Labour Cost in apparel industry across the Globe- A critical review.

Labour Cost in Apparel Industry

Labour cost is always an important factor in any manufacturing or service sector as it’s defined as direct cost on product. It has become a traditional thought in industry since long that labour cost has a deep impact on manufacturing cost. No one ever really bothered to analyse it systematically rather thought it an expensive proposition in a manufacturing establishment in a usual manner. The concept is no way different in Apparel manufacturing industry rather it appears more visible. Labour cost in apparel industry is a hugely debated issue since long especially in developing and under developing countries. It is always considered a land mark issue that directly has an impact on apparel manufacturing cost. labour cost is really not a sizeable percentage of cost of manufacturing. Unfortunately, no apparel manufacturer ever bothered to calculate it seriously. Labour cost is always directly related to various parameters like ambience at work place, quality of inputs used in apparel, technical features of machines and smooth operation of supply chain etc.

Relevancy of labour cost on final price of the product had never been well thought. The nomenclature Labour cost appears too generic in nature in context to present scenario of manufacturing activities in our country as it relates many other parameters like productivity, value addition, technology and other miscellaneous issues etc. So it needs to be well defined. Usually labour cost should be considered in percentage of value of output not in terms of cost per hour. Labour cost is usually very high in developed countries as manufacturers of these countries totally shifted to high valued and specially designed product that fetch a huge market value.

This issue has become a burning issue to industrialists in this sector and everyone intends to raise the issue on any platform so seriously and make hue & cry. Labour cost is never been a critical factor as it cost a small percentage of manufacturing cost. Otherwise, China couldn’t stand well till this time. Besides; other small countries like Vietnam, Cambodia and Thailand couldn’t make a space in Global market in the recent times. Vietnam had made a big progress within a short span of time and Cambodia is coming very fast. Unfortunately we are living up with a big hope to bag order that will be shifted from China due to high labour cost. But it din’t get happened in true sense since last couple of years. China is still ruling the market despite labour cost is substantially high in comparison to India & other Asian countries. The scenario is no way different in most of the developed countries. But unfortunately we remained unable to garner the benefit of such advantage. Still we are not able to make a visible progress in exports thus enhancing our global share. Developed countries shifted the manufacturing base to high value added products due to rising labour cost. These countries rather find it beneficial to import such low value added products from developing and under developing countries by dictating terms & conditions on quality, price and features of the product. As per the published S&D on average labour cost of Asian countries, it appears that South East Asian countries are still incurring a very low labour cost in apparel manufacturing industry. India is one of the bottom of the pyramid till now but failed to reap the benefit satisfactorily.

In China labour wage is varied in different regions and it varies US$ 161 to US$357 per month. At present there are three different regions where different featured garments are manufactured. It is reported that labour cost in China is usually 25-40% lower than USA. It’s cheaper than EU, Japan, South Korea and Mexico etc. US$ 132- US$190 per month though it is considered one of the low labour cost in apparel manufacturing. It is reported that wage structure varies in different regions like China. It is minimum US$133 –US$ 191 per month. Working hours is usually 48hrs in a week in a healthy working condition but it is 36hours where environment is not conducive at all.

It also reveals that minimum wage is even little higher than India in many countries and these countries are still performing very well in global market. The volume of business may not appearing so as manufacturing activity in apparel is also not so big in context to country size & population. At present
labour wage is lower in few African countries only which are yet come out of poverty. But many garment manufacturing establishments pulled down the shutter in South Africa due to rising cost of manufacturing including labour wage. The table depicts the research findings on labour wage in various countries.

Labour cost in apparel sector in India is highly fragmented in nature as industries are well scattered across the country. Labour cost is abnormally low in industries established in backward and remote areas. From the various studies & research report, it’s evident that labour wage is certainly an important factor in any manufacturing establishment but it’s impact is not that big as we usually focus on it. It’s truly related to product cost finally. Now it’s high time to identify the loopholes to plug that can make us competent to make strategic plan to enhance our export otherwise, it will remain a threat to us to lose the market to few upcoming small countries in Asia as they are making an inroad to global market slowly. Many Asian countries have identified the regions and frame the labour wage structure. Hence it’s better that our industrialists should change their mindset by taking corrective measures to make the industries more competitive. India is a vast country and work culture & industrial activities are widely varying and there is a huge opportunity to think of diversifying the manufacturing activities as well as labour cost. Industrialists should now design the new road map to segregate the manufacturing activity & make strategic plan to relocate the manufacturing establishments to scale down the cost of manufacturing including labour wage to remain competitive in the global market as China had made it happened.  


1. .A look at the labour cost, NCM April 2013.
2. Cost of labour Definition- Investopedia.
3. How much does Labour cost really matter, Editorial, NCM May, 2022. 
4. Calculate the Labour cost accurately using a PMTS System.
5. Minimum Wage level survey of Garment industries workers in the World. Dec. 2020.
6. Economy & Politics report. Released in July 2022

About Author:-

Industry & Management Expert.
Retd. Senior officer of Govt. of India.
Worked in industry, Research Association and later on Govt. of India.
S&Dare collected are sourced from different surveys & research studies and shared inputs from experience while working with Industries.

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