BIZCHINA> Review & Analysis
Look who's shedding tears for low-paid labor
(China Daily)
Updated: 2008-06-09 18:03

[The author Ding Yifan is a researcher with the Development Research Center of the State Council]

Recently some governments in the Americas and Europe have been vocal in demanding increased international coordination on the establishment of a global standard for labor. Their call has been echoed by some economists and politicians, trade unions and non-government organizations. What do these voices tell us and what is the motive behind them?

Actually the so-called global labor standard is aimed at developing countries and reflects a difficult position in which globalization has currently put the developed nations. Developed countries started globalization in the 1990s as many transnational conglomerates relocated their manufacturing facilities to the developing world en masse.

This kind of overseas investment is mainly aimed at amassing profits by taking advantage of cheap labor in developing nations. Globalization has fueled international trade, which in turn has accelerated economic growth around the world, including emerging markets.

It is obvious that globalization has benefited developed countries more than otherwise. First off, it sent transnational conglomerates' profits skyrocketing, which in turn boosted their stock prices and financing efficiency. Secondly, it allowed developed nations to make consumer goods in developing countries at extremely low costs and sell them back home with plenty of room for price cuts, which helped keep their inflation rate low. This has given developed countries a period of low interest rate and reasonably high economic growth. Last but not the least, the low prices of consumer goods made many luxuries affordable to the majority of consumers, whose buying power has thus been enhanced considerably.

Naturally, globalization has also brought developed countries some troubles that threaten their social stability as a result of relocated production. The transnational conglomerates made tons of money but much of it went into the pockets of ranking executives, further widening the income gap within those enterprises.

Enterprises with minimal business contacts with the outside world found themselves struggling to remain afloat by cutting staff and raising efficiency as globalization squeezed their living space tighter by the day. And the trend of out-sourcing forced many companies in developed countries to duel it out with their counterparts in developing nations. The outcome? Go cheap or go bust.

As the income gap continued to widen, some people in developed countries began to accuse developing nations and particularly the fast-growing ones of "stealing" their jobs by "unfair" competition. In order to win more votes, some politicians in developed countries even advocated "anti-dumping" duties on imports from developing nations.

Developed countries have a knack of occupying the "moral height" so as to blame others whenever a dispute pops up. They know perfectly well it was their enterprises that moved production to developing nations to exploit cheap labor there, but they always manage to blame the developing countries for the social discontent their own companies' greed had caused back home.


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