Employee rights, health and safety restrictions, and other labour protection regulations naturally drive up the cost of labour and, tied to that, the cost of doing business.
As companies compete to drive down prices, rising labour costs are an issue and so they outsource labour to places where there are fewer (or zero) labour regulations so they can drive down the cost of that labour, thereby lowering their prices.
In the last two decades, consumers have been more and more aware of sweatshops and child labour and global brands have responded by choosing to enact certain levels of employee protection.
But things have not really changed.
Companies still need to lower the cost of doing business, and so they look at creative ways to cut labour costs.
The result is a new generation of exploitative labour practices.
To be fair, not every company or business engages in these practices; but inherent within our globalized model of competitive capitalism is the ability of profit-focused companies to take advantage of loose labour laws (or loopholes) to lower the cost of labour.
In North America, immigrants continue to be taken advantage of (especially illegal immigrants, but legal immigrants are nearly as vulnerable) because of their lack of knowledge of their own rights.
In many industries, like the agricultural space or international nannies for example, temporary foreign workers have their residency rights tied to their employment so that their employers literally hold their legal residency status as a potential trump card.
Overseas, the typical sweatshop has been replaced by a factory that touts job creation as its contribution to society when in fact the jobs pay just enough for the employee to survive (barely), but not enough that they could ever invest in an education or skills training to help them get a better job.
Slavery is not dead, we just call it low cost labour sourcing.
In my next post I will be discussing some of the environmental impacts of competitive capitalism.