What about western countries using cheap foreign labor? Seems like an asymmetric power balance to me
The main difference with GitLab is that a) they are completely remote, b) they are called "GitLab" in every country instead of creating subsidiaries with different names, and c) they have made the "mistake" of making the payment differences entirely transparent. They were absolutely not forced to do that, but they did it nevertheless, and they should be applauded for that.
Obviously there is some correlation with pay vs cost of living as it helps people determine what they are willing to accept, but it is not the primary mechanism companies are using.
Also companies who pay the same regardless of where you live are still not paying based on cost of living.