Consulting

							Labor Issues in
China and India

Sanjay Kotte
China & Globalization – Professor Rong
                Our Agenda
Thesis
Issues Impacting Labor
China
   Growth and Development
   Issues to Address
   Recommendations
India
   Growth and Development
   Issues to Address
   Recommendations
China & India – Moving Forward
Q&A
                  Thesis
China and India are symbols of growth yet
both must address important labor issues in
order to ensure future success
  Understanding internal labor environment and
  how it relates to the global economy
  Reducing poverty and unemployment through
  infrastructure and social program development
  Addressing regional disparity in development by
  encouraging and influencing foreign investment
   Issues Impacting Labor
Legal System / Labor rights
Political system regarding development
and commerce
Social Services
Natural Resources and Landscape
China – Growth & Development
 Historical growth is a product of efficient, all-powerful
 government
    “top down” approach for developing the nation
 Historically has had a closed economic policy on
 focusing on internal growth and using protectionist
 policies
    Opposed Global political order
    Investment in State-owned Enterprises
 China opened its economy to international trade in
 1978, and now encourages international investment
     • Dismantling of the “iron rice bowl” promise of employment
     • Steady stream of foreign investment
   China – Issues to Address
Unemployment
   Lack of Education
   Eastern China vs. Western China
Attempts to improve growth through international investment
have reduced commitment to public services and poor western
areas
   Tax incentives offered to MNFs to encourage investment
   Government favors development of the coastal areas
   Insufficient social programs largely impact labor and poverty
Reluctance of China to offer more Labor rights
   Fear of losing control
   Fear of losing competitiveness
   Neglecting needs of minority groups
 China – Recommendations
Expanding employment by developing
the economy
 Development of the service industry
 Exploiting advantages in labor resources
 Establishing programs to bring laid off
 people back into the workforce
 China – Recommendations
Expanding employment by developing
the economy
 Improving Educational and Healthcare
 programs
 Implementing Vocational Training
 Technology Improvement
 Labor law reform
India – Growth & Development
 India gained independence in 1940s
 India’s past economic policy has failed:
   1950s – “mixed” economic model with capitalism
   and communism was inefficient
   1970s – more socialist approach was also
   disastrous
 India’s recent policy
   Early 1990s – gradually opened up markets
   through economic reforms
   Slow privatization of public-owned industries
India – Growth & Development
 Over past 15 years, India has been 2nd fastest
 growing country in the world
 “bottom-up” growth strategy that is messy and
 unplanned but works
 Factors contributing to growth:
   Efficient use of capital
   Deep private sector
   Well-regulated financial system
   Sturdy rule of law
   Focus on managerial innovation
   Consumer attitudes
India – Growth & Development
 Highly talented labor pool
    English is most widely spoken language in India
    Education places foundation for a services, knowledge, and
    IT-based economy
 Past assumption: India is stealing jobs of American
 Workers
 Today’s belief: India allows American firms to
 become more competitive, hence creating more jobs
    US tech employment is growing – 17% more tech workers in
    US today than in 1999; will increase by 30% over the next
    decade
    The large transfer of jobs didn’t occur
  India – Issues to Address
Burgeoning population and its pressure
on lack of infrastructure and social
services
Prevailing poverty
Corruption
Unemployment
 India – Recommendations
Privatize infrastructure development
and redirect government funding
  Encourage private investment
  Use available funds for social programs
Offer region-based incentives
  Encourage interior investment
  Help create jobs and improve poverty
China & India – Moving forward
 Both countries have extremely different histories but
 face similar problems:
    Must improve infrastructure to encourage foreign investment
    Must address issues of regional disparity of investment
    Must utilize advantages of labor pool and help citizens find a
    role in the economy to reduce unemployment
    Must address lack of social program investment in order to
    provide citizens with a better standard of living
Questions?