Answer:  

The only way countries can pay back IMF loans with high interest is by drastically cutting the spending in their country. That means cutting back on areas which don’t generate income, for example, health, education and housing.  If you cut back on these things, the quality of life for a country’s population is affected.  

With a flexible labour market, big transnational corporations (like Gap, Nike, McDonalds) can decide how much to pay workers, how many days and hours they will work, whether they can have breaks or not etc.  Countries usually have laws to protect people at work, but the conditions of IMF loans generally require countries to weaken or get rid of laws like this so that big corporations can employ a cheaper work force and make bigger profits.

The consequences of cutting back on public spending and developing a flexible labour market are to make a country poorer: people have worse schooling, health care and housing. They have less money to spend because wages are low, which not only makes individuals poorer, but also affects the country’s economy.

Richer countries benefit from a flexible labour market in poorer countries as they can buy cheaper goods and services.  If trainers can be made by workers on low wages in a poor country, the big corporation can sell them to people in richer countries more cheaply and still make a good profit.

Poorer countries generally have little or no choice as far as big transnational corporations are concerned, as they are often part of the preconditions for loans.  There is a lot of competition between developing countries who are all desperate to get contracts with the big corporations. This means each country tries to out do the others in offering an attractive deal to the corporations i.e. allowing the corporations to make goods as cheaply as possible and make maximum profits.  This results in governments changing laws designed to protect workers, and turning a blind eye to child labour and health and safety .