Dumping is the practice of selling a product in a foreign country for less than either the price in the domestic country, or the cost of making the product (economic dumping).
Social dumping could qualify the practice of displacing production to countries with lower levels of social regulation or less restrictive labour standards in order to gain a competitive advantage.
Social dumping "results from differences in direct and indirect labour costs, which constitute a significant competitive advantage for enterprises in one country, with possible negative consequences for social and labour standards in other countries."
(Eurofound,
Social Dumping, visited 2011-05-01)
Hoover: Case Study
"A conspicuous case occurred in 1993, with the relocation by an American multinational company, Hoover, of a manufacturing plant in Dijon in France to Cambuslang in Scotland, following negotiations that led employees in Scotland to accept inferior terms and conditions of employment. The result was the loss of some 600 jobs in France, and the recruitment of some 400 fixed-term workers in Scotland. French government representatives characterised the decision as ‘
social dumping' by Hoover."
(Eurofound,
Social Dumping, visited 2008-05-01)
A Strategy to Increase Competitive Advantage?
"Business representatives and union leaders in highly industrialised countries often accuse the governments of less developed countries of practising
social dumping in the sense of maintaining an underdeveloped welfare state to create a competitive cost advantage for their own industries. In particular they argue that the less-developed countries deliberately neglect the legislation for good social standards in terms of social fringe benefits, protection against injuries, pension schemes, co-determination rights and the like."
(Sinn, H.,
Social Dumping in the Transformation Process?, CESifo Working Paper Series, n. 508, June 2001, visited 2008-05-01)
To prevent
social dumping and a ‘race to the bottom' in wages and benefits, labour unions and human rights activists in developed countries argue that market access in the North should be conditioned on raising labour standards in the South. In order to ensure an adequate level of labour standards, some international agreements include a social clause which permits trade sanctions to be imposed in response to violations of labour standards. Developing countries tend to view such social clauses as disguised protectionism and have fought vigorously against initiatives to give the WTO a role in the area of labour standards.
