Labour troubles in developing countries
I have always been concerned by the fact that growth in India is not inclusive. Though India has been progressing above 8%, there are large pockets of society which are still mired in poverty and misery. These sections of society have their own aspirations and they also want to be part of this progress.
Recent developments in both India and China have shown how ignoring these have-nots can hamper the 'progress' for developing countries. Workers in Honda factories in China had gone on strike on demanding increase in wages. New generation of rural factory workers are no longer happy with less wages and pathetic working conditions. They want to lead better lifestyle. Similar stories happened in India as well. First workers from Hyundai went on strike and then from Nokia (coincidently both factories were in Chennai). These people also demanded better working conditions and wages. Unless concerns of these workers are not addressed, I don't think the growth we are forecasting would be feasible.
This raises another question about sustainability of model of outsourcing to developing countries. I remember reading in one of the economics article that the current low single-digit inflation (which used to be in double digits world over till 80s) and relatively less economic turmoil is result of the outsourcing and low-cost manufacturing. This may have proved beneficial so far, but as people from developing countries come out of poverty and demand better lifestyle, the low-cost advantage with developing countries would evaporate. Some Chinese companies have come up with solution of moving factories to hinterlands, where people are willing to work on lower wages. Even in India, we fear that some country like Vietnam may emerge which would provide cheaper service than India, affecting Indian outsourcing.
But till what level can this continue? To sustain this do we always have to find a cheaper place, where we can outsource? There has to be some way, where we all can reap the benefits of progress. In Thomas Friedman's words- All the poor in India are not asking to stop the progress train, they are asking to slow the train so that even they can get in!
posted by ninad @ 11:03 pm
2 Comments:
good one!
but y depend on outsourcing? thats typical third world country attitude... High time we too have our own identity and not be a dumping ground
Hey, nice article. While outsourcing is good for both the economies participating in it, for large countries like India/China, there will always be places where people will be okay to live at $5 per day and still think it is better than their current state, for the next 50 years. This is because of the huge population living BPL.
Consider Singapore for example, earlier there were many people who did the 'menial' or labour-intensive jobs like construction, maids, maintenance etc. Ever since Singaporeans became affluent as a whole, they shunned these jobs and the expats came from India/Bangladesh/Indonesia and lapped up these jobs. that scenario is unlikely to happen in India for decades (at least 20 yrs).
For businesses, it makes sense to adopt a global strategy, roll it out to regions and let the regions figure out how to do it. If Ford wants to build more cars in India, let the Indian managers decide how. If Alan Mullaly wants to meddle in Ford India's daily affairs, that's a sorry state of affairs.
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