International Business Davos 2010 and Labor

Child labor is a case in point. It presents a problem in most developing countries and even in industrialized nations. According to Kawachi and Wamala (2007), while child labor is not specifically an effect of globalization, it is exacerbated by the commercial pressures of such a phenomenon. (Kawachi and Wamala, p. 144) As previously mentioned, countries today are involved in cutthroat competition and the availability of cheap labor is an essential advantage because investors are looking for the best opportunity to cut costs. The International Labour Office (ILO) estimates that more than 350 million children worldwide are economically active and more than half of these were below 15 years of age.The sorry state of labor practices brought about by globalization is due to the lack of regional and world trade agreements that incorporate labor standards. Here, the use of sweatshops and child labor grew since, in globalization, there is a natural desire to produce more goods for export. (Brown 2003, p. 94) Currently, very few countries have legislated against child labor, sweatshops, and other unfair labor practices because governments from most undeveloped countries want to increase export.With globalization, labor was one of the things that were commoditized and deregulated. Besides the labor exploitation in poorer economies, there is also the rise of the gap between the wages of skilled and non-skilled workers. With the increase in globalization and the role that technology plays, there is now a pervasive shift in demand for labor that has favored skilled workers at the expense of the unskilled sector and that, according to von Brau and Mengistu (2007), this may translate into increased poverty or at least increased inequality. (p. 2)In the most extreme cases, globalization has led to worsened poverty in some countries as well as the violation of human rights and it has also highlighted the growing economic inequality spurred by the increased integration of the global market.