The International Monetary Fund promotes deregulation of labor markets because it contends that labor markets are overburdened with regulations, creating disincentives for employers to hire more workers. Deregulation harms the labor force in many ways. One of the most significant impacts is through abolishing minimum wage and collective bargaining laws. In many cases, the Fund encourages countries to foster low wages in order to attract foreign investment. The deregulation of labor standards in these countries is especially devastating to workers because they are not organized, generally are not permitted to organize and are unable to bargain for better working conditions.
People end up working longer hours for less pay.
The deregulation of the economy also results in rapid and substantial job loss as public sectors are quickly privatized. In many developing countries, the public sector has in the past provided a great deal of employment. As the IMF forces countries to downsize government agencies, the ranks of the unemployed grow quickly, usually faster than the private sector can absorb them.