Low -wage country – Wikipedia

When Low -wage country (colloquially too Low -wage country , English low-wage country ) apply states in which the labor costs are significantly below the average of other countries (so -called “wage gradients”). The contrast is the Hochlohnland.

The benchmark is the economic key figure of labor costs. These vary from state to state for comparable employment, so that they can be the cause of labor migration. Due to the land principle (or through a minimum wage), a high -wage country protects its acquired productivity and prosperity on the one hand, and on the other hand, there is the possibility to follow up with convergence in wages. ^[first] Because labor migration can lead to the fact that workers become scarce in the low -wage country and that an excess of work – i.e. unemployment – is created in the high -wage country. This results in a leveling tendency to work costs (rising in the low -wage country, falling in the high -wage country). ^[2]

Low wages are also available in highly developed industrialized nations, including in the USA and increasingly in Germany. ^[3] However, they are therefore not among the low -wage countries because statistically, low wages only make up a small proportion of the average labor costs.

Low wages often go hand in hand with poor working conditions with low standards in occupational safety, occupational safety, permitted child labor, lack of protection against dismissal or low qualifications.

When a state can be classified as a low -wage country is controversial. The World Bank describes all countries with an average per capita income of less than $ 995 a year as a low-wage country. ^[4] Other authors assume that all countries are considered a low -wage country if their wage level is at least 50% below Germany. ^[5] In 2004, the average monthly salary of more than 4,000 euros in Germany faced an average monthly income of 850 euros in Latvia, 450 euros in India, or only 50 to 150 euros in the Southeast Asian region. Both definitions are problematic because significant differences in purchasing power make a comparison difficult. This can be remedied by cleaning up purchasing strength or a purchase force.

The economist Adam Smith assumed in March 1776 that foreign trade was worthwhile if a good in a country can be manufactured cheaper than abroad; From this he developed the theory of absolute cost advantages in his work of the prosperity of the nations. ^[6] Smith only looked at the labor costs, so that a country with higher labor costs can import certain products from another country where the labor costs for these products are lower. David Ricardo went one step further in 1817 and also considered trading as advantageous if one of the countries can offer all products cheaper (comparative cost advantage). ^[7]

Today’s classification of the different labor costs uses the so -called Atlas method and takes place according to the amount of the gross national income ( English gross national income , Gni) per head (per capita income). The GNI was replaced in the UN economy of the UN economy of 1993. It contains all income generated by domestic countries, regardless of whether this has happened in Germany or abroad. As long as the high labor costs are justified by high labor productivity, they do not constitute a competitive disadvantage to other countries. Low -wage countries, on the other hand, have a competitive advantage over Hochlohnland because the former can produce cheaper due to the low labor costs. However, this is not always possible because there are neither qualified work staff nor the (industrial) infrastructure in low -wage countries.

Globalization also means that sub -areas of the value chain of high -wage countries are shifted to relatively poor low -wage countries (such as the body car in the automotive industry), ^[8] if there are qualifications and infrastructure. This relocation is called outsourcing or intercontinental offshoring. Between 1990 and 2007, automotive production in high -wage countries has increased by 5%, but in the low -wage countries by 251%. ^[9] If producing in a high -wage country, the high labor costs and also the higher overhead costs are added at the longer production time. This already results in large price disadvantages that are hardly accepted by the market.

Adjusted worldwide in 2017 Liberia with a gross national income (BNE) per capita of $ 710 as a poorest low -wage country, followed by Central African Republic (730), Burundi (770), Democratic Republic of Congo (870), Niger (990), Malawi (1,180) , Mozambique (1,200), South Sudan (1,440), Sierra Leone (1,480), Eritrea (1,500), Madagascar (1,510), Komoren (1,570), Togo (1,620), Gambia (1,670), Guinea-Bissau (1,700), Burkina Faso (1,810) and Uganda (1,820). Only then did the first non-African state follow Haiti (1,830). The poorest low -wage country in Europe is Kosovo (11.050), followed by Albania (12.120), Bosnia and Herzegovina (12: 880), Serbia (14.040), North Macedonia (14,590), Montenegro (19,150), Bulgaria (20,500), Croatia (24,700) ), Romania (25,150) or Turkey (26,150).

If you take the labor costs into account in euros per hour, the following states were among the low -wage countries in the European Union: ^[ten]

Land	2007	2017
European Union EU	22.80	26.80
Bulgaria Bulgaria	2.10	4.90
Romania Romania	3.90	6.30
Lithuanese Lithuanese	4.30	8.00
Latvia Latvia	3.70	8.10
Hungary Hungary	6.70	9.10
Poland Poland	6.70	9.40

Typical European low -wage countries are therefore Bulgaria, Romania or Lithuania. The further to the east or southeast of a state, the more likely it is one of the low -wage countries. The time comparison shows the significantly increased labor costs; Empirical proof of the convergence of wages that have occurred.

The wage gap between industrialized nations and low -wage countries offers companies in industrialized nations incentives to outsourcing, offshoring or nearhoring, although there are also high risks that can counteract the supposed cost reductions.

Opportunities for relocation in low -wage countries [ Edit | Edit the source text ]

Risks of the shift in production to low -wage countries [ Edit | Edit the source text ]

• Significant additional effort for communication, coordination, technical infrastructure.
• Significant geopolitical uncertainties and political risks (regional neighborhood conflicts, racial riots, terrorist dangers, religiously motivated conflicts).
• Massive infrastructure problems (health care, hygienic conditions, electricity and water supply, traffic route connections).
• Strong employee fluctuation.
• Leadership problems (in addition also refusal to manage or family members to change residence).
• Cultural differences and linguistic difficulties that often trigger misunderstandings.
• The frequent lack of occupational safety and workers’ rights is disadvantageous, which can increase the social problem in the medium term, as well as problems with one-sided import export relationships and in environmental protection (lack of corresponding regulations).
• A special case of the topic is the Maquila industry in Latin America. For example, it has made the north of Mexico a dynamic economic zone, but results in poor working conditions, social tensions and pollution.
• Compliance with the environmental standards is not always guaranteed.

Many transnational companies (TNU) are now trying to enforce compliance with social standards from their suppliers. One of the main reasons is public criticism of the catastrophic working conditions, for example in the clothing industry. This damages the call for responsible buyers from high -wage regions who do not want to enrich themselves at the expense of poorly paid workers.

However, not all TNU control the entire supply chain. The Clean Clothes Campaign Has started an action against the violation of social standards in Tchibo suppliers in Bangladesh: working hours there are up to 90 hours a week. Workers are released if they want to organize themselves union. However, many of these actions remain half -hearted because the poor working conditions in these countries are offset by customers.

The buying behavior in high wage regions is therefore a significant contribution to the design of working conditions in low -wage countries.

During the negotiations on the United States Mexico Canada Agreement (USMCA Agreement), in the United States, in the negotiations with Mexico, it was also a question of limiting Mexico’s low-wage advantage through stricter rules on labor law, including monitoring by independent experts. ^[twelfth]

Part of the wage difference is collected by a higher purchasing power in these countries, but this mainly refers to services and predominantly wage -intensive products, while goods such as medication with comparable quality differ only slightly in the price. Cheaper apartments are usually offset by bad living conditions in these countries. In order to acquire investment goods, employees of a low -wage country have to spend many times over working hours.

Side of side effects of low wages are often uncertain employment relationships in these countries, lack of hygiene and occupational safety, a lack of social security and child labor, since the wages of parents to maintain families are often not sufficient. In many of these countries, an union organization is associated with high risks for employees because it is systematically hindered by employers.

1. ↑ Heiner Flassbeck, 50 simple things you should know about our economy , 2006, S. 81
2. ↑ Eckhard Jesse/Armin Mitter, The design of German unity: history, politics, society , 1992, S. 296
3. ↑ Welt.de of March 18, 2010, Germany has become a low -wage country
4. ↑ Cesifo Group Munich – Low -wage countries. Accessed on September 12, 2018 .
5. ↑ Ulrich Jürgns/Martin Krzywdzinski, The new east-west working division , 2010, S. 28
6. ↑ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776/1978, S. 64 f.
7. ↑ David Ricardo, The Principles of Political Economy and Taxation , 1817, S. 184 ff.
8. ↑ Paul J.J. Welfens, Basics of economic policy , 2008, S. 533
9. ↑ Ulrich Jürgns/Martin Krzywdzinski, The new east-west working division , 2010, S. 29
10. ↑ Eurostat, press release 60/2018 of April 9, 2018, Labor costs in the EU , S. 3
11. ↑ Helmut Schmalen/Hans Pechtl, Basics and problems of business management , 2019, S. 69
12. ↑ US, Mexico and Canada sign revised trade deal to replace Nafta. In: The Guardian. December 10, 2019, accessed on December 14, 2019 (English).