Transfer of industries to low-wage countries

Displacement of employment opportunities to low-cost countries

Nature

Many commercial organizations are continually looking around to see if off-shore production can increase their profitability. This can result in exploitation of unprotected workers in low wage countries and abandonment of economies and workers in the countries they depart from.

Background

The transfer of industries to low-wage countries emerged as a significant global issue in the late 20th century, as multinational corporations sought to reduce production costs. Initial recognition followed widespread factory closures in developed nations during the 1970s and 1980s, sparking debates on economic displacement and labor standards. Over time, research and policy discussions increasingly highlighted the complex impacts on both source and recipient countries, shaping international economic and social agendas.

Incidence

The transfer of industries to low-wage countries has accelerated over recent decades, affecting millions of workers and reshaping global economic landscapes. This phenomenon is particularly pronounced in sectors such as textiles, electronics, and manufacturing, where multinational corporations relocate production to regions with lower labor costs. The resulting shifts have led to significant job losses in higher-wage countries and contributed to rapid industrialization, often accompanied by labor and environmental concerns, in developing economies.
In 2022, the closure of several automotive component plants in Germany and their relocation to Mexico and Eastern Europe highlighted this trend. Thousands of German workers faced unemployment, while the receiving countries experienced a surge in industrial employment and foreign investment.

Claim

The transfer of industries to low-wage countries is a deeply troubling problem that cannot be ignored. It devastates local economies, destroys well-paying jobs, and exploits vulnerable workers abroad. This relentless pursuit of cheap labor fuels inequality, erodes labor standards, and undermines communities worldwide. We must confront this issue urgently, demanding ethical business practices and fair wages for all, rather than sacrificing human dignity for corporate profit. The stakes for our global society could not be higher.

Counter-claim

Most reductions in available jobs and cuts in wages arise because of technological improvements and a change of organizational ethos that are much more to do with competition with and between rich countries than between richer and poorer countries.