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May 06, 2004

Race to the Bottom

Sound familiar?

Street sweeping, once a government job that paid triple what it does now and came with medical care, a pension, annual leave and job security, has been outsourced to private contractors, who offer none of that...

With greater efficiencies, global competition, cheap capital and new technology, private companies are doing more with fewer employees.

No, this isn't a story about privatization and outsourcing in the United States.

It's about India. Imagine, salaries in India being slashed by two-thirds?

And it's not just falling wages in many sectors. Jobs just aren't there for tens of millions of Indian workers:

As both economic and population growth outpace employment growth, economists say, the country's official unemployment figure of about 8 percent masks a far higher real rate.

With mass unemployment in India and China, this means global pressure to lower wages is just increasing.

Many free traders tell a story that it's sad that some Americans are losing jobs to "free trade", but we should not be greedy, since it benefits workers in developing nations.

But the current regime of outsourcing, privatization and the race to the bottom is hurting workers throughout the world, with corporate profits the only beneficiary.

Posted by Nathan at May 6, 2004 09:58 AM