Low wage countries offer really high saving potentials allegedly by extremely low labour costs (see low wages) of also highly qualified specialists or for enterprises of the Western European or North American regions.

Thus in the year 2004 an average monthly income of 850 euro in Latvia, 450 euro in India, or only 50 to 150 euro in one of the tiger states or the Pantherstaaten Southeast Asia faced the usual monthly salary of more than 4,000 euro of a software developer in Germany.

This wage differential provokes to the outsourcing, Offshoring or Nearshoring, although also high risks face it:

• Significant additional expenditure for communication, co-ordination, technical infrastructure.
• Substantial geopolitical uncertainties (regional neighbourhood conflicts, race troubles, terror dangers, religiously conflicts motivated)
• Substantial infrastructure problems (health care, hygenic conditions, current and water supply, traffic route binding)
• Strong coworker fluctuation
• Guidance problems (supplementing also refusal of the management or the relative to the residence change)
• Cultural differences and linguistic difficulties, which often release misunderstandings.
• The bare comparison of labor costs is not sufficient because it pretends to high cost savings.

From view of the low wage country and/or developing country the Offshoring has likewise multidimensional and contradictory aspects:

• Favourable is among other things the chance on economic growth and emergence of numerous jobs - also in economically disadvantaged regions,
• unfavorably the frequent absence of industrial safety and worker rights, which can strengthen the social problem medium-term, as well as problems with one-sided import export conditions and in environmental protection (lack at appropriate regulations).
• A special case of the topic is the Maquila industry in Latin America. It made for example the north of Mexico an extremely dynamic economic zone, has however bad conditions of work, social tensions and environmental pollution as a result.

Articles in category "Low wage country"

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