Question

How globalization has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country?

Answer 1

• Globalization enabled the global integration of production and markets across nations.

• Multinational Companies (MNCs) based their operations in regions where the cost of labour and resources are less, so as to maximize their profit and increase efficiency.

• Globalization has played an important role in contractualisation and casualisation of Indian labours market.

• Fierce competition has benefited consumers but harmed labourers and suppliers.

• This has had negative impact on the lives of workers.

• They have lost their social security provisions and lack a collective voice to raise for their demands.

• Increased informalization is detrimental as it impacts the long term goals of employment generation.

• There is also the scare of automation which would lead to further job losses.

Answer 2

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How globalization has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country?

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Globalisation along with it brought an idea of Liberalisation and Privatisation LPG 1991. which means less control of the government in the economic realm and greater involvement of the private sector in production and distribution of goods and services. Indian labour sector has been severely affected by globalisation. One of the trends clearly visible in labour sector is growing informalisation. Even government data supports informalisation. As per NCEUS, post globalisation share of informal worker has grown from 91% to 93%.

• Most of the inflowing Foreign Direct Investment went into technology and capital-intensive sector like IT, automobile, etc,
• which mostly are automatic requiring less human resourcesLevel of skill and education
• among Indian workers is very low thus rendering then unemployable in modern hi-tech industries
• Integration with global supply chains has made it necessary for industries to be flexible to survive cut throat competition, this has led flexible labour systems
• Wage system flexibility

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