 over 1993-94
coupled with a marginal improvement in the regular salaried class. Real wages of
casual labour also increased faster than in the past both among agricultural and
industrial workers. Further, the employment share of the unorganised sector was
7almost maintained in 1999-00. Furthermore, higher growth of rural non-farm
sector vis-a-vis agriculture facilitated absorption of excess labour from agriculture
in the rural non-farm sector. All these things taken together imply that there might
not have been any deterioration in the quality of employment in the country.
Skilled Labour and Wage Inequalities
Yet another healthy trend witnessed in the post-reform period has been the shift in
the composition of labour force in favour of the skilled labours, in general, and more
significantly in the unorganised sector. The dramatic expansion in software exports
has certainly contributed to this development. As a natural consequence, labour
productivity indicated faster improvement both in organised and unorganised
sectors. While the larger absorption of skilled labours in the unorganised sector vis-
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-vis the organised sector might have brought down the wage gap across, the same
might have widened within the organised sector itself with de-emphasis of wage
parity and narrow gap between the lowest and the highest paid employees. For
example, over 100 out of about 240 PSUs have reportedly not had any pay revision
since 1992 (National Commission on Labour, 2002, art. 4.286)
Organised Employment:
While the employment share of organised sector remained almost the same at
around eight per cent in 1999-2000 as in 1993-94, its employment elasticity came
down close to zero. In particular, public sector, which accounts for nearly 70 per
cent of employment of the organised sector, underwent a drastic decline in
employment elasticity primarily on account of pursuit of rightsizing in the context
of hard budget constraint. On the other hand, private sector, which is closely
intertwined with the developments in the rest of the world, demonstrated
considerable dynamism in terms of improvement in growth and elasticity of
employment even in the face of slowdown in output. This is contrary to the 8
popular pessimistic projections for the post-reform period but in line with the
enhanced role of the private sector in a market economy.
International Mobility of Labour :
The migration of labours across international boundaries is one of the most striking
features of globalisation worldwide. Since Independence, migration from India has
been characterized by movement of persons with technical skills and professional
expertise to the industrialized countries, and flow of unskilled and semi-skilled
workers to the oil exporting countries of the Middle East. During the 1990s,
however, there has been a clear shift in the pattern of labour demand in the Middle
East away from unskilled and semi-skilled categories towards service, operations
and maintenance workers requiring high skills. Besides, there has been a runaway
growth in exports of IT and software services from India - both on-site and business
process outsourcing (BPO) in the 1990s. One direct benefit for the employees in the
IT sector is in the form of Employee Stock Option Plan offered by the employers
which has led to the growing attractiveness of.the sector. All these have enhanced
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the employment opportunities for the Indian labour, particularly when the country
boasts to have very large pool of English speaking people as well as the second
largest pool of scientific and technical manpower in the world. In the process,
sustained remittances from the Indian Diaspora, which is in fact the largest in the
world, have imparted an element of stability in the countrys balance of payments.
Woman Labour :
Globalisation is found to have led to greater feminization of the workforce both in
the developed and developing world. The issue has assumed considerable
importance in view of the acute gender disparity in the country. Here, however, the
signals are not unequivocal with evidence of increased youth unemployment rate
among rural females coupled with a reverse tendency among urban females in
91999-00 over 1993-94. Nevertheless, the coincident increase in youth
unemployment rate among both rural and urban males points to a possible
feminization of the workforce at least in short duration urban informal activities.
Increased flexibility in the labour market may be needed if the country is to engage
women in the work force fully and compete better in international markets.
Child Labour :
Child labour, though undesirable, persists primarily in rural and agricultural
activities on account of socio-economic compulsions. One of the positive features of
the recent employment growth has been the definite decline in the participation of
children aged five to fourteen years in the workforce. One fall-out of the decline in
child labour has been the substitution effect, which favours the employability of
adult females. While the existing literature often identifies poverty as a major
determinant of child labour, evidence across Indian states indicates that the
correlation between poverty and child labour is very weak. Therefore, one should
possibly go beyond the poverty issues and look at areas such as quality of schooling
and spread of primary education.
Industrial Relation :
The phase of globalisation has witnessed silent and significant metamorphosis of the
labour-management relations despite the institutional inertia on the front of labour
laws and regulations. The erstwhile centralised and tripartite industrial relation (IR)
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system has slowly given way to many local bipartite IR systems. Increasingly,
consultation, co-operation and consensus are taking the place of coercion and
confrontation. This is reflected in the reduced number of man days lost at 210
million during 1991-2000 as against 402 million during 1981-90. One of the striking
features during this period is that more man days were lost in lock-outs on the
initiatives of the management than strikes effected by the employees. The new
industrial climate has also encouraged the employers to 10right-size the workforce
by way of closures, technological change and restructuring. Thus, the process of
globalisation has set in motion myriads of forces, which are operating at multiple
channels to transform the landscape of labour in the country beyond recognition. Let
me now turn to the emerging challenges for Indian labour in a globalised world and
the appropriate agenda for action.
Emerging Challenges and the Agenda for Action:
Globalisation has brought the issue of education and skills development to the
centre of the employment scene. The scope for absorption of labour in
manufacturing or services would depend on educational attainments and skills
acquired. As of now, the skilled labour force accounts for hardly around six to eight
per cent of the total, compared to more than 60 per cent in most of the developed
and developing countries. It is, therefore, necessary to orient the educational and
training system towards skill requirements in both formal and informal sectors. The
participation rate of women in the labour market is as low as 18 per cent in India as
compared to 44 per cent in China. The participation rate needs to be raised with
thrust on educational levels, enabling the women labour to reach up in the value
chain. Besides, action by the government and civil society is required to contain the
gender disparity. With globalisation and demands from the developed world for
adherence to the international labour standards, developing countries including India
would be increasingly under pressure to reduce the incidence of child labour.
Therefore, efforts should be directed towards poverty reduction and improvement in
the 11 quality of schooling. Making education compulsory for children is a
necessary condition for the reduction and abolition of child labour. The nature and
structure of the informal sector, which is the most dynamic and employment-
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intensive sector, presents a challenge to the traditional legal arrangements, industrial
relations and collective bargaining. There is need for promoting informal sector
labour organizations like SEWA for textile workers to improve the income and
working conditions of the informal workers. The present policy bias in favour of the
formal sector needs to be corrected by way of tax holiday, duty exemption and
access to credit for the informal sector. The trade unions as institutions for labours
are placed in a soul-searching mode in the new environment. They need to come up
with new types of services for their members and form new alliances. They should
be ready to deal with increasingly heterogeneous labour force such as part timers
and contract workers. They need to make a successful transition from currently
fragmented and political party affiliated system with overdependence on delayed,
legalistic and adjudicatory resolution of industrial disputes to healthy and strong
trade union movement wherein dispute settlement would be based on collective
bargaining and arbitration at the enterprise level. Indias labour laws have
evolved in a manner, which has greatly reduced the flexibility available to
employers to adjust the labour force in the light of changing economic
circumstances. In a globalised world, persisting with labour laws that are much
more rigid than those prevailing in other countries only makes us uncompetitive not
only in exports market but also in domestic market itself. Appropriate changes in the
laws are therefore necessary if we want to see rapid growth. For instance, the
Industrial Disputes Act (Section 5B), which now mandates that companies with
more than 300 workers should obtain State 12Government approval to rationalise
the workforce, has in practice made closures or retrenchment layoffs virtually
impossible. To bypass it, the "mutually agreed" Voluntary Retirement Schemes
have been increasingly resorted to some companies in recent times, although it
works out to be more costly. The provision for State Government permission should
therefore be suitably modified to provide flexibility in restructuring. Similarly, the
Contract Labour Act, which presently allows contract labour only for activities of a
temporary nature, should be amended to undertake contract labour for all activities.
Another issue that has to be addressed in parallel with efforts at labour market
reforms is the need for a social safety net in the form of unemployment
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compensation or insurance in the event of retrenchment. Industrialized countries,
and even some developing countries like China, are able to provide employers with
greater flexibility to hire and fire labour precisely because labour retrenched in the
process of restructuring has the benefit of unemployment insurance. In this context,
it may be mentioned that as part of the initial reform measures in the early 1990s, a
National Renewal Fund was set up for addressing labour retraining and
retrenchment. However, the miniscule corpus of the Fund as well as its poor
utilization has not really served the purpose of putting in place a social security net
for the working class. To reinvigorate the Fund, it may be necessary to earmark
certain proportion of the disinvestments proceeds of both the central PSUs and state
PSUs. In a move tow