It also encourages slavery. Who sows your clothes? Who assembles your phone? Who picks the vegetables you eat? Really it's all the same person: The cheapest option.
Indeed, if slavery turned out to be more efficient, it would.
But I think that the claim that slavery is more efficient does not hold, since opressing people binds a lot of ressources; also opressed people tend to do work as minimally as possible.
So it is much more efficient to give people the illusion of freedom instead of enslaving them.