Question.
Examine the impact of globalization on employment in the formal sector of India.
( UPPSC, UP PCS Mains General Studies-III/GS-3 2021)
Answer.
The formal sector is comprised of jobs that are registered, recognized by the government, and provide some form of social security or benefits to employees like Provident Fund or pension scheme.
Globalization has made many positive and negative impacts on the economy, capital flow, society, and other sectors in India since the 1990s.
The impact of globalization on employment in the formal sector of India is both positive and negative-
Positive impact-
Increase job opportunities; Globalization enabled the capital inflow and opening of the Indian economy to the world, which resulted in multinational companies have established their operation in India. This has resulted in an increase in employability in formal sectors. For example, the demand for engineers, managers, and IT professionals in MNCs has increased since 1990.
Skill development; Globalization has enabled the capital inflow and transfer of new technologies in India. This has resulted in the skill development and demand for skilled workers in the formal sector.
Higher wages;
Globalization led to an increase in business and an increase in the job market. This led to an increase in higher wages in the formal sector. Higher wages have improved the standard of living of many employees and their families.
Negative impacts;
The following are the negative impact of globalization on employment in the formal sector of India-
The exploitation of workers, and job insecurity; Some formal sectors like textile and garments provide very low wages to workers. Many companies in the formal sector outsource their job to contract which make worker exploit and job insecurity.
Increase in inequality; Benefits of globalization has not been equally distributed among all workers in the formal sector; For example, high professional have benefitted from higher wages and better job opportunities while less skilled workers have been left behind it, which increase the inequality in society.
In conclusion, the Impact of globalization on the employment of the formal sector in India is complex. On one hand, globalization leads to increased job opportunities, higher wages, and skill development while other hands it leads to job insecurity, exploitation of workers, and income inequality.
We can say, globalization increased the participation of contract workers in the economy and reduced formal sector employment. It also increased the competition among the industries which may lead to the shifting of industrial units to countries where low wages are prevalent. Therefore, the government of India should focus to address these challenges that benefit both companies and all workers in the formal sector.
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