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 2 nd 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?