Burma, Bangladesh and Cambodia have world's lowest labour costs

24 February 2015

Businesses with supply chains and operations in Burma, Bangladesh and Cambodia are benefiting from the world’s lowest labour costs, according to a new global ranking.

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.

Western Europe makes up the majority of the 25 highest cost countries in the index and Italy and France are the most costly countries in which to hire staff, it says.

While Western Europe is relatively productive in global terms, high average wages, expensive severance mechanisms and high employer social security contributions reduce its attractiveness as a location to employ staff.

However, Verisk Maplecroft 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”.

Charles van Caloen, a senior analyst at Verisk Maplecroft, said: “The true cost of business in the emerging economies is more than the direct expenses associated with the labour force. 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.”

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