Globalization and labor standards in India.

Globalisation is the new buzzword that has come to dominate the world since the nineties of the last century with the end of the cold war and the break-up of the former Soviet Union and the global trend towards the rolling ball. The frontiers of the state with increased reliance on the market economy and renewed faith in the private capital and resources, a process of structural adjustment spurred by the studies and influences of the World Bank and other International organisations have started in many of the developing countries. Also Globalisation has brought in new opportunities to developing countries. Greater access to developed country markets and technology transfer hold out promise improved productivity and higher living standard. But globalisation has also thrown up new challenges like growing inequality across and within nations, volatility in financial market and environmental deteriorations. Another negative aspect of globalisation is that a great majority of developing countries remain removed from the process. Till the nineties the process of globalisation of the Indian economy was constrained by the barriers to trade and investment liberalisation of trade, investment and financial flows initiated in the nineties has progressively lowered the barriers to competition and hastened the pace of globalisation.

Globalization is an important factor behind the high rate of labor standards in India. The economic liberalization policies, the economic and market growth and the trends of globalization have really made India into a vast consumer market which has increased demand to a great extent. All these factors have positively affected the rate of labor and employment in the country. It was in the 1990s that the economic liberalization policies were first undertaken by the government. The shift towards these open market policies really did a lot to bring about a change and make the country into a vast consumer market. The Gross Domestic Product as well as the exports started increasing significantly. This shift towards the consumer market and the demand supply chains led to the growth of various sectors which provided the scope of employment in the country. The open market economy also gradually led to the growth of the private sector which provided ample employment scope for the skilled workforce. 

Since then, the job prospect in India has really grown up over the years Prior to the economic liberalization policies, employment in India was mainly based on the government and public sector. Most of employment used to be generated in various government enterprises, banks, financial organizations and public sector units. This led to high scale red-tapism, License Raj and other problems of workforce. The standard of labor significantly started getting worse and there were constant labor problems, lockouts, strikes and so on. Due to all these factors, the overall work culture and the labor situation in India suffered a set back.

In India, In order to make conditions more friendly for investors, there is a need for adaptability. Labour legislation, such as the Indian Disputes Act and Contract Labour (Regulation and Abolition) Act, are now under debate, along with issues concerning special economic zones.

With more companies operating internationally, the impact on various business functions and labour laws in India is becoming more pronounced. Globalization, and the need to attract foreign investment, inevitably leads to an attack on a workers’ rights by diluting existing labour standards, as trans-national corporations (such as the World Bank, the World Trade Organization, and the International Monetary Fund) concede to the demands of Multinationals. This dilution of stringent labour standards and strong resistance to any strengthening of workers’ rights (which sometimes become an obstacle to competitiveness in the global economy) is becoming prevalent in India since the beginning of the reforms in the early 1990s, there have been demands from industry for liberalization in the stringent labour regulatory framework. With huge expansion in cross border capital, trade technology and information flows becoming a defining feature of the Indian economy, addressing labour concerns for making conditions more investor friendly would be the next rational step.