Consequences of Globalization – The Labour Market

Through the globalization the labour market is often no longer national or regional limited, but global. The result is that the labour supply is increasing enormously. The cost of living in Asia is often only 20% of the cost of living in Western Europe. Accordingly great is the difference in wages and salaries.

In many parts of the world the factor labour is much cheaper than in Western Europe. This means that a German worker is not only in competition with other German workers, but also in competition with many workers from around the world who offer their workforce significantly cheaper. This wage gap between Western Europe and many other parts of the world means that many companies simply relocate production activities to low-wage countries. The only way to avoid the competition with millions of unqualified cheap workers is to be high-qualified.

This can be easily observed at the German labour market: While many entrepreneurs have a need for well-trained workforce, many low-skilled unemployed are on the road. These low-skilled workers can’t offer their workforce at the world market price because they wouldn’t get enough money to afford a German standard of living.

For the future it can be assumed that even higher-skilled jobs are relocated to low-wage countries. This can be seen for example at IT companies, employing programmers in India. Also in China the effort to enhance the skills of workers is high: Every year many more students from China finish their studies with a technical degree than students from Germany.


3 thoughts on “Consequences of Globalization – The Labour Market

  1. A lot of pros and cons exist due to Globalisation, but it’s obvious that there are a many negative influences on the labour market. A company, first of all wants to make profit, so the employees have to deal with the consequences of Outsourcing and additionally compete with world’s labour force. For me the biggest problem is and it makes no sense, hat two people can be different paid for the same work! Of course in Asia or India the manufacturing costs are less, but such a huge difference in wages is unbelievable and not economically justifiable or ethical at all. Of course, everybody wants to achieve career goals and have a certain living standard, but no one can expect a whole nation being high-educated and always competing with the outcomes of the Globalisation.

  2. Globalisation is and willl always be a controversial subject. The wage gap is sometimes unimaginable.
    On the one side I can understand the companies who are outsourcing; they also just want to survive. Of course there are some companies which are only interested in increasing their benefits, but there are also companies who are forced to outsource some of their activities in order to be able to compete against the companies. Nowadays almost every consumer takes the price as a main factor to determine if he / she should do the purchase or not, therefore companies want to offer their products as cheap as possible.
    On the other side it is difficult to accept that companies outsource their work in countries with cheaper labor force, which are also known for child labor force or for hard working conditions.
    I think that here we can see that we as customers also have responsibilities. We should also look where the products, we buy, come from. The most of our clothes are produced in China, we buy it, because it is cheap, and why is it cheap ? Because the labor force earns almost nothing and the child labor plays an important role in these countries. Even if we know about these problems most of the consumers prefer buying these products.
    Instead of looking at the prices of the products, we should take into account other factors like the reputation of the company or if the company hires local people or if it is outsourcing, et cetera. By doing so we could change a lot.

  3. “(…) even higher-skilled jobs are relocated to low-wage countries. This can be seen for example at IT companies, employing programmers in India.” – Especially in Germany we have to dicuss this point, because Indian programmers are often more faster, very reliable, sometimes better and much cheaper than programmers in Germany.


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