The effect of Globalization

Published in the Business Journal – “The Minister”, MOP Vaishnav College for Women

Rapid growth in world trade, foreign direct investment and cross-border financial flows is a sign of increased globalization of the Indian and World economy. The worldwide wave of economic liberalization driving these changes has raised significant apprehensions about the implications of globalization for employment and income inequality.

In discussing the impact of globalization on Indian workers the government of India brought a critical focus not only on how various groups in India have viewed globalization but also how informal sector workers themselves have positioned themselves in their struggles to improve their lives. Within a large segment of the Indian Left, globalization is seen as a tool of imperialism and of the West which brings them to a total rejection of it. The trade unionists argue that the downward pressure on labour standards is being exerted by foreign capital and the WTO. Hensman, one of the greatest Indian Economist, however points out that they do not take into account domestic business lobbies that are providing an excuse for the anti-labour policies of domestic industrialists. Their anti-globalization position puts them in alliance with nationalists and the domestic capital. The national union federations have categorically rejected not merely trade sanctions against nations violating minimum rights but any link between trade and workers’ rights.

Most responses to globalization by (domestic) employers in the formal and informal sectors have ranged from outright rejection to qualified acceptance. The first category of employers – i.e. those who reject globalization and want India to leave the WTO – is represented politically by the extreme Right-wing Hindu nationalist RSS (Rashtriya Swayamsevak Sangh) and its affiliates such as the SJM (Swadeshi Jagran Manch). The Bharatiya Mazdoor Sangh (BMS) espouses the same ideology, but, as the ‘trade union wing’ of the RSS, has to protect the perceived interests of its members by opposing any dilution of labour laws. The opposition of the ‘Sangh Parivar’ (i.e. the family of organisations affiliated to the RSS) to globalization and the WTO is part of their extreme xenophobia towards everyone and everything they regard as ‘foreign’.

The second category, which accepts globalization provisionally, has put forward two major demands. The first is protection from competition from imports as well as foreign takeovers. Yet at the same time they urge the government to impose protectionist duties on garments produced in other Third World countries and the demand for deregulation of the labour market, without which, they claim, they cannot face the increased competition resulting from trade liberalization. The only strategy they see for surviving competition from cheaper and better quality imports – apart from imposing duties on them – is to cut labour costs. However there was a clear reversal of this trend in the latter part of the decade. Not only did exports decline as a result of stiff competition from cheaper and/or better quality products from other Third World countries, but even the domestic market began to be invaded by these more competitive products, some of them from countries like Taiwan and South Korea with considerably higher labour standards than India. Even from the standpoint of attracting foreign investments, cheap labour in an absolute sense may not be much of an asset.

The overwhelming majority of workers in India belong to the informal sector. Trade unions have made few attempts to formalize informal labour, with the notable exception of cases taken up to make contract workers permanent. The universal and most urgent complaint of informal workers is instability of employment. The impossibility of organizing and bargaining collectively meant, of course, that other urgent demands, concerning wages and benefits, working conditions, health and safety, paid leave and holidays, and so on and so forth, could never be raised. And job instability meant that even the limited social security benefits available to formal sector workers were not available to them. Garment workers in Bombay as well as beedi workers in Hyderabad whom Hensman had worked with, had some suggestions to remedy this situation namely, to struggle for a certain degree of formalisation of their employment. This implies the registration of all employers and their employees, no matter how temporary the employment relationship is claimed to be. There are provisions for such registration under the Maharashtra Mathadi, Hamal and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969, and the Beedi and Cigar Workers (Conditions of Employment) Act, 1966, specifies that the principal employer rather than the contractor will be considered to be the employer, demonstrating the legal possibilities of undertaking some such formalization. The advent of computers makes registration a practical proposition too.

Women garment workers were especially interested in attempts to impose codes of conduct on retailers in Western Europe and North America. There was less discussion of a workers’ rights clause in trade agreements, but in both cases there was openness to the possibility of using these interventions to help their own struggles, even while the more experienced women activists pointed out defects of the proposals in their present form. Workers felt that consumer pressure on retail companies to ensure respect for minimum labour rights by their suppliers could be used as a pressure point by workers who had very few other alternatives.

On the whole, the proposal for a workers’ rights clause in WTO agreements too has been greeted in a positive spirit by informal sector activists. Once again, this does not mean that all aspects of the proposal are accepted without criticism – for example, the suggestion that it will apply only to export production is seen as a defect – but, rather, that these activists are open to the possibility of using international pressure to secure rights for workers who have little hope of getting them through purely domestic action, a position taken by the anti globalizations.
The important conclusion is that, in spite of increasing globalization, national policies are still paramount in determining levels of employment and labour standards. These policies have to be more sensitive to considerations of international competitiveness, but this by no means implies that policy autonomy has ended or that the reduction of wages and labour standards is the only viable response to increasing globalization.

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