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Home » Glossary » Cheap labor

Cheap labor

Definition

What is cheap labor?

Cheap labor is a form of employment where a person or group of people typically work for relatively little money.

Unfortunately, they also typically work in appallingly deplorable working conditions. A vast majority of cheap labor is generally found in the agricultural industry and poorer countries.

Cheap labor is unacceptably low for most people, but it is unavoidable due to these countries’ rapid population growth and dismal economic situation.

Even after working long hours, workers in undeveloped and underdeveloped countries are paid meager wages without much support from government officials.

To make matters worse, these workers are stuck doing hazardous work in high-risk working conditions without any safety materials, such as masks or hand sanitizer.

Low-cost country sourcing is a technique in which a business purchases goods and services from countries with cheaper labor and manufacturing costs to reduce operating costs.

Global sourcing is a broad range of procurement initiatives, including low-cost country sourcing.

One of the most significant benefits of outsourcing is the availability of low-cost labor from other countries.

However, do not be confused with cheap labor and outsourcing; outsourcing is not cheap labor.

Outsourcing puts many developing countries into better working conditions and contributes to their economies in return.

What is cheap labor

A quick history of low-cost labor and wage growth

Industrialization can be traced back to the late 18th century in Great Britain when its economy underwent the Industrial Revolution.

The country remained the world’s leading industrial power throughout much of the 19th century. Eventually, the country was surpassed by the United States in the 1880s and then Germany soon after.

During this time, the most dramatic demonstration of how low-cost labor connects to racial discrimination under capitalism is slave labor in the Americas. It affected millions of people, even children.

Slave laborers were first and foremost displaced and sent to locations where they were most vulnerable, such as prison labor, rural areas, or even overseas. This led to an increase in incarcerated people.

Modern-day slavery cases demonstrate how employers continue to adopt variants on the plantation model of labor to reduce labor costs.

Like former African slaves, the cheapest laborers in the early twenty-first century were frequently refugees. One example is immigrants from developing countries, who were forced to immigrate due to economic pressure.

A quick history of low-cost labor

Even as the Western countries became more industrialized, China and India had quite different experiences with cheap labor.

For centuries, these two countries had been home to enormous craftsman manufacturing industries and produced and exported manufactured goods like textiles and ceramics.

Wage growth for unskilled workers would be moderate due to a massive supply of workers, particularly in the rural economy.

At the same time, wage growth for skilled labor would likely slow due to the recent convergence of college wage premiums to global practices and the expected healthy supply of college graduates and professionals coming from overseas.

As a result, wage growth will be gradual in the future.

Today, developing countries attract the most companies worldwide since they offer low-cost labor and trained personnel, allowing these investors to make the most money with the least amount of investment.

The capitalist system aggressively pursues cheap labor, dividing workers along racial, gender, and class lines and making them vulnerable to employer control.

Countries with the cheapest labor

It is inevitable for developing countries with a fast population increase and a dismal economy to provide unacceptably low wages for their workers. Most of these countries come from Southeast Asia and Africa.

The following is a list of developing countries having the cheapest labor in the world:

  • Uganda
  • Georgia
  • Cuba
  • Kyrgyzstan
  • Bangladesh
  • Tanzania
  • The Gambia
  • Guinea-Bissau
  • Venezuela
  • Malawi
  • Liberia
  • Congo
  • Tajikistan
  • Ghana
  • Madagascar

Some of these countries have resorted to having children as their workers.

For example, children work as gold sellers in Ghana. They typically work long hours for six or seven days and get paid such low wages.

This sort of labor that affects millions of children and adults leads to mass incarceration.

The future of cheap labor

In this modern age, companies and state-owned businesses are more particular about hiring quality workers and paying them decent wages.

While some workers from developing countries are still struggling to make a decent living due to poverty and the state of their economy.

However, moving forward, there is a greater need for safe work conditions, benefits for all workers, and paying them at least minimum wage.

After all, the more companies invest in their employees, the greater the results they can expect.

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