Social dumping is a practice of employers to use cheaper labour than is usually available at their site of production or sale. In the latter case, migrant workers are employed; in the former, production is moved to a low-wage country or area. The company will thus save money and potentially increase its profit. Systemic criticism suggests that as a result, governments are tempted to enter a so-called social policy regime competition by reducing their labour and social standards to ease labour costs on enterprises and to retain business activity within their jurisdiction.
There is a controversy around whether social dumping takes advantage of an EU directive on internal markets, the Bolkestein directive.
Entities losing from social dumping:
- Employees in exporting countries
- Child labor in exporting countries
- Industry and environment in exporting country
- Government in exporting countries
- Employees in importing countries
- Shareholders of the company in importing countries
Entities gaining from social dumping:
- Companies in importing country
- Shareholders in importing country
- Customers in importing country
- Industry in importing market
- Employment in exporting country
- Government and investment in exporting country
A joint NGO statement on the EU Seasonal Migrant Workers’ Directive also warns against social dumping. The document argues that a vague definition of seasonal work might fail to cover all types of seasonal employment taking place when the Directive exerts its otherwise-welcome protective measures on the labour market.
- ^“Joint NGO Statement on EU Seasonal Migrant Workers’ Directive” (PDF). Retrieved 27 August 2012.
- ^“Proposal for a Directive of the European Parliament and of the Council on the conditions of entry and residence of third-country nationals for the purposes of seasonal employment” (PDF). Retrieved 27 August 2012.