Question

Briefly explain the two aspects of informalizaion. WHat are their effects and how are they connected to globalization in practice.

Answer 1

Briefly explain the two aspects of informalizaion. What are their effects and how are they connected to globalization in practice.

The employment sector consists of two types such as the organised sector and unorganised sector. Organised sector regulated and fully controlled by the government while the unorganised sector being left open for the private entity to operate freely with certain rules and regulation implemented by the government. Informalisation means rapid fall in the percentage of the workforce in the formal sector with a rise in the percentage of the workforce of the informal sector over a period. Two aspects of informalisation are the difference in wage rate or remuneration received by an individual involved in the same work and no social security or job security over the job provided by the corresponding private entity.

Effects of informalisation

It has both pros and cons to the state of employment in the economy. It augments the efficiency and productivity of the workforce deployed in different sectors of the economy. The remuneration sometimes is underpaid or overpaid in the formal sector of the economy, the process of informalisation make it balance and attributed to equal payment according to the work performances of the individual. Its cons are badly affecting the working force significantly. There is no certainty over the job provided by the private unit and it could retrench at any time at their own discretion.

Connection with the Globalisation

The informalisation of the working force in an economy significantly helps its foreign sector. In the era of Globalisation, the MNCs widely being operated all over the world and have widened their network and presence all over the world. The large scale of the skilled workforce would be an asset for the MNCs to capture the domestic as well as the international market. The export sector of the economy would get a boost in the process of globalisation connected with the informalisation of the workforce in the economy.