Cheap labor becoming a thing of the past around the world
Article Type: Industry news From: Soldering & Surface Mount Technology, Volume 25, Issue 2
Many emerging economies ratcheted up their minimum wages this month as labor shortages stemming emerge from an influx of foreign manufacturers.
The trend of rising pay is expected to pick up speed going forward –posing a new challenge to manufacturers, whose overseas strategies had relied on low-cost production.
In Indonesia, the monthly minimum wage in Jakarta jumped 44 percent to 2.2 million rupiah, or about 23,000 yen, this month. Vietnam hiked the lowest wages by 16-18 percent nationwide. And in Thailand, the Bangkok daily minimum of 300 baht, or about 920 yen, now applies in the rest of the country as well.
After labor costs surged in China, the traditional factory floor, foreign manufacturers hastily shifted production to Southeast Asia to take advantage of the relatively low wages there. But their mass entry is now pushing up wages in the region.
The situation is not unique to Southeast Asia, either. Brazil hiked monthly minimum pay by 9 percent to 678 reais, or roughly 31,170 yen, this month. South Korea’s Hyundai Motor Co. has been forced to give workers at a Sao Paulo factory a 24 percent raise after they went on strike. And in South Africa, a mine operator has agreed to sharply raise pay following a strike by tens of thousands of workers.
The average factory wage in 14 emerging-economy cities more than doubled from 2003 to 2012 in dollar terms. Meanwhile, salaries at Japanese companies fell 9 percent in yen terms and rose only 40 percent or so in dollar terms.
“The era of emerging countries as a source of low-cost labor is reaching a turning point,” says Chief Researcher Seiya Sukekawa of the Japan External Trade Organization’s Bangkok office.
Translated from an article by Nikkei staff writer Manabu Ito.
