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What is your view on importing Cheap Labor?

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March 05, 2009 – Comments (11)

This is a question that I don't have an answer. Everyone here knows my position on voluntary contracts, but here in Qatar and previously when I lived in Kuwait I've seen the good and bad when it comes to cheap labor.  I've also seen the other side, having lived in Pakistan, where much of the cheap labor comes from, and seeing how completely desitute much of that population is. I'm going to paint with a little bit of broad brush here, but I promise not to over-generalize. I have several years of experience out here. 

A great deal of what you may consider "exploitative" cheap labor is imported by the Arab governments, or by businesses contracted to work with the government. Some come to work at the oil refineries (a government monopoly), others work on roads, and others work as home builders. All are laborers. Most of the females in this skill level work as maids. This population mostly comes from Pakistan, India, Bangledesh, and Sri Lanka.

However, there is another class of cheap labor in Qatar, UAE, and Kuwait, and that is the cheap white collar labor. This group is made up mostly of Philipinos and Indians who do clerical work. They speak English and sometimes even Arabic. They are computer-literate, if not savvy. The females in this group usually hold equal position to the men.

Finally, there is another group, kind of an in-between group of food service, retail, medical assistance, etc.. made up of a mix of Philipinos, Indians, Lebanese, Syrains, Iranians, etc. The females in this group are usually nursies or private nannies. I get some benefit from this group as I have a maid that comes on a regular basis at a very cheap rate. I have inexpensive laundry services and if I so desired, I could hire a cook at a very low wage.

There are several things of interest going on here:

1. The cheapest laborers, outside of having difficult jobs, suffer plenty of abuse. Reports are rampant, and I have witnessed horrible abuse by Kuwaiti police officers on cheap labor myself. Unspeakable things.

2.  Most clerical and customer service laborers are geniunely content here. I speak to them often and know several on a personal level. They miss home, as everyone does, but the money more than makes up for it. There is still occasional abuses at this level, but usually it's just an unreasonable or corrupt boss.

3. The law is not friendly to any of these groups. In the Arab world, in order to file a legal complaint against your boss, your boss must accompany you to the filing office. Worse yet, there is no legal protection for your between that time and the time your case is heard. In other words, there is nothing to prevent your boss from firing you the minute you walk out of the legal office. Upon termination, you have 30 days to leave the country so good luck sticking getting back for the court hearings.

4. Crime among laborers is practically non-existent. Most laborers are so terrified of having their visas revoked that they don't mess around. Also, the law is quite harsh if you get caught - though not as harsh as it used to be. Finally, most criminals don't want to work so few ever volunteer for such jobs. At first, it would seem that Al Qaeda types would flock to such jobs, in order to supplant themselves in pro-America countries in order to carry out attacks. The problem with that is these jobs require actual hard work. One thing I've learned about criminals in my lifetime is that they are allergic to hard work.  Heh, why do you think they come to America on student visas?

5. As tough as the cheapest laborers have it, I've seen how they live back home. There is a reason the Arab countries are able to import them at such cheap prices. I remember from my time in Pakistan from 1999-2000 that cheap labor earned about $30/month, unemployment was rampant, and at least half the population lived at a savage level. About half the country had running water and electricity. Whatever aid was coming into that country never made it past the bureaucracy, and judging by the current plight of Pakistanis, I suspect that is still the case. 

For all the good and bad of cheap labor, the system in the Middle East does seem to more beneficial to all parties than America's minimum wage laws. However, I must stress that any policy which encourages business to bring in LEGAL cheap labor, on visa status, should give those laborers enough legal rights to be protected from the kind of abuse that we see in the Middle East. On the flip side, taxpayers should not foot the bill for their medical care, education, or anything else. As my border patrol agent buddy noted, most of the people currently flowing across our borders have absolutely no interest in working. Maybe if they knew we were going to put their butts to work or send them packing, we'd get a different class of citizen.

These are just my experiences and thoughts on the subject. I welcome yours.

David in Qatar

11 Comments – Post Your Own

#1) On March 05, 2009 at 11:15 AM, jgseattle (32.43) wrote:

Another very good post!

Here in Seattle MSFT anounced layoffs recently.  It created an uproar because MSFT is one of the biggest lobbist for expanded H1 visas (worker visas)  The issue here was should MSFT give a priority to non H1 holders, Americans, when conduction layoffs?  I do not think they should.  It should be the best person gets the job.

Now this is coming from someone who is unemployed, just returned to the US after 3 years in China.  I have been looking for jobs in the $100k range, now I am looking in the $60K range, and if I cannot find anything i will start looking at $30k, then anything.  I am not afraid to compete for jobs with anyone!  And i think everyone should compete so at some point I may be working 2 jobs but u know what I will be supporting myself.

If a country cannot generate the jobs to support its people let them migrate. Give them the protection they need and lets compete.  Most of the jobs that migrants are looking at are not the jobs I am looking at, but if it comes to that point I will compete and I will work harder and hopefully smarter.

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#2) On March 05, 2009 at 11:16 AM, jgseattle (32.43) wrote:

Another very good post!

Here in Seattle MSFT anounced layoffs recently.  It created an uproar because MSFT is one of the biggest lobbist for expanded H1 visas (worker visas)  The issue here was should MSFT give a priority to non H1 holders, Americans, when conduction layoffs?  I do not think they should.  It should be the best person gets the job.

Now this is coming from someone who is unemployed, just returned to the US after 3 years in China.  I have been looking for jobs in the $100k range, now I am looking in the $60K range, and if I cannot find anything i will start looking at $30k, then anything.  I am not afraid to compete for jobs with anyone!  And i think everyone should compete so at some point I may be working 2 jobs but u know what I will be supporting myself.

If a country cannot generate the jobs to support its people let them migrate. Give them the protection they need and lets compete.  Most of the jobs that migrants are looking at are not the jobs I am looking at, but if it comes to that point I will compete and I will work harder and hopefully smarter.

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#3) On March 05, 2009 at 11:25 AM, MarketBottom (29.25) wrote:

Lincoln wasn't very fond of cheap labor

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#4) On March 05, 2009 at 11:44 AM, abitare (35.58) wrote:

The quality of life in the M.E. can be significantly better then the US. In the M.E. an American makeing $100k can live like a king, driver, cook, maid, gardener. In the US, an American making $100k lives comfortable/to poor. 

Labor should be priced at market rates. The market can price labor, efficently, the government cannot. Most labor rates are enough to provide food and shelter, globally.

In most countries, if you are NOT working you do not eat. Unemployment varies 10-60% globally. Most unemployed will work for food, if they were able. A guy or child working is happy, because h is eating.  Starving to death or starving in general sucks. 

The US is a welfare/warfare state. Millions of Americans do not have to work because the warfare, reserve currency status and welfare provides for them.

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#5) On March 05, 2009 at 11:56 AM, lquadland10 (< 20) wrote:

Listen to dwot alstay and most of all
abitare is the best. Cheep labor my foot. I call it slavery. Pure and simple. You point out the HORRORS of what you have seen. I pray you never see what is even worse. I am talking the sex slave trade. A few rich people don't care about the money. It is the power to control the people. It is sick. We the world need to pull out of the world bank the United Nation and the G20 known as the International Monetary Fund. Why rent the money from these people who use us to do what they want and keep all of us poor. No more slave labor in any country.It  is a sin IMHO. If you don't earn a decent wage you can not buy things. Hence another contraction world wide more unemployment and then social unrest and then riots. This is what the power people want. Why? To help control the worlds population. The UN has a mandate to reduce the worlds population by 50 to 90 % It in on their web sight. Also if you want more information on what will come next Just go to the Alex Jones Show. Info wars is also a link to him. It is going to get real bad out there. Talk to Abitare he is ex military and has been around the world and knows more about this than I do. Blessings Lynda.

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#6) On March 05, 2009 at 12:03 PM, MikeMark (29.42) wrote:

Read "Tomorrow's Gold"

We are in global wage competition. That means that people in the US are getting the big wake-up call. Our standard of living so greatly exceeds the minimum standard of living in the world, that it will change. In addition, minimum wage laws reduce the number of available jobs. Taken to the extreme, nobody works.

Here's something that gives me hope: there is no tax on someone who will work for food. I believe we will begin to see many people who want to work, but will trade for some good other than US dollars.

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#7) On March 05, 2009 at 1:52 PM, whereaminow (20.23) wrote:

Iquadland10,

Unfortunately, I have seen the horrors of the sex slave trade. I friends from Uzbekistan, one of the top producers of prostitutes in the world (what a thing to put on your resume.) Many have sisters and daughters who either been taken or were tricked into partaking in it. If i could tell their stories here I would, but it's not appropriate for this forum.

Slavery is a separate discussion from what we are talking about, but not irrelevant. Like abitare, I am also ex-military, and I've been working overseas for 12 years now, in some of the crappiest places on earth. Little wonder that I agree with him on so many issues.

I support Alex Jones (on most issues) and your beliefs as well. Best wishes to you.

David in Qatar

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#8) On March 05, 2009 at 2:27 PM, kaskoosek (53.16) wrote:

When I was working in the UAE, I noiced that people were paid according to race.

My wage was $4000/month. (IT manager) (Lebanese)

Pakistani guy under me 400$/month (very bright with a masters degree) 

4000$ was not enough for me in the UAE. Rent was 2000$.

An English or American guy would get paid at least twice my salary for it to be worthwhile to leave his country.

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#9) On March 05, 2009 at 5:29 PM, Donnernv (< 20) wrote:

David:

Great post.  Let me try a higher level take on it.  We have a couple of serious problems.  First, our worker base is shrinking relative to our aging population.  Second, we are competing on the world markets with a handicap: our labor rates are much higher than our world competitors.

For us to solve or ameliorate these problems, we need more workers at lower rates than we are used to.  Of course the objection that they will steal jobs from "hard working Americans" will immediately surface.

But if they don't, our world competitors will and are doing so today.  This is a damned bitter pill to swallow, but if we don't move in this direction, we'll become a marginalized economy.

We need more workers to pay for our increasing entitlements for our growing numbers of retired workers.  We need lower labor costs to compete in the global economy.

Of course...what about us!  A valid fear from the "hard working American".  But guys, it's going away as I type.  Those jobs being exported are not coming back.  We are too expensive.

We could permit a controlled inflow of immigrant workers, documented and tax paying.  No more or less rights than the rest of us.  Citizenship available in five years for the good actors.  Job required before immigration permitted.

And yes, the wages would be at the lowest rate possible.  Let's tap this resource to get our feet back under us and start moving forward.  Will it be painful?  Damned sure it will.

But will it be worse twenty years from now than what is happening today?

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#10) On March 06, 2009 at 3:28 PM, jmt587 (99.87) wrote:

Going to have to go back and read the rest of your blogs, very interesting and insightful, I hope you keep up the regular posting.

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#11) On March 11, 2009 at 2:53 PM, nzsvz9 (< 20) wrote:

Cheap labor is a distortion of the labor market from the interventions of government, specifically in the oppressed nations.

A country which does not value the life and liberty of its' people does not care if they eat. Myanmar anyone? Vietnam (my coworker is a former boat-people captain) controlled people by controlling food. North Korea controls food and food aid for it's starving population. Here in the U.S. we are getting fat.

Capitalism feeds more people than governments starve and kill. What the starving people of the world lack is freedom, and a government who would defend the laws through which they could live their lives. Natural disasters happen, and they are tragic, and we will never get Sally Struthers off the late night T.V. stations -- but there will always be poor so long as there are dictatorial governments.

Slavery in ancient times was most often the result of military victory over the vanquished or as payment of debts. Sex slavery, abhorrent as it is, percolates in the hell-holes of this world where life and liberty have little or no value.

The oppressed around the world are starving, dying, and languishing in slavery. Does working as "cheap labor" sound that bad?

I'm surprised to hear that the UAE and other ME governments do not treat their "Guest workers" better. I suppose it is only in the US that "All men are created equal".

Known by my neighbors as nzsvz9

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