September 3, 2010

Is Globalization To Blame For Unemployment?

It is a well-known fact that globalization increases productivity and life standards. There are a lot of advantages which causes business owners to work on the goal of expanding the business overseas. While this is proving to be beneficial to countries where products and services are being exported to, the concern grows for locals. This concern is largely focused on that fact that the unemployment rate continues to rise thereby giving the impression that globalization is one of the causes.

It is true that because of the economic downturn, most businesses are looking to outsource services to take advantage of lower labor costs in developing countries. Outsourcing has been a hot debate topic ever since its inception. The main idea is that the local economy suffers since the jobs are handed over to other countries instead of their own.

Globalization is responsible for modernizing business processes and outsourcing certainly changed the way how business is being done. However, it is not only these factors which contribute to the rate. The biggest contributor to unemployment is companies who close down because of the recession. The increase in number of small businesses helps alleviate the unemployment rate and if these small businesses go global or outsource some of their services, it does not necessarily mean that there would not be jobs for locals. Some might argue that globalization and outsourcing may mean a lesser demand for workers. This is called structural unemployment and even when the economy was doing better than it is today, this still happens but it doesn’t warrant a rise in unemployment. Globalization proves to be more beneficial than harmful apart from some of its disadvantages. The trick is to change it to work, rather than against, your business.

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