The other day, I got an e-mail from my friend, Dave Starr. Dave was letting me know about an article that he thought I may find interesting. Over the years, both Dave and I have followed the blog of a fellow in Australia named Yaro Starak. Yaro is an Online Entrepreneur, just like I am. He makes his living exclusively through the Internet and has a number of websites and online projects that keep money coming in. Yaro has been very successful over the past 5 years or so. I can remember when I first started reading his site, Yaro was not too successful, but he really has done very well in recent years.
Yaro’s blog, Entrepreneur’s Journey used to be a favorite read of mine, I checked it every day. A few years ago, I stopped reading it, though, for a few reasons. Primarily because his site turned into more of an advertisement for his products and for other products that he was affiliated with. I have no problem with advertising your products, heck, I advertise my products here on LiP and my other sites. However, I felt that Yaro’s site got to the point that every single article was a new product or service, and that there was little of value that I was getting from the site, so I stopped reading. I still check in from time to time to see what Yaro is up to, but I am no longer a regular reader.
When Dave e-mailed me the other day, he was letting me know about a new article that Yaro had recently posted on the topic of Outsourcing, and in particular Outsourcing work to the Philippines. Yaro has discussed this topic before too, and I have found myself both in agreement with him, but also in strong disagreement with some of his previous points. In his new article, he discusses the question, “Is outsourcing exploitation?” Having lived in the Philippines for the past decade, I found this topic to be of interest, and read the article. I would suggest that you give it a look too, as Yaro makes some interesting points in the article.
Of course, my viewpoint, and the viewpoint of those interested in reading this site will be different than many other people. Most people despise outsourcing because it takes jobs away from Americans (or whatever country you are from) and it also sends money out of the US economy and to foreign countries. However, for readers of this site, we all have some connection to the Philippines. Many of us have Filipino wives, and thus have family ties to the Philippines. Others of us have a desire to live in the Philippines, and thus could benefit in some way from the growth of the business sector here. In short, our opinions would be a little different from the guy who loses his job at the factory in Cleveland because they are going to outsource his job to Mexico. I have no problem with differing opinions, it is what keeps the world interesting.
In my personal case, I have a debate going on in my mind. Do I outsource work? You see, I make my living on the Internet. I sell products and services on the Net, and I also publish information (like this site) on the Net, which is supported by advertising and by the sales of my products and information. I have almost all of my work done by Filipino workers, and the cost of labor is cheap. But, am I outsourcing? Technically, I am not, because I live in the Philippines, and thus I am keeping the work in the economy of the country where I live. However, in practice, I feel that I am outsourcing, because I am earning my living from the first world (US, Europe, Australia, etc), yet I am getting the work done in the third world where labor is cheap. So, I am, in practice, actually somewhere in a gray area.
Now, let’s get down to the meat of the subject and look at the question… Is outsourcing exploitation? Yaro focuses in on the point that it is possible to hire workers in the Philippines to do the work that he needs done for a very low rate of only $2 per hour.
Wait.. hold on… something is not right with that.
In the Philippines, I have never heard of a job that pays an hourly rate. Most wages in the Philippines are paid on a day rate, not an hourly rate. I guess that the average worker here in Davao City probably earns about P200 per day, which is about $4.50 per day, and that is for 8 to 10 hours work in a day. So, in that case the hourly rate is only about 50 cents per hour! Is that exploitation of the worker? Let’s keep talking, and we’ll decide about that later.
The minimum wage in the Philippines varies from City to City, it is set by a Government wage board in each individual city or region. In Davao, I believe that the minimum wage locally is somewhere around P320 to P350 per day.
Wait! Bob, what are you saying? The minimum wage is up to P350 per day? You just said the average worker is getting about P200 per day. Was that a typo?
No, that was not a typo. Yes, the government mandated minimum wage is P350 per day, or somewhere in that vicinity, but most people don’t get the minimum wage. There ware ways around that which are beyond the scope of what we are discussing here. Basically, the minimum wage is mandated for “regular” employees, and most employees are not “regular”. That’s a topic for a different time.
So, anyway, back to the focus of the article… if the average worker is making only $4 to $5 per DAY, and you, as an online worker, start paying a Filipino worker $2 per hour to do work on your website, and let’s say that laborer works for 10 hours per day, well, he is earning $20 per day, about P900 per day! Wow, he is suddenly earning more than 4 times what he would earn if he were working in a mall somewhere, or doing construction on a building in the hot sun. Is that exploitation? Let’s decide at the end of this article.
OK, let’s look at this from a different angle. Juan is a Filipino fellow works at a lechon manok stand (a place that sells roasted chickens). You can buy a whole lechon manok for P150 or so (when I first moved here you could get one for P60 or so), that is about $3.50 or so. Suddenly, a lot of Filipinos are making P900 per day instead of P200 per day because they are working on outsourced jobs over the Internet. Juan thinks to himself, hey, people are starting to make a lot more money! Instead of charging P150 for my lechon manok, I think I’ll raise up the price to P300 or P350… people can afford that anyway, and why should I live in poverty while everybody else is pulling themselves up to the middle class? Next thing, Nene the mango vendor who is charging P45 per kilo for her sweet mangoes notices that she has to pay P350 for a lechon manok to feed her family. She can’t afford to pay that price, though, so she has to raise the price on her mangoes, and suddenly they are P120 per kilo. The chain keeps going, and suddenly it costs a lot more to live in the Philippines.
So, is that worker who is working for Yaro suddenly getting rich on his P900 per day? He was doing pretty well at first, but now, inflation is eating him alive! His P900 per day is not buying him that much more than he used to get when he was making P300 per day!
You see, it’s a vicious circle. When people start realizing that they are exploiting workers, and pay them 2 or 3 times as much, it starts a chain reaction, and eventually prices spiral out of control. In the end, people may be marginally better off, but not as much as you would think.
So, for me, personally, I do not feel that paying somebody here $2 per hour to work is exploitation. The average worker here is getting only 50 cents or so per hour (if you want to break it down by the hour), so in fact you are rewarding the worker greatly by paying him $2 per hour. I don’t have a problem with $2 per hour, but if you said “I am going to pay him $10 per hour so I won’t be exploiting him” – Well, that is going a bit overboard. As times move ahead and the Philippines creates a more resilient economy, and the labor market here matures, then people here will earn amounts more in line with their western counterparts. But, for now that $2 per hour is a fine wage for a worker here.
After reading Yaro’s article, I have some thoughts about how you, as just a “regular guy” can take advantage of the outsourcing possibilities in the Philippines, and I will be sharing those ideas on this site soon.
So, in answer to Yaro’s question… is outsourcing exploitation? I believe that the answer is a resounding NO. Yaro also asked if paying that wage could be considered slave labor? I simply see no way that it can be.
Bob..great post and your right on one part of it..as soon as 2 many started making per say $20.00 a day there, then as you said a lot would think they have to raise things and pretty soon you are right back where you were to begin with in a way..but! The poor person that still only made $1.00 to $4.00 a day would be..not sure where they would be..but would not be good…This same thing about wages has been going on in the USA for years. I can remember many years ago when I made $2.00 per hour or $16.00 a day…I could do a lot with that $16.00…gosh..big hamburger and fries for $0.35..cup of coffee for $0.10..gas..$0.28 to $0.30 a gallon.Those that smoked..$0.20 a pack…big glass of beer for $0.25.. My 1st apartment was $50.00 a month with heat included and the light bill was $8.00 a month and phone bill was around $6.00 and ect. So..what I see in all of this…in the long run like you said…how much better off are you just because wages go up or went up..if every thing else goes up with it..as it seems to do. Not sure what the answer is on all of this other than sure that many workers there would like to make more money per day or hour.. I would say that from what you shared and how you shared it that $2.00 a hour would not be “outsourcing exploitation” but as you said would create many other things all would have to deal with…..
Hi Dan – I’m glad you enjoyed my article today. Of course, as time passes, those workers will be earning more, but let it take time to build up, not just an instant shot… that is what will mess up the economic balance that exists. The Philippine economy needs to mature.
I knew it would be good to get your perspective on this, Bob. Well said. There’s two additional points I think people ought to consider, before they make up their minds on the exploitation/no exploitation question.
There is no precise mathematical way to translate $2.00 an hour in the Philippines into US terms, but in my view this would easily be equal to $10 an hour in the US … or about $20,000 a year. Although $20k is at the lower end of the salary scale, there are literally millions of Americans who would leap at a $20k job .. those wiht no job at all or the millions stuck with jobs from Americas largest employers, McDonald’s, Wal*Mart, et al who typically start people at $7 or $8 and hour ($14k or $15k a year). So in raw economic terms paying a Filipino worker $2 an hour is hardly exploitation.
The second point is less economic … a bit more “touchy-feely” if you will. These are not ‘slave worker’ type jobs, like paying a guy to load 50 kilo sacks of rice on a truck in the sun for 8 hours a day, or cutting cane, or struggling behind a carabao plow up to his butt in mud, baking under the sun.
For the most part the jobs Yaro is talking about are on the technical/creative side. Writing articles to specification. designing logos and other illustrations. Analyzing keyword content in on-line articles and correcting it/replicating it for other articles, programming or modifying programs for specific tasks, etc.
The Philippines is literally bursting at the seams with folks, often with college degrees, who bought into the “go to school for IT or Computer Science and make something of yourself” mantra.
When they graduate, they can’t find any jobs to match the work they were trained for. If they are lucky they drive a tricycle or load trucks or mop floors.
To give a person a job, at way over minimum wage, in a skill s/he is trained for and has wanted to work at for years is labeled “exploitation”?
Maybe to some, but to me it’s more like picking someone up, setting them firmly on their feet and giving them an honorable “leg up” that will help them all their lives.
Or so Dave opines.
Hi Dave – I agree with everything you say. One point that I intended to put into the article, but overlooked while writing goes hand in hand with your second point. By giving a Filipino such a job at $2 per hour, or whatever the salary, it is like on the job training. He can learn what Westerners want and expect. He can be exposed to the “real world” of computer related jobs, and from this experience he can learn. If he is a “go getter” he can after a year or two either start his own business mimicking what he was doing as outsourced labor, or he can get a better job with a bigger outsourcing company. The $2 an hour job is only an entry level position, and it is his chance to use that as a stepping stone to something better. Many of the tricycle driving jobs, mopping, etc, are jobs that have no room for advancement, and are dead end positions. No only is the outsourcing not exploitation, it is actually a doorway toward a path that will bring great success in life, if used properly.
Hi Bob – Exploitation? NOT! Providing jobs? YES! Providing “social justice” through payment of better than prevailing wage? HARDLY!
Yes, it all seems so caring and so compassionate to provide workers with inflated wages. The only result that is guaranteed is chaos in the local economy. Even providing employment at $2.00 @ hr will bring tsismis to a a hot boil among those hearing a partial story and comparing their pocketbooks with those “overpaid workers who must be doing something corrupt or illegal to receive all that money.”
Foreign economists must leave their standards and measures back home, and employ those that exist here. Every first-world economy had its start and beginning years similar to what the Philippines currently has. All things being normal and given time, the Philippine economy will similarly progress.
If there is any problem, it would be in the slower pace of development, not in the wages. The Spanish in their early colonial period were not happy with the speeds of development and progress, so they employed methods to increase production speed and amount that have evolved to today’s “express fees” and inate corruption. Paying higher wages under a banner of cancelling exploitation only further corrupts the economy.
My two cents worth provided with a nickel – keep the change! 😆
Ha ha.. good comment, Paul, and quite interesting. It has an air of truth to it, no doubt. I especially liked what you said about the “high $2” wages causing a stir of tsismis and such, and I agree fully.
Bob- you said :
However, in practice, I feel that I am outsourcing, because I am earning my living from the first world (US, Europe, Australia, etc), yet I am getting the work done in the third world where labor is cheap
I find your logic faulty Bob ! Where your customers are located is irrelevant. But where your business is located is- to me – the true test. If you have a business in Davao and get the work done in China you are outsourcing, but if you have a business in davao and get the work done in Davao you cant possibly be outsourcing. It has no bearing where the end buyer is located.
As to the question of exploitation I feel that the test is ” am I paying the going rate” . Am I being exploited because here in Davao I only get paid $100 and hour, but in Vancouver I got paid $250 an hour. But no one forced me to come here, so how can I possibly claim i am being exploited. In the same way the clerk who is getting 200 pesos a day- and who considers herself the luckiest person she knows to have the job- can in no way be considered to being exploited.
If there is exploitation it is not by me as someone creating jobs and paying the going wage- but rather by those in power in Manila whose dynasty families have grown hugely wealthy on the backs of their own countrymen.
Increases in wages have to be applied to all areas of employment at the same time, and to all people in those areas at the same time. If you want to get a higher paying job ie call centre agent- spend the time improving your English. I see very few people here taking the time to improve themselves. And that is a matter of attitude, and has to be taught. Education involves more than learning your A B Cs- it has to teach people how to change their attitudes and how to affect meaningful change in their lives. [ Sort of like the old adage about ‘teach a man how to fish’ lol ]
Hi Ian – I feel that I could be considered outsourcing in an economic sense. In terms of the economics of what I do, I mean. In the real sense of things… no, I would not be outsourcing at all.
On the question of exploitation, I agree with you fully.
We have a friend who’s a supervisor at a call center in MNL – she makes a lot more than $2 an hour. Without that entry level job, whatever that paid when she started, she wouldn’t have her supervisor’s salary now. And as been said, there’s more upside – she’s young still.
Hi Gary – That’s just it… the lower paying jobs are just a stepping stone to something bigger and better! I can remember having plenty of jobs that paid low. I learned a lot from doing those kinds of jobs, and I am thankful for my experiences.
And here’s a reality: The argument is commonly that it is taking American jobs. I suspect that sometimes that is true, but I know that sometimes it is not. I have used both American workers and overseas workers for projects. Often what I have elected to outsource is work that I would not have done here because it would have been cost prohibitive for my small business. So, in essence, no one would get the benefit. At least with outsourcing (to the Philippines, to India, to etc.), there is a benefit to someone.
Hi Tom – I fully agree with you that when a job can be done for a low price, as outsourcing allows, more work gets done! Work that could not be afforded, or would not be feasible if the salary were too high.
Wow Bob, an article that’s bound to provoke some profound thinking, that’s for sure. IMHO, you are very correct in pointing out that “overpaying” workers can, in-fact, be quite harmful to a society in the short term, particularly for the unfortunate chap who has no income or job, and simply can’t increase his prices.
As for outsourcing, well, again IMHO, it is, whether we like it or not, a global economy these days. Outsourcing is simply the way in which the global economy adjusts and balances itself.
I can guess there will be a few people out there who will find this whole topic quite inflaming and infuriating, but it will be interesting to read the thoughts of those who can lay their emotions aside for the purpose of the discussion.
I’ll take a look at the site(s) of this guy Yaro, thanks for the link.
Jim
Hi Jim – Without a doubt, I agree that we are in a global economy. If a company is to be a success these days, they must take advantage of cost savings that are available. If they don’t, their competitors will eat them alive.
“The chain keeps going, and suddenly it costs a lot more to live in the Philippines.”
I would also imagine that money sent by overseas workers contributes to inflation quite a bit. Has inflation been higher in the Philippines than the rest of the world?
Clever the way you worked the title of the website into the article.
Inflation in the Philippines is indeed quite high, Peter. The official rate is only about 4%, but truth is that it is obviously much higher.
Hi Bob- Good article and thought provoking as well.I am not so much interested in what people earn for whatever job they do, what worries me about outsourcing is the fact that personal information can be compromised.We in the UK have had instances of personal information being sold by Indians which included Bank and Credit details as well as Medical information etc.
Best wishes.
Jim.
jim- i agree that privacy issues are important, but I believe that if you do some research you will find that people who work in outsourced companies in India are far from being alone !!
Google UK privacy issues and in the first 2 pages you will find links to Google and Facebook- but not one link to India.!!
I was born in England and as far back as I can remember my parents liked to blame everything that they didnt like on Indians and Pakistanis.
Hi Ian- I wasn’t targeting particularlly Indians I was only quoting a happening.I’m sure as you say it happens where ever outsoursing is done.
Regards.
Jim.
Hi Jim – I am also concerned about the loose use of private data in such arrangements. The kind of work that Yaro is talking about, though, would not involve such information.
Hi bob well i have seen this happen to a company that i worked for ,for nine years a company who puts a special coating on optic lenses that the company i worked for moved there operations to manila and closed down there processing area here the only reason i can see for them doing that is to make a huge profit on there product (as if it wasnt expensive enough) now not many people know about this move and theprice of the product has not come down but i bet the people who do the work dont get paid anywhere near what the people her were paid ,i have known of large companies ie:the one i worked for getting there product made in 3 world countries such as mexico ,china ,brazil and actually having it sent back here and repacaged in bowes that say masde in australia absolutely outragous i dont trust anything that says made here anymore unless i grow it myself or see the guy building it ,the one bonus i suppose for the workforce is that a lot of countries make them use brand new equipment to set up not like the 40 year old clunkers we used to use but it is in one way exploitation but in another it is providing employment and some form of income to people so i suppose it really is a catch 22 situation as long as the western world has shareholders who want good dividends then there will always be exploitation of work forces throughout the world
chris
Hi Chris – Really, making a profit is not a sin. It is the job of the company to make a profit. Business is not charity, after all. That said, I do feel sorry for workers who cannot be competitive and thus end up losing their jobs. But… being competitive does not necessarily mean that you have to be the cheapest. If you are more productive and also provide more quality, your price can remain high. Perhaps that is the key for American (and other first world) workers.
Hello guys – Hey Bob, I learned about this post when Yaro commented and posted your link in another blog, not his. http://allfreelancewriting.com/2010/05/17/freelancing/business-career/the-thin-line-between-outsourcing-and-exploitation/#comments
I’d like to ask several questions for clarification:
1. Have you tried living in Manila so you can compare life, expenses in Manila as opposed to Davao City?
2. You said that the government mandated P350/day minimum wage but workers in Davao get on the average P200/day only? Are you talking about white collar workers who are educated college graduates and can be hired as writers, web designers, graphic artists, etc online? Do they speak and write good english as well?
3. Are the workers you mentioned getting P200/day eligible to be hired as writers, web designers or graphic artists?
4. Do you pay your workers P350/day? Regardless of what kind of work they do because P350 is government mandated?
The reason why I am asking these questions is that your readers might misconstrue that workers in the Philippines, with the caliber of quality writers. web designers and similar jobs needed online, get the same wage i.e. P200 per day the way you are explaining it. You have to be clear on this because online workers, whether or not they are quality workers based on the standards of their employers are college educated and can speak and write good english. And P350/day is the mandated wage so that’s roughly $1/hr. I guess the Department of Labor should look into these workers you are referring to including the amount of time they spend working. In the Philippines, anything in excess of 8-hour work in a day is considered time and half as what you Americans would call it. In the Phils they call it overtime. And workers you are referring to should be getting time and half if they work 10 hours.
I have been to several places in the Philippines and there many foreigners in cities like Davao, Cebu, Puerto Pincesa and Mindoro. Why? It’s either they are married to a Filipina who hails from those places or simply because it’s cheaper leaving in those places that is why they chose to put up their business there rather than staying in Manila.
I definitely agree that outsourcing is not exploitation but the rate these foreign employers give is exploitation! If you are talking with the mindset of an entrepreneur, the investment of these freelancers are their education. How much do you think does a college education cost – a good school for that matter? And the other incidentals that goes with studying? Would you not at least want to recoup the cost you spent for your education and a little more through working? Philippine labor is no longer fair as it is. This is the reason why some chose to go overseas to work instead of staying here and getting a measly $1/hr rate.
I guess we always have to compare apples to apples. Even if these outsourcers pay, $5/hour to these freelancers, they can still save $2.50 based on US minimum wage. If they get the same Filipino workers in the States, they are forced to give the $7.50/hr rate, right?
But just the same, at the end of the day, it is not slave labor. No one forced them to accept that gig or work at gunpoint! And considering the way Filipinos work, they tend to work beyond what is expected of them. Even your household help can attest to that. They were hired as caretakers of your kids but every now and then they do errands for you or you ask them to do other menial tasks aside from just, you know looking after your kids, right?
If you are a pensioner, receiving pension from the States of roughly $1,200/month, you will definitely live a comfortable life in a city like Davao. With the current exchange rate of P43/$1, that would be P51,600.00. An ordinary person working in a bank would not even get that much. 🙂 I should know, i worked in a bank for over 10 years!
Thanks for giving me a chance to comment here. 🙂 Saw your kids – they’re cute!
Hi MacSwitcher – Actually, if a company pays a worker less than minimum wage, that is not illegal. As I said in my article, that really goes beyond the scope of this article, though. However, suffice it to say that under Philippine labor laws, there are ways that you can legally skirt minimum wage – if your company is smaller (if you have less than 20 employees, labor law does not apply), or if your employees are not “regular” and only contract workers. Anyway, your logic is a bit off when it comes to the “live in Manila issue”. No, I have never lived in Manila, nor will I. I avoid Manila as much as I can because I don’t like the place, or find it relaxing to go there. You say that people only live outside Manila for cheap living or because that is where the wife’s family is. Well… that’s not the case for me. I don’t live cheap, that’s not the lifestyle I enjoy or look for. My wife’s family is not in Davao, yet this is where I live. Anyway… I just think that some of the things you argue are far removed from my lifestyle.
Chris- unless you are running a charity then the goal of any firm is to maximize profits. That is the basic idea of capitalism. Would you rather that firms not outsource ? I ask since you say ” there will always be exploitation “. Maybe you should ask the workers you think are being exploited if they would rather that the corp not outsource- then those employees can go back to living on NO wages .
Dividends is NOT a dirty word. It is the reason that someone will risk their had earned money . When you start a business and hire employees with the money that you have worked 30 years to earn then you will understand the situation. If everyone just took their wages and put it in the bank there would be no new businesses and no new jobs created. And no one would be exploited.But I dont think that all those employees in 3rd world countries would agree that that was the best way to go.
You talk about your firm that put a special coating on optic lenses. I find that many companies are stuck with unions that make such horrendous demands on the companies that they work for that it is the companies who are really being exploited ! Maybe if you and your coworkers hadnt made unreasonable demands you would have found that your employer wouldnt have been compelled to go offshore inorder to maximize the return on their investment . I have no way of knowing your particular situation but I have seen many companies where that was the reality. All i am saying is that many times things are not as simple as people would have us believe.
Bob,
This is a topic that is not only interest me but effects me in so many ways. First I am a software developer for a large U.S. company so outsourcing is just a way of life. Each year at budget time I see many jobs going overseas mostly to China. So far I had been able to keep mine.
Being a software developer often times I am approached to do many small jobs that I will work on at night or on the weekends. I used to turn most of them away because my primary jobs requires 40+ hours a week of my time. I have friends that work fulltime taking on jobs like this and they use sites like http://www.rentacoder.com to get some of the development done to low bidders.
Like most people that follow your site I have connections in the Philippines. Over the years I have been able to take on some of the small jobs here offered to me and have my friend in the Philippines do some of the work. They don’t work fulltime but make about what they would make if it was fulltime work. My worry is if I am not able to get side work in the future. My friend will find it hard to adjust even with a degree from a respected college in gensan.
Hi Ben – Interesting comment. A guy like you who knows software can keep your job working in the industry, and start your own software company on the side by outsourcing work to people in the Philippines. It would be great for you, I think.
There are regional wage rates which you pointed out. The problem is that business are not monitored. Just discovered in northern Luzon out of the 3 businesses I worked with, only 1 was playing by the rules. One has a stack of pending cases at DOLE. From what I’ve heard from the locals (anecdotal), the outsourcing industry in the country pays better than minimum. Not hourly but per day. Therefore, $2.00 per hour equals $16 per day or P 700.00 +/- per day. That’s not exploitation.
To compare $2.00 per hour in the Philippines (assuming that is correct info) with US wage rates is comparing apples to oranges. $2.00 per hour in the Philippines is a living wage, but not in the US.
Hi AlexB – It is also important to remember that companies don’t have to always pay minimum wage. The most common way around this is when they hire workers on a contract basis, and keep them for less than 6 months. When they do that, the workers are not entitled to minimum wage, or even protection under the labor laws.
Yes, Bob, the contract employment thing. I’m not versed on Philippine labour laws but I pointed that out to them that maybe, there’s something in the code that might get them in trouble. Well, someone (from a govt agency) tipped me they are up to their eyeballs with pending cases at DOLE. Whether that gets resolved or not is a different matter. Going back to the issue of “exploitation,” for any expats in business it’s best to work within the labour code of the country.
I agree, as an expat it would be best, by far, to make sure you are in compliance with all laws, even do better than the law requires. If you don’t do that, you may well become a target for enforcement!
One more factor you might want to work in is the unemployment rate in the Philippines. Just having a job is worth it’s weight in gold to many people.
Very true, David. One reason, though, why I would be careful making that argument is that it can play into the hands of people who think that outsourcing exploits the workers… they will say:
It’s a fallacy to think that hiring more people (because there’s lots of people without jobs) will result in good or better business. Doubling the size of your labour force at very cheap wages does not automatically mean better performance or productivity.
I totally agree. In fact, if you lay off half your staff and downsize… keep the most productive employees you can certainly improve your businesses performance, and often get most of the same work done for way less money!
Hi ian well to start with if you read the post i think i said that in one respect it maybe classed as exploitation but on the other it provided work for the local population , i realize that the aim of any company is to make a profit as they report to there share holders at there general meetings however as for your union bashing they dont try to make unfair demands on companies only to protect there members / workers from unscruopulous employers who try to stick it to there workers ,we have just got rid of a government who beleived that workers had no rights and employers could get them to work when ever they wanted them to for the basic wages in sometimes dangerous and unsafe conditions thank god for the vote we ousted this mob of d,,,,,,,heads and now have a government who try to be fair to both employer and employee if you notice we came out of the recession quite well unlike the great home of the capitolist , if employers tried to work with the unions instead of against them things would be vastly different ,oh and by the way read the post correctly this company was not the one i worked for, here we use something you probably have not heard of an enterprize agreement where both employers and employees sit down and work out there conditions and wages together so the workers didnt put unreasonable demands on there employer otherwise the agreement would have never been passed by government in fact the employer would give them a bonus for the work that they acheived every month when and if they reached a target level ,treat your employees with respect and they will respect you and no doubt try to move mountains for you as i have seen treat them like rubbish and that is what you will get as your final product
chris
Chris- sorry that you think i didnt read the post correctly and that this company was not the one that you worked for – I was just going by your statement which said ” i have seen this happen to a company that i worked for ,for nine years a company who puts a special coating on optic lenses that the company i worked for ”
I guess I didnt understand what you meant when you said twice in the same sentence ” A COMPANY THAT I WORKED FOR ”
I have no idea how the rest of your post relates to the topic of exploitation by outsourcing .
Does the Philippines need a minimum hour wage for workers…Or should the open market , supply and demand for employees ….set what the rate of pay will be…True workers here are hardly paid a livable income……But with higher wages…comes higher prices and higher cost of living…..Then the workers are right back where they started……Becuse then it takes the higher income to buy products and services….which will cost more money….Kind of like the dog chasing his tail……
It’s a catch 22, isn’t it, mi$ter dinar!
Bob,
In consideration of “is outsourcing exploitation?”, no, these are two unrelated issues. If workers in a specific city/country/region are being paid poorly for their efforts – in comparison to the local norms – this is exploitation, caused by the employer, usually with the acquiescence of the local government. If an employer is paying “the going rate”, any consideration of exploitation is at the hands of the government. If the rate is higher than the norm, then there can be no consideration of exploitation, in terms of wage rate.
When the NAFTA agreement was signed between the U.S., Mexico & Canada, the doors of opportunity for companies to outsource, without penalty, were opened. Within a short period of time, many similar agreements were made in other regions of the world, each time, a major benefit to corporations, each time sounding the death knell of workers’ rights, benefits, continued employment. Sadly, the governments’ requirements for companies to adhere to wage rates & workers’ safety issues, is as varied as the number of countries whom have benefitted from outsourcing and the results are that workers have been exploited by many unscrupulous companies & governments whom are solely concerned with maximum financial gain & care nothing about the worker.
From the perspective of a foreigner whom operates a business in The RP, regardless of where one’s products/services are offered, paying the going rate to local employees is reasonable, paying more is commendable & allows one to hire the “cream of the crop”. We experienced anger from competitors, when operating our businesses in Mindanao, due to the wages we paid. As a result, we brought profit-sharing into the mix, with mostly successful results.
Bob, by raising this question you’ve shown that the plight of your present & future employees is a consideration for you, when operating your business. That your consideration is of exploitation, rather than “how little can I get away with paying them?”, speaks volumes. Much respect from these quarters!
Ian, your response to Chris’s comment makes me believe that you are one who views workers as a necessary evil, rather than as the reason that a business is able to exist & grow. I have never known a company to exist that had owners, a board of directors, or managers, whom worked harder than, or benefitted less than, their average employee, quite the opposite. Don’t blame unions for the reasons companies have out-sourced or been unable to compete, NAFTA & similar corporate-sponsored agreements caused that.
Mike2
Mike2- on the contrary, I do not consider workers as evil at all. I consider them as a means by which my investment can earn a return on the money which I risk. Not once have any of my workers risked any of their own money in my companies. You have read how my 46 employees, all of whom were getting paid while I was losing money decided to demand even more and thus caused me to shut my business and them to all be unemployed, so I find it hard to understand that the workers are ” the reason that a business is able to exist and grow”.
You say you have never known a company to exist where the ownners worked harder than their average employees- well come on over to my office and I will be glad to show you one. Or go to Bobs office and I guarantee you will see another one. [Words like “never” and “all” and “always” most times take away from the argument that you are trying to make.]
You obviously arent from Alberta where “right to work” legislation allowed that province to prosper where others were stagnant. BTW right to work really means ” no unions” .
In your last line you imply that NAFTA caused companies to be unable to compete- I disagree with you totally and I challenge you to back that statement up. [ but only on a slow day with a San Mig in your hand ! lol life is way too short to waste on political discussions – right ?]
Outsourcing is exploitation of economic differences, e.g. wages and making a profit out of it. The word “exploitation” has a negative and bitter taste due to history. For example, centuries ago the Portugese, Spaniards, French, British and Dutch made huge profits by ruthless exploitation of Far East resources while little or nothing benefited the local population. As a matter of fact, whole societies worked for nada by force or were enslaved and were in some cases completely destroyed.
I think that there is nothing wrong with outsourcing as long as the local population and economy benefit. Today, China grows rich and into an economic power because of outsourcing. In the Philippines, economic exploitation also works the other way around: millions of OFW’s exploit higher earnings in other countries.
Governments should regulate wages and conditions. Each government/country is different. Take the local circumstances into account. If you feel that governments are not doing a good job for the people and the local economy in broadest sense, it should nag your conscience.
IMHO
Ton
Hi ton – In a sense I agree with you. In another sense, I disagree strongly.
You are right that the act of outsourcing exploits the differences in wages in different parts of the world. In that sense, exploitation is not a bad thing. You are taking those differences and using them to your advantage. Exploiting people is a bad thing. Exploiting circumstances, when it hurts nobody, is not a bad thing at all though.
When you mention Government and aying that Government should regulate wages… well.. you and I could not be further apart then. I despise government intervening in the free market. I am a capitalist. The government can do nothing but make things worse, and screw up everything. That’s how I feel, so we cannot be further apart from each other’s viewpoint in this area.
Bob, just go back to the country where you came from and pay your staff $2 per hour there and stop exploiting us. You are a shame in your country. We can well live without you. There are a lot of ethical outsourcers, not only a shark like you. And, you are here in the Philippines, yet you outsource Filipinos. It is illegal. You have an online business, do you have a permit? For all you know, people in Davao is already watching over your back while you buy a double dead lechon manok that costs cheap at the dark corner of a slum street. Or maybe you have not eaten in a real restaurant at all.
Anya – ha ha… you are an idiot.
Because idiosyncracy can only make an idiot understand what he is.
You oppose Yaro Starak whom you used to admire just because his predicament is against yours when it comes to ethics and exploitation. Are you an Australian? I think it’s obvious.
When England throw you away and Australia was born, where SOME second hand dumb-brained people are used to getting their way for free, you were one of them. How did you met your wife? In one of the cheap bars in the Philippines? Because no decent and intelligent Filipina would wed a man without substance but full of useless, nonsense words like you – jargons to give an impression that you are so intelligent. Such a garbage caucasian.
Hi Anya – If you took even 5 minutes to look over the site you would know that I am not Australian. Please, go spread your misery elsewhere.
I would wager that is why you are not married to a decent and intelligent Filipina are you Anya?
Hi Miguk – Anya is posting from an IP address in Cebu City. I suspect that she is a Filipina who somehow feels that us westerners are exploiting her in some way. Unfortunately, she has not read enough of the site to know what she is talking about, though.
oops she is a woman….sounds like a disgruntled filipino. Regardless, there is a chip on the shoulder the size of Gibralter!
To Anya…”Anya met dayta!” (Ilocano dialect) in tagalog “Ano ba yan!” I suggest you read everything slowly first and understand what is being said there before making a negative conclusion and unnecessary insulting remarks, and if still you don’t agree with something that is said there, then perhaps you can post your arguments here in a professional manner rather than bashing on people. Lets make peace not war.
Outsourcing just doesn’t work. Yes it helps people in third world nations survive, but at the same time, millions of Americans and first world countries are struggling to survive and find employment. In the end, I think we will just have the few rich doing business with each other and everyone else will be the poor slaves making just enough to survive to serve their slavemasters. Welcome back slavery and third world america.
Did you know that there are call centers in the USA?