Cheap Labour Markets

Cheap Labour Markets – Destruction of the Economy?

In this text I would like to explain the worrying influence of cheap labour markets on foreign and national economy.

Cheap labour markets like South-East Asia attract attention to companies, which have to sell their products at low prices in order to survive on the market. Therefore the concerns establish factories in these countries to save costs in the loan sector.

In these countries unemployed people work for the lowest rent to gain money, they need to survive. They often have to work more than 14 hours a day. Even children have to work in these factories in very bad and unhealthy conditions. They do not have any chance to get education and a better life.

Furthermore there are less licensing requirements of environmental care, so the companies do not have to establish expensive filter systems to reduce the pollution. Nevertheless the concerns believe that they bring prosperity to these people but in fact their only concern is their own enrichment. As a result the gap between rich and poor is widening, which is another threat to the world's economy.

Moreover there is also the fear of job losses in the own state resulting from capital flight to low-wage countries. It will lead to a higher rate of unemployment in a country, if companies only produce in foreign states.

The pressure of price dumping of large concerns affects also smaller companies, which only produce at home and not abroad. They have to deal with higher loans and taxes and are not able to sell their products at the same price level as the larger concerns. As a result they often have to file for bankruptcy.

In conclusion cheap labour markets lead to an enormous competition and pressure on the world market. Small companies start to disappear and large concerns become larger for this reason the gap between rich and poor is widening.