Impact of Globalisation on workers

and shrinking employment opportunities

The aim of the Globalisation is to have unfettered flow of finance capital the world over.
While the maximisation of profits is in any way an integral part of capitalist dynamics from
its inception, globalisation seeks to crush in a frenzied pitch, all the rights of the workers won
over decades to take the law of maximisation of profits to unprecedented levels. In this
process, Globalisation has brought out some important trends in the production process,
seeking legislative changes which are affecting their job opportunities, working and living
conditions, pushing the workers’ lives to the brink.

Though every section of society was hit by this imperialist onslaught, the attack on
workers is more direct and severe. The first causality in this attack is the declining
employment opportunities i.e their source of living itself. The second serious impact on the
working class is their deteriorating working conditions.

Unemployment escalating to the unprecedented levels

According to the recent round of the national surveys the unemployment rate in India is
7.2% i.e. about 7 crore people. This is despite the fact that about 55% of the people are ‘self-
employed’.

The unemployment figures published by the government are grossly under-reported and
misleading. The official unemployment rates are low because the poor never get themselves
into the registers of unemployment. According to the latest World Bank report the poverty in
India is about 32%. In other words much of the employment is not adequately remunerative.

The earlier 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 Railway
official sources they have received about 74 lakh applications for 2000 vacancies. While the
qualification required for these posts is a pass in Class VIII, graduates and post graduates
including 20,000 engineers and 3,000 MBA degree holders were among the applicants.

The major reasons for this escalating unemployment are the de-industrialization process
swaying throughout the country and the reduction of jobs for cutting costs at a feverish pitch
as globalisation is underway. Because of liberalization policies, Indian markets are flooded
with MNC products. The MNCs are crushing already beleaguered small capital. Unable to
face the competition from the MNCs many small scale industries, which are the main
employers are closing down. The onslaught of globalisation is such that under the wheels of
juggernaut through privatisation the huge Public sector companies are sold to the MNCs and
the big bourgeoisie for a song. In the last few years six lakh units have closed down and
millions of people have been thrown out of their jobs. Even the Report of NCL, 2002 which
avowedly supported the globalsiation process and suggested anti-labour policies too can not
ignore the reality staring on the face: "A large number of workers have lost their jobs due to
VRS, retrenchments and closures both in organised and unorganised sector. Exact number is
not available. No data have been compiled by any State governments"

Cutting down the wage bill has become the thrust area for the imperialists. All the
technological improvements and mechanization are centered around the concept of ‘jobless
growth’ i.e. increasing the production and reducing the workforce. New industries established
by foreign capital have not created enough jobs to absorb those who lost jobs in the process of
de-industrialization.

According to the report of May 2002, a special group on Employment opportunities

constituted by the Planing Commission, the rate of employment growth had declined from an
annual average of 2.8% in the period 1983 and 1993-94 to 1.07% in the period between 1993-
94 and 1999-00. This happened despite a significant acceleration in the recorded rate of
economic growth, from an annual average of 5.2 percent in the earlier period to 6.7 percent.
As a result of this the unemployed population had increased from 20.13 million to 26.58
million.

The condition of those who are employed is no better. Most of the workers in India are not
only under-employed but working under horrible working conditions and increased work
pressure. Flexibility of deployment of labour is the new mantra of the globalisation period.
Flexibility of labour means employing labour at the whims and fancies of the employer.
Workers are hired and fired as per the convenience of industrialists. Keeping the workers
whenever there is a demand for their products and firing them when the demand falls. This
flexibility of hiring workers facilitates the management to maintain the wage bill at the
minimum level and pushes workers into permanent uncertainty.

Capitalists are asking for freedom in dealing with workers. Because of this approach of
industrialists, the status of worker is undergoing a see a change. "Restrictions on the hiring
and firing of workers are identified as one of the challenges of doing business in India". The
imperialists and big bourgeoisie want ‘hire and fire’ policy to be legalised. This is the remark
of World Development Report, despite the fact that more than 90 percent of workers are
under the unorganised sector who do not have any protection of labour laws whatsoever.

According to the Second National commission on Labour Report, a mere 8.3 percent of the
Indian labour force is organised, the majority of which mainly belongs to the public sector.
Estimates say that no more than 2 to 3 percent of the labour force in India has access to
assertion of labour rights through the collective bargaining process.

The new trend in industrial production is outsourcing. Outsourcing or contracting out is a

process to get certain activities outside their expertise through contractors. This will not only
reduces the management’s burden but also becomes economical. Though outsourcing was an
age-old practice in the manufacturing industries, now it has become an important
phenomenon to reduce the cost of production. Since the contractors generally employ casual
workers who are generally unorganised and don’t have any job protection or wage protection
and hence become a most vulnerable section of the working class.
 Casualisation of the work force 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
having casual labour. This casual labour is not only denied benefits like minimum wages,
compe-nsation, 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. In this present phase of
Globalisation to enhance the profitability by cutting down the wage bill the whole production
process is being restructured. This restructuring process has adversely affected the working
class.

Since the late 1970s, a relentless process of casualisation of employment has been under
way. In 1983, 31.5 percent of the employees are recorded as casual, 7.5% were salaried and
61 percent self employed. According to the National Sample Survey records of 1999-00, the
casual employees increased to 37.3%, salaried employees decreased to 6.7% and self
employed has fallen to 56%.

The decline in the already modest contribution of the organised sector shows the same
trend of a rapid deterioration in the quality of employment. In 1990, the total employment in
the organised sector, with the public sector amounted for over 71% of the total. Up to 1997,
there was some increase in the employment of organised sector and after that there is some
steady decline. In the net, recent figures available for the year 2001, the organised sector is
27.79 million of which about 69% is in the public sector.

Another trend the present day production system is using multi-skilled workers. It means
using the same worker from different operations to do other jobs. This has considerably
increased the work pressure on workers and saved money for the capitalists. In modern
management terminology this is also called as "functional flexibility".

As a result of bringing so-called labour flexibility and the international competition, which
led to increased emphasis on reducing costs, mainly labour costs, in order to retain both
domestic and international markets, labour saw the erosion of many benefits which they had
earned through past struggles. It leads to further segmentation of the labour market and the
expansion of low-income informal sectors in the economy. This process was accompanied by
increasing casualisation, contract labour, subcontracting, house working and lengthening of
working hours.

Another aspect which has seriously affected the working class is with liberalisation and
structural adjustment policies, agricultural subsidies were cut and the food prices are moving
towards international prices which are typically higher than domestic prices. As workers both
in urban and rural area as well spend a large share of their income on food, the real wages of
the workers have gone down adversely affecting their living standards.
 With the introduction of mechanization, demand for skilled workers would increase and
the gap between the wages of skilled and non-skilled worker will increase. Various studies
conducted in the underdeveloped countries, which have undertaken trade liberalisation under
the directives of the WB and IMF have empirically shown that wage inequality has
considerably increased.

The impact of globalization is more severe on women. Many supporters of globalization

claim that it is creating more employment opportunities but the fact is that woman
employment has increased only marginally. And it is only in the flexible and cheap labour
category catering mainly to the needs of contract works and the informal sector. Of course
there has be an increase as sex objects in the tourism, advertising and entertainment sectors.

There is another factor for women employment. With the drop in the primary worker’s
wages and employment, women are typically called upon to help sustain household income.
In other words, more women are pushed into the labour market. According to World
Development Report [WDR] (1995) relative position of women has often deteriorated under
structural adjustment, because women, who are mostly employed in low-wage informal
sectors are more vulnerable than men.

The reforms with the help of the restructuring process, have further accelerated the
segmentation of the labour market through informalisation of the economy which has spelt
deterioration of labour standards. More and more skilled and unskilled workers retrenched
from the formal sector have sought employment in the informal sector.

Changes in labour laws

The MNCs and big bourgeoisie want key changes in the labour laws. They argue that
labour is over protected. The essence of their endevour is to nullify all the rights won over the
decades through the change of labour laws. Their essential target is on two pieces of
legislation. They want freedom to close industrial units and they want to use contract labour
as the primary method of employment (whom they can hire and fire at will). The Industrial
Disputes Act, the legislation which most employers clamour for abolition. The industrial
dispute Act of 1947 whose stated objective was to protect workers from the threat of unfair
dismissal and with lot of loopholes accept the right to strike by the workers. The other one is
The Contract Labour (Abolition and Regularisation) Act, 1970. It is obvious that industrial
houses will greatly benefit if these two legislations are dismantled. Companies can hire and
fire at will on contractual terms that are far more onerous for workers.

The Second NLC has recommended on changes in labour laws on the same lines as
demanded by the MNCs and big bourgeoisie. Its recommendations free are to employers from
the obligation of obtain-ing prior permission from the government for closing down
establishments employ-ing up to 300 workers. Worker will however be entitled to two
months’ notice or pay in lieu of notice in case of retrenchment.

The employees of units, with more than 20 and more workers could be closed by payment
of 20 days salary. This category includes the majority of industrial units India.

In this new economic environment of stabilisation and adjustment programmes, firms are
responding by introducing new technologies and workplace laying-off business, retrenching
workers and cutting costs. These new technologies are supposed to engender economic
growth by bringing about increasing levels of productivity, efficiency and profitability. The
speed of operation, labour saving, accuracy, variety, quality of product and reliability, are the
most distinguishing characteristics of the new technologies from the management point of
view. However major undesirable side effects of the new technologies are related to its
negative impact on employment and job impoverishment.

Industrial units offering VRS often require more workers. Therefore they offer VRS to
their permanent workers, claim Income Tax benefit on their compensation and simultaneously
recruit as temporary or badli workers who are not only relatively less costly but are also more
"flexible".

The offensive of capital is tremendous

See how the NCL reports of this phenomenon after the post "reforms" period, noting that
there are more man days lost due to lockouts rather than to strikes (13 crore due to lock outs,
and 8 crore due to strikes between 1991-2000). The NCL admits: Conditions of employment
have been uncertain, and many workers do not seem to be willing to go on strike or resort to
action that may put their jobs in jeopardy. But employers seem to have acquired more
confidence and are resorting to lockouts more often. The agreements that are arrived at too
are more in favour of the managements. This reflects a changed situation.

The downsizing of industrial units, VRS, shrinking job market, changing of labour laws in
favour of employers are all part of the changing industrial scenario in the globalisation period.
The judiciary which is part of the regime is playing its anti-worker role. There are a series of
Supreme Court decisions, which patently serve the neo-liberal agenda of the imperialists and
big bourgeoisie. The SC’s dictum of banning or restricting bandhs, its stamp on the most
draconian law — ESMA, and the amended version of it by TN government, its
pronouncement of making all strikes by government employees as ‘morally and legally
invalid’ thus striking at the very roots of the rights of the people. Its recent outpour is on
‘violence’ of workers at the time of hartal or strike, are all indications on how the judicial
system has fully backed the imperialist agenda.

This is unprecedented. The summary dismissal of over one lakh employees in TamilNadu
is a clear signal. Workers have to take up the new challenge and respond. Thousands of
workers are already are on the streets who became victims of the liberalisation process
initiated in the 1990s.

Imperialism and all exploiters are monsters with clay feet. If the working class rises like a
tornado like in the Paris Commune, or in the Bolshevik revolution and in various social
revolutions, the monsters will be swept away. The Indian working class has to play its
historical role. Then oppression will come to end.