1

The Challenges of the New Global Labor Market

Student

Institute

course

instructor

date
 2

Introduction

Economically, the world was initially divided into different countries. However, in recent

days, the situation is different due to the liberalization process. Liberalization has allowed cross-

border trade among the countries in the entire world. In implication, there has been increased

mobility in labor among other factors of production. Also, the trade has increased the final

products from the industries. Most importantly, the process enhanced the globalization process

whereby different local economies have integrated to form one global economy. The

globalization process started with few countries coming together to help each other grow

economically like OECD countries (Freeman, 2008). Later, different organizations were formed,

some merging to form blocks. Although the partnership of the countries had some merits

attributed to, in the long-run, there are some problems it brought about in the recent days,

especially in the new international labor market. Some of these challenges that are being faced

by the new global labor market include but are not limited to "great doubling," different

international policies, continuous technology changes, and the current issue of COVID-19. These

challenges are elaborately discussed in this article.

The “Great Doubling” Challenge

Initially, the world's economy involved about half of the global population, including

OECD member countries such as Africa, Latin America and Caribbean, and Asian parts.

Workers from these counties were deemed low-wage workers, and they never competed with the

United States workers among workers from other higher-income countries. Indian and Chinese

workers, alongside those from the soviet empire, were low-wage workers (Freeman, 2008).

Given that the three regions, the Soviet empire, China, and India, had not joined the Global
 3

economy, the workers from higher-income countries like the United States enjoyed low

competition in the international labor market from the low-wage workers (Latin Americans,

Africans, and Caribbean people). However, the new market is facing an immense problem after

the low-wage labor force from the Chinese, Indian and soviet empires have joined the global

labor market in the 1990s (Freeman, 2008). The joining of these regions to the world's economy

made the entire world form one economy (global economy). However, the integration

contributed to the increased world's labor pool size, which was the main source of the problem

being experienced. Before joining the China, India, and soviet empire, the labor pool was 1.46

billion workers, and there was a manageable competition in the market. However, after they

joined, the labor pool increased to 2.93, the "great doubling (Freeman, 2008).” The effect of this

doubling is the challenges experienced in the global labor market.

The critical challenge as a result of this great integration is the increased competition in

the labor market, whereby many workers are unemployed. The logic behind this is that the flow

of capital has been directed to countries like China and India, where the entrepreneur’s intent to

enjoy the relatively low-cost labor from such countries. This shifting of the capital to such

countries adversely affected workers' well-being in countries like the United States. First, there

has been an increased downward pressure on less-skilled workers’ earnings and employment. As

a result of the unemployment, less-skilled workers (Latin Americans, Africans, and those from

the Caribbean) have been forced to shift their services from formal to informal sectors whereby

the work is precarious, significant hazards and risks, and low productivity and wages (Freeman,

2008). Therefore, the great doubling contributed to all these challenges to the international labor

pool. In implication, the issues of inequalities among the international workers, the increased

risks, and loss of their value have been contributed by the great doubling of the 20th century.
 4

Difference in Labor market Policies

Although there is an increased integration of the local economies to global economies,

individual countries are retaining some autonomy in their operations. For instance, countries

have their economic policies alongside the global economic policies. The most important is labor

market policies. Different countries have different rules and regulations governing their labor

markets. For example, the law of minimum wage varies from one country to another. In other

countries, a system of unemployment insurance has been implemented, and social benefits are

mandatory (Crépon & Van Den Berg, 2016). Although each country has its labor market

policies, there is a significant difference among the policies. The difference has caused a great

challenge in the global labor market as potential entrepreneurs are afraid of investing in some

countries where the labor market policies are strict. For instance, there is no investor who will be

willing to invest in a country whereby the government sets a higher minimum wage by the

foreign investors for its people. Additionally, the international labor market has been adversely

affected by the social protection policies whereby the local governments are determined to

protect their local labor forces, especially in the developing nations, by implementing some strict

restrictive rules (Crépon & Van Den Berg, 2016). As a result, the labor mobility of skilled

workers from foreign countries has been limited. Therefore, the difference in labor market

policies has adversely affected the global economy by limiting the access of foreign skilled or

relatively cheap labor through limited labor mobility across the border.
 5

Continuous Technology Changes

Scientists and researchers are playing a significant role in applying scientific knowledge

in the industry. Initially, industries were labor-intensive. However, new methods of carrying out

industrial operations are being implemented in recent days, replacing the labor force. This issue

has adversely affected the workers (Chinoracký & Čorejová, 2019). However, the rate of shifting

to a capital intensive system is different from one country to another in the global economy.

Some countries like the United States are moving with speed to the new technology. This shift's

effect is that some of the workers, especially the semi-skilled Latin Americans, Africans, and

Asians, are becoming irrelevant in the market as their duties are now performed by machines

(Chinoracký & Čorejová, 2019). Therefore, the technological changes are affecting the

international labor market in a way that workers, regardless of origin, are continuously becoming

irrelevant due to changes in the methods and techniques of performing their duties. Additionally,

robots are completely replacing human resources, and many industries like the banking sector are

not relying on slow, inaccurate, and unreliable human labor.

The Current Issue of COVID-19

Since 2019 the global economy has adversely been affected by the outbreak of COVID-

19. The pandemic has killed millions of people forcing the respective governments to develop

directives to control its spread (Sforza & Steininger, 2020). Some of the directives included

banning of cross-border movements, discouragement of social contact, and complete country

lockdown. The disease was first experienced in high-income countries like America, China,

Brazil, and Italy, whereby it later spread to other countries as immigrants in such countries were

trying to escape to their home countries. Upon reaching their respective countries, different
 6

countries like the United States, Italy, China, and Brazil, and India banned the movement of

people from outside the country to their country to control the spread of the disease (Sforza &

Steininger, 2020). Most of the aforementioned countries depend on international labor whereby a

significant percentage of their workers is made of foreigners. Following the government policy

of banning the movement of people from outside and outside the country, these internal

businesses that are gradually resuming their operations are undergoing inadequate labor supply.

In implication, the foreign workers' services have been limited since they are locked out in their

countries to mitigate the spread of the pandemic. Most countries that are gradually resuming

their economic activities are advocating for the use of the local labor force as the vaccine is

being spread to ensure citizens' safety.

Integration of local economies to form a global economy has helped in enhancing the

development of countries, especially the low-income ones. This has been achieved through an

increased market for goods and services in such countries alongside a widened labor market.

People in different countries have been able to shift their services from local industries to global

industries. However, there are some challenges that are facing the global labor market. Such

challenges include but are not limited to a great doubling of the 20 th century, continuous

technology changes, differences in labor market policies, and the current world issue of COVID-

19. The doubling led to increased competition in the international labor market, inequality

among the global workers, and the shifting of capital from high-income countries to low-wage

countries. Different labor market policies have limited labor mobility and potential entrepreneurs'

investment. Technology is continuously making international workers irrelevant, and finally, the

COVID-19 has limited the access of global workers due to banned cross-border movements.
 7

References

Chinoracký, R., & Čorejová, T. (2019). Impact of digital technologies on the labor market and

the transport sector. Transportation research procedia, 40, 994-1001.

Crépon, B., & Van Den Berg, G. J. (2016). Active labor market policies. Annual Review of

Economics, 8, 521-546.

Freeman, R. B. (2008). The new global labor market. Focus, 26(1), 1-6.

Sforza, A., & Steininger, M. (2020). Globalization in the Time of COVID-19.