Social dumping

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Social dumping is a term that is used to describe a practice of employers to use cheaper labour, than is usually available at their site of (1) production and/or (2) selling. In the second case, migrant workers are employed; in the first, production is moved to a low-wage country or area. The entrepreneur will thus save money and potentially increase his profit. Systemic criticism suggests that, as a result, governments are tempted to enter a so-called social policy regime competition whereby they would reduce their labour and social standards in order to ease labour costs on enterprises and, eventually, to retain business activity within their jurisdiction.

There is a controversy around whether social dumping takes advantage of an EU directive on internal markets: the Bolkestein directive.

Entities losing from social dumping:

  • Employees in exporting countries
  • Child labor in exporting countries
  • Industry and environment in exporting country
  • Government in exporting countries
  • Employees in importing countries
  • Shareholders of the company in importing countries

Entities gaining from social dumping:

  • Companies in importing country
  • Shareholders in importing country
  • Customers in importing country
  • Industry in importing market
  • Employment in exporting country
  • Government and investment in exporting country

A joint NGO statement[1] on the EU Seasonal Migrant Workers' Directive[2] also warns against social dumping. The document argues that a vague definition of seasonal work might fail to cover all types of seasonal employment taking place when the Directive will be exerting its otherwise welcome, protective measures on the labour market.

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