Lohndumping

Lohndumping, or wage dumping, refers to the practice of paying workers wages that are suppressed relative to productivity, living costs, or norms in other markets, in order to gain a competitive edge. It commonly arises in globalized industries where firms can relocate production, outsource tasks, or hire labor in jurisdictions with lower wage floors or weaker protections. The term is used in economics and policy discussions about labor markets and trade.

Mechanisms include offshoring or outsourcing to low-wage regions, the use of subcontractors or temporary staffing agencies to suppress wage growth, and worker misclassification to avoid standard benefits. Wage competition may also reflect differences in minimum wages, bargaining coverage, and enforcement strength across countries or regions.

Impacts are debated. Wage dumping can exert downward pressure on wages in higher-wage economies and contribute to job displacement in affected sectors. Proponents argue it boosts efficiency and consumer welfare when it expands markets; critics say it erodes labor standards, increases inequality, and undermines fair competition.

Policy responses emphasize stronger labor-law enforcement, higher or more widely applied minimum wages, fair procurement rules, and measures to improve enforcement across borders, including international labor standards and regional trade agreements with labor provisions.