Professional Documents
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INTRODUCTION
It is true that most of the news paper, magazine, Proceeding of the national,
international seminars, conference and speeches of the most of the political leader is
about the global financial crisis and its impact on dynamic economics of the world. In the
beginning of 21st century world would experienced consistent financial crisis that led to
unemployment, poverty and many social challenges. In the present financial crisis would
leads to closure of 25 international banks and its expected to affect another 52 banks,
many company and shake the economy of the most of the countries. This would teach
good lesson to the world community. This the time to remember the words of Peter
Drucker “Increasingly world investment rather than world trade will be driving the
international economy, exchange, rates, taxes and legal rules will become more important
than wages rate and tariff.”1 Such a taught would remain how important to manage the
money transfer otherwise that would hit the economy, this what we expiring today? “This
phenomenon is resemblance of ‘Casino Capitalism’. It means assets are traded primarily
for speculative profit rather than for the benefits of the real economy which adversely
affecting the lives of millions of ordinary people, who have put their saving and assets at
its disposal. Even those who are not part of Casino Capitalism poor people, trader Etc
may not be able to escape from its Impact.”2
1
Peter F. Drucker “ Managing for the future, Butterworth- Heinemann Ltd,Oxford,1992,pp.35.
2
Dr.Victor Louis Anthuvan, “Hot Money Flows and Financial Turmoil”,The Dynamics and The Impact of
Globalisation,A subaltern Perspective,P-126,May-2006
It is true today “The ILO in its annual report has warned that the existing global crisis
might cause mass unemployment on a global scale. The report states that some 200
million workers could lose their jobs”3. Such situation causes due to fiancial crisis or cost
benefit advantages?
Now the question is does such a situation will not occur in the world and what were our
responses to minimize such situation? And present financial crisis is really due financial
crisis or catch the cost benefit advantages?
GLOBAL VS INDIAN FINANCIAL CRISIS
The global financial crisis, brewing for a while, really started to show its effects in
the middle of 2007 and into 2008. Around the world stock markets have fallen, large
financial institutions have collapsed and governments in even the wealthiest nations have
had to come up with rescue packages to bail out their financial systems.
On the one hand many people are concerned that those responsible for the
financial problems are the ones being bailed out, while on the other hand, a global
financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-
connected world. The current financial crisis evolved quickly due to banking crisis. This
would cut the job of many people in India. The problem could have been avoided, let we
see what the lesson we had learnt from history.
Why it’s important because most of the financial crisis states from the
failure of the banking systems would automatically leads to the financial crisis in
the country. If one host countries banking system is weaker is the case in the today
LPG ear it typically hits the entire nation wherever that country’s holds foreign
operation in variable any types of industry. It is really note worthy because for the
last twenty decades Indian has 6 banking crisis where as United stated for the 10
decades its has more than 10 crisis. Than we thank to the Indian prudence
financial systems. Then why such financial crisis has big effect in Indian
economy. How it has big hits in the employment of the Indian labour?
“In 2008, global unemployment increased by 8.4 million and global job losses
could hit 50.4 million for 2009, according to the International Labor Organization”4
It is crystal clear from the above statement that three Asian region had contributed
maximum percentage of global employment creation despite highest number of the
people has lost their job only in India.
Over all decline in employment in export unit has observed to be 1.57 lakh
compared to increase employment in non exporting unit.”8
6
International Labour Organisation , 4th February 09
7
Ministry of labour and Employment,Shri Harish Rawat in Written reply in Rajya Sabha.
8
Results of third quarterly survey on effects of economic slow down on employment in Indian(April to
June 2009) Brought out by labour bureau.
STATE OF EMPLOYMENT
Such situation emerged today in the name of financial crisis perhaps price were
increased, sale too increased and profit would have touches couples of digits more than
the previous quarter. Even than lay off, pay cut, no bonus, retrenchment and termination
continued in the most of the industries especially sever ice sectors.
A survey report of ASSOCHAM stated that “Seven key industrial sectors would have
nearly 25% of lay off in next 2 weeks.”9
Senior industrialist met also went off with failure that government has offers special
crisis panel for consider the future action but industrialized has promised that they would
not resort to lay off and perhaps there is a possibility of termination in the of non
performance.
According to M.K.Pandhe secretary of the CITU “ Lay off, closures and termination
have began in a big way.
9
Association of chambers of commerce and industry
EAST VS. WEST STRATEGY FOR HANDLING FINANCIAL CRISIS
WESTERN INDIAN
Hiring Freeze 25% Restructuring 67%
Restructuring 23% Slower Rate of salary 51%
Salary Freeze 12% Hiring freeze 62%
Salary reduction 4% Reduced work 10%
Pay reduction 3%
Early Retirement 15%
i) Business daily The Economics Times, Pothen Jacob, Head Capital group,
Watson Wyatt India.
"In the absence of a structured social net, the implications of a workforce reduction are
both economic and emotional," writes Jacob. "Companies should first consider
approaches that avoid layoffs."10
The above table shows that west companies are lenient in terms of reducing employ
where as in India reduction is higher. Hence we needed to protect at least high percentage
of job cuts in the name of financial crisis
We must collect transparency from the company where the job cut higher.
We must check periodical what is the status of employee in India through
ministry of labour even in the service sectors as we did for reducing child labour.
Every company needs to update the consolidated balance sheet for employees.
Which must gives the information about job offered, job cut ,lay off and attrition
etc.
10
Job Cuts vs. Pay Cuts: In a Slowing Economy, What's Better for India?: India Knowledge@Wharton
(http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4333)
For avoiding financial crisis world community will have think of common
currency for international trade which is not the currency of any country as
Keyens suggest in the second world war II
These things would better helps to mange the employment status in India
CONCLUSION
India’s emerging as the 12th country in the world with trillion – dollar economy
could prove to be mixed blessing. Growth declined to 7.3% in 2008, down from 9.3% in
2007 Current Government estimates are for approx 6.5% to 7.5% growth in 2009,but the
IMF forecast is for growth to fall to 5.1% As economic growth contracts Demand for
labour has fallen, Large-scale job losses in some sectors, Rising unemployment &
Underemployment, Downward pressure on wages, SMEs have been hit hard, Informal
economy and has expanded, Reverse migration has increased”11 Rising unemployment in
the Asia-Pacific Region Low estimate 7.2 million additional unemployed. Over 2009 and
2010, an estimated 20.3 million additional jobs will be needed to absorb India’s growing
labour force .There is very little chance that a sufficient number of new jobs will be
created to keep up with expected labour force growth. Wall street would affect Dall
street consistent it would affect all the people in main street. Hence it’s very serious to
take care labour market and poor people of this country .
11
ILO,The fallout in Assia: Assessing Labour market impact and national policy responses to the global
financial crisis,18-20 Feb,2009