4. LOW-INCOME COUNTRIES WOULD LOSE THEIR COMPETITIVE EDGE
The first and most obvious point to make here is that labor costs represent such a small proportion of the cost breakdown of a garment that even doubling them would make only a small difference.
Paying a living wage could even improve quality and flexibility, allowing suppliers to retain a competitive edge.
The labor costs in a typical piece of clothing make up 1 to 3 percent of its retail price.On top of this, it’s not just the cheap labor that entices production to other countries. China is popular not just because of its cheap workforce but also because its industry is very efficient and productive from cotton production to finished garment.
Wage increases have been shown to improve workforce morale and productivity, as well as reduce absenteeism and employee turnover. Paying a living wage could therefore improve quality and flexibility, allowing enlightened suppliers to retain—or even gain—a competitive edge.