According to the business magazine, risk analytics company Verisk Maplecroft’s Labour Costs Index measures a combination of wages, employment regulations, social security contributions and labour productivity to enable companies to identify and compare the cost competitiveness of workforces in 172 countries.
Not surprisingly, Western Europe accounts for most of the 25 highest cost countries in the index, with France and Italy the most costly countries in which to hire staff.
Just because a country is cheap does not necessarily mean it is the best place to set up shop.
The ranking company warns that the cost competitiveness of markets where labour costs are the lowest could be offset by the risks of poor working conditions and high levels of child labour and trafficking, and that these countries are rated as “extreme risk”.
According to an analyst, the true cost of business in the emerging economies is more than labour costs. “It is essential for companies to understand and price in risks, such as strikes, disruptions and poor worker health, when making market entry or strategic sourcing decisions,” he said.