Minimum Wages in apparel manufacturing countries

Minimum Wages in Apparel Manufacturing Countries Statistical Report

Minimum wages will be raised in a series of emerging countries, as of January 1st. Sharp increases are planned in countries with higher inflation rates whereas a series of governments try also to reduce poverty and comply with the concept of "living wages". Our report includes a comprehensive list of manufacturing countries, with the new level of minimum wages in January 2016 in US$ terms, compared with January 2014 and January 2015.

Minimum wages will be raised as of January 1st in a series of emerging countries, whatever current difficulties being faced by their exporters.

The upward adjustment has been decided here and there, due to economic reasons like a rise in consumer prices in 2015, and for political reasons, as new governments had promised higher wages before elections.

Surging minimum wage in Turkey

In Turkey for instance, where the inflation rate was still at 7.6% in October and where the AKP of Recep Tayyip Erdogan has just won elections, the minimum wage could be raised by no less than 30% as of January, from 1,000 up to 1,300 liras.

Labour-intensive industries and primarily textiles and clothing sectors have made it clear that such a jump in labor costs will negatively affect their business and could accelerate the relocation of their production facilities to other countries.

The rise of the minimum wage is however partly offset by the sharp decline of the Turkish currency. In US$ terms, the minimum wage has therefore declined all over 2015, actually.

As a result, it would only rise from US$428 to US$454 in dollar terms. This is however rather different in euro terms, due to the fall of the European currency over the period, meaning that production costs will sharply rise in euro terms in Turkey.

Indonesia invents new formula

In Asian low-cost countries, the rise of minimum wages is not only due to higher consumer prices.

The need to fight poverty is now supported by the concept of "living wages" which is increasingly accepted in different countries.

In Indonesia, the minimum wage has been increased through a formula mixing the impact of inflation rate and the GDP growth.

In poorer provinces, an extra 5% increase is being allowed in order to reduce the gap between the minimum wage and the living wage.

Minimum wages raised in Cambodia, China and Vietnam

In Cambodia, the minimum wage has been raised from US$128 up to US$140 per month.

Trade unions had requested US$177, but the minimum wage has actually surged in the last years in Cambodia and the competitive advantage of Khmer exporters could be eroded in the future.

Minimum wages are also being raised in various provinces in China, like Zhejiang and Fujian.

In Vietnam, the government will go with a rise of about 12% of the minimum wages as of January 1st. Implementation could however be delayed due to the higher budget deficit than expected.

India still struggling with complex system

In India, the government aims at simplifying the way minimum wages are adjusted since 1948 through an extremely complex system.

The decision to raise minimum wages would be partly unified under the federal government. However, consequences are not easy to assess and new delays could be observed in India's modernising process.

In Bangladesh, requests have been heard for raising the minimum wage which does not seem to be changed, however.

Efforts are currently focusing on safety standards and exporters are taking advantage of a stability in labour costs since the sharp rise of 2013.



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