China’s germ of higher wages rocks Asia
Particularly in the textile and apparel industry non-government agencies are pressing for higher wages in Asia and governments of such manufacturing countries are in process to increase minimum wages. In turn clothing will become dearer for the end customers and also the hype of prices in the cotton area will add to this tendency
Just recently the Malaysian government has approved the first minimum wage to become effective soon and the governments from Thailand to Indonesia boost wages in recent months. Also Cambodia, Sri Lanka and Bangladesh will be forced to increase minimum wages. All of this will change the pattern for sourcing. A new focus is placed on countries of Central America and Haiti as well as Jordan, especially for orders from the U.S.A. The turnover of regimes in the Middle East and North Africa has been accentuating the call for higher wages in order to avoid rising labour turmoil and actions in Asian countries. On the other hand, rising wages will have a positive effect on domestic consumption in these countries and like China these countries are inclined to push for more inland consumption in order to offset weaker exports. Also the soaring oil prices create new official worries in view to the economic development.