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Outsourcing, Not To Be Confused With Cheap Labour


Informal Workers / Cheap Labour Workers In The Philippines

People tend to look the other way when it comes to the issue of cheap labour in different countries. No matter how progressive labour laws are in most countries, cheap labour is still a common occurrence. This especially rings true in developing countries, with Immigrants and individuals, from low socioeconomic backgrounds tending to fall victim to cheap labour practices.


Overseas outsourcing/ offshoring may involve saving costs and resources, but it is in no way, shape or form, cheap labour. This article delves into the definition and characteristics of cheap labour, on how countries and employers regulate against it, and the reason outsourcing should not be considered cheap labour.


What Is Cheap Labour


Cheap labour, often referred to as forced labour, refers to employees who are subject to poor working conditions and below minimum wage salaries. To cut costs, some rogue businesses use cheap labour tactics, knowing full well the impacts it has on their employees’ welfare. Developing countries such as Bangladesh and Vietnam are prone to these working conditions.


Some forms of cheap labour involve child labour, 90 to 120-hour work weeks, low wages, with some employees earning less than a 1 cent an hour, avoidance of employee benefits and labour protection laws set by the country, forcing employees to work in sub-par conditions. According to the International Labour Organization (ILO), there are around 25 million people worldwide that are victims of this practice.


The History Of Cheap Labour


The practice of cheap labour began with the rise of the industrial revolution. The three major industrial countries United States of America (US), Great Britain, and Germany were said to have started cheap labour practices for their industrial production. Their first workers were often either migrants or people from the countryside.


The labour movement in the US assisted workers to improve their economic standing and welfare. The US labour movement negotiated better working hours, better pay, and benefits for each worker regardless of their immigration status.


Physical vs Digital Labour


Currently, cheap labour goes by the way of two forms: either through physical labour and/or digital labour.


Physical labour. This involves abuse of manual labour, often occurring in factories, sweatshops, and even farms.


Digital labour. Prominent with online workers, resulting in some workers being paid well below the standard rates, at around $1-$2/hour.


According to a report by PayPal, 58% of freelancers in their poll even experienced not getting paid at all.


Cheap Labour In The Philippines


The Philippines also has its share of cheap labour conditions. This involves the informal or underground sector with a total of 88.1% of the country's employment coming from this. As the Philippine Institute for Development Studies (PIDS) states, it includes the diversified set of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state.


According to PIDS, women are the most vulnerable workers in the sector, having lower earnings, longer work hours, and poor working conditions.


Regulations Against Cheap Labour


Currently, almost all countries in the world have some of form of legislation in place to enforce and protect workers rights. In the Australia, the Fair Work Commission through the Fair Work Act provides for minimum wage rates, industrial awards, dispute resolutions, the approval of enterprise agreements and unfair dismissal hearings.

In the United Kingdom, labour laws include anti-discrimination in the workplace, maternity leave, and requests for flexible working hours.


The International Labour Organization (ILO), established in 1919, brought together employers, workers, and the governments of the United Nation’s 187 member states to set international labour standards and protect the welfare of all workers.


Outsourcing, Not To Be Confused With Cheap Labour


Despite its popularity, some labour movements condone the working conditions in the outsourcing/offshoring industry in different parts of the world. This is due to their belief that it is a form of exploitation of workers rights in developing countries.


However, outsourcing, in general, should not be considered cheap labour. Governments of some countries even encourage it. One of the reasons for this is because, outsourcing companies make sure that they follow the labour regulations of their location and provide a safe work environment for their workers.


In the Philippines, employees of outsourcing companies can receive a starting salary of anywhere between a AUD $ 400 to $1,000 a month, which is well above the minimum wage in the Philippines. In addition employees receive bonuses and incentives and can participate in social events put up by their respective companies. With the the demand for outsourcing employees in the Philippines rising, employers actually go above and beyond the minimum requirements in order to attract the best employees.


In developing countries, outsourcing has been a major boom to the economy, allowing those below the poverty line to gain employment, with reputable companies, earn above average wages and up skill all at the same time as contributing to the economy.


Outsourcing has helped many developing countries expand their economies by providing jobs and income to the country.


So, thinking of outsourcing as form of cheap labour, is an inaccurate description and does not do justice to its contribution it is having on developing countries.


If you are thinking of outsourcing services to the Philippines, feel free to contact Integrated Globaltech by clicking here.

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