The high consumption levels in wealthy countries in the Global North are supported by significant labor contributions from the Global South. Research from the Institute of Environmental Science and Technology at the Universitat Autònoma de Barcelona (ICTA-UAB) shows that this is due to unequal exchanges in global trade.

The study tracked the labor embedded in goods traded worldwide from 1995 to 2021. In 2021, the Global North imported 906 billion hours of labor from the South but exported only 80 billion hours in return. This means that for every hour of labor the Global South gets from the North, it sends back 11 hours.

Huge contribution

Overall, the Global North received 826 billion hours of labor from the Global South—more than the total labor force in the United States and Europe combined. If this labor were paid at Northern wages, it would be worth €16.9 trillion.

“These numbers are incredible,” the researchers said. “They show that a large amount of value flows from the South to the North every year. The wealth of the Global North is partly built on this extraction of value.”

This unequal exchange happens because of global price differences. Northern countries and companies push for low wages and supply costs in the South, making it cheaper to buy goods and services. As a result, Southern producers have to export more to buy the same amount of imports from the North.

Global imbalance

This imbalance benefits Northern consumers and businesses but harms the development of the Global South. “Labor that could be used to improve life in the South is instead used to support wealth accumulation in the North,” the researchers explained. This is a major cause of poverty in the South.

The study found that Southern wages are 87% to 95% lower than Northern wages for similar work, and 83% to 98% lower within the same industries. High-skilled workers in the South earn only a third of what low-skilled workers in the North make.

The appropriated labor makes up about half of the total consumption in the Global North. Without this unequal exchange, Northern consumption would drop by 50%, or Northern workers would need to double their hours to maintain the same living standards.

The study challenges the idea that the South only provides low-skilled labor for agriculture and mining while the North provides high-skilled labor in other sectors. In reality, the South provides most of the labor across all skill levels and industries. Surprisingly, the North gets more high-skilled labor from the South than it does from other Northern countries.

To solve these issues, the researchers suggest that countries in the Global South should focus on reducing their reliance on Northern imports and use their resources to meet their own needs and development goals.