Low-wage competition
Foreigners, especially from the Third World, make a convenient scapegoat for UK problems and are particularly blamed for providing ‘unfair’, low-wage competition. Wages in the Third World are extremely low but are often accompanied by low productivity, a lack of key categories of skilled labour, and a shortage of supporting industrial services and infrastructure.
The UK is not unique in facing this competition and is itself a low-wage economy by developed country standards. In some sectors (e.g. textiles and cheap electrical goods) Third World competition has been important but, as yet, the scale of Third World involvement in the export of world manufactures is too small (around 18% of OECD-manufactured exports in 2010) to be regarded as a major cause of UK structural change. As we see in Chapters 25-27, the main competition comes from other industrial market economies, not from low-wage developing countries. We should also remember that countries like the previously high growth Asian ‘Tiger’ economies provide important export markets for manufactured goods, and so have contributed to world economic growth, with the slump in the late 1990s in these economies creating problems for the export sectors of many industrialized economies, such as the UK.
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