Effect of Liberalization,

Privatization & Globalization (LPG)

on Indian Industries

A Presentation By

Prof. R.Balasubramanian

SSN School of Management & Computer

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

Liberali-
zation

Industrial
Safety &
Health
Globali- Privati-
zation zation

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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 produced
2. 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 wages
2. The most vulnerable work force
3. 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. Economic
2. Political
3. Governmental
4. 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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