Hameed and Nazir (2014) argue that liberalization neutralises unemployment, citing Pakistan, as one of nations where trade liberalization has helped reduce job losses. Complementing the argument, Siddiqui and Kemal (2002) state that after liberalization, employment and production increased, generating demand for labour and imports. This dropped unemployment and reduced poverty, as economic and living standards continued to rise.
Dollar and Collier (1999) argue that when low income nations join the global markets for products and services, poverty is decreased as the people access better forms of employment, in the towns and municipalities. For example Bardhan, (2007) states that in India, poverty declined from 44.55 percent in 1983 towards 27.5 percent in the period 2004 and 2005, resulting from the productivity surges attributed to skilled workers earning more within the integrated market, because globalisation works to encourage easy labour mobility across the integrated market. For example, engineers as well as economists can quadruple his/her pay by moving to Silicon Valley or the Wall Street from Kerala and New Delhi (Birdsall, 2001).These workers will send money home which will help better the lives of their families.
Additional gains have been experienced by the family according to Manson (2002) because the working women’s pay cheque supplements the household’s income. This has led to a rise in the quality and quantity of the consumption because women are chanced to spend more on, dressing, education, health care, housing etc. Within the family, there is cost sharing resulting from the supplementary finances from the woman’s pay. This has given men the opportunities to move to cities in search of rewarding employment, rejoin school or move overseas for better compensation. Industrial employees In Bangladesh, send a portion of their pay back home to their people and save the rest for the future. These remittances help improve the people’s living standards and reduce poverty (Manson, 2002).
Finally, Johnson (2002) argues that Developing countries have gained awareness of the issues facing the population and are increasing activities aimed at addressing them, which has helped improve the standard of living in some countries of the global south and raised life expectancy. Cambodia’s life expectancy for example increased from 40 to 61 in the period between 1980 and 2008, this according to Simpson (2007) resulted from improvements in health care, immunization, infant mortality and social services.
As majority of scholars agree that Globalisation is reducing poverty, there are other scholars arguing that globalisation is the catalyst for the increasing poverty. For example;
Manson (2002) argues that Market policies, for example privatization which raise unemployment through retrenchments that eat into the household income and subsequently give rise to poverty. Hilary(2003) states that the poor households in the global south lack sufficient water cater for the basics family needs because privatisation of the water divisions in the global south has led to escalation in dues to heights they cannot afford. These massive price escalations on water in cities such as Manila have constrained household food expenses and forced the children quiet education, join their parents so that they can all work as one in order to stand up to the economic pressure on the household. (Hilary 2004)
The unskilled and illiterate as stated by Basu (2004) are left lagging behind due to their inability to take advantage of the recent technological changes. This means, the poorest people suffer for a long time before benefiting from globalisation. Skilled workers in poor countries are expected to benefit excessively from globalization, because their technological operational skills make them marketable to international organisations that pay better. Brain drain in large amounts brings about skill dearth in developing countries which raises the demand and price of certain skills and enriching the skilled few Banerjee and Piketty (2005) argue that the rich minority in India have benefited most over the last decade as a result of globalisation and as the get wealthier, the poor get worse off and their total welfare may fall as a result of the rise in prices brought about by skilled labour deficiencies. Skills traditionally learned may lose their value and the people who used them to earn a living may be under threat of losing their small business. Basu (2006) writes , villagers from Jakarta who earn their livelihood working handicrafts and embroidery on fabric, were concerned that their small businesses and sources of income could get wiped out by competition from global manufacturers who may decides to make embroidered clothing on a larger scale and export them to India. To these village residents, globalization is seen as a source of hardships.
Weisbrot et al (2002) is cited in Kiely (2005) stating that tariff abolition, reduces national revenue, particularly because tariffs are easier to collect in comparison to other dues, in economies seeking growth. A quarter of India’s national proceeds in 1990 were from tariff collection.
The wealthier people get, the more socially transformed they become, treating the less wealthy unequally. As shown in the literature below globalisation increases inequality;
Stringer, (2006) cited in Faustino, Vali (2011) argues that Foreign Direct Investment, in developing countries hinders growth of the economic and endorses income inequality by forming disparities and dualism in productive and economic configurations. Majority of conglomerate For example, form an extremely capital intensive export section, operating on their own, consuming majority of the resources, capital and existing credit, only to repatriate their takings (Stringer 2006). Further still, foreign direct investment creates and sustains social groups that work to guarantee the access to cheap labour and socially excluded employees, according to Stringer (2006).
The largest rise in inequality was seen in the export industry. Accordingly, Feenstra and Hanson (1996b), rising income inequality in Mexico is concurrent with overseas remittances. A growth in outsourcing by conglomerates has shifted manufacturing towards skill intensive services thereby raising the demand for skilled labour which is favoured by globalisation.
Aitken et al (1996) and Pavcnik (2000) argue that skill-intensive manufacturing in Mexico is recommended because employees of conglomerates and international joint ventures are highly rewarded. There is proof stating that higher qualification curry better salaries. The Asian Development Bank (2007), as cited in Bardhan (2008) indicated that full-time employee wages in India had risen to 0.47 in the year 2004 from 0.38 as recorded 1983 Bardhan (2007) attributes this rise in wage inequality as a result of the skill-intensity of Indian’s economic development and the lack of relevant skills and talent in the corporate sector.
Unskilled women have more often been victimised by globalisation. Martell (2010) argues that House helps can be illegal or undocumented immigrants, isolated in homes where they are exploited, harassed and work long hours for little money that is sometimes not paid. House based labour is eye-catching but because it is unsystematic, exploitation is painless. Globalisation, the rise of multinational and outsourcing have brought about the employment of women who offer cheaper labour and tolerate poor conditions. Amnesty international (2013) writes about the enslavement of domestic workers in Hong Kong. Workers are punched, beaten, physically and sexually mistreated, hungry and un paid.
Gupta (2008) argues that, globalisation has promoted a culture where by a portion of the population that has the ability to pay high prices for private medical services are the only ones catered for by the Indian health care industry . In India, private, pricey health care is for the privileged and cheap, low class and state funded medical care is directed to the poor. The poor are looked down upon when they try to seek private health checks. The ailing Majority, have to take a loan or put their assets up for sale and 25 per cent of poor households with an associate requiring in-patient care services are at risk of falling into extreme poverty. (Gupta, 2008).
As countries open up to integration, business grows, many jobs are created and poverty is reduced. This may create a situation where by inequality rise, as some scholars would argue;
Martell (2010) argues that when markets are run fairly, earnings generated helps people rise above poverty which in turn leads to a reduction in the level of unfairness. Trade liberalisation burrs protection of indigenous firm with quotas and tariffs on imports, or subsidies that create undue advantage over other businesses. The elimination of such trade instruments diminishes inequality, allowing the poor free access to the global market. Bardhan (2007) argues that the Chinese, provinces embraced global exposure had reduced inequality and higher growth. Benjamin et al (2005) further argues that while income in coastal China rose from 0.35 to 0.39 in the period 1991 to 2000, the equivalent increase from 0.39 to 0.48 in the same period was seen in the internal prefectures.
Figini and Gorg (1999) argue that multinational Corporations do not just outsource activities that employ majority of under qualified and low-cost labour. They initiate the use of technological advancements that were not available in the Developing economies. The role of new technologies is vital for economic growth. Initially, the introduction of new technology leads to higher demand for skilled workers and thus, a rise in income which brings about market segmentation and a rise in income inequality. In the early stages, low-skilled workers are paid less because their skills are not up to standard. However, in due course, the formerly under qualified workers learn more skills through training and gain experience as they work with new technology, which rises compensation and shrinks income inequality (Faustino &Vali, 2011).
Joyce (2010) argues that financial liberalization has the likely hood of contributing to higher output .This he claims is due to the fact that liberalization permits the utilization of extra funds to attain the highest rate of return on wide-reaching schemes. The conjecture here is that control on currency circulation from one country to another reduces the money market’s capability to match investors with commendable debtors. It is stated further that poor countries with scarce resources attract more investors because there is a higher rate of return on investment than in prosperous economies. The economic incentive resulting from a rise in financial flows to an impoverished country will boost the country’s growth rate and employment. This in turn leads to a fall in worldwide inequality.
Many people are suffering as a result of globalisation and that is why there is need to come up with effective social policies that will help reduce the hardships and negativities caused by globalisation as in explained in this section;
Social policy should advocate for more funds to, teach, coach and enhance schools that favour innovation. As up-and-coming economies work hard to ensure free education, free basic health services, like inoculation, developed economies might be required to amend their curriculum. Given that globalization brings about unemployment, targeted training that helps young people and others without jobs, to move to in demand professions is very trivial. The goal towards universal primary education may necessitate the compensating the poorest and help them recoup losses sustained from sending children to school. Gupta (2008) argues that, the returns from medical tourism (India) may well profit the health care sector if satisfactorily taxed to sustain public health facilities. Cuba for example has hospitals for the inhabitants, health tourists and civil servant. The government uses medical tourism as a source of income used to improve the lives of people (Gupta, 2008).
Forced labour should be exterminated as well as child labour and unbiased employment should be endorsed. Togetherness and freedom of association should be promoted in a bid to make globalization more impartial. The difference in cultures and traditions around the world will determine what constitutes child employment. In general, the process of putting each core labour standard into action calls for harmonizing policy action, like the compensation of income losses from the elimination of child labour (Srinivasan1994,Rodrik 1996, Maskus 1997, OECD 1995 and 1996, &Freeman 1998). While majority of people in the developing world are employed outside the formal sector, that is in ancestral set businesses, some form of self employment or other unceremonious employment sources, the overall blueprint of growth that encourage development, are in general more important to the poor than specific labour policies (ODI,2000).
Globalization has caused the destruction of aspect of social insurance and public protection. This has been mainly in relation to the protection models based on worldwide coverage and huge government spending in wealthy nations. Judging by the downbeat consequences of globalization, it is argued in ODI (2000), that more efficient systems are needed to protect society because, social protection is an essential element of public policy which can help facilitate protection against shocks especially for persons at risk of irretrievable declines in assets, personal and public. ODI (2000) states further that, the enormous disparities in the determinants of powerful social protection and how it will be financed pose a challenge when trying to put social policy into operation. The community and other concerned establishment need to put emphasis on social provision for they have not’s, in a way that is consistent with the country’s developmental goals. Vibrant programs in the employment marketplace have been put forward as the most excellent complementary strategic actions, with the greatest possibilities of guaranteeing well-organized insurance against unemployment
Globalisation has been the reason for the decrease in world poverty and the fall in the levels of inequality in many developing economies. For example individuals have been encouraged to relocate to places where their skills are seen as valuable, markets have opened up and people are learning efficient ways of production etc. However globalisation can be said to increase poverty and inequality since, privatisation resulting from globalisation leads to retrenchment of workers and unskilled workers who move abroad trying find a better life are enslaved by their employers. It is negativities such as these during and within globalisation that necessitates coming with social policies that will help those affected negatively to benefit from globalisation.