Low-priced manufacturing countries, such as Myanmar, Bangladesh and Cambodia, have the world's cheapest labour costs, according to a labour cost index released in February by risk analytics company, Verisk Maplecroft. Meanwhile, rising wages in China saw the country lose ground in the index. Europe is home to the most expensive markets, accounting for a large proportion of the top 25 highest cost countries in the index. Italy and France ranked as the most expensive and least competitive places when it comes to recruitment.

The labour costs index takes into consideration a number of measures, including salaries, regulations related to employment, contributions to social security and productivity of the labour force, in order to determine and examine workforce cost competitiveness across 172 countries. “The cost of employing staff is a key consideration for companies when they consider where to invest,” said Charles van Caloen, Verisk Maplecroft’s senior analyst.


A rise in average salaries, large severance mechanism costs and high social security contributions have combined to make Europe a less appealing place for hiring employees. Among the most expensive countries are Italy, France, Belgium, Spain and Finland. Laws protecting employees in Italy and France make these countries among the least competitive in the world. The index states that difficulties relating to recruiting new employees has an impact on unemployment rates in Europe, but adds that the European Commission has prioritised reforms in the labour market.

Rising social security contribution costs and wages are among the reasons that China has lost ground in the ranking, compared with competitors in the low-cost manufacturing space, such as Myanmar, Bangladesh and Cambodia. Average wages in China stand at $450 per month and there is a 20% contribution to social security, while average monthly wages are less than $100 in Cambodia, Myanmar and Bangladesh, and in the latter two countries there is no obligation to make a social security contribution.

“The true cost of business in the emerging economies is more than the direct expenses associated with the labour force,” said Mr van Caloen.

Despite the low-priced labour force attractiveness in Myanmar, Bangladesh and Cambodia, investors should be aware that risks relating to poor working conditions, health and safety, child labour, or human trafficking may arise. “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,” said Mr van Caloen.