Rediff Logo Business Banner Ads
Find/Feedback/Site Index
July 7, 1998


Mobility of labour crucial to development, India tells WTO

India has stressed the need for promoting mobility of labour as a ''natural corollary'' to the movement of capital flows across countries and regions as both are accepted as ''delivery modes'' for trade and investment in goods and services.

In a working paper submitted recently to the working group on trade and investment of the World Trade Organisation, India has said that a liberal integrated approach towards the issue of mobility of labour is necessary as part of the free flows of capital, goods and services across the globe.

''Both mobility of capital and labour are two sides of the same coin and yet are being treated as two separate water-tight compartments. This is essentially because we have not yet appreciated the complementary and critical role of this relationship. The fact remains that there is a two-way relationship between capital and labour and any discussion on mobility of capital remains incomplete without appropriate investigation into the scope for mobility of labour,'' the paper says.

India has suggested that the WTO working group on trade and investment should explore the nature and extent of issues relating to labour resources faced by different sectors and consider ways to improve the productivity of capital by improving the mobility of labour.

India has also proposed that the working group should suggest easy mobility of selected categories of labour apart from the higher categories of personnel for which most member countries of the WTO have already undertaken commitments under the General Agreement on Trade in Services. For complementing production, the working group ought to suggest ways for selected labour to move from surplus regions to labour-deficit regions. The working group should also be able to consider degrees of mobility of labour under the aegis of the WTO.

Referring to the barriers presently facing free flows of capital and labour, the paper points out that in terms of the intensity of these barriers, labour is obviously the weaker partner and also that it did not receive adequate coverage in the Uruguay round of multilateral trade negotiations.

In fact, the mobility of all categories of labour except higher categories of personnel and business visitors was kept out. In this context, it states that the framework of Gats does not encourage mobility of labour as a mode of delivery for exporting services. Compared to the larger issues of mobility of capital and the mobility of labour, Gats is dealing mainly with limited mobility of capital and limited mobility of skilled manpower.

At present, mostly higher level professionals are allowed under the Gats agreement for rendering services abroad, whereas in reality there is a huge shortage of different categories of labour -- including professional, managerial and administrative work force -- in the global workplace which can be attributed largely to the constraints facing mobility of labour.

Without mobility of labour as a complementary to the mobility of capital, production of global firms would get affected by severe labour crunch and economies of scale and production would be adversely affected by the labour shortage, forcing firms to do with less desirable options such as working with lower supply or lower quality of labour with lowered scale of production etc.

This would consequently have an adverse effect on the effectiveness of the capital employed by firms, slow down global trade and investment and even reflect on the futility of WTO's role as a facilitator for bringing about a package deal for augmenting global trade and investment flows. The paper also stresses that in terms of costs, guaranteeing mobility of labour would be the cheaper and the more effective option.

It may be recalled that in his inaugural address at the second ministerial conference of the WTO in Geneva on May 18, Commerce Minister Ramakrishna Hegde had referred to the Gats which is scheduled for review in 2000 and expressed the hope that developing countries would be able to achieve substantial improvement in market access during the negotiations.

He had also pointed out that while there had been great focus on the movement of goods and capital, hardly any attention had been paid to market access for professionals from the developing countries. ''We are concerned that the comparative advantage of our professionals is not allowed to be exploited in full measure,'' he had said.


Tell us what you think of this report