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Globalisation & Industrial Relations


What is Globalisation?
Globalization is the free movement of Goods,
Services People and Information across National
Opening of economy increases competition
internationally and leads to structural changes in
economy and alters consumers preference, life
style and demand of citizens
In other words it is the world wide production
and marketing of goods and services by
Multinational enterprise.

Industrial Policy Prior to


In 1948, immediately after Independence, Government of India introduced the

Industrial Policy Resolution ( IPR the regulato ry mechanism for
Industrialisation )
After the adoption of the Constitution and the socio-economic goals, the
Industrial Policy was comprehensively revised and adopted in 1956
.The 1956 Industrial Policy Resolution gave primacy to the role of the State to
assume a predominant and direct responsibility for industrial development.

The Policy Resolution of 1956 also identified the following three categories of

those that would be reserved for development in public sector,

those that would be permitted for development through private enterprise with
or without State participation,
and those in which investment initiatives would ordinarily emanate from private


The Government will ensure that the public sector plays its rightful
role in the evolving socio-economic scenario of the country.
Government will ensure that the public sector is run on business
lines as envisaged in the Industrial Policy Resolution of 1956
To meet new challenges, from time to time, it was modified
through policy statements declared in 1973, 1977 and 1980.
Govt also encouraged regional development and ownership
The Govt still maintained the control on Industrial Development
through Licensing policy , MRTP Act, Export Import Policy, SSI
reservation, and Location Policy

Consequence of Regulated Economy

Large no of Sick PSU
Restricted growth in key heavy and Infra

Poor share of Foreign Trade

Disparity in Development

Need for/Gateway to Globalisation

Indian Compulsion: Poor infrastructure development being depended on Govt for
All heavy industries like Steel, Cement ,Mining depended on state
Other areas like Telecom, Electricity, I&B, Banking, Insurance,
Shipping , etc being under regulating environment needed large
scale expansion and cannot be funded by Govt
World Bank pressure for opening up to extend funding support for
Large scale unproductive employment in PSU leading to poor
growth and sickness
Low mobilization of saving
Poor balance of payment position

The Surge of Activities

Incoming MNC in all commercial operations in India .

Increase in FDI and FII

New employment opportunity :- BPO, Call Centre, Off shore consulting.

Opening for small scale service activities

Merger ,acquisition and Consolidation

Stress on Core Competency

Expansion of service industries

Closer of industry adopting old technology


Disinvestment Affecting ownership of business, work
organisation, employment practice etc.
Deregulation - Labor laws leads to erosion of the accrued
interest of workers and trade union
Concern of industries to remain globally competitive was given
outmost priority
Decentralization -Shift in IR from Macro to micro from industry
to enterprise
Lead to weakening of bargaining power of unions
Industry adopting core, casual and outsourced employees

Globalisation: Impact on IR
New actors and emerging dynamics
Trade unions are getting isolated- pressure to realign with society
Pro-labour-pro-investor policy leading to declining power and
influence of unions.
Changed mind-set of Legislators and Executives-(less importance
Pro-labour social security became more prominent- ESI, PF,
Minimum Wages
Emergence of NGO activity and influence


Impact of Globalisation ON IR
Declining trade union density-due to
composition of workforc
Social security measures even to un-organised
Worker militancy replaced by Employer
Bargaining power of union is shrinking