Massive takeover of work from the Global South enables high consumption in rich countries

Press release of the AUTONOMOUS UNIVERSITY OF BARCELONA. Bellaterra (Cerdanyola del Vallès), July 29, 2024

The high levels of consumption enjoyed by the rich countries of the Global North are only possible through the mass appropriation of labour from the populations of the Global South. Research by the Institute of Environmental Science and Technology of the Autonomous University of Barcelona (ICTA-UAB) shows that this appropriation occurs through unequal exchanges in international trade and global commodity chains.

A new study published today in Nature communication Calculated the labour flows included in world traded goods for the period 1995–2021.

The results show that in 2021, the global North imported 906,000 million hours of embodied work from the South, while exporting only 80,000 million hours in return. This means that for every hour of work that the global South imports from the global North, it has to export eleven hours to “pay for it.” As a result, the countries of the global North appropriated 826 billion net hours of work from the global South, across all skill levels and sectors: mining, agriculture, manufacturing, and services. This figure of 826,000 million hours is equivalent to more work than the entire labor force of the United States and Europe combined.

The net wage value of this labor force is €16.9 trillion in 2021, at prices in the Global North. In other words, this is how much an equivalent labor force would cost if it were paid at prevailing rates in the North, with equal pay for equal work. “The numbers are staggering and show that every year, a very large amount of value flows from the South to the North,” says Jason Hickel, a researcher at ICTA-UAB and the Department of Anthropology at UAB. “The Global North is enriched by redirecting value from the South,” he adds.

Unequal exchange occurs because of systematic price inequalities in the global economy. States and powerful companies in the global North attempt to suppress wages and supply prices in the global South in order to obtain cheaper inputs and other goods. Producers in the global South are then forced to export more goods and services in order to buy a certain level of imports.

This translates into large net transfers from the global South to the global North, which benefits businesses and consumers in the North but extracts from the global South the productive capacity necessary for their development. “Labor that could be used to advance human development in the global South is instead used to service capital accumulation in the global North,” said co-author Morena Hanbury Lemos, also of ICTA-UAB, who said: “This is one of the main drivers of deprivation in the South and it needs to be addressed.

According to the study, wages in the global South are 87% to 95% lower than in the North for work with the same skills, and 83% to 98% lower for work with the same skills in the same sector. Wage inequality is so extreme that highly skilled workers in the South receive only one-third of the wages of low-skilled workers in the North.

Net work accounts for about half of total consumption in the global North. This means that if this unequal exchange did not occur, consumption in the North would fall by 50% or workers in the North would have to double their working hours to compensate.

According to the study, workers in the South provide 90% of the labor that powers the global economy, but the benefits of that labor go disproportionately to the global North. Workers in the South receive only 21% of global income. “People tend to assume that the South provides low-skilled labor in agriculture and mining, in exchange for high-skilled labor in the manufacturing and service sectors of the global North. But that’s not how it works in the modern global economy,” says co-author Felix Barbour of the Beijer Institute for Ecological Economics at the Royal Swedish Academy of Sciences. “In fact, the South provides the majority of labor at all skill levels and in all sectors. In fact, the global North network takes more high-skilled labor from the global South than it receives from North-North trade.”

To overcome this problem, the researchers say countries in the global South must turn to industrial policies to reduce their dependence on imports from the global North and remobilise their productive capacities around what is most necessary to meet human needs and achieve national development goals.

Reference
Hickel J., Hanbury Lemos M., Barbour, F. (2024) Unequal labor exchange in the global economy. Nature Communications. https://www.nature.com/articles/s41467-024-49687-y

Contact the investigators
Jason Hickel – [email protected] Hanbury Lemos – [email protected]

ICTA-UABI Communication Areasabel Lopera – [email protected]