Indice
One might suppose that the outsourcing agreement concerns the production of a semi-finished product, for which a certain number of workers have to be employed, whose wages represent the main cost, which inevitably spills over into the entire Global Value Chain (or Global Supply Chain) of the group firm. This being the case, it is clear that the parent company commissioning the work – and pursuing the overall group interest – tends to set a ‘downward’ contract price, whereby it is de facto determined as to what share of the wages should be allocated to the workers employed by the contracting-subsidiary company.
The so-called ‘one-contracting party exchange’ underlying this type of business transaction actually conceals an unequal exchange between the corporate group – governed by the parent company – and the outsourced workers hired by the subsidiary company and included in the Global Value Chain (or Global Supply Chain).
Indeed, a large body of scientific literature confirms that the international expansion of outsourcing (or offshoring, i.e. outsourcing to another country) of production is driven by the main objective of cutting costs, especially labour costs, and not by the ability of outsourcers to offer customers better quality products and services than in-house production.
Although the studies conducted so far cannot be considered to be exhaustive and do not lead to unanimous conclusions[i], it has been observed that within the OECD countries offshoring has had a negative impact not only on wages but also on employment[ii].
With regard to the United States specifically, it was found[iii] that between 1983 and 2002, there was an exponential increase in offshoring, with goods being produced – and then imported – in low-income countries. At the same time, jobs in the manufacturing sector declined by around 6 million with a drastic increase in income inequality. Among other things, the results also show that multinationals contributed to the increase in employment in low-income countries through their foreign affiliates.
Another study conducted on a number of European countries (Germany, Italy, France, Spain and the United Kingdom)[iv] highlighted how the technological variable plays a significant role in the relationship between offshoring and wage inequality.
In particular, it was found that high-tech offshoring increases the wages of high-skilled workers, while it decreases those of low-skilled workers. In order to arrive at these conclusions, a sample of four job categories was considered, i.e. managers, craftsmen, white-collar and blue-collar (manual) workers. It emerged that repetitive tasks performed in factories and in the service sector – which, thanks to technology, can be easily moved around in low-income countries – have been hard hit by the use of offshoring by multinationals.
[i] See William Milberg and Deborah Minkler, Outsourcing Economics: Global Value Chains in Capitalist, Cambridge, Cambridge University Press, 2013, p. 174. For an overview of the main studies conducted on the impact of offshoring on employment, please refer to the recent paper by A. Bramucci, Offshoring, Employment and Wages, Berlin School of Economics and Law, Institute for International Political Economy (IPE), IPE Working Papers no. 71, 2016.
[ii] See Milberg and Minkler, Outsourcing Economics: Global Value Chains in Capitalist, cit., p. 174.
[iii] Avraham Ebenstein, Ann Harrison, Margaret McMillan and Shannon Phillips, Estimating the impact of trade and offshoring on american workers using the current population surveys, NBER Working Paper Series, no. 15107, National Bureau of Economic Research, 2009.
[iv] Bramucci, Offshoring, Employment and Wages, cit.