1. 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? (CSE Mains 2016)GS-II 2016

          Globalization enabled the global integration of production and markets across nations.  Multinational Companies (MNC’s) base their operations in regions where the cost of labour and recourses are less, so as to maximize thier profit and increase efficiency. Fierce competition has benefited consumers but harmed labourers and suppliers.

           Companies have pointed out  that strict labours laws of India act as a hindrance for their businesses. Inorder to circumvent them companies have increasingly relied upon contractual labour. They want an easy hire and fire policy. Government has allowed for flexibility in labour laws to  attract foreign investment. However, there has been increasing demand for more reforms especially in labour laws.

           India needs to generates labour intensive jobs. The government had  identified  leathers apparel and shoes as core areas to boost production. Government intervention should be balanced and take into consideration the genuine concern of MNC’s. Arbitrary minimum wages and stringent labour laws might lead them to shift their operation outside India. There is also the scare of automation  which would lead to further job losses. The government should explore alternatives such as Universal Basic Income to secure a living wage (Economic Survey of 2017 had mooted  upon the idea) .

           Thus globalization has played an important role in contractualisation  and casualisation of Indian labours market . 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. The International Labour Organisation had called for fairer globalisation.