Cheaper goods don’t matter when you’re forced to work in unpleasant or even dangerous conditions. No amount of dirt cheap goods can make up for that suffering.
Competition with other countries is a problem. However, this would also be a problem with any workers rights laws in any country. This competition would also have the effect of forcing worker owned businesses to innovate or be out competed. They would need to increase automation to increase efficiency or increase quality to have their industry out compete those where this system isn’t in place. There’s only so much you can lower working conditions or pay until there are demands for better conditions or a better system. Eventually, the efforts to suppress an unhappy populace will cost more than paying workers more or redistributing wealth. The end goal is to create the most sustainable, wealthy, and happy system possible to outlast opposition.
The real Achilles heel of this plan is that the rich won’t want to give up a dime, and there will need to be tremendous popular support. It’ll also require amending property rights, as many have the erroneous assumption that property necessary for survival and achieving a reasonable level of security and happiness is just as worthy of protection as a billionaire’s superyachts. This would be a huge change in how the law thinks of human rights, and it will not happen unless a lot of things change first.
Capitalism as is doesn’t work. We need to bend it, or it’ll break us. Efficiency, the economy, even the government only matter and only have value in the capacity to which they serve us. If the economy or the government isn’t serving someone’s self interest, they have every reason and every right to demand change. We need to bend these non human systems until they serve everybody.