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Global Labor Cost Arbitrage – Spanish workers Lose Jobs to poorer EU neighbours

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One of my theories is that a lot of distortions and opportunities for arbitrage that we are seeing in the world today is because “Labor is not Globalized while Capital and Trade are “.However the Restrictions on the “Globalization” or in other words Free Movement of Labor is being reduced through the following trends

  1. Improvement in Communication and Transportation, that has given rise to  Outsourcing
  2. Creation of regional blocs like the NAFTA,ASEAN ,EU etc.  has allowed broken the labor barriers within the bloc between the members.This has resulted in “winners” in the form of the “poorer members labor” and  “losers” in the form of “richer members labor” .
  3. MNCs like IBM,Applied Materials with operations spread across multiple countries exploiting this situation by moving most of their labor requirements to low cost locations .

Spain has been in the eye of the storm of the European sovereign debt crisis.It also faces one of the Highest Unemployment figures in Europe.This has been exacerbated by the rising trend of Global Labor Cost Arbitrage as labor from poorer Eastern Europe countries replace the more expensive local workers.

Spain’s Jobless Find It Hard to Go Back to the Farm – NY Times

Now, with the construction jobs gone, Mr. Rivera is behind on his bank payments and eager to return to the farmwork he left behind.

But Spaniards have been largely shut out of those jobs. Those bent over rows of strawberries under plastic greenhouse sheeting or climbing ladders in the midday sun are now almost all foreigners: Romanians, Poles, Moroccans, many of them in Spain legally.

“The farmers here don’t want us,” Mr. Rivera said with a defeated shrug.

Local officials and union leaders say Mr. Rivera has it right. Farmers have been reluctant to take Spanish workers back — unsure whether they will work as hard as the foreigners who have been picking their crops, sometimes for a decade now.

So far, only 5 percent of the pickers this year are Spaniards, said Diego Cañamero, the head of one of Spain’s largest labor organizations, the Field Workers Union, or S.O.C. He said the union was working to keep tempers from flaring and to persuade farmers to employ local people again, but with little success.

“There is a sense of bewilderment among the Spanish workers,” he said. “They say: Why do they let people come 5,000 miles, when we need the jobs?”


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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