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Sunday, November 11, 2007

Labour costs?

So I was busy gardening today and while on my hands and knees pulling out weeds (hey that rhymes!) I got thinking about how expensive it is to get one of those professional gardeners to mow the lawn etc.

My thoughts turned to plumbing/electrical for some reason and how relatively cheap it is to get a handyman from a street corner in Karachi to come to your place and fix-up whatever it is that needs doing. And relatively speaking these labourers are very cheap as compared to plumbers and technicians here in Australia.

A couple of reasons as to why they are cheap over there is possibly due to the lack of higher education the majority of the population has, thus very difficult to move up from poverty standard of living into middle class. Also, the supply of labour is excessive.

A couple of reasons as to why labour costs for such trades is so expensive here in Australia (and probably applies to other western countries); not many people actually aspire to do such jobs (even though many of these people are multimillionaires!); There are barriers to entry into such roles. There are rules, regulations, certifications which must be met/passed before any sort of work can be done. I guess the basic premise is to protect the consumer? As a result of such barriers, supply is limited.

This is an analogy that applies to China and India. Excess labour supply is what allows China to maintain such cost competitive manufacturing, while in India although the I.T. sector is seeing a significant rise in costs, the number of engineers, scientists etc coming out of universities is tremendous. This is the case in China also.

Hmm something to think about....

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2 Comments:

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