Negatives

♤ Indian Economy has become more vulnerable to global shocks like East Asian crisis 1997, European crisis, Global Financial crisis (2007-08) etc.

♤ Globalization has adversely affected many established companies (like organisations manufacturing Ambassador Cars or Fiat cars etc) which failed to face competition from established global players.

♤ Steep and fast reductions in custom duties have snatched large part of Indian market from Indian Industry and passed it on to imports from established global players.

♤ For its survival in the face of global competition, Indian industry has transformed itself from labour intensive processes to Capital intensive processes by adopting global technologies and automatic machinery. This has resulted in high rate of unemployment in India. Unemployment is the biggest challenge for Indian Government today.

♤ There has been a tremendous increase in consumerism for goods and services.

We may call globalization, at best, a double edged weapon. It has helped Indian consumers to enjoy all high Quality global brands. It did help Government of India to tide over its serious foreign exchange problem, though temporarily, by enabling it to get loan from World Bank. But critics cite serious erosion of control of Indian Government over its economy and the loss to local Industry as setbacks.

7.1. Impact of Globalization on Employment in India

Globalization affects the employment situation through trade liberalisation, through encouraging exports and imports and through increasing incentives for investment and innovation. It also encourages FDI which supplements domestic investment and leads to higher growth of the economy. Globalization, which is often combined with domestic liberalisation, also results in reducing the power of trade unions and encourages informal contractualization and lock outs.

No wonder, the advocates of globalization have always been of the firm view that globalization would result in significant increases in labour intensive exports thereby promoting employment and income generation in developing countries. Simultaneously, larger flows of FDI would result in increased investment in Greenfield areas and would lead to accelerated direct and indirect employment and income growth in the developing countries.

In the Indian context of post economic reforms, the rate of growth of the economy and the rate of growth of employment have accelerated, but the economy as also employment remains undiversified. Both interpersonal and inter-regional income inequalities remain high and seem to have increased. The quality of employment remains very poor for a major portion of workers. The following points may be noted in Indian context:

♤ Globalization has resulted in casualization of labour. Global competition tends to encourage formal firms to shift formal wageworkers to informal employment arrangements without minimum wages, assured work or benefits. It encourages informal units to shift workers to piece-rate or casual work arrangements without assured minimum wages, or benefits.

♤ Real wages of casual labour increased faster than in the past- both among agricultural and industrial workers.

♤ There has been a shift in the composition of labour force in favour of the skilled labors, in general, and more significantly in the unorganised sector. As a natural consequence, labour productivity indicated faster improvement both in organized and unorganised sectors

♤ International mobility of labors: The migration of labours across international boundaries is one of the most striking features of globalization worldwide.

o 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.

o 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.

o Besides, there has been a runaway growth in exports of IT and software services from India

o All these have enhanced the employment opportunities for the Indian labour, particularly when the country boasts to have very large pool of English speaking people.

o 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 country’s balance of payments.

♤ Woman labour: feminization of the workforce increased after liberalization.

♤ Child labour: Though undesirable, child labor persists primarily in rural and agricultural activities on account of socio-economic compulsions. But there has been a decline in participation of children aged 5- 14 years in the workforce. There has been a substitution effect, which favors the employability of adult females.

♤ Industrial relations: 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.