LABOUR EXPLOITATION AND WAGE INEQUALITY IN MULTINATIONAL CORPORATIONS: EVIDENCE FROM FIVE DEVELOPING ECONOMIES

Abstract

Multinational corporations are recognised as significant agents in the global economy, facilitating economic interaction, technology transfer, and cross-border employment. This research examines the role of multinational corporations in influencing labour exploitation and wage inequality. For empirical analysis, data were obtained from twenty multinational corporations operating in five developing economies: Bangladesh, Vietnam, Ethiopia, Mexico, and Indonesia, over the period 2015 to 2023. The study uses a composite dependent variable, the Labour Exploitation and Inequality Score, a straightforward summary measure that combines several practical indicators of poor labour outcomes, such as low or withheld wages, unsafe working conditions, excessive working hours, and precarious employment, into a single score where higher values indicate greater exploitation and wage inequality. Multivariate regression analysis revealed a significant relationship between the Labour Exploitation and Inequality Score and several independent variables. The empirical results show that Bargaining Power Gaps, Outsourcing Intensity, and Wage Differential Ratios have a positive and significant effect on the Labour Exploitation and Inequality Score. In contrast, Labour Standards Compliance, Regulatory Enforcement Index, Corporate Social Responsibility Commitment, and Union Accessibility Score hurt the exploitation and wage inequality index. These findings indicate that reduced compliance with labour laws, lower union access, and greater outsourcing are associated with increased exploitation. Conversely, stronger corporate social responsibility and regulatory enforcement contribute to improved labour outcomes.

Keywords: Labour Exploitation, Wage Inequality, Multinational Corporations, Corporate Social Responsibility