With China's production costs now rapidly rising in yuan and US$ terms, there are strong reasons to compare labor costs in apparel manufacturing countries. The study released by U.S. consulting firm Jassin O'Rourke reveals that seven Asian countries are now offering lower labor costs than China. The study also offers a labor cost comparison within each region of the planet from Latin America to Eastern Europe and Africa-Middle East

 

 

With China's costs so rapidly increasing, there are strong reasons to assess and compare labor costs in a large number of countries.

 

Bangladesh, Cambodia, Pakistan and Vietnam

 

According to Jassin O'Rourke, lowest labor costs are still in Bangladesh, at 22 US cents per hour or five times lower than in China's richest coastal areas.

 

Labor costs include wages, social charges, and a series of bonuses.

There may be very large differences in labor costs within a country as minimum wages may vary depending on economic zones.In addition to Bangladesh, Cambodia, Pakistan and Vietnam are other apparel exporters taking advantage of extremely low labor costs at 33 cents, 37 cents and 38 cents per hour, respectively.

 

By contrast, China's lowest labor costs are at 55 cents in the country's inland and remote areas while labor costs may now reach US$1.08 in certain areas of coastal provinces. Labor costs in Haiti therefore are 50% below highest Chinese costs and at the same level than lowest labor costs in China, according to indexes

 

US$ Slide Affecting Labor Costs

Labor costs were calculated in local currency terms before being converted in US$ terms (at prevailing rates on March 31, 2008).

The US$ conversion strongly affects the results but makes sense as international prices are set in US dollars.The yuan's sharp rise since July 2005 obviously boosted China's labor costs in apparel plants, for example.

 

The dollar's decline resulted in a 10% increase in US$ China costs in the 15 months between February 2007 and May 2008.

For the same reason, US$ costs were raised by 7.8% in India over the period and 9.2% in Thailand, according to Jassin O'Rourke.

Labor costs are not the unique factor for sourcing decisions, as everyone is aware in the apparel business.

 

Other factors include labor productivity (usually very high in China), quality and cost of available textile materials, energy prices, lead times, services offered to apparel importers or brands, import tariff rates in Europe or the United States, cost of freight, etc.

 

 

Comparison of Apparel Manufacturing Labor Costs in 2008
In US$ per Hour – Including Social Charges
Countries	Labor Cost	Labor Cost
	US$/Hour	US$/Hour
		Bangladesh=100
Bangladesh	0.22	100
Cambodia	0.33	150
Pakistan	0.37	168
Vietnam	0.38	173
Sri Lanka	0.43	195
Indonesia	0.44	200
India	0.51	232
China III (Inland)*	0.55-0.80	305
Egypt	0.83	377
China II (Coastal 2)	0.86-0.94	409
China I (Coastal 1)	1.08	491
Malaysia	1.18	536
Thailand	1.29-1.36	600
Colombia	1.42	645
Guatemala	1.65	750
Peru	1.78	809
El Salvador	1.79	814
Turkey	2.44	1,109