Low wages not always key success factor for overseas investment

by 17 Oct 2006

The comparative cost advantage of taking business to low-wage countries such as China or India, where unit labour costs in manufacturing are 20 per cent lower than in the US, are often not the bargain they seem when wages are adjusted for low productivity, according to a report released by The Conference Board. “One critical lesson for businesses that benefit from one-time labour cost benefits when investing in ‘low wage’ countries is that productivity gains from new technology and innovation have to keep pace with often fast rising wages of skilled and semi-skilled workers or the cost advantage begins to erode,” said Bart van Ark, director of The Conference Board international economic research program.

Talent and money lost on poor repatriation plans

Despite the war for talent, many organisations are letting experienced employees be poached by their competitors or simply leave after spending considerable money and resources on sending them on international assignment, according to a survey by KPMG. It found 38 per cent of employees leave an organisation after completing an international assignment because there is no longer an appropriate job for them in their home country and 26 per cent resign because they are offered a job and career in another company. A further 23 per cent of companies said they establish assignment-specific career goals for every assignee.

New HR head for Vero Insurance

Brad Griffiths recently joined Vero Insurance as head of human resources. Griffiths, who was formerly part of the people & culture team at AGL, has also worked in management and consulting within the insurance industry. With tertiary qualifications in psychology and labour law, Griffiths’ areas of expertise include business strategy and facilitation. “Vero is an organisation that sees its people as central to its success. Vero also recognises the role that HR can play in maximising the contribution and commitment that employees can make to the business,” he said.

Stereotypes at heart of ageing workforce crisis

Baby boomers are seen as expensive, difficult to manage and a liability to an organisation’s future, according to research by over-40s job board Adage. The survey revealed how hidden myths and stereotypes of older workers are impacting critical business decisions in Australian companies, including, for example, that mature age workers: cost an organisation more (69 per cent); are not open to new training opportunities (36 per cent); are less productive than younger ones (27 per cent); are a poor cultural fit in an organisation (63 per cent); and had significant technological limitations (84 per cent).