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

Final Impact of Globalization on Employement

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