Globalization affects the employment situation through trade liberalization, 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 liberalization, also results in reducing the power of trade unions and encourages informal contractualisation and lockouts.
No wonder, the advocates of globalization have always been of the firm view that globalization would result in significant increases in labor-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 developing countries. In the Indian context of post-economic reforms, the rate of growth of the economy and the rate of growth of employment has accelerated, but the economy as also employment remain 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 the Indian context:
- Globalization has resulted in the casualization of labor. Global competition tends to encourage formal firms to shift formal wage workers 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 labor increased faster than in the past- both among agricultural and industrial workers.
- There has been a shift in the composition of the labor force in favor of skilled labor, in general, and more significantly in the unorganized sector. As a natural consequence, labor productivity indicated faster improvement both in organized and unorganized sectors
- International mobility of labor: The migration of labor across international boundaries
is one of the most striking features of globalization worldwide.- Since Independence, migration from India has been characterized by the movement of persons with technical skills and professional expertise in industrialized countries, and the flow of unskilled and semi-skilled workers to the oil-exporting countries of the Middle East.
- During the 1990s, however, there has been a clear shift in the pattern of labor demand in the Middle East away from unskilled and semi-skilled categories toward service, operations, and maintenance workers requiring high skills.
- Besides, there has been a runaway growth in exports of IT and software services from India
- All of these have enhanced the employment opportunities for Indian labor, particularly when the country boasts to have a very large pool of English-speaking people.
- In the process, sustained remittances from the Indian Diaspora, which is, in fact, the largest in the world, have imparted an element of stability to the country’s balance of payments.
- Woman labor: Feminization of the workforce increased after liberalization.
- Child labor: Though undesirable, child labor persists primarily in rural and agricultural activities on account of socio-economic compulsions. But there has been a decline in the 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, cooperation, and consensus are taking the place of coercion and confrontation. This is reflected in the reduced number of man-days lost.