Volume 5, No. 10, October 2004


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.





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