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Textile industry labour cost mounts up

Jul '07
Labour costs have risen in China, Italy, India, Turkey, and South Korea between 2002 and 2007, according to Werner International's hourly labour cost comparison reports for the primary textile industry. Labour costs have also risen across all developing countries.

Italy is in the top ten expensive countries in the survey. European Union countries hold another six spots in the top ten, along with Switzerland, Japan and Australia. The high US$/Euro exchange rate has helped increase the labour cost measure for the European countries.

The biggest movement has been Japan's fall from 3rd to 6th place, with lower average hourly labour costs in its own currency and in US$. The United States is ranked 12th.

South Korea is in the upper-middle of the group at 15th.

There was little change in positions among lower labour cost countries. China, the top wool processing country, has a mainland hourly average wage rate higher in the survey than Bangladesh, Pakistan and Vietnam (but also higher than particular regions in other low-cost countries such as Thailand and Indonesia). China's more developed coastal region has a higher hourly average wage.

Labour costs are an important factor for textile competitiveness, which drives the location of manufacturing, and in determining the price of final goods. However, there are many other internal and external factors such as exchange rates, raw material costs, energy costs, and quality levels.

Therefore, while labour costs may be increasing in manufacturing countries, retail prices may not increase because of new technology or price competition.

Higher relative wage costs, such as for Eastern Europe because of greater wage increases, may potentially drive further relocation to lower-cost countries, but factors such as transport costs and access to markets also play a role.

Australian Wool Innovation Limited

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