In 2010, a Chinese worker could produce just 27% of what his/her American counterpart could for every hour worked. Not because Chinese workers are lazier, nor because American workers are a dialed-in group of high-efficiency automatons. No, American workers hold the advantage largely because of our head start on automation -- we've got better machines . . . . Rising wages in China further erode the advantages of setting up shop there . . . .
[Now,] labor doesn't account for all of the costs of making a product. As the report's authors note, "Labor content ranges from only about 7 percent for products like video cameras to about 25 percent for a machined auto part." Therefore, since 2000, the tradeoffs for Chinese labor have been economically beneficial for global companies.
But while Chinese laborers are making steady gains in productivity, so too are their wages. BCG offers a succinct view: "Although we forecast that Chinese productivity growth will remain impressive ... output per worker will increase at only half the pace of the rise in wages." In other words, multinational corporations are going to be getting weaker and weaker returns on their investments in Chinese labor.
|BCG (Fair Use): Chinese vs American workers -- Productivity vs Labour costs, 2000 - 2015 (estimate)|
|A Cane harvester in action -- notice how few people are needed (Source: Earth U [Costa Rica], fair use. Note the EU proposals to modify the harvester to make cane harvesting play a bigger role in a green energy future. Notice as well their note on how dangerous manual harvesting is, with Brazil suffering about 100 deaths per year 2002 -5.)|
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