Home » Glossary » Cheap labor

Cheap labor

Definition

What is cheap labor?

When a person works hard for relatively little money, this is referred to as cheap labor. Unfortunately, they also typically work in appallingly deplorable conditions. Cheap labor is generally found in the agricultural industry.

Cheap labor is unacceptably low for most people, but it is unavoidable due to the rapid population growth and dismal economic situation. Even after working long hours, workers in undeveloped and underdeveloped countries are paid meager wages.

Low-cost country sourcing is a sourcing technique in which a corporation purchases goods from countries with cheaper labor and manufacturing costs to reduce operating costs. Global sourcing is a broad range of procurement initiatives that include 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 helps many developing countries improve their overall condition and contributes to their economies in return.

What is cheap labor?

A quick history of low-cost labor

Industrialization can be traced back to the late 18th century in Great Britain when its economy was undergoing what’s known as 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 cheap labor connects to racial discrimination under capitalism is slave labor in the Americas. Slave laborers were first and foremost displaced and sent to locations where they were most vulnerable.

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 are frequently refugees, such as immigrants from developing countries, who immigrate in reaction to economic pressure.

Even as the western countries became more industrialized, China and India had quite different experiences. For centuries, these two nations had been home to enormous craftsman manufacturing industries and produced and exported manufactured goods like textiles and ceramics. 

Wage growth for unskilled workers will 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, salary growth will be gradual in the future.

Today, developing countries attract the most investors worldwide since they offer the cheapest 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.

The world’s cheapest labor countries

It is inevitable for countries that have a fast population increase and dismal economic situation to provide unacceptably low salaries for their workers. Most of these countries come from Southeast Asia and Africa.

The following is a list of 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

Start your
journey today

  • Independent
  • Secure
  • Transparent

About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO).

The #1 outsourcing authority

Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between world-leading outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 900+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.