Economics
In what ways has competition affected workers, Indian exporters and foreign MNCs in the garment industry?
Global & Ind Econ
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Answer
- Job Security — Workers have lost their permanent jobs. Faced with growing competition most employers prefer to employ workers ‘flexibly’. It means that jobs are no longer secure. Wages are low and workers have to put in long hours of work. Workers are denied their fair share of the benefits.
- Cost cutting — India’s exporters are facing tough competition and try hard to cut down their cost of production to remain in competition. The intense competition compels exporters to offer competitive prices, which affects their profit margins. As cost of raw materials cannot be reduced, exporters try to cut labour costs by employing workers on temporary basis and making them work very long hours during the peak season.
- Maximizing profit — MNCs in Europe and America source their products from Indian exporters. They seek the cheapest goods to maximize profits. While competition allows MNCs to make substantial profits, it often comes at the expense of workers and smaller businesses.
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