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International Outsourcing: Trends and Policy Issues

2. International Outsourcing: An Emotional Debate. "What's going on with this offshoring of American jobs to India and China is nothing but terrorism

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International Outsourcing: Trends and Policy Issues

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    1. International Outsourcing: Trends and Policy Issues Malte Lübker Policy Integration Department, ILO Decent Work and a Fair Globalization: National Policy Responses ILO Staff Seminar Turin, 27-29 September 2005

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    3. 3 Outsourcing has provoked a very emotional debate, especially in the United States – less so in Europe and in developing countries. Potentially conflicting interests: workers vs. employers (but also within groups) and source countries vs. receiving countries. Where do we as the ILO stand? We should not be guided by a alliance to specific groups, but by our organizational values and goals: decent work and fair globalization.

    4. 4 Three main arguments: Outsourcing can make globalization fairer between countries; it creates jobs in developing countries. Outsourcing calls for active national policy responses. Outsourcing can make globalization unfair within countries.

    5. 5 1. Outsourcing can make globalization fairer between countries; it creates jobs in developing countries:

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    9. 9 Developing countries: Lay foundations to participate in outsourcing as a host country. Industrialized countries: Cushion the labour market effects and re-employ workers who lost their jobs.

    10. 10 Availability of low-wage labour is not sufficient to attract outsourcing. Indian success in attracting services outsourcing shows that government policy was crucial: Investment into human capital formation; IT recognized as a crucial sector as far back as the late 1970s; provision of IT infrastructure (high-speed communication links; technology parks); abstention from over-regulation; tax exemptions and FDI promotion.

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    12. 12 In industrialized countries: Low-skilled workers in manufacturing and services (e.g. call centre agents, most of them women) are disproportion-ately affected, although outsourcing can also affect middle- and high-skilled jobs. In developing countries: Paradoxically, out-sourcing need not be beneficial to low-skilled labour (e.g., call centre positions are filled with college graduates in India).

    13. 13 Rising inequality in market incomes need not translate into higher inequality of disposable incomes. In Finland, the Gini for market incomes rose by 0.10 between 1980s and 1990s, but the distribution of disposable incomes remained stable. In the UK, inequality in market incomes rose less than in Finland, but there was a sharp increase in inequality of disposable incomes (Atkinson 2004). Public policy in different domains (taxes; education; social security system) can contain inequality effects.

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