RESEARCH PROPOSAL:
Introduction
There has been a significant concern across the globe about employee turnover and the experience requirement in a given type of job portion. Cost minimization is a critical factor in a manufacturing and production firm. Employers demand cheap labor in the labor market. The cheap labor is associated with the low cost of production, especially the labor-intensive methods. The employee’s potentiality is also significant factor firms are investing. Labor productivity is one of the competitive advantages that a firm can enjoy within a highly competitive market. The management techniques and methods employed to secure these skilled employees at a minimum age rate are of emphasis.
Due to increased and overpopulation in nations like China, India, and other third world nations, unemployment has been a disgrace to the economy. This situation causes disequilibrium between demand and supply for labor (Lee, 2020). There is an excess supply of employment at the lowest wage rate below the international standard requirement. The human resource management department of firms is tasked with the exploitation of the labor market by ensuring the best labor force is employed into the firm at the lowest rate possible; due to increased population (Butollo, 2014).
There is a dynamic expansion of infrastructure and building development in residential and commercial areas. This phenomenon has led to increased demand for goods and services as well as the service provision industry, which should be made adequate to lower the pressure on the demanded commodities.
This research project focuses on the provision of cheap labor and the effects associated with the firm and the employees’ social being. The following questions will be asked and appropriately analyzed through extensive research with precise and proper data collection techniques used to gather comprehensive information.
Why companies demand cheap labor as opposed to highly skilled expensive work?
Should firms invest more financial resources on labor as a factor of production? And what measures should the employees take to prevent themselves from exploitation through low wages?
The aim is to establish the efficiency of China’s labor market and bring into the limelight the challenges and benefits firms enjoy by opting for cheap labor. Both at the cost-benefit level and the product quality and the market share, among other components of the perfectly competitive market. Also of great concern is the employee’s perception and problems encountered when employed at the minimum wage pay .what this interprets into their living standard and social development. Methods such as questionnaires, interviews, and video recording will be used to gather information from the selected employment-consultant firms, employees, managers, and the unemployed. Graphical data representation will be used to visualize the computed data for the best comprehensive understanding.
Literature Review
The puzzle of maximizing production while cutting down cost cuts across different economies. One way companies have managed to solve this is through acquiring cheap labor within the labor market. However, the phenomenon has come at a price with firms facing a threat to the production of low-quality products and backlash from the media over-exploitation of workers. This situation further affects the profitability of the business as employees and customers shift their loyalty elsewhere due to the prevailing bad corporate image.
Nonetheless, companies continue to hunt for venues to source cheap labor to ensure maximum profit. China has established itself as a haven for multinational companies in need of cheap labor. China being one of the most populated countries in the world, China boasts a 783,194,000 labor force as per the 2019 World Bank report (World Bank, 2019). China provides a perfect example of understanding key labor issues such as reasons for going for cheap labor over expensive labor and its challenges as well as measures to curb low labor exploitation. Different scholars provide insight on critical issues under discussion, which would be crucial in analyzing cheap labor in china.
According to a study conducted by Cuong (2013) in Vietnam, the findings of the study based on propensity score matching indicate no relevant statistical impact of the 2005 20% wage hike to the profit of firms. However, another research by Draca et al. (2011) indicates that the reduction of firm profitability after the introduction of the minimum wage in 1999 in the UK. Based on these researches findings, Metcalf (2008) states that the efficiency of businesses to withstand the reduction in profits due to heightened labor cost is the sole reason for the effectiveness of the minimum wage policy in the UK. A case study conducted at China’s Pearl River Delta (PRD) within the electronics goods sector points out that increased productivity and profits within the PRD as a result of cheap labor as well as land (Airriess, 2008).
A report produced by China Labor Watch (CLW), an activist group, indicate that one of the leading effects of low wages among Chinese workers in toy factory firms include subjection to poor working conditions and being overworked. The employees work 11 hrs a day with a stretch of up to over 130 hours of overtime in a month. With the workers earning $292 in a month, they end up volunteering to work for more hours, which has resulted in higher safety risks due to exhaustion (VOA, 2016). The prevalence of low labor has brought in earning inequalities amongst employees. According to research conducted by Lucifora et al., (2005), in some nations, significant differences in wages has brought about a heightened share of workers who are paid low. A further cross-country connection amongst the incidence of low pay and earning inequality through the use of the updated OECD data series indicate that there is a positive linkage between the two.
Reference
Airriess, C. (2008). The geographies of secondary city growth in a globalized China—comparing Dongguan and Suzhou. Journal of Urban History, 35(1), 134–149. DOI: 10.1177/0096144208321877
Butollo, F. (2014). The End of Cheap Labour?: Industrial Transformation and” social Upgrading” in China (Vol. 9). Campus Verlag.
Cuong, N. V. (2013) Do minimum wage increases matter to firm profitability? The case of Vietnam, Journal of International Development, forthcoming
Draca, M., Machin, S. and Van Reenen, J. (2011) Minimum wages and firm profitability, American Economic Journal: Applied Economics, 3, 129–51.
Lee, C. Y. (2020). The end of cheap labor?: industrial transformation and ‘social upgrading’ in China by Florian Butollo. China Journal, 76.
Lucifora, C., McKnight, A., and Salverda, W. (2005). ‘Low-Wage Employment in Europe: A Review of the Evidence.’ Socio-Economic Review, 3(2), 259–292.
Metcalf, D. (2008) Why has the British national minimum wage had little or no impact on employment? Journal of Industrial Relations, 50, 489–512.
VOA. (2016, November 27). Report: Poor Conditions, Low Wages in Chinese Toy Factories. VOA. https://learningenglish.voanews.com/a/chinese-toy-factories/3611587.html
Wolrd Bank. (2019, September). Labor Force, Total – China. World Bank Open Data | data. https://data.worldbank.org/indicator/SL.TLF.TOTL.IN?locations=CN