Consider the following statements about a garment exporter that cuts its permanent staff and sends stitching orders to small workshops and to women working at home.
Statement I: The exporter is following a trend of outsourcing that more and more companies now adopt.
Statement II: Because the small workshops compete for orders from big companies, they usually pay higher wages to keep their workers.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Statement I is correct but Statement II is incorrect
Statement I: The exporter is following a trend of outsourcing that more and more companies now adopt. — Correct. Cutting permanent staff and sending work to small workshops and homes is outsourcing. More and more companies now reduce permanent employees and outsource work to smaller companies or even to homes.
Statement II: Because the small workshops compete for orders from big companies, they usually pay higher wages to keep their workers. — Incorrect. The competition works the other way. Small companies compete for orders from big companies, so they keep wages low, and working conditions are often poor.
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