Effect of Liberalization, Privatization & Globalization (LPG) on Indian Industries

A Presentation By

Prof. R.Balasubramanian

SSN School of Management & Computer Applications

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Effect of LPG on Indian Industries with special reference to the impact on labor, Industrial safety & Occupational Health.

Globali-zation

Privati-zation

Liberali-zation

IndustrialSafety &Health

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The Genesis A wave of LPG sweeping the entire world in

1990s WTO- the driving force behind LPG To understand the effect of LPG on industry, it is

essential to know about WTO & its ramifications WTO - a development, which has no parallel in

the past, in its magnitude & reach LPG under the new world order impacts every

aspect of human life

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WTO and it’s Impact on Developing Nations

At the conceptual level, WTO visualizes a ‘world order’ where free enterprise will flourish for the benefit of all nations, even while ensuring systemic, institutional and regulatory structures are put in place to protect the interests of various segments

But the ground reality is that there is a wide gap between ‘Precept’ & ‘Practice’- a factor which has been causing lot of anguish to all the developing nations, which is very nicely captured by Mr Kofi Annan in his statement at the opening session of the WTO meeting

-

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WTO and it’s Impact on Developing Nations (Contd.,)

‘We are told that Trade can provide a ladder to better life and deliver us from poverty and despair. Sadly the reality of international trading system today does not match the rhetoric’ -

Mr.Koffi Annan Secretary General –United Nations WTO Stipulations heavily loaded in favor of the

developed nations. Our focus is on impact of WTO inspired LPG on

Labor, Industrial Safety & Occupational Health.

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Implications for labor, Industrial Safety & Occupational Health – An Emerging Picture

For a clear understanding of the implications, we need to consider the following dimensions:

Driving force of WTO inspired LPG is rank commercialism

Environment the first casualty The Global race to the bottom Industrial Renaissance of the East-not an unmixed

blessing and has it’s darker side ILO Excerpts on impact in the spheres of Labor

Welfare, Industrial Safety & Occupational Health

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Driving Force of LPG is rank Commercialism

In the WTO regime, Countries that enforce labor rights are disadvantaged by countries that deliberately violate international labor conventions

Yet, time & again WTO has ruled that it is:1. Illegal for a Government to ban a product

based on the way it is produced2. Governments cannot take into account

non commercial considerations

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Environment the first casualty

The main reason for migration of industries from developed nations to developing nations is the lower costs due to less stringent regulations regarding pollution and environmental rights.

The result is accelerated movement of ‘dirty’ industries overseas and consequently ‘Third world countries are fast becoming a dumping ground for developed nations’

WTO is being increasingly used by corporations to dismantle hard won environmental protections which are attacked as barriers to trade. In 1993,the very first WTO panel ruled that a provision of US Clean Air Act requiring both domestic and foreign producers alike to produce cleaner gasoline was illegal.

In the process environment is the first casualty in the globalised era.

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The Global Race to the Bottom

In the ‘Global race to the bottom’ , MNCs roam the world looking for

1. The Lowest wages2. The most vulnerable work force3. The least regulation of environmental

& occupational health As a result, most manufacturing

activities got shifted from US and other developed countries to China, Vietnam and Taiwan.

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The Darker side of LPG induced Industrial renaissance of the East

In the nineties, people hailed the migration of manufacturing activities from the developed countries to developing countries as the ‘Renaissance of the East’

No doubt industrial development in these countries took a quantum leap.

But the euphoria was short lived as they soon discovered that it was not an unmixed blessing.

In the spheres of labor welfare, industrial safety and occupational health, the picture is quite dismal as is evident from ILO reports published from time to time

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Excerpts from ILO Reports Annually there are two million work related deaths- more

than 5000 a day and for every fatal accident there are around 500 – 2000 injuries depending on the type of job.

For every fatal work related disease there are about 100 illnesses causing absence from work.

Cases of work related cancer and circulatory diseases have increased. The biggest work related killer is cancer causing 32% deaths followed by circulatory diseases at 23%, then accidents at 19% and communicable diseases at 17%. Asbestos alone claims some 100,000 lives annually.

Interestingly, the figures of fatal accidents went up in developing countries whereas it decreased in most industrialized countries.

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Experience of China and South East Asian Countries Study conducted by Ernst & Young in Nike

Shoe’s Kwang Vina Factory in Vietnam Chinese Experience in Guiyu recovery

Plant From Silicon Glen in Scotland to Silicon

Plateau in India, there are serious concerns about long term health and environmental impact of micro electronics industry. India has a lot to learn from the experience of these countries

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Highlights of Ernst & Young Study

Workers at Nike Shoe’s Kwang Vina Factory near Ho Chi Minh City in Vietnam exposed to carcinogens that exceed local legal standards by 177 times in some parts of the plant

77% of employees suffering from respiratory problems

Employees forced to work 65 hours a week (far more than what the Vietnamese law allows), for just $ 10 a week

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The situation in Guiyu In the recovery plant in Guiyu in China, one

finds the workers heating ‘aqua regia’, an acid mixture that will dissolve gold.

Workers inhale acid fumes,chlorine & sulphur dioxide gas all day as they swirl computer chips in the potent acid mix to recover tiny amounts of gold.

The sludge from the process is directly dumped into the river

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The Challenge Ahead Globalization has brought in it’s wake

serious concerns regarding industrial safety & occupational health

However LPG per se cannot be reversed This is not to say that we do not act to

meet the threat posed by Globalization Key to success lies in meeting this

challenge in a pragmatic manner

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Pragmatic & Pro active Approach – The Need of the Hour

Global Threats to workplace health & Safety have never been greater

But so are the opportunities for meeting the threats No doubt the race to the bottom pushes

manufacturing activities to the developing countries causing occupational health & environmental problems

No doubt LPG is converting the developing countries into a dumping ground for toxic wastes

But at the same time, it should also be recognized that India being a founding member of WTO and also it’s predecessor, we cannot reverse the liberalization process.

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Pragmatic & Pro active Approach – The Need of the Hour

Solution lies in facing the issues squarely and take pro active measures at the

1. Economic2. Political 3. Governmental4. Operational and 5. Professional Levels

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Pragmatic & Pro active Approach – The Need of the Hour

Level Recommended Proactive Approach

Economic All International business transactions to be evaluated not only w.r.t commercial indices but also with regard to implications for industrial safety, occupational health, environmental protection etc.,

Political Trade Unions & Labor wings of Political parties should increase their awareness and be sensitive to long term implications of any move in the focus areas of workers’ safety

Government

Take up these issues strongly in the WTO ministerial conference and also lobby for support for such initiatives from other developing countries

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Pragmatic & Pro active Approach – The Need of the Hour

Level Recommended Proactive Approach

Operational

While shopping for Technology negotiating collaborations & entering into strategic alliances, entrepreneurs should be conscious of their social responsibility and have the conviction not to be a party to any arrangement which will be unacceptable to their counterparts in the developed world.

Professional

Plant engineers should ensure that adequate safeguards are put in place , safety regulations of Industrial Safety Act, Environmental Protection Act and other such regulatory mechanisms are scrupulously followed. They should also keep themselves aware of international developments in this regard to ensure that they are pro active in their approach.Create awareness in the minds of the public & stakeholder community. Form NGOs to take up such causes (e.g.) Gene Campaign, India, protesting against ‘New guidelines for testing GM foods’, proposed by us Food & Drug Administration (FDA).

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