Official: Globalisation causes child labour

.. that’s the conclusion of a report published last year by AgEcon, part of the University of Minnesota.

The key metric the researchers used was PCGDP, or per capita GDP (see note at the end).  The other acronym used is FDI: foreign direct investment, or overseas companies building operations in the country.

The researchers came to four conclusions:

1. in countries where PCGDP is less than $7,500, child labour decreases as globalisation takes effect
2. in countries where PCGDP is greater than $7,500, child labour increases as globalisation takes effect
3. the greater the FDI, the greater the child labour problem
4. there is a negative association between openness to trade and increasing child labour

Globalisation is all about allowing businesses from one country to trade freely in other countries.  The method which is employed is often FDI where a company either sources material or products from the host country or builds an infrastructure to distribute is products there.

All this activity pushes up GDP because there is more money being spent in the country, which therefore pushes up PCGDP and so child labour meaning as globalisation expands so will child labour.

Why would this be?

The answer is pretty simple: greed and wealth.  What almost always happens through FDI is that a facility is built in an impoverished area where wages can be kept low.  The facility is almost always owned and managed at arm’s length from the main company, sometimes though a subsidiary but very often trough a third party contractor.

Naturally, when the jobs arrive all the households in the region want to have a piece of the action so the Dads and Mums trek off to try and get a job, and quite often the children get involved too .. after all, trebling the household income seems like quite a sweet deal doesn’t it?

These facilities can be anything but when it comes to child labour they’re more likely to be farms, mines or fashion sweatshops.

Which is where we get to the sharp end of this story.  We’re not producing enough food we’re told (actually, we’re wasting too much of it, but that’s a different story) and we need to dig lots of new minerals out of the ground to power a green energy revolution.

So does this mean that that fixing our social and technological problems will mean increasing child labour across the world?  Yes, it probably does.

At this point many peoples’ eyes will glaze over.  “Oh, that won’t happen for us.  We have good standards in this country and our companies wouldn’t ever dare to subvert them for profit.”

Oh yes they would.

Look at the trouble Primark routinely gets into for how it sources its cheap clothing.  Or Apple, which despite valiant and sincere efforts recently admitted it simply couldn’t guarantee working conditions in its Far Eastern factories.

And this is finished products: commodities (including food) are even harder because they typically pass through five or ten pairs of hands before the western consumer gets the item or finished product.

So please believe me, if it originates from a country outside your own it probably contains child labour.  Just about all electronics these days (mining), a huge whack of food (anything not fairtrade really) and a large proportion of clothing (cotton farming and intricate sewing).

And it’s only set to get worse.  So next time you hear about how countries are emerging out of poverty or bland figures about FDI spare a thought for the children, because a large part of this is happening on their backs.

(NOTE on PCGDP: This is a pretty straightforward calculation: with a little finessing you take the country’s GDP (how many times each dollar, pound or yuan is spent) and divide it by the country’s population.  It should not be confused with personal income which is another metric altogether.

So for example, Qatar routinely tops the PCGDP table because alot of money sloshes around the oil rich state but the country has very few citizens.  However the vast majority of the people living there are very low paid expat immigrants, giving it a woeful per capita income measure.)

Picture Credit: http://www.flickr.com/photos/amirthanarayanan/4439718705/

Tagged as: agecon, child labor, child labour, eldis, fdi, GDP, globalisation, pcgdp, qatar, university of minnesota