Wall Street Shakes Main Street of India

8/14/2019 Wall Street Shakes Main Street of India

http://slidepdf.com/reader/full/wall-street-shakes-main-street-of-india 1/8

WALL STREETS SHAKES THE MAIN STREETS OF INDIA, IS IT AN EFFECT OF

FINANCIAL CRISIS OR COST BENEFITS ADVANTAGE?

D.SUGUMAR M.COM., M.PHIL., MBA.,PGDPMIR V.MEERA M.COM.,M.PHIL.,PGDCA

Assistant Professor, Assistant Professor

Vel Sri Rnaga Sanku College Vel Sri Rnaga Sanku College

(Arts & Science) (Arts & Science)

Chennai-62 Chennai-62

INTRODUCTION

It is true that most of the news paper, magazine, Proceeding of the national,

international seminars, conference and speeches of the most of the political leader is

about the global financial crisis and its impact on dynamic economics of the world. In the

beginning of 21st century world would experienced consistent financial crisis that led to

unemployment, poverty and many social challenges. In the present financial crisis would

leads to closure of 25 international banks and its expected to affect another 52 banks,

many company and shake the economy of the most of the countries. This would teach

good lesson to the world community. This the time to remember the words of Peter

Drucker “Increasingly world investment rather than world trade will be driving the

international economy, exchange, rates, taxes and legal rules will become more important

than wages rate and tariff.”1 Such a taught would remain how important to manage the

money transfer otherwise that would hit the economy, this what we expiring today? “This

phenomenon is resemblance of ‘Casino Capitalism’. It means assets are traded primarily

for speculative profit rather than for the benefits of the real economy which adversely

affecting the lives of millions of ordinary people, who have put their saving and assets at

its disposal. Even those who are not part of Casino Capitalism poor people, trader Etc

may not be able to escape from its Impact.”2

1 Peter F. Drucker “ Managing for the future, Butterworth- Heinemann Ltd,Oxford,1992,pp.35.2 Dr.Victor Louis Anthuvan, “Hot Money Flows and Financial Turmoil”,The Dynamics and The Impact of Globalisation,A subaltern Perspective,P-126,May-2006



It is true today “The ILO in its annual report has warned that the existing global crisis

might cause mass unemployment on a global scale. The report states that some 200

million workers could lose their jobs”3. Such situation causes due to fiancial crisis or cost

benefit advantages?

Now the question is does such a situation will not occur in the world and what were our

responses to minimize such situation? And present financial crisis is really due financial

crisis or catch the cost benefit advantages?

GLOBAL VS INDIAN FINANCIAL CRISIS

The global financial crisis, brewing for a while, really started to show its effects in

the middle of 2007 and into 2008. Around the world stock markets have fallen, large

financial institutions have collapsed and governments in even the wealthiest nations have

had to come up with rescue packages to bail out their financial systems.

On the one hand many people are concerned that those responsible for the

financial problems are the ones being bailed out, while on the other hand, a global

financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-

connected world. The current financial crisis evolved quickly due to banking crisis. This

would cut the job of many people in India. The problem could have been avoided, let we

see what the lesson we had learnt from history.

Cause of 5 Major Financial Crises

3 Mohan Nepals – ILO “Warns developing nation of mass Unemployment due to global crisis, Jan 29,2009.

S.No Year Name of the problem Amount of loss

1 1866 Overend, Gurney &

Company

11 million pounds, equivalent to

£981 million at 2008

2 1929 The Wall Street Crash The market lost $14 billion in value

that day, bringing the loss for the

week to $30 billion.

3 1985 US saving and Loan

Scandal

totaled around $160.1 billion, about

$124.6 billion

4 1987 US Stock Market Crash 508 points to 1738.74 (22.61%).

1998 LTCD 4.6Billion USD

5. 2000 Dot.Com Crash $5 trillion

http://en.wikipedia.org/wiki/United_States_dollar







1921,1929 Moderate capital Mobility 1920-1929

1947 Low capital Mobility 1930-1969

1993 High Cap Mobility 1980-2007I) www.Mostlyeconomics.wordpress.com

The obvious reason is that at least out 400 companies of fortune 500 listed

companies are operating in Indian . They trust the Indian labour market, and they use

Indian knowledge as missal for hitting targets. At the same times these Missal available

large in numbers so they can change when ever they wants. Fancy for protecting these

labour are low so they used such financial crisis for lay off the employee and reduce the

wages, Imposed the stringent policies etc because most of the company are operating in

India are MNC of west and East. Then is important to protect our poor Indian labour. We

need to protect this people .

DAUNTING EMPLOYMENT IN THE WORLD AND INDIAN

“In 2008, global unemployment increased by 8.4 million and global job losses

could hit 50.4 million for 2009, according to the International Labor Organization” 4

The global economic crisis could results in an additional 18 million unemployed

in the world, increased levels of vulnerable in employment, and 200 million indeveloping countries being pushed into extreme poverty.”5

The highest impact is expected only in the developed world

Highest Unemployment Records Lowest Unemployment record

Country % of Employment for

the year 2008

Country % of Employment for the

year 2008

North Africa 10.3% East Asia 3.8%

Middle East 9.4% South Asia 5.4%

Central & Central & South

Eastern Europe (Non EU),

Commonwealth of Independent

States (CIS)

8.8% South East

Asia

5.7%

Sub-Saharan Africa 7.9%

Latin America 7.3%

I) International Labour Organization , 4th February 09

4 ILO (2009) “Global Employment Trends: Update May 2009.”5 Mohan Nepail, “ILO warns developing nations of mass unemployment due to global crsis”Jan29,2009.





STATE OF EMPLOYMENT

It indicates boneless employment opportunities prevailing in Indian market. In

India most of the organized sectors became growing as an unorganized sector in terms of

employment which often ignore or follows the social ethos, rather the follows business

ethos with out man kind.

It is very important to note the situation existing in India labour market is that

Many employer offers the employment to the fresher because of lower emolument either

side no guarantee that how far they are keep us inside the organization?. This situation is

called jeopardize or buoyancy employment. In fact as like Sensex updating most of the

organized private companies employees needed to view the notice board or alert the

mobile or E-mails for checking whether their name in the employment list or Not?

Such situation emerged today in the name of financial crisis perhaps price were

increased, sale too increased and profit would have touches couples of digits more than

the previous quarter. Even than lay off, pay cut, no bonus, retrenchment and termination

continued in the most of the industries especially sever ice sectors.

A survey report of ASSOCHAM stated that “Seven key industrial sectors would have

nearly 25% of lay off in next 2 weeks.”9

Senior industrialist met also went off with failure that government has offers special

crisis panel for consider the future action but industrialized has promised that they would

not resort to lay off and perhaps there is a possibility of termination in the of non

performance.

According to M.K.Pandhe secretary of the CITU “ Lay off, closures and termination

have began in a big way.

9 Association of chambers of commerce and industry



EAST VS. WEST STRATEGY FOR HANDLING FINANCIAL CRISIS

WESTERN INDIAN

Hiring Freeze 25% Restructuring 67%

Restructuring 23% Slower Rate of salary 51%Salary Freeze 12% Hiring freeze 62%

Salary reduction 4% Reduced work 10%

Pay reduction 3%

Early Retirement 15%

i) Business daily The Economics Times, Pothen Jacob, Head Capital group,

Watson Wyatt India.

"In the absence of a structured social net, the implications of a workforce reduction are both economic and emotional," writes Jacob. "Companies should first consider approaches that avoid layoffs."10

The above table shows that west companies are lenient in terms of reducing employ

where as in India reduction is higher. Hence we needed to protect at least high percentage

of job cuts in the name of financial crisis

WHAT WE HAVE TO DO?

We must collect transparency from the company where the job cut higher.

We must check periodical what is the status of employee in India through

ministry of labour even in the service sectors as we did for reducing child labour.

Every company needs to update the consolidated balance sheet for employees.

Which must gives the information about job offered, job cut ,lay off and attrition

etc.

10 Job Cuts vs. Pay Cuts: In a Slowing Economy, What's Better for India?: India Knowledge@Wharton

(http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4333 )



For avoiding financial crisis world community will have think of common

currency for international trade which is not the currency of any country as

Keyens suggest in the second world war II

These things would better helps to mange the employment status in India

CONCLUSION

India’s emerging as the 12th country in the world with trillion – dollar economy

could prove to be mixed blessing. Growth declined to 7.3% in 2008, down from 9.3% in

2007 Current Government estimates are for approx 6.5% to 7.5% growth in 2009,but the

IMF forecast is for growth to fall to 5.1% As economic growth contracts Demand for

labour has fallen, Large-scale job losses in some sectors, Rising unemployment &

Underemployment, Downward pressure on wages, SMEs have been hit hard, Informal

economy and has expanded, Reverse migration has increased”11 Rising unemployment in

the Asia-Pacific Region Low estimate 7.2 million additional unemployed. Over 2009 and

2010, an estimated 20.3 million additional jobs will be needed to absorb India’s growing

labour force .There is very little chance that a sufficient number of new jobs will be

created to keep up with expected labour force growth. Wall street would affect Dallstreet consistent it would affect all the people in main street. Hence it’s very serious to

take care labour market and poor people of this country .

11 ILO,The fallout in Assia: Assessing Labour market impact and national policy responses to the globalfinancial crisis,18-20 Feb,2009

Documents

Wall Street Shakes Main Street of India