The Chaina magazine picked up an interesting article from Reuters this month: SE Asian governments gamble on making Cheap Labour Less Cheap. Here are a few excerpts:
In Thailand, minimum wages will jump by 35 percent in some regions from January, on top of a nationwide increase of 40 percent last April.
In the capital, Jakarta, a newly elected mayor has announced a 44 percent increase in the monthly minimum wage to 1.5 million rupiah ($160).
The prime minister signed a decree on December 4 raising the minimum wage for laborers by 16 to 18 percent, lifting laborers’ wages to anywhere between 1.65 million to 2.35 million dong ($79-$113) per month.
Malaysia plans to bring in a minimum wage in January of up to $300 a month, which will give some 3 million workers an increase averaging 5 percent.
This article focuses on South-East Asia, but countries like Bangladesh have even faster wage increases (as driven by market forces).
A highlight of this article is that employers’ associations have vigorously protested against these raises. In these countries, most exporters’ business models are based on cheap wages. They are seldom capable of re-organizing their processes and gain in productivity.
I wish all journalists understood the difference between low wages and low labor cost. If productivity is very high, labor costs can be low even with high wages…