GLOBALIZATION & ITS IMPACT ON

INDUSTRIALIZATION
 GLOBALIZTION:

The word “globalization” is derived from the verb “globalize”, which means “to make
worldwide in scope”. The globalization is the process of international integration arising from
the interchange of the world views, products, ideas and other aspects of culture.

It reflects the “press of denationalization of markets, politics and legal system” for the
emergence of global economy and includes the emergence of worldwide interdependence among
nations propelled by the “unprecedented contraction of space and time occasioned by” advances
in information and communication technology and the new revolution in transportation
technology.

Globalization directly or indirectly affects the socio-economic and political development of

nations. It stimulates and leapfrogs technological advancement in developing countries.
Globalization is view by some scholars as beneficial, inevitable and irreversible; while others
belief that it increases inequality within and among nations, creates unemployment and threatens
social security and progress. This implies that globalization offers opportunities and threats to
most nations. Divergent opinion exists on how well developing nations involved in the
integration of world economies. This is because globalization is a multisided process with great
capacity to change the path of history in many nations.

However, the Second National Commission on Labour has defined globalization as, “The free
movement of goods, services, people and information across national boundaries. It creates and,
in turn, is driven by an integrated global economy, which influences both economic as well as
social relations within and across countries. The opening up of the economy increases
competition internationally as well as externally, leads to structural changes in the economy,
alters consumer preferences, life styles and demands of citizens”1

1 nd
2 National Commission Labour Report, 2002.
The Concept of Globalization has been defined by International Monetary fund as, “the growing
economic interdependence of countries worldwide through increasing volume and variety of
cross border transactions in goods and services and of international capital flows and also
through the more rapid and widespread diffusion of technology.”

The 19th century witnessed the advent of globalization approaching its modern form. In the
history of the world the industrialization has marked the most fundamental transformation in the
life of human. Globalization has given rise to a number of interrelated concerns that include
impact on employment, distribution of income, role of labour standards and mode of labour
activism.

After 1991, Government of India changed its industrial policy and accepted Liberalization,
Privatization, Globalization (LPG) policy. This policy aims at opening of the economy to the
world, leading to completion of industrial changes. Because of competition employers try to cut
down in labour cost. Government has appointed Second National Commission on Labour to
recommend ‘Required changes in labour laws’. However there have been no major changes in
labour laws up till the present. But practices of industrial employers have changed.

India illustrates the contradictions of current globalised and neo-liberal economies well. India
has experienced sustained economic growth over the last two decades, and yet the quality of
employment in the non-agricultural sectors continues to deteriorate. The growth of exploitation
shaped by informalisation processes in India has been aided and abetted by government through
active informalisation policies from the 1990s onwards. The government has been less active in
the area of pro-worker labour market regulation and labour protection.

 POSITIVE IMPACT OF GLOBALIZATION:

There is a decline in the number of people living below the poverty line in developing countries
due to increased investments, trade and rising employment opportunities. Also, there is an
improvement in various economic indicators of the Less Developed Countries such as
employment, life expectancy, literacy rates, per capita consumption etc. Free flow of capital and
technology enables developing countries to speed up the process of industrialization and lay the
path for faster economic progress.
Moreover, Products of superior quality are available in the market due to increased competition,
efficiency and productivity of the businesses and this leads to increased consumer satisfaction.
Free flow of finance enable the banking and financial institutions in a country to fulfill financial
requirements through internet and electronic transfers easily and help businesses to flourish.

 NEGATIVE IMPACT OF GLOBALIZATION:

Domestic companies are unable to withstand competition from efficient MNCs which have
flooded Indian markets since their liberalized entry. It may lead to shut down of operations, pink
slips and downsizing. Moreover skilled and efficient labour get absorbed by these MNCs that
offer higher pay and incentives leaving unskilled labour for employment in the domestic
industries. Thus there may be unemployment and underemployment. Payment of dividends,
royalties and repatriation has in fact led to a rise in the outflow of foreign capital.

With increased dependence on foreign technology, development of indigenous technology has

taken a backseat and domestic R and D development has suffered. Globalization poses certain
risks for any country in the form of business cycles, fluctuations in international prices,
specialization in few exportables and so on. It increases the disparities in the incomes of the rich
and poor, developed nations and LDCs. It leads commercial imperialism as the richer nations
tend to exploit the resources of the poor nations. Globalization leads to fusion of cultures and
inter-mingling of societies to such an extent that there may be a loss of identities and traditional
values. It gives rise to mindless aping of western lifestyles and mannerisms however ill-suited
they may be. It leads to overcrowding of cities and puts pressure on the amenities and facilities
available in urban areas.

 IMPACT OF GLOBALIZATION ON LABOUR PRACTICES:

India is second highly populated country of world and has consequently big labour force in the
world. India like any other nation of the world could not afford itself to remain outside the
clutches of impact of globalization on its economy and industrial relations. Due to preference for
contract labour by the employer the job security of an industrial worker is under threat in the era
of globalization.
With the present globalization in the 1990s, the process of informalisation of the labour force has
exacerbated and taken a new turn. Global competition has forced large scale enterprises of the
formal sector to out-source their production process to smaller informal firms where wage cost
and cost associated with labour and environmental standards are substantially low.

Further, large scale retrenchment of labour has taken place through VRS in pursuit of high
productivity. With the aim of ‘rightsizing’ the firms, creation of new jobs has been outpaced by
job-loss, and surplus labour from the formal sector is being thrown out into the informal. These
two types of informalisation, out-sourcing and lay-off, are increasing the informal economy
enormously, so much so, that today formal labour constitutes just 6 percent while informal
sector, with its already high rate of growth has acquired the enormous size of 94 percent of the
labour force.

Moreover, the dual structure that was distinct in terms of capital labour relationship is no longer
easily discernible as two opposite hold-ups for labour, any longer. The labour force may be best
described as a continuum of labour with different degrees of insecurity, wage structure and
production relation with the exception of one category of highly skilled, highly paid
professionals – the labour- aristocrats, if we may call them. Herein lies the problem of
maintaining labour standards on the one hand and on the other, providing social security for the
labour force, both precipitated by the process of globalization.

 ILO CONVENTION LEGISLATION:

Protecting workers against the risks of loss of earning capacity was part of the International
Labour Organization’s (ILO) agenda when it was created in 1919, and series of conventions and
recommendations was adopted to that end before World War II. These first-generation standards
were geared toward social insurance protecting specific groups of workers against an initial list
of risks (medical care, sickness, unemployment, old-age, employment injury, family, maternity,
invalidity, death).

In face of globalization, ILO tried to respond to the new situation by adopting a Declaration in
1998 on Fundamental Principles and Rights at Work, which changed the normative context for
its action with respect to social security. This was followed by a list of four “principles
concerning the fundamental rights,” – the second generation standards, which are: a) freedom of
association and right to collective bargaining; b) elimination of all forms of forced or compulsory
labour; c) effective abolition of child labour; and, d) elimination of discrimination at work. But
this list does not include social security or even protection of health at work.

In fact, the ILO’s response to the challenges of globalization is precisely the “Decent Work
Agenda”. The Decent Work Agenda has four strategic objectives: rights at work; employment;
social protection; and social dialogue. Bearing in mind the founding role played by ILO in the
history of labour law, this Agenda is fiercely criticized: where trade in goods is subject to a
“hard” law and the fate of men to a “soft” law. The rhetoric of the decent work agenda would
further reveal that apart from labour rights related to child labour and gender equality, which is
unproblematic for economic welfare, the fundamental social and labour rights could not be
incorporated in the rigid World Bank programmes. 2 The decent work agenda sets the bar a good
deal lower than the full set of ILO conventions does, and formal sector labour in proper labour
contracts are likely to have better conditions of work and pay than proscribed by it. On the other
hand, for informal labour ‘decent work’ is, at best, a distant goal far removed from their actual
conditions of work.

Decent work is now the main policy objective for the international community with regard to
labour. In 2006 it became part of the Millennium Development Goals and in 2010 even the IMF
engaged with the decent work strategy.3 By 2011 the ILO had entered into specific bilateral
‘decent work’ agreements with 61 countries.1 But how does this approach work out in relation to
developing countries? That is the overarching topic of this article with a specific focus on the
case of India. India’s interaction with the ILO goes back a long way. India was one of the
founding members of the ILO and also, in more recent times, India’s engagement with the ILO
has been noticeable. Importantly, in February 2010 the Government of India effectively signed
up to the decent work agenda by agreeing a five-year ‘Decent Work Country Programme’ with
the ILO.4

Instead of seeking to establish new legally binding conventions this agenda focused on eight core
conventions within a broad, non-binding framework concerned with ‘fairness’, ‘decency’ and
other value-laden but imprecise descriptors. the precise levels of pay and conditions required and
2
ILO does not enjoy a formal observer status at the WTO.
3
International Monetary Fund, 2006.
4
http://horizon.documentation.ird.fr/exl-doc/pleins_textes/divers12-07/010055071.pdf (last Visited 16/10/2017).
needed in order to achieve the ‘decent work’ stage were not to be fixed by the ILO. What
mattered was a worldwide formal agreement ‘to put in place a social floor for the global
economy’. This new approach accepted the historic defeat of the classic ILO attempt to enforce
social democratic labour standards internationally. However it also represented a welcome shift
in focus of the ILO, away from unionized formal sector workers only towards unorganized
workers in informal employment. Given the ILO’s organizational makeup, where labour is
represented by formal sector labour unions, this was not an easy shift and it still sits uneasily
within the ILO setup.5

The four strategic objectives of the ILO ‘decent work for all’ agenda have remained constant
since they were launched in the 1998 ILO ‘Declaration on Fundamental Principles and Rights at
Work’: 1) Rights at work, grounded in fundamental principles of work and international labour
standards 2) Employment and income opportunities 3) Social protection and social security 4)
Social dialogue and tripartism. In February 2010 the Government of India (GoI) and the Indian
employers and workers organizations agreed a decent work program (DWP) with the ILO. The
ILO hailed it as ‘the biggest and most widespread DWP to be launched by the ILO and social
partners in a country so far’.

 CONCLUSION:

I would like to conclude that, after 1991 we accepted a policy of but there is an adverse impact of
globalization on industrial labour in this system. Workers have virtually have no rights in this
system. In industrial area the ‘hire and fire’ system has spread all over. Cases are pending in
industrial court and some recent judgment court gives adverse decision to labour. No major
change in labour laws have been made but there have been significant changes in practices.
Thus overall Courts, judgments, appointments, strikes are opposed to labour and climate also
changed and tended to favour the industrialist. However the introduction of ILO’s “ Decent
work” agenda has been noticeable and thus, really contributing to the labour force.

5
Concept of Liberalizaton, Privatization and Globalization
,http://dspace.vpmthane.org:8080/jspui/bitstream/123456789/4186/, (Last Visited: 15/10/17).