GLOBALIZATION AND ITS IMPACT ON INFORMAL SECTOR
Submitted By:
Ameen Gupta- 2009tt10774 Parvej- 2009tt10813 Siddarth Sachdeva- 2009ph10746

INTRODUCTION
Globalization comes up with the process of more interconnection between various entities like nations, organizations, individuals, etc. This interaction creates the migration of human resources, technology transfer, capital flow, etc. Thereby, this process of globalization results in the increase in quality, quantity or production and thus makes various organizations profitable. In the race of survival, it enhances the competition level among various players in terms of their brand value set according to the needs of the people. This phenomenon of competition plays a crucial role for these existing service providing players as well as for the end consumer or public at large. For service providing players, it decides the cost benefit analysis and makes it less generally due to the presence of various other players simultaneously. For public, it makes things easily available and at comparatively low prices of varied varieties.
The phenomenon of globalization also generates employment. These jobs are largely created in formal sectors. It also results in employment increase in the informal sector. The formal sector is directly visible in a country and is under scrutiny and supervision of the government through various trade and tax laws. This sector provides people the job security, standard working conditions and wage payment. They also have the basic rights that are being provided by the constitution of a country. In case of exploitation, they can approach the grievance redressal agencies for the enforcement of their guaranteed rights. The recruitment and promotion mechanism is standardized here and thus people have more faith in this sector. The people must have the formal qualification for working in this sector apart from just the required skills. Apart from this various other benefits like housing, provident fund, post-retirement benefit, etc. are also being provided.
The informal sector doesn’t guarantee all these benefits. The people in this sector may not have the required formal qualification necessary to work for a particular job. But they have the required skill for the particular job. These people are generally adapted to work through traditional means and machines. Thus their quality and quantity both suffer. Due competition from players in the formal sector, they face lot of problems like low production and quality, low sale and thus less profit. This situation makes this sector more vulnerable for its survival even. Thereby, even the skilled people have to live in miserable conditions.
INFORMAL SECTOR IN INDIA In India, the informal sector is more prevalent. Although due to globalization and privatization policies adopted in 1991, the establishment of formal sector is strengthening. The international players are also coming in India as the government of India has started liberalizing the trade and tax policies and as well the relaxation in the laws related to local administration for their better adjustment. Even then the formal sector has been able to establish itself in major cities and that in some fields only. In rural areas and mainly three-tier cities, it is the informal sector that plays the prominent role in everyday life.
ROLE OF INFORMAL SECTOR The informal sector plays a crucial role in the lives of middle class and the poor people. Because in the formal sector, the things like electricity, services etc. are generally costly. As they have to take into account the various laws and regulations put by the government while trading. The players in the informal sector don’t need to worry about these regulations put by the government because they are not organized and standardized and thus government is not able to monitor them. In the informal sector, people get things at lower price. Thus, people also don’t have to pay the service tax, etc. which people have to pay in the formal sector. And as well from the past experience and legacy, the people in India have a mindset and thus not willing yet to favour the formal sector over informal sector. As the people can have the schemes of bargaining, barter system, etc. in the informal sector. The informal sector results in low level of competition at national and international level. Thus, the country is not in position to export material leading to less generation of capital. The people also get the good quality products at lower price many times. The prevalence of informal sector or lack of infrastructure in the formal sector results in the less attraction of people from international community. This has a bad impact on the economy of a country as is prevalent in India before 1991. The people don’t have access to modern technology in the informal sector. The people are not well connected to various parts of the world and as well the awareness is not good enough about the current situations prevalent in the country.
The trade reforms in India have played a significant role in deciding the fate of informal sector. These reforms were implemented to strengthen the economy of the country by facilitating various private and some government organizations in various sectors. The tax and trade laws came up liberalizing the existing strict rules for import and export and as well for the establishment of foreign firms in India. But here the people who are in formal sector only have the opportunity to trade outside officially. And as well to maintain the competition position at the international platform, they need to have products of high quality and as well the production is in large quantity. Thereby, in this kind of scenario the people working in the informal sector don’t have enough opportunities to flourish themselves and then they become vulnerable even to their sustainability. But due to establishment of formal sector in India, the people in the informal sector are taking its advantage. As they have to compete in their existing working scenario with their corresponding rivals in the formal sector, thus, they focus on increasing their efficiency and product quality cost wise. They are also getting benefit of the advanced technology as it is being available due to presence of formal sector. They are also becoming more and more technology oriented and aware about rest part of the world. As in many fields, the products are more costly in the formal sector due to imposition of tax duties, etc., thereby the people approach informal sector for purchasing goods specifically people from middle class and poor families.
There has been formation of trade unions and workers associations. These associations help workers against exploitation of their rights. In case of adverse situations; they protest and demand for guarantee of their rights. This provision of workers association has been enacted by the constitution of India. Thereby, it is a crucial platform for workers to guarantee their rights.
WOMEN IN INFORMAL SECTOR
Over the past two decades, employment in the informal sector has risen rapidly in all regions in the world. Until the recent Asian economic crisis, it was only the once rapidly-growing economies of East and Southeast Asia that experienced substantial growth of modern sector employment. Recognizing and, more importantly, counting women's invisible remunerative work would challenge our empirical understanding not only of the informal sector but also of the economy as a whole. Why should we be concerned about women who work in the informal sector? There is a significant overlap between being a woman, working in the informal sector, and being poor. There is also a significant overlap between being a woman, working in the informal sector, and contributing to growth.

Size and Composition
Women are over-represented in the informal sector worldwide. This basic fact has several dimensions. Firstly, the informal sector is the primary source of employment for women in most developing countries. Existing data suggest that the majority of economically active women in developing countries are engaged in the informal sector.

The informal sector is a larger source of employment for women than for men (UN 2000). The proportion of women workers in the informal sector exceeds that of men in most countries. Women’s share of the total informal workforce outside of agriculture is higher than men’s share in 9 out of 21 developing countries for which data are available (Ibid.).

The following table shows share of non–agricultural workforce, female and male, in informal sector and women’s share of informal sector.

| Percentage of nonagricultural labor force that is in the informal sector, 1991/1997 | Women’s share of the informal sector in the non-agricultural laborforce, 1991/1997 | | Women | Men | | Africa Benin Chad Guinea Kenya Mali South Africa Tunisia | 97 97 84 83 96 30 39 | 83 59 61 59 91 14 52 | 62 53 37 60 59 61 18 | Latin America Bolivia Brazil Chile Colombia Coast Rica El Salvador Honduras Mexico Panama Venezuela | 74 67 44 44 48 69 65 55 41 47 | 55 55 31 42 46 47 51 44 35 47 | 51 47 46 50 40 58 56 44 44 38 | Asia India Indonesia Philippines Thailand | 91 88 64 54 | 70 69 66 49 | 23 43 46 47 |
Source: The United Nations, 2000. The World’s Women 2000: Trends and Statistics. Chart 5.13, p. 122

Major Segments of Women Workers in Informal Sector

Role of Women in Informal Sector in India
Anvita Gupta et al state that the women workers do not have a choice to work, or not to work, due to desire need of income. The limited opportunities available to women are mostly low paid, low-status jobs in the informal sector; jobs which do not have any possibilities of betterment, advancement of efficiency or training, to enable them to enter better jobs at a later stage. In the overall state of unemployment and lack of opportunities, women hold a secondary place to men in the race of employment. It has been observed that women find it difficult to enter the structured system of organized sector. It is also found, that there is no economic reason for paying lower wages or giving only a particular type of work to women workers.
Women are poised to take part in the rapidly India expanding economy. They contribute for economic development. The Indian constitution grants women equal rights with men, but strong patriarchal traditions persist, with women’s lives shaped by customs that are centuries old. In most Indian families, a daughter is viewed as a liability, and she is conditioned to believe that she is inferior and subordinate to men. Sons are idolized and celebrated. The overwhelming majority of women in rural areas is afflicted by problems of poverty, unemployment, underemployment. Historically, the sustained the labour of the women has been the pivot of the village economic system. The status of women and the enactment of the constitutional amendments of 73rd and 74th amendments have added new dimensions to the issue of women’s empowerment by making provisions for the compulsory participation of women in local governing bodies and involvement in development activities.
The spread of agro-industry and rural industrialization has increased the possibilities for women to access cash income through self-employment or the setting up of rural enterprises. Wage employment allows women to get out of the relative isolation of the home or their small rural communities and gain self-esteem and confidence. Data collection of women's employment in informal sector India by NSSO as well as by problems in defining what constitutes economic activity for women, particularly in the agricultural and informal sectors.

CHILD LABOUR
In this era of globalization, few issues facing developing countries attract the same amount of popular attention as child labor. To understand the nature and extent of child labor in India, we must first clarify what we mean by “child labor.” Definitions used in government and academic circles can vary a great deal. The Census of India defines child labor as any person under the age of fourteen engaged in one of 59 occupations or processes listed as hazardous under India’s Child Labor Act of 1986.

The widespread occurrence of child labour is another characteristic of the informal sector. Reliable statistics of the number of child workers in India are hard to come by; according to ILO estimates, the number is at least 90 million, while some NGOs put it even higher (Economic Times 2000). The Child Labour (Prohibition and Regulation) Act, 1986 represents a half-hearted attempt by the government to deal with this massive problem - its aim is not to abolish child labour but only to prohibit its use in hazardous industries. Numerous investigations make it clear, however, that all employment is hazardous for children, and that they are regularly maimed, tortured or killed, by accident or ill-treatment, in supposedly non-hazardous occupations such as garment manufacturing, food production and domestic labour

There are some indications that child labour in export production, such as the carpet industry, has increased since liberalization, as reported by Joseph Gathia of the Centre of Concern for Child Labour ( Vivekanandan 1996:167). On the other hand, globalization, by stimulating a worldwide outcry against child labour, has also for the first time focused the attention of the Indian government and Indian trade unions on this problem, as well as providing the possibility of new remedies

Child labour, though undesirable, persists primarily in rural and agricultural activities on account of socio-economic compulsions. One of the positive features of the recent employment growth has been the definite decline in the participation of children aged five to fourteen years in the workforce. One fall-out of the decline in child labour has been the substitution effect, which favours the employability of adult females. While the existing literature often identifies poverty as a major determinant of child labour, evidence across Indian states indicates that the correlation between poverty and child labour is very weak. Therefore, one should possibly go beyond the poverty issues and look at areas such as quality of schooling and spread of primary education.

With globalization and demands from the developed world for adherence to the international labour standards, developing countries including India would be increasingly under pressure to reduce the incidence of child labour. Therefore, efforts should be directed towards poverty reduction and improvement in the quality of schooling. Making education compulsory for children is a necessary condition for the reduction and abolition of child labour.

HEALTH AND INTER STATE MIGRATION
The last two decades have witnessed the emergence and consolidation of an economic paradigm which emphasizes domestic deregulation and the removal of barriers to international trade and finance. If properly managed, such an approach can lead to perceptible gains in health status. Where markets are non-exclusionary, regulatory institutions strong and safety nets in place, globalization enhances the performance of countries with a good human and physical infrastructure but narrow domestic markets. Health gains in China, Costa Rica, the East Asian ‘‘tiger economies’’ and Viet Nam can be attributed in part to their growing access to global markets, savings and technology. However, for most of the remaining countries, many of them in Africa, Latin America and Eastern Europe, globalization has not lived up to its promises due to a combination of poor domestic conditions, an unequal distribution of foreign investments and the imposition of new conditions further limiting the access of their exports to the OECD markets. In these developing countries, the last twenty years have brought about a slow, unstable and unequal pattern of growth and stagnation in health indicators. Autarky is not the answer to this situation, but neither is premature, unconditional and unselective globalization. Further unilateral liberalization is unlikely to help them to improve their economic performance and health conditions. For them, a gradual and selective integration into the world economy linked to the removal of asymmetries in global markets and to the creation of democratic institutions of global governance is preferable to instant globalization.
If properly managed, globalization can lead to important health gains. Global market forces work efficiently in settings where domestic markets are competitive and non-exclusionary, regulatory institutions are strong, asset concentration is moderate, access to public health services is widespread, social safety nets are in place, and rules of access to global markets are non-exclusionary. Under these conditions, globalization reduces opportunistic behavior, rewards effort and entrepreneurship, captures economies of scale in production, increases employment opportunities, and improves welfare by raising earnings, and reducing the prices of consumer goods. An expanding, symmetrical, and non-discriminatory global market can help to incorporate into the world economy those developing nations that have good human and physical infrastructures but narrow domestic markets. Such a global market can also facilitate the spread of North-to South transfer of investment, health and other technologies, and knowledge. With slow growth and frequent rises in inequality, health improvements during the era of deregulation and globalization decelerated perceptibly, especially during the 1990s. In many parts of Africa and countries of the former Soviet Union there was total stagnation or a sharp regression. The infant mortality rate, a key indicator of overall health in developing countries, fell more slowly over the period 1960–98than in previous decades (Table 4), despite the massive increase in the coverage of low-cost, lifesaving public health programmes (vaccination coverage rose from an average of 25% to 70% between 1980 and the end of the 1990s) and the spread of knowledge about health, nutrition, and hygiene among parents. More detailed national data often portray a worse health picture than that indicated in Table 4, which is mainly based on estimates of some time ago by the United Nations Population Division. UNICEF data for the European economies in transition show, for example, that in 15 countries the infant mortality rate was higher in 1994 than in 1990. In sub-Saharan Africa as a whole the 1999 mortality rate for children aged under 5 years was higher than in 1990. In countries affected by large external shocks, sudden and large declines in household income have contributed to subtler but equally pernicious health outcomes. World Bank studies of the impact of the Mexican and Thai financial crises show that, even after the economies of these two countries recovered, health status was still affected. During the transitory but acute recessions, children were taken away from their schools, entered hazardous jobs or prostitution rings, or sustained permanent brain damage if they suffered from acute malnutrition.

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