The everyday abuse of wage theft has received little attention in recent years. The relevant international labour standard, the Protection of Wages Convention, 1949 (No. 95), has become so outdated that it prohibits ‘payment of wages in taverns’.
Is there a case for shifting the focus of engagement to these more ‘mundane’ abuses against migrant workers? This article presents some of the key arguments for increasing attention to the denial of remuneration and benefits to migrants under the rubric of ‘wage theft’.
Wage exploitation is a key motivation for employing migrant workers
Within a globalised economy, choices about where to source or manufacture products are frequently based on the availability of low-cost labour and a permissive environment for industry. As labour is typically the largest cost of outsourced production, multinational firms actively comparison shop to find labour markets which offer the greatest reduction in worker wages.
This creates enormous pressure on their upstream suppliers to constantly pursue lower labour costs, including through underpayment of migrant workers. In many labour-intensive industries, these market forces create business models which are only able to remain profitable due to various forms of wage theft.
The recent unbridled enthusiasm for self-regulation through corporate social responsibility and sustainability initiatives has not been successful in eliminating these abuses. Instead, they have largely undercut demands for legally enforceable labour standards and marginalised the plight of migrant workers outside global supply chains. Only workers whose conditions are highlighted by their proximity to markets in the Global North are understood to deserve attention, and the power is placed in the hands of consumers and corporations to effect change rather than workers themselves.
Restrictive labour migration regimes create structural vulnerabilities to wage theft
The basic premise for admitting migrant workers to a destination country is typically to address a labour shortage in a particular sector or geographic region. If admission of migrants can hold down wages in these industries or areas, the economy is seen as benefitting from the increased supply of low-cost labour.
To maintain these objectives, policies on temporary labour migration in destination countries generally provide very limited flexibility for migrant workers to change jobs of their own volition. Their legal status is directly tied to their employer, preventing them from leaving their employment without losing permission to stay and work. Moreover, the opportunity for migrants to organise into trade unions to bargain collectively and access legal assistance is limited within many destination countries. The restriction of their basic rights creates a dependency that is easily exploited.
With these enabling factors in place, wage theft cannot be regarded as an unintended consequence of illiberal labour migration governance regimes. Systematic measures to decrease the ability of migrant workers to avoid, seek redress for, or leave abusive situations have a calculated recoupment effect on wages. It has been argued that the cost of migrants’ rights are in fact directly priced into the formulation of migration policies in destination countries.
Lack of wage protection enables discriminatory pay practices
Migrant workers are more commonly employed in informal sectors of work which are not fully covered by labour laws. As a result, they are exempted from key wage protections such as a legal minimum or overtime pay. This contributes to artificially low wages and segmentation within national labour markets.
The fragmentation of employment relationships in recent decades has also reduced labour and social protections for migrant workers. Due to externalised work arrangements through outsourcing and misclassification of employment, employers now have considerably less statutory responsibility for the pay and benefits provided to migrants.