Export of Labor

SWOT Analysis
 What is Labor Export?

• Export-oriented employment refers to employment in multinational

corporations' international industrial factories, usually located in
developing countries. Such factories produce goods and services for sale in
other countries.
 What is Labor in Economics?
• In classical economics, labor is one of the three factors of production, along with land and
capital. Labor is often defined as the physical or mental effort exerted by human beings in the
production of goods and services.
• In neoclassical economics, labor is a broader concept that incorporates all human activity that adds
value to a product or service. This includes not only physical and mental effort but also the use of
tools, machines, and other equipment. It also surrounds the time spent on planning, organizing, and
supervising production.
• In certain economic models, labor is assumed to be a homogeneous input. This means that all
workers are assumed to have the same skills, abilities, and productivity. However, labor is not
homogeneous in real life. Workers differ in their skills, abilities, experience, and motivation. These
differences can lead to different amounts of output per hour of work, even when all other inputs are
the same.
• Labor productivity depends on many factors, including the workers' skills and abilities, the
technology used, the organization of production, and the motivation of the workers.
• Regardless, labor productivity is increased by investments in education and training, via the use of
better technology, and by improvements in the organization of production. Labor is an important
factor in the economic development of a country, and a high level of labor productivity is typically
necessary for better living standards. In some cases, however, a country may be able to maintain a
high standard of living even with relatively low labor productivity, given it has other resources, such
as natural resources, that can be exploited. Additionally, a country's level of labor productivity may
 What are the Types of Labor in Economics?
• There are several methods of categorization for types of labor included in modern
economics. Some of these types of labor include unskilled, semi-skilled, skilled,
wage, and contract.
• Wage labor is a common type of labor in the economy that relates to the
association of employees with their workers regarding their payment. It is defined
as work that is done in exchange for wages or other forms of compensation. Most
paid labor is considered to be wage labor. The term wage labor refers to a mode of
production in which workers sell their labor power in exchange for wages. These
wages are typically paid hourly or in the form of a salary. The term contract
labor refers to a type of wage labor where workers are hired temporarily by a
company to work for a period of time, typically for a specific project.
• Labor can also be categorized based on the abilities and skills of the workers.
• Unskilled labor is labor that does not require any special skills or training. It is one
of the most common types of labor and is often the first step toward economic
development. Unskilled labor is often affiliated with low-paying jobs, such as
manual labor or agriculture.
 Cont’d

• Semi-skilled labor requires some skills or training, but not as much as skilled labor.
It is more common than unskilled labor and is often found in jobs that need more
physical labor than skilled labor. They are often paid at a lower rate than skilled
labor, but it is still an important part of the economy.
• Skilled labor is labor that requires a high level of training and experience. It is a
considerably difficult type of labor to find, and it often offers generous pay. Skilled
labor is often found in jobs that require a high level of skill, education, or
experiences, such as engineering or medicine.
• In some cases, economists add a fourth category of labor: professional labor. It is
skilled labor that requires a refined skill set with an adequate level of training and
experience. It is the most difficult type of labor to find and is the highest-paying
type of labor. Examples include elite lawyers, doctors, and professors.
• All of these types of labor are essential to the economy, and each plays a different
role in the production of goods and services.
 What is the Labor Market in Economics?
• The term labor market refers to the supply of and demand for labor services. It is a
market where workers compete for jobs and employers compete for workers. The
supply and demand for labor are determined by a series of factors, including the actual
amount of work to be done, the number of workers available or able to do the work,
and the level of wages that workers are willing to accept. The labor market is often
studied as a part of the overall economy, and it is sometimes referred to as the "job
market." The interaction of the demand and supply of labor determines the equilibrium
wage: a wage at which the quantity of labor demanded by employers equals the
quantity of labor supplied by workers. The equilibrium wage may be above or below the
minimum wage, depending on the relative strengths of the demand and supply of labor.
• Employment is the number of people working or actively seeking work in a labor
market. The term employment rate refers to the percentage of a labor market's
employed population. Labor force participation is the percentage of the people that are
either employed or actively seeking employment. The unemployment rate refers to a
labor market's percentage of the labor force that is not currently employed but is
actively seeking employment. All of these factors are variables in an ever-changing
labor market. They can be further influenced by additional factors, such as technological
change, changes in the overall economy, and changes in government policies.
 Advantages of Labor Export
1. Remittances
• Remittances (money transfers of emigrants) have important positive effects
for the national economy because:
• Increase internal demand for goods and services, thus becoming a growth factor;
• Increase monetary flow;
• Contribute to improving the balance of payments and foreign currency reserves of the
country (thus allowing for higher imports and more substantial development loans);
• Contribute to reducing the cost of money (exchange rate and interest rate, which
means more credit for consumption and investment);
• Lead to increasing the standard of living of those concerned and their families, long-
term and indirectly of the entire population;
• For money transfers made through the banking system, the ones personally brought
by the emigrant must be added, which could mean a much stronger impact.
 Cont’d
2. Reducing Unemployment through Migration
• In line with the objectives of the Europe 2020 strategy, the European
Employment Strategy aims to create more and better jobs throughout the
European Union. The European strategy encourages measures aimed at
achieving three major objectives by 2020:
• 75% of people aged between 20 and 64 are active in the labor market;
• Reducing school drop-out to less than 10% and increasing to at least 40% the share of higher
education graduates among the 30-34-year-old population;
• Reducing by at least 20 million the number of people suffering or at risk of suffering from
poverty and social exclusion (Chis, 2012).
• These goals of the Europe 2020 strategy are aimed at the social field - employment and social
inclusion / poverty reduction - which is an acknowledgment of their essential character in the
processes of sustainable development and social progress and a way of strengthening the
European Union's social dimension, for the next ten years (Strategia Europa, 2020).

• The advantage of migration for migrant workers is that of finding a job with
skills and qualifications, with a higher payment than in the country of home,
 Disadvantages of Labor Export

• The inconvenience of labor migration for the country of home are: the loss
of investment in human capital through the migration of highly skilled labor,
the generation of a labor shortage in some areas, the stagnation of the
economy, the aging of the population and the decline in GDP due to the loss
of creativity and neutralization the labor capacity of those who go to work
abroad or even the decline in the competitiveness of the national economy
as a result of the decrease in the qualitative characteristics of the labor
resources;.
 Labor Export in Pakistan

• Pakistan has one of the largest labor and manpower resources in the world, due to its large
population, which is the sixth largest in the world. According to data produced by the CIA World
Fact book, the total number of Pakistan's labor force is 57.2 million, making it the ninth largest
country by available human workforce. About 43% of this labor is involved in agriculture, 20.3%
in industry and the remaining 36.6% in other services.
• Along with other countries in the South Asia, Pakistan extensively exports much of its labor to
nearby Persian Gulf countries of the Middle East.
• Pakistan’s CAD (current account deficit) also depend on remittances generated by export labor.
• Remittance per-capita