Daniella Joy D.

Binuhat The Contemporary World (GEC103)

Jocel S. Cabarrubias I – BSCE/ TFR 1:00 – 2:30
John Lloyd O. Molina Instructor: Jayboy M. Sartorio

Cheap Labor: A Subject of Globalization

1. Discuss the relationship between globalization and Cheap Labor. Discuss the severity of
the problem.

Globalization increases global competition, lowering prices and giving consumers

more options. Trade and international investment agreements have made it easier for
companies to move between countries. However, more skilled workers are in higher demand,
at the expense of less-skilled workers. As a result, less-skilled workers are forced to work
long hours for a low wage in a terrible work environment.
As the pressure for global competition intensified, enterprises introduced changes in
the organization, new work methods, and technology, alongside productivity-based
employment conditions. Technologies such as robots and intelligent digital agents that can
act for you are advancing rapidly. With advances in artificial intelligence, research has
shown that the demand for basic data processing skills and manual labor will decline over the
next decade, while cognitive, social, and emotional skills will be more in demand such as
problem solving, teamwork, giving advice, and demonstrating leadership (Urban Institute,
2018).
However, many workers in the occupations that are losing jobs lack the necessary
skills to shift into higher-paying positions. In the field of agriculture, farmers may lose their
jobs and be replaced by robots. As the Silicon Valley company claims, robots powered by
artificial intelligence could farm sustainably more than traditional agriculture (Alexander, B.
2021). And at that point, they'll either settle for cheap labor or no employment at all. Jobs in
technology that are replacing those positions are much higher paying, whereas jobs like home
health aide and personal care aide pay less. Indeed, it is clear that globalization, particularly
as technology advances, may result in workers receiving cheaper labor or losing their jobs.
Moreover, the Philippines has a high proportion of cheap labor conditions. This refers
to the informal or underground economy which accounts for 88.1% of all jobs in the country.
One of these workers is young rural women who are primarily employed in the informal
sector as domestic helpers, farm workers, or self-employed with low wages or unpaid family
workers1.
Another source of cheap labor in the Philippines is foreign investors' influence on
various businesses. Foreign Direct Investment may result in higher living costs. Investors in
1
Outsourcing is not cheap labor. (2021, December 22). Outsource Accelerator. Retrieved June 7, 2022, from
https://www.outsourceaccelerator.com/articles/cheap-labor/
 other countries may find that goods are more expensive than when they are exported. More
money is frequently spent on machinery and intellectual property than on wages for local
workers2. Since the Philippines is a peripheral country, it lacks manufacturing equipment,
making it dependent on more developed countries. It is also stated in the dependency theory
that underdeveloped or developing countries provide cheap labor and raw materials. The
poor economic growth was attributed to the unequal trading relationship between developed
and developing countries.
Furthermore, lower prices benefit many customers, but they also foster tough
competition, leading some businesses to look for cheap labor. Without a doubt, globalization
has coincided with the availability of cheap labor among the less skilled. Given these
circumstances, it is clear that globalization has an impact on the labor market, increases
worker inequality, and provides cheap labor.

2
16 advantages and disadvantages of foreign direct investment. (2021, March 11). ResearchFDI. Retrieved June 7,
2022, from https://researchfdi.com/foreign-direct-investment-advantages-disadvantages/
2. Discuss the actions taken by the government and its people to solve Cheap Labor.

Agriculture, among other fields and industries, can be perceived to be an underrated

domain because of its subsequent low rate in terms of professional choice. As observed in the
aspect of education, science and technology-related courses are drawn as the topmost priority as
subject to utmost development and success for the Philippine nation, both national and
international levels. It is more prominent especially due to globalization since as discussed,
robots are getting through the way.
Rarely back then did the agricultural industry have been highlighted for job selection and
some sorts of enhancements, especially through its implication in economic track. The
Philippines has been a rich source of raw materials but is poor in utilizing those, unlikely for the
outsiders who benefited the most. With such realization, the Philippine government took several
steps to address various agricultural issues.
One of the outstanding programs that have been enacted was the Farmers and Fisherfolk
Enterprise Development Program through the Republic Act No. 11321 also known as the Sagip
Saka Act (FAO, 2019). The cheap cost of labor is the major setback in the agricultural field;
excessive work but low profit. This law allows the farmers and fishermen to accumulate higher
income by producing supplies for the government directly. In some provinces, the profit for
coffee from P7,350 increased to P14,224 and the rice from P25,000 to P100,0003
Included in the decree is also the goal to improve skills development, equipment,
facilities, and the provision of research and development procedures to gain more access to
advanced technologies4. This action of the government opens the way to greater labor
opportunities through creating higher quality services that could attract more investors thus
simulating more income. In addition, there are also several employment programs administered
by some government agencies that support many individuals to reduce the effects of cheap labor.
These are mostly intended for students to sustain their expenses without burdening their parents.
The programs are The Special Programs for Employment of Students (SPES), Government
Internship Program (GIP), JobStart Philippines Program (JSP), and Livelihood programs such as
TESDA (ADB, 2022).
Moreover, a higher cost of living is one factor to describe cheap labor. The amount of
income of each laborer does not exceed their daily maintenance thus people would suppose that
their wages are cheap. In the course of globalization, this issue is very stagnant, for instance, in
the Russia-Ukraine conflict. However, the Overseas Workers Welfare Administration was one
great undertaking of the government as it provides prospects for more labor opportunities and
income for many Filipinos outside the boundary.

3
Sagip Saka Act. Copyright 2022 © Official Website of Francis “Kiko” Pangilinan. Retrieved from
https://kikopangilinan.com/sagipsaka/
4
FAO (2019). Retrieved from https://www.fao.org/faolex/results/details/en/c/LEX-FAOC187106/
3. Discuss what can be done to further strengthen the mechanisms employed by the
government to combat Cheap Labor.

First and foremost, we must underline that there is a problem with the process by which
employees are compensated as a result of globalization to enhance the mechanisms utilized in
battling low-wage labor. The problem is exacerbated by the fact that the workers in these
countries do not experience the same level of compensation as their counterparts in developed
countries. We should begin by acknowledging the problem and the potential for reform.
By outsourcing jobs to other countries, we have reduced the quality of work and
henceforth lowered the cost of work by reducing the power of labor unions to bargain for the
rights and welfare of workers5. Therefore, workers often are coerced to accept lower wages and
the working conditions that the employer is willing to offer. To combat this, our government
should raise product costs exported to other countries to ensure an increase in the minimum wage
(DePersio, G. (n.d.)), invest in worker training programs, and create a single-payer health care
system. These changes will ensure that all employees are paid fairly and have access to quality
health care.
Simultaneously, we must invest in education and training programs to guarantee that our
workforce has the skills necessary to secure meaningful employment. This investment in
education and training is a key element in lowering unemployment and enhancing job quality.
There are several programs that we can look into as well, such as the JobStart Philippines
Program and livelihood programs such as TESDA. We should invest more in these types of
programs above all else, and we should consider other programs that will enhance the welfare of
our workers and aid in the overall quality of Philippine labor.
The Department of Trade and Industry should also contemplate creating a system where
companies that hire foreign workers are penalized by the government for employing foreign
workers. Initiatives like this would serve to draw attention to the problem, which could help
secure the support of the public for further reform. The government should also create a
commission that is responsible for examining the various policies used by businesses and trade
unions to address the problem of low-wage employment.
In addition, a possible option is to switch to a pay-as-you-go system, which would allow
workers to get a fixed amount of money for each hour worked regardless of how many hours
they had previously worked or how many hours they had worked in a given week. This would
provide workers with a sense of security and predictability while also reducing the need to
migrate in search of higher earnings. It would seem that another viable solution would be to
provide an additional amount of compensation for workers who are not able to work full time
and also offer additional compensation for those that can work full time. This would help
alleviate the problem of compensation inequality and would also help to reduce the migration of
workers to countries where they can earn better compensation. An even more crucial mechanism
to be considered is to guarantee that the International Labor Organization has the necessary
power to compel companies to compensate their workers fairly. It will also help ensure that
workers are paid their fair share of the cost of living and maintain a stable workforce. It is indeed

5
International Monetary Fund. Retrieved from https://www.imf.org/external/pubs/ft/issues11/
a necessary step for the protection of workers and can be beneficial to the overall health of the
Philippine economy.
Finally, we must realize that low-wage labor is an issue not just in the public sector but
also in the private sector to build measures that would counteract it. The international community
must address the developing trend of tax evasion and tax havens from the source, ensure that free
trade agreements are equitable and that tax regulations are enforced and limit the amount of tax
avoidance and aggressive tax evasion that exists today (Dadush, U., & Shaw, W., 2012). We
must ensure that our tax policy meets the needs of the general public. We should also do research
and development to improve the working conditions of workers, particularly in the agricultural
sector. This would be a great approach to oblige workers to make a living and maintain a stable
workforce and promote the growth of Philippine agriculture. Doing so will benefit the long-term
upliftment of the agricultural sector and enhance the socio-economic conditions of Filipino
workers. It'd be an excellent strategy for requiring employees to earn a livelihood and maintain
steady employment to boost Philippine agriculture's growth. This will boost the agriculture
industry in the long run and improve the socio-economic circumstances of Filipino workers.
 REFERENCES

16 advantages and disadvantages of foreign direct investment. (2021, March 11). ResearchFDI.
Retrieved June 7, 2022, from https://researchfdi.com/foreign-direct-investment-
advantages-disadvantages/
Asian Development Bank (2022). LABOR MARKET PROGRAMS IN THE PHILIPPINES.
Facilitating Youth School-to-Work Transition ProgramSubprogram 1 (RRP PHI 49117-
002). Retrieved from
https://www.adb.org/sites/default/files/linked-documents/49117-002-sd-04.pdf

Alexander, B. (2021, September 26). Could these AI robots replace farmers and make
agriculture more sustainable? Euronews. Retrieved June 7, 2022, from
https://www.euronews.com/green/2021/09/26/could-these-ai-robots-replace-farmers-and-
make-agriculture-more-sustainable
Dadush, U., & Shaw, W. (2012, February 2). Globalization, Labor Markets, and Inequality.
Carnegie Endowment for International Peace. Retrieved June 7, 2022, from
https://carnegieendowment.org/2012/02/02/globalization-labor-markets-and-inequality-
pub-47028
DePersio, G. (n.d.). How Minimum Wages May Raise Unemployment. Investopedia. Retrieved
June 7, 2022, from https://www.investopedia.com/articles/investing/080515/minimum-
wages-can-raise-unemployment.asp
Economic Issues 11--Does Globalization Lower Wages and Export Jobs? (n.d.). International
Monetary Fund. Retrieved June 7, 2022, from
https://www.imf.org/external/pubs/ft/issues11/
FAO (2019, April 17). Republic Act No. 11321 establishing the Farmers and Fisherfolk
Enterprise Development Program (known as Sagip Saka Act). Retrieved from
https://www.fao.org/faolex/results/details/en/c/LEX-FAOC187106/
How is technological advancement changing the labor market? (2018, September 28). Urban
Institute. Retrieved June 7, 2022, from https://www.urban.org/urban-wire/how-
technological-advancement-changing-labor-market

Outsourcing is not cheap labor. (2021, December 22). Outsource Accelerator. Retrieved June 7,
2022, from https://www.outsourceaccelerator.com/articles/cheap-labor/
Sagip Saka Act. Copyright 2022 © Official Website of Francis “Kiko” Pangilinan. Retrieved
from https://kikopangilinan.com/sagipsaka/