CHALLENGES IN CREATION OF NEW JOBS IN

GLOBALISATION
INTRODUCTION:
Job creation is an immense global challenge. More than 200 million people
worldwide are unemployed, many of them young people. Another 2 billion working age
adults mostly women remain outside the workforce.

With the world's population growing rapidly, 600 million more jobs will need to be
created during the next 15 years. Sub-Saharan Africa alone will need 11 million new jobs a
year through 2030. In many places, the need for jobs will intensify social and political
pressures, contributing to international migration. Above all, job creation will be the key
factor for developing countries to reduce poverty, improve people's lives, and reach the
Sustainable Development Goals by 2030

CHALLENGES IN CREATION OF NEW JOBS IN GLOBALISATION

While globalization offers many benefits, it’s not without challenges. Velocity

Global’s 2020 State of Global Expansion Report: Technology Industry reveals some of the
top challenges that U.S. and UK tech leaders face when taking their companies global, and
leaders of other companies likely face the same obstacles.

Immigration Challenges and Local Job Loss

The political climates in the United States and Europe show that there are different
viewpoints on the results of globalization. Many countries around the globe are tightening
their immigration rules, and it is harder for immigrants to find jobs in new countries. This rise
in nationalism is mainly due to anger from the perception that foreigners fill domestic jobs or
at companies moving their operations abroad to save money on labor costs.
For example, the Economic Policy Institute reports that the U.S. trade deficit with
China (or the amount by which our imports exceed our exports) cost Americans 3.4 million
jobs since 2001.

Foreign Worker Exploitation

Lower costs do benefit many consumers, but it also creates tough competition that leads some
companies to search for cheap labor sources. Some western companies ship their production

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overseas to countries like China and Malaysia, where lax regulations make it easier to exploit
workers.

Payroll and Compliance Challenges

Another common global expansion obstacle is managing overseas payroll and maintaining
compliance with changing employment and tax laws. This management task gets even more
difficult if you’re trying to manage operations in multiple markets.

Managing Employee Immigration

Immigration challenges cause a lot of headaches internally, which is why 28% of U.S. and
UK tech leaders agreed it was one of their top challenges. Immigration laws change often,
and in some countries, it is extremely difficult to secure visas for employees that are foreign
nationals. The U.S., for example, is getting stricter with granting H-1B visas, and Brexit
makes the future of immigration to the UK uncertain.

International Recruiting
It’s not surprising that 30% of U.S. and UK tech leaders cited international recruiting as their
most common challenge. Recruiting across borders creates unknowns for HR teams. First,
companies create a plan for how they will interview and thoroughly vet candidates to make
sure they are qualified when thousands of miles separate them from headquarters. Next,
companies need to know the market’s demands for salaries and benefits to make competitive
offers. To ensure successful hires, HR teams must factor in challenges like time zones,
cultural differences, and language barriers to find a good fit for the company.

EXAMPLE

In recent decades, China has succeeded in creating millions of employment

opportunities and absorbing millions of new entrants into its labor market, while transforming
its economy and society. China's path offers useful lessons for others. As it moves higher on
the global value chain, China is also creating fresh opportunities for other developing
countries.

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How did China do it?
Globalization may have been responsible for moving jobs out of the US to low-wage
countries but, if anything, it should have been a boon to emerging economies like India and
China. These two populous Asian countries had similar levels of poverty in 1978 when the
Chinese reforms began. Since then China has transformed itself into an industrial
powerhouse.

From 1978 to 2007, the per capita income in China grew at an astounding 8.12% per
annum. Nearly 78% of the growth in per capita GDP (gross domestic product) in China over
the period 1978-2007 can be attributed to the growth of total factor productivity
(technological improvement).

As productivity increased, so did wages and output. Poverty at $1.90 at 2011 PPP

(purchasing power parity) fell from about 80% in 1978 to 26% in 2007; by now saying that
China has eradicated poverty at that level would not be an overstatement. How did they do it?

THE ANSWER IS:

 They did it in stages and charted their course carefully to avoid huge social upheavals. In
1978-79,
 when the Chinese reforms began, China was still an agrarian economy. Initially, when the
transition began in 1978, China emphasised productivity growth in agriculture. When
farm incomes grew, the demand for non-farm services and locally produced simple goods
rose, creating rural non-farm sector jobs.
 During 1978-1984, total factor productivity in agriculture grew at 5.62% per annum;
agricultural output grew by 47% and the share of labour force in agriculture declined
from 69% to 50%.
 After a brief pause, agricultural productivity started growing again as new technologies
were introduced. It grew at 5.1% per annum from 1988 to 1998.

Throughout this period, China was gaining in its manufacturing productivity, first through its
institutional innovation of ‘Township and Village Enterprises’ (TVEs) whereby it mobilised
the local resources and human capital to initiate manufacturing activities.

This innovation served as an intermediate step in its transition from an agrarian economy to
an industrialised one. It made the transition smoother by avoiding mass unemployment and
limiting rural to urban migration.

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 By 1995, TVEs had been gradually replaced by private firms sometimes started by
workers and managers from TVEs. Throughout the 90s, China absorbed foreign
technology speedily, managed to skill its vast labour force, and became a manufacturing
colossus.
 In 1999-2000, it was admitted to WTO (World Trade Organization) and
 Through the decade of 2000-2010, it became the factory for the whole world. In
1993, Chinese share of global merchandise exports was 2.5%; by 2014, it had grown to
12.7%.

The salient features of Chinese rapid transformation were: High rate of agricultural
productivity growth in the initial stages; phased transition through an institutional innovation
of TVEs to absorb rural labour being released by agriculture; rapid absorption of foreign
technology through foreign investment; and export-led industrialisation targeting the markets
in developed countries. Chinese course of development, unlike that of India, was clearly
navigated by the State.

Indian course of development, on the other hand, was guided by happenstance. In order to
understand this we should first take a good look at the structure of Indian economy.