You are on page 1of 14

Labour and Change:

Essays on Globalisation, Technological Change and Labour in India


Kuriakose Mamkoottam
Chapter 2
GLOBALISATION, TECHNOLGY AND HUMAN RESOURCES

Introduction

The last quarter of 20
th
century would be well remembered for the widely debated issues on Globalisation
and internationalisation of economies across the world. Much of the debate has remained unfinished even
at the beginning of the new millennium and the world seems divided between those who support the
process of globalisation and those who, if not oppose it, have highlighted that its ill effects outweigh the
advantages. Globalisation as a term has not only gained universal currency, but has also brought about a
radical shift in the structure and functioning of contemporary industry and business. Globalisation has
come to define the competitive advantage of nations, as propounded by Michael Porter (1990), in terms of
their ability to compete and survive in the global market, going beyond national, political and cultural
boundaries. One of the most enduring tests of an economy's comparative advantage is being seen in terms
of its ability to be a global player, which it can attain and sustain only by integrating with the global
market. Interestingly and perhaps expectedly, large part of the discussion on globalisation has focussed on
the developing and newly developed economies. Impact of globalisation on the structure and performance
of the national (domestic) economy and industry, on employment and labour market, on organisational
structure and management practices are among the important issues which have attracted the attention of
scholars and policy makers. Some of the issues relating to globalisation and technological change and their
impact on labour/ human resources, work organisation, occupational structure, employment pattern and
industrial relations in general are discussed in this chapter. While the discussion in this chapter remains at
a larger level, these issues would be discussed in detail in the subsequent chapters. The major purpose of
this chapter is to outline the concepts and theoretical issues relating to globalisation, technological change
and how they impinge on the work organisation, human resources and industrial relations.

In recent years many countries have undertaken major reforms to integrate their economies into the world
market to cope with changes taking place at a speed faster than most are prepared or willing to accept. In
the seventies only a few among the developing countries, primarily from East Asia opened up their borders
to flows of trade and investment capital. Subsequently, many countries from Latin America and the sub-
Sahara, and three giant nations -China, the former Soviet Union, and India- which account for nearly half
of the world's labour force- entered the global market. According to an estimate made in the early nineties
(World Development Report, 1995) by the year 2000 fewer than 10 percent of the world's workers were
likely to be cut off from the economic mainstream, a projection, which has become debatable today.

In fact, it was the availability of cheap labour which ultimately led to the success stories of Japan and later
the Asian tigers in the global market. However, it is paradoxical but true that India's role in the world
market reduced as a result of its increasing labour costs, in addition to the relatively slow pace of structural
reforms including industrial restructuring and labour (legislative) reforms. India ceased to enjoy the
advantage of cheap labour, whether in textiles or in engineering sector, although the absolute wages in
India is among the lowest. Despite the fact that wages in Japan or in other economically prosperous Asian
countries are no longer cheap, these countries have continued to play a dominant role in the global market,
largely through factors other than cheap labour.

Low wages alone will not play a crucial role any more in developing countries like India for comparative
advantage, since actual labour costs have sharply declined in the developed nations as well. In the G-7
countries, labour cost is estimated to account for less than 5 per cent of sales value. New elements like
market trends in design, quality and packaging, delivery schedules, market positioning, sales promotion and
distribution contribute to the competitive advantage. Competitiveness was always based on productivity.
However, today productivity is seen not simply as a measure of labour cost; but quality and flexibility have
assumed greater importance.
2

Globalisation and Technological Change

Information technology and ever improving communication and transportation facilities have played a
major role in global integration. Cross-border transport and trade have become easier today because of the
progress in resolving many of the political conflicts that had divided the economic world for decades.
Political strategies for economic development and industrialisation have changed across the world. Central
planning has been abandoned in the former Soviet Union and Eastern Europe. Trade and import-export
policies of most countries in Latin America, South Asia, and Middle East are no more designed to prevent
trade. More and more countries have found it necessary to bring about radical shift in the structure and
functioning of the economy, industry and enterprises. Many of the developing countries introduced major
structural adjustment programmes to liberalise their economies to achieve better competitiveness in the
global market. Success in the global market can be no more based on a nation's natural resources or cheap
labour, but on deliberate choices for core technologies to compete at the international level. Constant
improvement and innovation in process technologies, product designs and management methods have
become key variables, which define competitiveness of corporations. Concrete measures undertaken in the
Indian context and an assessment of their success or failure would be discussed in detail in subsequent
chapters.

Historically technology has always been a key factor in bringing about change in society. However, during
the past few decades, a new range of technologies based on microelectronics have ushered in changes of a
different kind and intensity. Adaptation of new technologies not only transforms the manufacturing
processes and the service sector, but also brings about profound changes in the entire life style of modern
society. In the early 1980s great deal of pressure was put on firms by an increasingly competitive market.
Industry was challenged to produce more flexibly, with higher quality, better delivery systems and service
orientation to the customer. At the same time there was growing awareness of the potential of new
manufacturing technologies to meet the challenge of improved performance. As John Bessant (1993)
observes, the possibility was emerging of using such technology in integrated rather than direct form,
taking advantage of advances in communications and networking technology to facilitate the emergence of
linked manufacturing systems.

The emerging pattern of `computer-integrated manufacturing' (CIM) systems promised significant
improvements at a strategic level. They not only improve performance of particular tasks or functions, but
enhance the overall performance of the firm in terms of reduced response times, better quality control,
faster new product development and lower inventory levels (Bessant 1993). As the new technology
became more advanced, it also became substantially more flexible leading to the development of Computer
Aided Design/ Computer Aided Manufacturing (CAD/CAM) systems. The key focus of the manufacturing
environment of the 1980s and 1990s came to be on quality, design and flexibility. Firms came under
increasing pressure to innovate in order to secure the most productive use of the investments while
providing continuously improved quality of service and product to the customer. According to Bessant et
al (1990), the global market in 1990s posed the biggest challenge by demanding simultaneous objectives of
high productivity and high flexibility from the firm. The new technological opportunities and strategies
came to the rescue of the firm to meet such a challenge. During the period 1975-85 European and US
manufacturers discovered that quality and cost efficiency were not incompatible, and the next period 1985-
95 showed that the traditional trade-off between flexibility and cost efficiency was a thing of the past.

Faced with the emerging challenge of the market, manufacturers turn to new technology. The information
technology (IT) not only improves the communication and control activities across a broad range of
manufacturing activities, but also brings about an all-time important function of integration. IT brings
together previously discrete items of equipment into more powerful, multi-function systems. The
integrated manufacturing systems offer high levels of computer integration while retaining their flexibility.
The computer integrated manufacturing (CIM) technologies contribute to immense improvements in factors
of effectiveness including lead times, reduced inventory, and quality standards. James Womack et al.
(1990) in their fascinating and much acclaimed book, The Machine that Changed the World, state that just
as mass production swept away craft production, so a new way of making things, called lean production, is
now rapidly making mass production obsolete. A world-wide study of the automotive industry by the
3
authors showed that the lean production welds the activities of everyone from top management to line
workers, to suppliers, into a tightly integrated whole that can respond almost instantly to marketing
demands from customers. It can also double production and quality, while keeping costs down. Its
adoption, as it inevitably spreads beyond the auto industry, will change almost every industry and
consequently how we work, how we live, and the fate of companies and nations as they respond to its
impact. The widespread use of Internet in recent times is expected to make more dramatic changes in the
manner, in which we live and work.

However, studies show that the full benefits of new technologies such as computer integrated
manufacturing (CIM) systems, computer aided manufacturing (CAM), computer aided design (CAD),
computer aided production management (CAPM), flexible manufacturing systems (FMS), or any other,
cannot be taken for granted. These technologies are beneficial only if simultaneous changes are brought
about in physical layout, organisation structure, manpower skills and work culture (Rush et al. 1990).
Mamkoottam & Herbolzeihmer (1990 & 1991) found in the case of Spanish automobiles and textiles that
absence of such a simultaneous approach can delay, if not totally stop the introduction of new technologies.
In order to avail of the advantage of what Fleck (1987) termed as "configuration technologies" it is
essential that firms should adopt an approach based on "synchronous innovation" as suggested by Ettlie
(1988). The adaptation of new technologies would require a "paradigm shift" integrating the product and
process innovations along with new patterns of organisation designs (Bessant et al. 1990). Such a shift
would involve wide ranging changes in the areas of skills, work organisation, functional integration,
control, inter-organisational relationships, and of work culture, just to mention a few examples. In fact, all
these areas are to be co-ordinated by the people in the organisation who come together to achieve the
mission of the organisation by sharing a common set of beliefs and values. These issues would be
discussed in some detail in Chapter 4 of this volume.

Technological Change and Human Resources

The intimate relation that exists between technology, market dynamics and other social institutions is well
accepted; but the nature and direction of their linkages have been subject to debates. It is not difficult to
identify the areas and extent of technology diffusion/ application, and changes in the trends of production
and services. It is also not difficult to notice that the pattern of employment, quality of human resources,
organisational changes, and other labour market variables are related to technological changes. It is not
however, easy to establish how far these shifts and changes in employment, human resources,
organisational changes and labour market variables are directly attributable to technological changes/
innovations. In fact, the emergence of new technologies based on microelectronics and information
technology have given a new impetus to this debate.

Sociologists have used the Durkhemian concept of the division of labour to explain the interaction between
technological change on the one hand, and the organisation of work, the generation and distribution of
skills, on the other. Since Durkheim, different views have emerged in industrial sociology on the
technology and labour relationship. The first view, which is, called the decline and rise of skills, proposed
by Woodward (1965), suggested that after degradation of work roles, the evolution of work roles would be
in the direction of upgrading and enrichment. This reversal of the trend was seen as an evolutionary
process and attributed to technology and the increasing prevalence of the continuous-process production.

On the other hand, Braverman's theory (1974) that degradation of work and polarisation of skills resulted
from the implementation of new technology gave a new direction to the on-going technology debate. Major
focus of discussion shifted to the consequences of process applications of microelectronics. Braverman
propounded a second view, which is known as the degradation of work or polarisation of skills. According
to him, in capitalist production, complex work roles are continuously broken up and divided in two ways.
On the one hand into lower grade, more routine, simple and monotonous roles within a more segmented
organisation of work-flow; and on the other, into more demanding, responsible and varied roles founded on
more elaborated education and training.

Both these views are based on a deterministic view of technological change and work. A third approach
which stressed the importance of socio-technical choice, founded on research at the Tavistock Institute,
4
suggests that the evolution of work was in no way determined by the course of technological change but by
the strategic choices adopted by the key decision makers in the organisation. This view suggests that the
development of the technical, the social and the sentient systems of an organisation be founded on a
strategy of enriching skills and achieving an overlapping, rather than divisive, organisation of tasks.
Subsequent research on the applications of microelectronics by Sorge et al (1983), Kern & Schumann
(1987), Hyman & Streeck (1988) and others have followed the third view.

The predominance of information technology, on the one hand, and the prevalent application of
management methods and principles, on the other, have distinguished post-modern industrial society. The
enormous attention paid by scholars and practitioners alike, in recent years, to the field of management
have contributed to the development of new ways of manufacturing and marketing of products and services
and of managing people, finances and organisation. Among other things, information technology, in
particular, has had the most serious impact on management philosophy and systems. Unprecedented
competitiveness of the modern (globalised) market has brought to place an all-important focus on concepts
of quality, design and flexibility. These developments, while having immense impact on the occupational
structure, skill composition, organisational structure, communication systems, trade union density and
quality of working life, have at the same time also been guided and controlled by the latter.

Firms in the competitive environment constantly innovate in order to secure the most productive use of the
investments - manpower, raw materials and energy- while at the same time offering improved service and
quality to the ever-discerning customer. The global market of the post-modern era poses the biggest
challenge by demanding simultaneous objectives of high productivity and wide flexibility from the firm.
Faced with the emerging challenge, firms increasingly turn to new technology. The application of new
technology not only improves the communication and control activities across a broad range of
manufacturing activities, but also brings about an all-time important function of integration. It brings
together previously discrete items of equipment into more powerful, multi-function systems. The
integrated manufacturing systems offer high levels of computer integration while retaining their flexibility.

New technology is almost always equated with information technology (IT) and its applications. In fact, a
very major part of activities in modern organisations, whether manufacturing or service, is based on
convergence and application of computers and communication technologies. The potential for using a
technology, which offers dramatic improvements in the way in which we manage information activities, is
very significant. Unlike earlier technologies which are specific to a particular process or area in
manufacturing, IT is seen as a pervasive and integrative technology which offer significant improvements
across a broad front in quality, in flexibility and in productivity. New technology is a powerful strategic
weapon and, if used effectively, can help to pursue the long-term strategic goals of organisations.

Flexibility

Flexibility is a key characteristic of modern business and industry. Flexibility is an all-pervasive concept
covering product design and manufacturing, production process, and labour. Labour flexibility refers to a
variety of decisions affecting geographical and occupational change of workers, recruitment, deployment
and working hours. Flexibility enables a course of action to be modified in accordance with an encountered
situation, which may surprisingly deviate from prior anticipation. Central to the notion of flexibility is the
capability of a system to generate a variety so that options are available to do things differently or do
something else if the need arises. Flexibility, thus, provides agility, versatility and resilience- qualities
which modern industry must possess. Flexibility is also required to cope with fluctuations in market
demand, which may vary wildly in response to changing tastes, seasonal demands, advertising and other
variables. Inability to meet market demand and customer needs can damage business viability.

Customers want reliable products, easy availability and rapid response, in terms of sales and after sales
service. Increasing degree of flexibility is also required in the routing and scheduling within the work place/
organisation itself. More efficient use of capital invested in plant, equipment, infrastructure and human
resources would require a more flexible use of these for producing a number of different products/ services.
Organisations have been moving towards greater flexibility by producing smaller volumes with higher
degree of specialisation and customisation. Atkinson (1984) identified three different aspects of a flexible
5
firm: (a) functional flexibility - the ease with which tasks performed by employees can be adjusted to meet
changes in technology, markets or other contingencies. This is possible because of the multi-skilling of the
workers. (b) Numerical flexibility - the ease with which the number of employees can be adjusted to meet
fluctuations in demand or other contingencies. There is also a trend to operate with a core plus a peripheral
work force, the core remaining the main and permanent force, while the peripheral is retained and recalled
for shorter periods on part-time and contractual basis. (c) Financial flexibility - the extent to which the
structure of pay encourages and supports numerical and functional flexibility. The attempt is to find less
rigid payment systems, which can motivate individual performance and reward accordingly. The need for
greater flexibility questions some of the basic principles of traditional (production) work organisation based
on rigid systems and elaborate division of labour. Chapters 4 & 5 of the volume would discuss these issues
in the Indian context.

Occupational structure and skills

The relationship between technology, occupational structure and skills is a complex one. While it may be
seen that obsolete knowledge and skills act as a constraint on new technology, the latter may facilitate the
development of new knowledge and skills. As Campbell (1992) observes high levels of technological
change will be increasingly associated with hybrid (or mixed) skills where workers and managers will have
less specialised training and broader ranges of taught capabilities to cope with the evolving technological
challenges. Low levels of technological change may be found with low skill levels. By far the most
serious concern is for suitable skills and expertise to support the application of new technology. In general,
IT poses a number of challenges for new and broader skills both to support it directly and to supervise and
manage systems based around it. Skills in systems analysis and programming to develop new applications,
skills in maintaining and testing microelectronics, and skills in managing the increased flow of information
made available to organisations are some examples.

The new trend is a shift from operating skills to those of design, programming and analysis, maintenance,
diagnosis and supervision. This pattern has been reducing the number (of employees) and increasing skill
levels in the industry. In some countries, this trend has created serious problems, as there may not be
enough skilled people available to support a microelectronics-based system. In the year 2000, even
developed nations such as Germany has been found wanting in adequate supply of IT professionals.
Countries like Japan and the Republic of Korea have invested heavily in developing appropriate skills and
therefore do not face such problems. The range of skills is also expanding, with a major requirement for
core skills, as also an increasing convergence of skills. It is also important to stress that higher levels of
skill are required not just at the operator and maintenance level but also at the managerial level. Absence
of such professional skills at managerial level could limit the ability to exploit new technology to its full
advantage, as cases from developing countries, in particular, indicate. A concrete illustration of this
scenario may be found in chapter 4.

As products are customised using flexible technology, the ways in which the machines are used affects the
occupational profile of the workplace. Better skilled operatives backed up by highly trained technicians
and engineers would become more predominant in the new work place. According to Schumann (1990), a
holistic approach with reduced division of labour is being found to be more efficient than traditional
`Tayloristic rationalisation' patterns (quoted in Campbell, 1992). Studies of British engineering industry
(Henderson 1989; Senker and Beesley 1986) show how technological changes alter the occupational
structure in favour of higher skilled upper strata. Fewer people will be employed in manufacturing and
these will be white-coat labour forces. A mushroom shaped organisation profile in which a small number
of managers direct a much larger number of engineers supported by a much smaller number of technicians
and a diminishing number of other ranks seem to be replacing the traditional pyramidal structure.
Microelectronics has been gradually displacing the labour intensive operations with miniaturisation and
automation. Campbell and Warner (1992) suggest that changes in skill mix are likely to occur in the work
place in two ways. First, there will be employees with distinctly new skills represented in the workplace,
and second, because many workers will have several new skills mixed with their existing ones, there will
be hybridisation of skills. While higher degree of specialisation of functions was associated with
industrialisation and technological change in the past, the reversal of the trend seems to happen with the
6
application of microelectronics. The single disciplined craftsman has no foreseeable future, and the shift is
to a multi-skilled professional worker.

Workers are expected to co-operate across occupational boundaries, with theoretical knowledge in a range
of fields matched by practical experience and diagnostic skills. Such a skills mix and co-operation in the
work place enable workers to cope with a greater variety of tasks across different and related functions such
as production and maintenance. Increasingly mixtures of operator and maintenance skills are required to
function effectively with new technologies. Reports from fieldwork in a large firm making information-
technology equipment in the electronic industry show that employees may learn a wider range of less
narrow skills and/or more or fewer more specialised ones (Campbell & Warner 1992). Maintenance
craftsmen may need to have a wider mix of engineering and electrical skills as well as new electronic
technician skills. Mamkoottam & Herbolzeimer (1990) observe similar developments in the automobile and
textile companies in Spain.

New technologies, in other words, affect the structure of employment and the skill requirement at work.
Differentiating skills into three categories of (a) cognitive, (b) interactive, and (c) motor skills, Howell and
Wolf (1991) noticed a decline in the growth of cognitive skills and a slight decline in the rate of growth of
interactive skills from the 1960's to 70's for professional, technical and managerial staff. They also observe
that cognitive skill levels of job grew faster for non-supervisory workers than for supervisory workers, and
interactive skills grew substantially faster in the supervisory category. The shift in the skill levels has been
attributed to the introduction of new technologies, which resulted in a reduced need for jobs with low
cognitive skill requirements in the manufacturing sector. The same reason leads to a relatively rapid
growth in the average cognitive skill level for non-supervisory occupations, as team work, inter-functional
co-ordination and integration were required in the new work environment. However, with the rapid growth
of IT and Internet based knowledge economy, the value of cognitive skill has already seen a quantum jump.
Burton-Jones (1999) argues that knowledge is transforming the nature of production and thus work, jobs,
the firm, the market, and every aspect of economic activity. These issues with special reference to the
Indian context will be discussed in chapters 3 and 5. All such changes are ushering in a new worker as well.

Technological change and the (new) worker

The integrating nature of the new technology requires increasing competence across a range of traditional
and new disciplines. Maintenance of industrial robots, for example, requires skills in microelectronics, in
electrical and mechanical engineering, in hydraulics, pneumatics, as well as in diagnostic and system
analysis. Evidence from process industries, banking and finance, food processing, electronics, engineering
and services show trends towards greater integration of tasks and a need for "cross-trading" and demand for
multi-skilling. The new technology calls for a new worker, who possesses not only higher technical
knowledge but also better adaptability to new situations, an ability to respond quickly to technical problems
as well as a capacity for teamwork. The traditional order of physical strength and individual work ability
are no more sufficient.

The new technology calls for a polyvalent and professional worker, who should understand not only the
basic process of production but should also possess knowledge about the basic functioning of the machines
and their operation. As the new machines are flexible and versatile, so should the new employee be so that
he would be able to operate them efficiently. It is also important that the employees should be competent
both conceptually and in technical matters; he should be open-minded, and should be willing to learn and
co-operate with others to work effectively in teams. The new employee, in a way, is expected to be a
superman who will function in a versatile, flexible and multi-functional position.

The new polyvalent worker performs larger number of tasks. He occupies positions embodying broader
job descriptions within a reduced hierarchy of division of labour. In general, this is reflected in the overall
reduction in the number of employees required to perform a given set of operations. Such a reduction
would be more prominent in the categories of unskilled and semi-skilled levels as these are easily
mechanised and replaced by machines. The traditional three-tier categories of unskilled, semi-skilled and
the skilled are being replaced by the less skilled and the highly skilled categories. The unskilled category
would be gradually reduced and eliminated and merged with the less skilled group, while the skilled
7
category would increase in size and importance. Change in the structure of the organisation would become
much more accentuated as there would be an increase in the number of skilled workers in the organisation.
In fact, the IT industry, which employs predominantly knowledge workers, is already experiencing the need
for a new organisational structure (a virtual organisation!).

Experience of the developed economies suggests that there is an increase in the requirement for
professional engineers, technicians and professional managers. This is also reflected in the changes in the
educational aspirations of individuals who are more conscious of the need for higher levels of qualification
and a desire for greater personal growth and development. There is greater emphasis on flexibility and
creative problem solving and the need to understand and appreciate the whole system, rather than a small
part. Cross-trading and continuous education and training to update skills and fight the ever-faster rate of
obsolescence are also evident from various researches. While traditional models involved narrowly
defined, predictable and predetermined tasks, the emerging trend is one, which demands a flexible and
professional response. The important skills required are agility, open-mindedness, and adaptability to be
able to switch quickly across different skills.

As a consequence of the developments described above, greater importance will be given to training and
continuos education. The emerging pattern is one in which skills often have a short life cycle and where
the ability to acquire new skills and to update old one becomes critical for one's own survival in the
professional field. This, in turn, shifts the focus from task related training to personal development. Tacit
knowledge and ability to acquire and dispose skills in flexible fashion will become increasingly important
factors in getting new technology to perform effectively, and many firms are now beginning to recognise
the advantages offered by becoming a `learning organisation'. Developments in these areas with reference
to the Indian context will be discussed in chapter 4.

Major changes are taking place in the composition of work force in terms of gender, age and education
across the world. Increasing number of women are entering the work force, especially in the developing
countries, where relatively few women have been absorbed so far. William Johnston (1991) has observed
that the trend toward women leaving home-based employment and entering the paid work force is an often-
overlooked demographic reality of industrialisation. As cooking and cleaning technologies ease the burden
at home, agricultural jobs diminish, and other jobs especially in the service sector proliferate, women
would be absorbed increasingly into the industrial sector. More than half of all women between the ages of
15 and 64 are now estimated to work outside the home; and women comprise nearly one third of the
world's organised work force. However, the developed economies have absorbed many more women into
the labour force than the developing economies. It may be noted that women in the Scandinavian countries
hold more than 50 per cent of the jobs. A larger presence of women at the work place will have
implications on the working conditions and terms of employment, while it may create demands for new
services. Demands for services such as fast food, day care for children, home cleaners, and nursing homes
are expected to increase as more and more women join the labour force. More importantly, as women have
more demands on them at home than men do, they are likely to be away from work more often than men,
and work place may require to restructure the pattern of time schedule giving way to flexi-time and other
innovative methods of deployment.

Technology and Organisational change
Studies show that the full benefits of new technologies can come only if simultaneous changes are also
brought about in physical layout, organisation structure, manpower-skills and work culture. It was found
by Mamkoottam & Herbolzeihmer (1990 & 1991) in the case of Spanish automobiles and textiles that
absence of such a simultaneous approach can delay, if not totally stop the introduction of new technologies.
It is generally accepted that technological change requires/ results in organisational change as well.
Innovation theory suggests that compatibility, i.e., the degree to which an innovation fits into the context in
which it is being placed, is an important determinant of adoption success. In the case of a change over to
new technology this is particularly true and many commentators have talked about the need for "a new way
of thinking". The adaptation of new technologies would require a "paradigm shift" integrating the
production and process innovations along with new patterns of organisation designs (Bessant 1993).

8
Technological change demands significant adaptation by going beyond the normal organisation learning
curve and find new and radically extended answers to the new challenges being posed. These changes,
moreover, are multi-dimensional, in the sense that they impact the entire organisation in its every aspect.
Such process often requires an element of `un-learning' and `creative destruction'. However, change does
not happen automatically with the introduction of new technology, but has to be initiated deliberately and
implemented effectively. Such changes will have to be introduced at individual level, at group level, at
inter-functional level and at the level of the organisation. The traditional model of (work) organisation
based on `Fordism' is giving way to the new model of `Toyotism', bringing about major changes in the
areas of skills, work organisation, functional integration, control, inter-organisational relationships, and
organisational culture. In the absence of one `best choice' in any of these areas, organisations would be
expected to make their own strategic choices from a variety of choices and contingencies. As Child (1977)
suggested, strategic choices have to be made in the context of given environmental contingencies,
technologies and structure of the organisation. Such choices, in an increasingly uncertain world, demand a
highly flexible organisation to deal with these contingencies. Experiences from the Indian context will be
discussed in chapter 4.

Work Organisation

Technology may be seen essentially as a system involving both tools and organisation around using those
tools. Unless technology is seen and managed as a total system with appropriate attention paid to the
organisational dimensions, it would not deliver the full benefits. As manufacturing/ service systems
become more complex and interdependent and the environments become more unpredictable, the need for
flexibility further increases. The new technology requires a greater degree of co-operation among the
employees who should also possess larger amount of skills for information processing and decision making
in the uncertain environment. In order to be able to respond quickly a work organisation, which encourages
local autonomy and decentralised decision making allowing sufficient degree of functional flexibility is
considered to be more suitable. In such an organisation workers would be given a broad task specification
within which they are expected to organise themselves by allocating roles and scheduling tasks etc.

According to Bessant (1993), `a factory within the factory' is created by the functional flexibility and a
greater degree of functional integration, bringing many specialist functional roles within the same
organisation. The increasing technological integration forces functional groups to work more closely
together. Computer aided design and computer aided manufacturing (CAD/CAM), for example, require a
much closer relationship between design and manufacturing. Similarly, to maintain quality standards, very
close relationship would be required between production, maintenance and quality control. Similar
changes would take place in the traditional process of control and monitoring, from direct supervision to
local autonomy and decentralised decision making. Highly interdependent systems designed to deal with
high levels of uncertainty and local diversity would require decentralisation of control to the operating
point at the local levels. It is argued that flexible response can be offered through a combination of flexible
technology and flexible organisation.

Organisation Culture

Technological change has often been seen as a `paradigm shift', and all paradigm shift would involve
values and norms. Organisational change always involves a shift in the organisational culture, without
which introduction/ implementation of technological innovations would become very difficult, if not
impossible. Technological change implies also a shift in the prevailing system of beliefs and values; all
technologies may be seen to be couched in a way of thinking as well. It is the organic type of
organisation as against the mechanistic organisation, as characterised by Burns and Stalker (1961), which is
considered to be suitable to accept technological changes. Organic organisations encourage innovation,
lateral rather than vertical communication, higher degree of decentralisation, flexibility and integration.
Drawing from Child (1977) and Handy (1980) it may be suggested that organisational change is possible
only if all members within the organisation share the same values and goals. Such commitment would be
characterised by a sense of ownership and participation/ involvement of the workers as against the
traditional model of organisations in which the worker is at the periphery.

9
However, it is also observed that the options available in work organisation design are dependent on the
skills available in the organisation. Wherever levels of skills are high and there has been training to support
multi-functionality, options would be open. Experiments in team working and the use of multi-skilled
workers are more prevalent in Scandinavia and Japan than in the U.K., the U.S.A. or in other parts of the
world, where relative skill levels are much lower and distributed more narrowly across the work force
(Senker 1990; Rush & Bessant 1989). These issues would be discussed with reference to the Indian
context in chapters 4 & 6.

Quality of Work Life

The physical and the socio-psychological implications of new technology are not without ambiguities and
contradictions. While the new worker would be better skilled and would be performing a larger job with
more responsibilities compared to his earlier counterpart, his wages may not always be enhanced
correspondingly. This is more so as often the worker may not necessarily be given a promotion to a higher
level within the organisation with acquisition of new or higher skills. In fact, trade unions have argued that
introduction of new technology often leads to a fall in real wages of the employees. Although the new
worker performs a job with more functions and greater responsibilities and may be subjected to greater job
stress, his job classification may remain just the same as before. A study based on a number of new
technology agreements in the U.K. during 1979-80 showed that unions often secured agreements with a
guarantee for no reduction in earnings and no downgrading for those offered re-deployment. However, the
unions seldom secured an increase in earnings for those operating new technology (Manwaring, 1981).
Mamkoottam & Helbolzeimer (1990) report similar findings from a study of the automobile and textile
sectors in Spain. These dimensions would be discussed in the Indian context in chapter 5 of this volume.

Human skills are increasingly incorporated into machines, which automatically perform many simultaneous
and sophisticated functions with the help of microprocessors and electronic data processing applications.
In this process, the worker would increasingly become subservient to the machine mainly assisting and
maintaining it to perform the major operations. Robotisation and incorporation of microelectronics in the
manufacturing and service functions provide evidence of how the machines control the worker by setting
the process and pace of work. This not only increases the monotony of the work, but also his isolation,
because often a single worker manages a whole unit of automated processes.

In the context of new technology, while the worker receives less direct supervision and thus enjoys better
autonomy in the traditional sense, greater control is imposed on him by the machines, which immediately
reduces the area of his freedom. Moreover, as the rate of technological change becomes faster, workers in
general, and those in the older age groups in particular, find it extremely difficult to retain themselves in the
face of a faster rate of (technological) obsolescence. Similarly, though new technology creates often a
cleaner work environment by reducing the level of dust, dirt, noise and physical strain, it may increase
mental and psychological stress of the worker. Although teamwork, job rotation, group tasks and employee
involvement schemes are meant to reduce these negative elements, they are as yet to become a popular
practice in most cases, including in India.

Employment

It has indeed become debatable to what extent globalisation and liberalisation have helped the national
economies, especially in terms of the impact on the employment situation. The recent trends in
unemployment, however, are particularly disturbing. Despite steady improvement in the world economy,
open unemployment has grown in most countries. The new phenomenon characterising the 1990's and
beyond has been termed as jobless growth. Employment growth has lagged behind that of both output
growth and growth of labour force. In the OECD countries GDP was estimated to grow from a base of 100
in 1975 to 191 by the year 2000, while employment was expected to grow from a base of 100 to only 124
in the same period. In South Asia, GDP was estimated to grow from a base of 100 in 1975 to 299, while
the corresponding growth in employment was projected to grow from 100 to only 154 in the same period.
In East Asia GDP was estimated to grow by more than five times, while employment was expected to grow
from a base of 100 to only 155 in the same period. Similarly, a widening gap is projected in terms of
growth in labour force and growth in employment. In the OECD countries labour force was expected to
10
grow from a base of 100 in 1990 to 105 by the year 2000, while employment was expected to grow from
100 to 104 in the same period. The situation was projected to be much worse in South Asia, where labour
force was expected to grow from 100 in 1990 to 122 by 2000, while employment only up to 116. In East
Asia labour force was estimated to grow up to 137 and the growth in employment to 117 by the year 2000.

There is a growing gap between the growth in population and growth rate of employment. While the
number of workers in the total population increased by 26.80 per cent between 1981 - 1991, the growth in
employment between 1977-78 and 1987-88 has been only 1.95 per cent registering an all India
unemployment rate of 3.77 (Ministry of Labour 1994-95). In fact, the demographic indicators are likely to
exert additional pressure on employment scenario in India. The proportion of the dependent age group
between the ages of 0-14 to total population will reduce, while the age group of 15-64 and those above 65
are expected to increase substantially in the coming years. These demographic changes, no doubt, increase
the burden on employment in the future.

Moving more specifically to the Indian context, many argue that liberalisation has adversely affected
employment rate in India, while others suggest that over-all employment rate has shown improvement
during the period after 1991, compared to the pre-reform period. Based on various empirical data, S.
Mahendra Dev (2000) argues that liberalisation policies are likely to have a significant impact on the
employment and incomes of the poor of South Asia. According to him, macro picture can be misleading
and micro-level realities indicate a decline in the rate of employment in the organised sector. On the other
hand, Goldar (2000) refutes the pessimistic position taken by most studies and argues that employment in
organised manufacturing sector in India was stagnant during the 1980s, but grew in the 1990s. Analysing
the Annual Survey of Industries (ASI) data, Goldar further suggests that this growth was due to the change
in the size structure of the industries in favour of small and medium industries and the slow-down in the
growth of real wages, factors facilitated by post liberalised context. During the pre-reform decade,
employment in the high productivity factory manufacturing segment increased at the rate of 0.53 percent
per annum in response to a stepped manufacturing output growth of 8.7 percent. Though manufacturing
output growth slowed down to 7.4 percent per annum during the post-reform period, employment recorded
2.7 percent growth annually. Unlike the pre-reform decade when public sector employment grew at more
than double the average, it was employment, in the private factory-manufacturing segment that experienced
above average growth during the post-reform period.

According to Goldar, the post-liberalised policy regime had a major influence on the size structure of
industries. In the early 1960s, factory employment was heavily concentrated in very large establishments.
Protection, investment incentives, credit control and the promotion of industry in the public sector
discriminated against the small establishments. Since the imbalance in the size structure was largely a
consequence of economic policies, the correction that has taken place in the last two decades may be
attributed, at least in part, to changes in the economic policy, especially the liberalisation of industrial and
trade policies (Goldar 2000:1193). Such a change in the size structure would have had its impact on the
occupational structure as well.

K Sundaram (2000) analyses the growth of population and the structure of occupations. He finds that the
trade, hotels and restaurants sector alone has raised its share by 33 points, while the services sector
(excluding construction) taken as a whole has raised its share from 124 per 1000 in 1961 to 203 per 1000 in
1993-94 (by 79 points). It is the tertiary sector, rather than the secondary sector, that has picked up the bulk
of the decline in the share of agriculture and allied activities in the aggregate work force. According to
Sundaram, an overwhelming proportion of the additions to the workforce in the manufacturing and repair
services sector have been absorbed by the low productivity unorganised manufacturing establishments. It
may be noted that during the same period though the unregistered manufacturing sector absorbed 83
percent of the incremental work force, it accounted for only 34 percent of the incremental GDP originating
in the manufacturing sector. This indicates the failure of the high-productivity organised manufacturing
sector to absorb the large increases in work force generated by the dynamics of population growth in India.
It is also widely recognised that post-globalised world and the liberalised India have witnessed a fast
growing informal sector and vastly shrinking formal sector. An important reason for this scenario may be
attributed to the slow or delayed introduction of technological innovations in the large manufacturing
sector.
11

Papola (1989) observes that labour saving technological changes have taken place in practically all
branches of the Indian industry. In industries and units where technological changes have been rapid and
significant, employment potential has declined. However, employment is declining also in the older
industries, where technological change was delayed or slow, due to stagnation in output. In other words,
the interesting observation is that introduction as well as non-introduction of technological change is found
to produce an overall adverse effect on employment generation.

While it is true that new technology incorporates human skills and manual labour into machines and
thereby reduces and replaces human labour, it may also be observed that more and more of the new jobs
available in services and manufacturing sectors are in the area of new technology. In other words, there are
also new employment opportunities which may be filled either by those de-skilled and displaced from
traditional activities or by newer entrants. So the question of whether or not microelectronics poses a skills
problem depends on choices made about education and training. The general trends in skill change related
to microelectronics are towards higher levels, wider breadth, and greater flexibility. These trends may also
be responsible for a shift in the relationship of individual workers with the firm. Talking about the
increasing role of knowledge workers, Burton-Jones (1999) suggests that some individuals are likely to
form stronger relationships with the firms for which they work, others are likely move towards increasingly
distant market-like contractual relationships. Such fundamental changes cannot occur without profoundly
altering both the nature of employment and its future role as a form of work arrangement.

Subcontracting

In response to technological changes, organisations have been developing a two-tier segmented labour
force. The work force often consists of a group of flexible and multi-skilled workers clustered around a
stable core as the permanent force and others who are hired on contractual and temporary basis exist at the
periphery. As the market expands, the periphery grows to take up the slack; as growth slows down, the
periphery contracts. Those at the periphery are the subcontracted part-time workers, the self-employed and
several others in the category of casual, home-based temporary employment. These are comparatively low
paid on shorter-term contracts and are neither protected by labour laws nor organised by the trade unions,
and thus bereft of benefits available to permanent employment. Though subcontracting existed always, it
appears to increase with the introduction of new technology. The indication is that the trend in
subcontracting will continue and perhaps increase. Although trade unions have been trying to restrain
management from subcontracting jobs, the new tendency of what is commonly referred to as neo-liberal
flexibilisation and their legitimisation by state legislation will make subcontracting more popular and
easier. This increasing tendency of subcontracting, in turn, leads to a higher level of labour segmentation.
More and more jobs will be removed from the core sector to the peripheral (informal) sector, which will
become less secure and more isolated from the external labour market and the wider trade union protection.

Papola (1989) observes that growth of employment in India has been widely divergent and the real
explanation for this fact lies in the practice of sub-contracting. Favourable conditions have emerged for
large scale sub-contracting. A large number of small units have come up during the recent years,
particularly in the manufacturing sector, which are not in a position to compete with the large units with
brand names and market share. In fact, these small units produce for the use of larger units, and the latter
find it economical to use the capacity of the smaller units. The wage costs are usually much lower in the
smaller units, and the parent firm avoids the problems associated with the management of large work force,
including industrial relations and post-retirement and other benefits. The wage rates in the small units are
usually about two-thirds of those paid by large units and social security and other benefits are not provided
in the sub-contracted units. Sub-contracting is widespread in almost all sectors. According to an estimate
not more than 40 per cent of the production is undertaken in the parent unit. All these issues directly or
indirectly are concerns of trade unions as well.

Globalisation and Trade Unions

12
Trade unions are creation of the industrial society, which have played an important role in modern society.
Since inception trade unions have not only grown geographically across the world, but have also assumed
greater role in different ways in different countries at different points in history; each of these factors have
affected the structural and political (strategic) dimensions of trade unions. Trade unions, in other words,
have responded to the changing environment by redefining their role and strategy. Craft based union
structures of the initial years became industrial unions later, which developed centralised power/ bargaining
centres at national or sectoral levels. The centralised and conflict model of collective bargaining and
industrial relations of the UK and the US took a decentralised and co-operative form in West Germany and
Japan of the post World War-II. The new structures for labour management co-operation have been
influenced by the economic and social environment of the countries or regions they belong to. In Japan
such co-operation was built on the presence of "quasi-communities of labour" which adopted a problem-
solving approach within enterprises. The quasi-communities helped develop a pattern of enterprise
restructuring with flexible employment practices based on retraining and relocation of workers with
minimal use of lay-off. The Works Councils, which started in countries like Germany, where labour and
business practise mutually beneficial consultation are now being adopted all over Europe (Jose2000).

As mentioned earlier, the past few decades have witnessed changes in the political and economic
environment, which is, perhaps, unprecedented in dimension and intensity. Globalisation of the national
economies and internationalisation of products and services have brought about paradigmatic changes in
product, marketing, and labour (human resource management) strategies. Subsequently, labour-capital-
management relations have also had to be realigned. International competition and technological
innovations have resulted in new ways of organising capital and other resources. New products with
shorter life cycle and demand (consumer)-driven market, which became highly price (cost) and quality
sensitive created the need for flexible labour market policies and constant innovation. Innovative forms of
work organisation and a new generation of work force with different skill composition and career
aspirations, may be seen as natural corollary of the recent developments. Above all, the role of the state and
relevance of the public sector enterprises became an issue of contention in most part of the world, including
the erstwhile Soviet Union.

Trade unions have receded in importance and reduced in their membership during the recent decades of the
new work environment. The decline in union membership and the associated "crisis of representation"
have for a decade or more been the source of debate about the future of trade unions. Upchurch et al (2000)
identify at one level the pessimistic conclusions (Valkenburg 1996; Phelps Brown 1992), which associate
the growing individualism of the worker and a fragmented working class to the decline of trade unions as
solidaristic movements. On the other hand, they suggest that there is a substantial body of empirical
evidence to contradict such conclusions. They refer to the works of Lind (1996) in Denmark and
Waddington and Whitson (1997) in the UK, which show no such evidence to indicate a shift from
collectivism to individualism. Upchurch et al argue that many of the traditional values of trade union - job
security, full employment, fair distribution of wealth, democracy at work - are precisely the terms of
workplace relationship that have been denigrated by the new employer offensive. This raises the issue of
structure and strategy trade unions may have to adopt to successfully mobilise membership and survive in
not so favourable, if not, a hostile climate.

In sum, we have seen in this chapter that globalisation in general and technological change in particular
have huge implications on labour and human resource dimensions of the modern work place. Heightened
levels of quality, flexibility and cost efficiency of the competitive environment are leading to major
changes in the work processes, work organisation, knowledge and skill dimensions of the workers and
managers. Moreover, globalisation and technological change bring about radical changes in the labour
market conditions, organisational culture and the way the work place is managed, including trade unions
and industrial relations. The following chapters will deal with many of these aspects with reference to the
Indian context. The government of India, for example, announced a series of policy measures in 1991 to
liberate the Indian economy and industry from the monopolistic and centralised system, which would be
the focus of the next chapter.

Bibliography

13
1. Atkinson, J. 1984. The Flexible Firm, Institute of Manpower Studies, Sussex University,

2. Bessant, John, Paul Levy, Clive Ley, Stuart Smith and David Tranfield. 1990.
"Management and Organisation for Computer-Integrated Technologies",
Brighton: Centre for Business Research, Brighton Polytechnic.

3. Bessant, John 1993. "Towards Factory 2000: Design Organisations for Computer-Integrated
Technologies", In Jon Clark (ed.) Human Resource Management and
Technological Change, London: Sage Publications.

4. Braverman, H. 1974.
Labour and Monopoly Capital, New York: Monthly Review.

5. Burton-Jones, A. 1999.
Knowledge Capitalism, Oxford, New York: Oxford University Press.

6. Daniel, W.W. & Neil Millward. 1993.
"Workplace Industrial Relations", In Jon Clark (ed.) Human Resource
Management and Technical Change, London: Sage Publications,

7. Dev, S. Mohan. 2000.
"Economic Liberalisation and Employment in South Asia", Economic and
Poitical Weekly, January 8: 40-51.

8. Ettlie, J. 1988. Taking Charge of Manufacturing, San Francisco: Jossey-Bass.

9. Fleck, J. 1987. "Innofusion or diffusation?", Working Paper, University of Edinburgh,
Deptt. of Business Studies.

10. Goldar, B. 2000. "Employment Growth in Organised Manufacturing in India" Economic
and Political Weekly, April 1: 1191-1195.

11. Jose, A.V. 2000. "The Future of the labour movement: Some observations on developing
countries", Discussion Paper, Geneva: Labour and Society Programme,
International Institute of Labour Studies

12. Mamkoottam, K.& E. Herbolzeimer 1990.
"Interface of New Technology and Human Resource Management: A Case of
Automobiles and Textiles in Spain", Brussels: EFMD.

13. Mamkoottam, K. & E. Herbolzeimer 1991.
"Human Resource Implications of New Technology: A Case Study of
Automobiles in Spain", Indian Journal of Industrial Relations, Vol.26,
No.3.
14. Mamkoottam, K. 1994.
"Globalization and the Emerging Labour-Management Relations" In
C.S.Venkata Ratnam et al. (ed): Labour and Unions in a Period of
Transition, New Delhi: Friedrich Ebert Stiftung,.

15. Marshall, Ray 1992. "The Future Role of Government in Industrial Relations", In Bognanno,
M.F. & M.M. Kleiner (ed) Labour Market Institutions and the Future Role of
Unions, Massachusetts: Blackwell.

16. Ministry of Labour.1995.
Annual Report 1994-95, New Delhi: Government of India.
14
17. Lind, J. 1996. "Trade Unions: Social Movement or Welfare Apparatus?", Capital and
Class, 65:9-20.

18. Phelps-Brown, H. 1992.
"The counter-revolution of our time" Industrial Relations,29,1: 1-14.

19. Porter, Michael. 1990.Competitive Advantage of Nations, New York: Free Press.

20. Rush, Howard and John Bessant. 1989.
"Revolution in Three Quarters Time: Lessons from the Diffusion of
Advanced Manufacturing Technologies" Brighton: Centre for Business
Research, Brighton Polytechnic,

19. Sundaram, K. 2000. "Economic Development: Employment and Occupational
Diversification", New Delhi: Paper presented at the Millennium Conference on
Population, Development and Environment Nexus, February 14-16, 2000

20. Upchruch, M., Danford, A., and Richardson, M. 2000.
"Trade Union Response to Industrial Restructuring: Sectoral Case Studies from
the South West of England", Hamburg: The Fourth International Progressive
Policy Congress, March 02-05.

21. Valkenburg, B. 1996.
"Individualisation and Solidarity: The Challenge of Modernisation", in P.
Leisink et al (Eds.) The Challenge to Trade Unions in Europe, Cheltenham,
Edward Elgar.

22. Waddington, J. and Whitson, C. 1997.
"Why do people join unions in a period of membership decline?" British Journal
of Industrial Relations, 35, 4: 515-46.

23. Willman, Paul 1986.
Technological Change, Collective Bargaining and Industrial Efficiency, Oxford:
Clarendon Press.

24. Womack, J.P., Daniel T.Jones, and Daniel Roos. 1990.
The Machine That Changed The World, New York: Maxwell Macmillan
International.

25. Woodward, J. 1965. Industrial Organisation: Theory and Practice, Oxford: Oxford University
Press.

26. World Bank. 1995. The World Development Report, 1995, NewYork: The World Bank.