2014 World Textile Industry Labor Cost Comparison

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According to the latest Werner International Labor Cost Comparison Report, labor cost gaps remained huge among textile industries worldwide in 2014. Within the 40 countries covered by the report, labor cost in Switzerland ($51.36/hour), the highest, was 82 times higher than in Bangladesh and Pakistan ($0.62/hour), the lowest, in 2014. Overall, labor cost in Western European countries (such as Italy, France and Germany)+Japan remained the highest in the world, followed by (from high to low):

  • the United States
  • advanced economies in East Asia (South Korea and Taiwan)
  • Eastern European countries (such as Poland)
  • South American countries (such as Brazil and Peru) 
  • developing countries in East and Southeast Asia (such as Bangladesh and Pakistan).

[Note: The report does not cover African countries].

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On the other hand, consistent with statistics from other sources, Werner’s report also suggests remarkable labor cost increase in China, which is rapidly approaching the $3 per operator hour (up from $2.1 in 2011 and up from only 0.69 US$ in the year 2000). From 2000 to 2014, labor cost in the U.S. textile industry went up about 25 percent. However, in terms of absolute difference, China’s labor cost was still only 15 percent of the level in the United States in 2014. As noted by the publisher, the labor cost comparison report covers all primary textile industry sectors, consisting of spinning, weaving and dyeing & finishing. Cut & sewing operations are not part of these comparisons. Labor cost in the clothing industry is not covered by the report however.

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Author: Sheng Lu

Professor @ University of Delaware

18 thoughts on “2014 World Textile Industry Labor Cost Comparison”

  1. This data of textile industry labor costs of different countries is no surprise to me at all. It makes sense that the more developed countries have higher labor cost per hour for operators than poor and non-developed countries for multiple reasons. First of all operators is developed countries have a higher education/skills therefore they must be compensated more for their work. In addition operators in developed countries have to be more knowledgably with high-tech machinery, which is driving the textile industries, and this knowledge requires a higher price for salary. Healthcare cost and other employee safety/protection fees drive up the prices for labor in developed countries unlike poor and less developed countries, which do not have such benefits. The sharp rise in labor cost in less developed countries such as China is no surprise either. This is largely due to the fact that their economy in the textile industry is changing from a labor abundant resource industry to a capital abundant resource industry with the implementation machines, as the country is becoming a more developed nation. Also becoming a more developed nation leads to more skilled worker and more workers’ rights and protection, which increase labor costs.

  2. I agree with the comment above. The data makes perfect sense because the countries that have the highest dollar per operator hour are the most capital and technological abundant countries. Also these countries, like Switzerland and Italy, have high quality goods such as watches and leather which in turn would make the labor wages rise because of all the work needed to be put in to create the lifetime quality. For low wage countries like Bangladesh and India, these countries are still developing and have no coverage for protection and workers healthcare which solidifies the fact that they have low wages.

  3. The comments above are right the charts and statistics make sense because it shows the developed countries vs. the non-developed countries. It is clear that developed countries with the resources to produce good quality products and to have the technology to produce will have a higher labor cost wage, while the non-developed countries that lack the resources and technology have a low labor cost. Many companies tend to these low labor cost countries because it is cheap and fast but by using the developed countries labor it would be good quality products that would be produced at a decent time. The one thing that I question to the publisher is that why did they not include the sew and cutting operations in these comparisons? It would have been nice to be able to see every aspect of the labor cost breakdown.

  4. I don’t think that it is so surprising that there is a huge difference in labor costs worldwide. The big gap in labor costs is reflected by economies. As seen in the cart, more advanced economies have higher labor costs, while less developed nations have lower labor costs. Some economies are just more labor intensive than others. I think that they also don’t have the resources and technologies that some have. Countries like the United States search for low labor costs because it is reflected in the cost of goods we buy. Consumers want low prices and low labor costs can help with that.

  5. The charts above show what I would have assumed the results to be. It makes sense that developed countries are able to pay workers more while non-developed countries have a lower labor cost. I think this is definitely due to the technology, education and quality the more developed countries have access to. Many companies take advantage of producing something in an non-developed country because of the low cost of producing there where as choosing to produced in a developed country such as the United States where it would cost so much more money to make the same product. Developed countries also have the money to buy machines and only hire one person to do what hundred of people would be doing to complete the same task in a non-developed country. I do not see this changing in the future because of the fact that people want things at the lowest cost possible and unless society is ready to sacrifice that the majority of products will continue to be produced overseas for the cheapest cost possible.

  6. It is definitely no surprise to see that other countries such as undeveloped ones have excessively low wages. It definitely has to do with the setting, the cost of living and how developed the country is. In China, it is good to see that the wage has slightly risen, however, it is saddening to see that it is still so low. If we were to have such a wage in the US, there is no question that a person could not survive with that. Countries take advantage of underdeveloped countries because they know that the wages are low, so the cost to produce and but the products from them will also be low. The only way the wages can change is if people suck it up and pay more for what they buy. If they refuse to pay more, then the wages will remain low.

  7. I wasn’t really surprised that developed countries had a higher labor cost than undeveloped countries. You can see it in their life style. You can’t possibly compare the wages between a country like U.S. with countries like Senegal or Bangladesh. Developed countries have the money, resources, technology and capita that are way more advanced than developing countries. There economic standing surpass that of developing countries. Not to mention they also have a higher education level that helps them deal with more complicated sectors. If there wasn’t a wage gap developed countries would not be putting in time and money to develop their clothing overseas in countries like Bangladesh.

  8. Looking at this chart disgusted me. I always knew that better off countries paid their workers much more than developing countries, but I never had a chart to look at and see the comparison of the large difference between the highest paid countries and the lowest. The thing that bothered me the most was that the highest paid country is Switzerland and I couldn’t think of one thing off the top of my head that they make in the Textile and Apparel Industry. However, the lowest paid country, Bangladesh, creates a majority of products in the Textile and Apparel Industry and their workers are only making $0.62 an hour, in horrible working conditions I might add.

  9. I am surprised by this chart yet I am not. The places for the countries on this chart make sense due to whether they are considered a developing country or a developed one. What struck me as most surprising was actually how high they pay their workers in Switzerland. Seems like it would be a desirable job at that rate! In contrast with the pay in Bangladesh its obviously a much less desired job to have. I’m interested in why its so high in Switzerland and how the job is viewed by its citizens and how it compares to other hourly wages. I’m also kinda surprised that China is as far up as it is, I expected it to be almost at the bottom.

    1. good thinking! ECN 201 also applies to the labor market (demand and supply) and in general wage level is in parallel with the value created. If the industry in Switzerland is highly capital intensive (implying value of output/person is so high), workers’ there definitely will be paid higher. And vice versa for Bangladesh. Wage in China truly is no longer at the bottom. It is also because China is quickly moving up in the value chain to engage in more value added functions.

  10. I was not very surprised by looking at the data of these labor costs for different countries because it makes a lot of sense. It is very understandable and just known at this point in time that developed countries have a higher labor cost then those in undeveloped countries it is not something that is unexpected. Developed countries like the U.S today are so much more advanced in the way that they have growing technology, resources, education and money that allows them to be the leading countries that they are. Since these countries have the resources and money they are capable of producing high quality products and with the advancement in technology they are able to have a higher labor cost wage. Unfortunately for countries like Bangladesh they are put at a disadvantage being that they aren’t as technology advanced and lack resources which results in them having a low labor cost. The one thing I did find bizarre while reading this is that an undeveloped country like Bangladesh is the lowest paying country when a vast majority of the products we use today are made there. It is crazy to see that they are being paid little to nothing while working in horrible working conditions as we can see from what took place with the Rana Plaza tragedy while Switzerland who contributes very little to nothing to the Textile and Apparel Industry is the highest paying country. I understand expenses in Switzerland are very high and the value of a dollar is a lot less then that of a franc but It is still very confusing on how they have managed to be the highest paying country in this industry.

    1. You raised a very interesting point that Bangladesh garment workers are “being paid little to nothing while working in horrible working conditions… while Switzerland who contributes very little to nothing to the Textile and Apparel Industry is the highest paying country.” Think about the smiling curve which we introduced in the class. You may also check this page about the Switzerland textile machinery industry
      http://www.yarnsandfibers.com/preferredsupplier/reports_fullstory.php?id=561
      So how to help Bangladesh garment workers? Personally I think the answer is far more than just providing them with a safe working environment.

  11. These two graphs are not surprising to me at all. When thinking and learning about the textile and apparel industry, you never really hear about countries like Switzerland or Belgium. If you hear about them it is because you’re talking about chocolate and waffles. The labor cost both Switzerland and Belgium are unbelievably high which makes it almost impossible for there to be a textile market. As for Brazil all the way down to Bangladesh (first graph) the numbers are declining more and more. Why? Well as most of us know, or should know, most clothing comes from these countries. What also does not surprise me is that they are not including the cut & sew statistics with these graphs. I believe they are doing this because the countries who have the lowest labor costs are lower than low. Companies are always trying to find the cheapest places for labor, and at the moment, China and Bangladesh are two of the well known places to go despite the conditions of factories and hours the workers have to work.

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