It is often assumed that the Global South inherited low wages, that poverty was a starting condition and that, with time and reform, incomes would naturally converge upward. This assumption has shaped development policy for decades. It is also misleading. Low wages were not a historical accident. They were designed into the system.

Wages did not simply fail to keep pace with productivity. They were restrained deliberately through policy choices and institutional incentives that prioritised cost control over income growth. Expansion occurred, but the channels through which growth typically translates into household prosperity were weakened or bypassed. Cheap labour ceased to function as a transitional feature of development and became a structural requirement.

Across manufacturing floors, service sectors and informal markets, essential labour remains persistently undervalued. This persistence is not evidence of failure. It is evidence of design.

For much of the twentieth century, a clear orthodoxy emerged in development economics. Cheap labour was treated as a comparative advantage rather than a constraint. Restraining labour costs was presented as necessary to attract investment, expand exports and absorb unemployment. Wage growth, by contrast, was framed as a risk to competitiveness, price stability and fiscal discipline.

This logic was embedded into adjustment programmes, trade agreements and investment frameworks. Minimum wages were set cautiously and often below subsistence thresholds. Collective bargaining was weakened in the name of flexibility. Labour protections were diluted to reassure capital. Over time, restraint hardened into doctrine.

Governments internalised this framework. Wage moderation became a signal of seriousness to lenders and investors. Keeping labour inexpensive was presented as prudence. Underpayment was recoded as strategy.

The low wage model persists because it produces indicators that appear successful. Output rises. Employment expands. Export volumes increase. These outcomes are measurable, comparable and internationally legible.

But societies do not live on output alone. They depend on purchasing power, security and the expectation that effort will yield improvement. When wages remain compressed, households adapt quietly. Consumption is reduced. Nutrition is downgraded. Healthcare and education are deferred. Debt fills the gap between income and survival.

What looks like stability in macroeconomic terms becomes managed exhaustion in daily life. Growth continues, but progress becomes harder to feel.

Wage policy reveals itself most clearly at the level of an hour.

In Mauritius, Pay Research Bureau scales for the 2026 cycle offer a revealing snapshot of what the state considers acceptable compensation for essential work. Converted into hourly terms using a standard full time assumption, the figures fall within a narrow and instructive range. General workers earn roughly Rs 104 per hour. Police officers earn around Rs 161. Nursing officers earn approximately Rs 169. Educators earn slightly above Rs 200.

Placed alongside a developed economy benchmark, the contrast is stark. The United Kingdom’s national living wage is set to rise to £12.71 per hour from April 2026. At prevailing exchange rates, that single hour is worth several multiples of comparable public service labour in Mauritius.

The point is not to argue for simple parity across countries. Productivity, fiscal capacity and price levels differ. The point is to illustrate how decisively political and institutional choices shape the value of labour. In many Global South economies, the hour is priced low not because workers contribute little, but because the system is organised around keeping labour inexpensive.

Wage restraint did not emerge organically. It was reinforced through policy frameworks that treated labour costs as the primary lever of competitiveness.

Structural adjustment programmes frequently imposed public sector wage ceilings, hiring freezes and fiscal consolidation. Trade liberalisation exposed domestic firms to international competition before many could upgrade productivity, intensifying pressure to suppress wages as a survival strategy. Export processing zones weakened labour enforcement to attract investment. Investment treaties prioritised capital protection, discouraging wage policy changes perceived as raising costs.

None of these mechanisms required an explicit decision to underpay workers. The system operated through incentives. Governments were rewarded for restraint and penalised for deviation. Over time, capital mobility increased while labour power declined. That asymmetry alone was sufficient to hold wages down.

In many Global South economies, wage policy operates indirectly because a large share of employment is informal. Informality is not marginal. It is often dominant.

Workers without contracts or protections are excluded from minimum wage enforcement and collective bargaining by default. They compete on availability rather than skill. Wages adjust through longer hours rather than higher rates. Security depends on personal resilience rather than legal protection.

Informality is often described as regulatory failure. In practice, it also functions as a shock absorber. It keeps recorded unemployment low, fragments labour demands and allows growth without formalising responsibility. In this context, wage restraint is embedded in the structure of employment itself.

Low wages do reduce production costs, which is why governments continue to defend them. Export oriented growth strategies rely on cost competitiveness to attract buyers and investment. In the short term, employment expands and foreign exchange flows in.

The longer term consequences are less benign. Suppressed household incomes weaken domestic demand. Consumption remains shallow. Local markets struggle to absorb higher value goods and services. Firms remain locked into subcontracting roles, competing on price rather than innovation.

This imbalance is not immediately visible. GDP rises. Industrial output expands. Employment figures improve. But the structure of growth becomes increasingly narrow. Economic activity is geared outward while domestic purchasing power stagnates. The economy grows, but it does not deepen.

Over time, fragility accumulates. External shocks such as shifts in global demand, trade disruptions or currency volatility transmit directly into livelihoods. Without a robust internal market, downturns are harder to absorb. Growth becomes episodic and dependent on conditions beyond national control.

The paradox is that policies designed to ensure competitiveness ultimately undermine it. By restraining wages, states limit the development of domestic firms, reduce incentives for skill upgrading and constrain the tax base. What begins as an export strategy hardens into a growth ceiling.

Currency policy often completes what wage restraint begins. In many Global South economies, depreciation is used deliberately to support exports or manage balance of payments pressures. In the short term, weaker currencies make domestic production appear more competitive abroad.

The mechanism is straightforward. Many developing economies depend heavily on imports for essentials such as fuel, food staples, fertiliser, medicine and capital equipment. When the currency weakens, import prices rise quickly. Prices adjust faster than wages.

Because pay setting institutions are rigid or politically constrained, real incomes erode even when employment remains stable. Public sector salaries are revised infrequently. Minimum wages are adjusted cautiously. Informal workers often cannot bargain for compensation that matches rising costs. Purchasing power declines quietly.

This allows governments to speak of prudence while households absorb the adjustment. Inflation is described as imported. Depreciation is framed as unavoidable. The burden falls on labour. Competitiveness is preserved through declining living standards rather than productivity gains.

Over time, households cut discretionary spending, reduce nutrition quality, postpone healthcare and draw down savings where they exist. Domestic demand weakens, reinforcing export dependence. Currency management becomes wage suppression by other means.

In many low and middle income economies, outward migration has evolved into a structural feature of economic management. Labour export functions as an informal extension of wage policy, relieving pressure on domestic labour markets without raising pay.

The arithmetic is compelling. Workers who leave reduce unemployment at home while sending money back. Remittances provide steady foreign exchange inflows, often exceeding foreign investment or aid. Consumption is supported. Currency pressures ease.

Yet this apparent success masks a deeper failure. Migration becomes necessary when domestic wages cannot sustain a dignified life. When comparable labour earns multiples abroad, leaving becomes rational and staying becomes sacrifice.

Instead of raising wages to retain labour, states rely on remittances to offset low incomes. Household consumption is supported by earnings generated elsewhere. The economy functions, but only because part of its workforce is absent.

Over time, the costs accumulate. Families fragment. Care burdens shift to older relatives. Skilled workers exit essential services. Labour shortages emerge even as wages remain suppressed for those who stay. Remittances stabilise macroeconomic indicators while eroding domestic foundations.

Digitalisation was expected to loosen geographic constraints and raise incomes through productivity gains. Platforms promised flexibility, access to global markets and new opportunities for independent workers. In practice, technology has often reproduced wage suppression in new forms.

The mechanism is institutional rather than technological. Digital platforms fragment work into discrete tasks, standardise output and centralise control while dispersing risk. Workers are classified as independent yet managed through algorithms that set prices, allocate jobs, monitor performance and enforce discipline. Pay is determined by opaque systems optimised for cost minimisation rather than negotiation.

In economies with weak labour protections, platforms absorb surplus labour without contracts, benefits or wage floors. Employment expands without security. Productivity rises without bargaining power.

Technology also alters wage adjustment. Instead of rising with experience, pay is continuously recalibrated through competition among workers. Algorithms reward availability and speed rather than skill accumulation. Workers respond by extending hours instead of improving productivity.

For governments, this model appears attractive. Participation rates rise. Visible unemployment falls. Public investment requirements are minimal. For labour markets, however, technology entrenches a new form of discipline in which wages are suppressed not by law, but by code.

The central question facing the Global South in 2026 is not whether it can remain competitive. It is whether it can afford to remain cheap.

Cheapness persists because it has been organised to persist. It is a policy configuration, not an inevitability. Redesigning it requires shifting what governments optimise for, from labour costs to living standards, from output to purchasing power, from growth to durability.

Wages are not merely numbers on a payslip. They are signals of dignity, political priorities and belief in the future. A society that continually asks its people to work without advancement eventually discovers that the most valuable resource is not labour, but trust. And trust, once depleted, is far harder to import than fuel or food.