You are on page 1of 43


Sr. No.

Subjects Covered







Impact of Globalization








Globalisation means free movement of capital, good, technology, ideas and people. 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 2

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, the effects 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 3

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

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, this would 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 are settled 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

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.

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

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.

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 reducing poverty 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.

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%.


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


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.


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 Job Creation 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. Todays New 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


represents 47 percent of all public sector employment and 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


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.


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


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


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.


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 19

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


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,


rather than more, total profit. This has been described as the consumption or wageled '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


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.


3.2 Various schemes to reduces unemployment and under-employment Government took following measures to provide employment and alleviate underemployment. 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.


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:


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. 26

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


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 27

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 67% 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


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


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 antilabour 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


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


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.


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 19992000 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


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


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-


-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 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 8 popular pessimistic projections for the post-reform period but in line with the


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)


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-


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


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 towards laying the foundations for social safety net, a new social security scheme has been recently launched by the Central Government for the informal sector. These efforts need to be strengthened.


The foregoing analysis revealed that the impact of globalisation on employment in India is more of warning signals. The unorganised workers would expand further due to globalisation. Under the present deprived conditions of unorganised sector, this would lead to imbalance in the labour market leading to more supply of labours, low wages and low level of income. This situation would affect the social and economic conditions of the unorganised working population. The unorganised 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. The implications of globalisation for a national economy are many. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level.


It can be argued that the benefits of globalization on the Indian economy would get achieved, only if the negative impacts on employment are settled 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 process on the one hand, and on the other, contribute towards the success of globalisation.



Websites: www.researchpaper .com