metadata: authors: 0: author: Riveros,Luis Alfredo
docna: 0: docna: International differences in wage and
            nonwage labor costs
docty: Policy Research Working Paper
subtopic: Construction Industry,Common Carriers Industry,Food & Beverage Industry,General Manufacturing,Pulp & Paper Industry,Plastics & Rubber Industry,Labor Markets,Food Security,Business Cycles and Stabilization Policies,Rural Labor Markets
teratopic: Finance and Financial Sector Development
abstracts: cdata!: The ratio of nonwage labor costs (for
            social security, pensions, vacation days, severence
            compensation, and the like) to direct wage costs is
            proportionately higher in Europe and Latin America than in
            Asia and Africa - largely because workers there are
            protected more by regulations. The distortionary growth of
            labor costs because of increasing nonwage costs is not
            common in the LDCs however. The author of this paper found
            that international differences in labor costs are
            attributable largely to differences in labor productivity
            and capital-labor ratios. The author also found that labor
            costs declined significantly in almost all LDCs in the
            1980s, and that the impact of declining labor costs on
            manufacturing employment was statistically significant - and
            bodes well for the growth of nontraditional exports.
            International differences in labor cost levels are
            important, especially when one compares LDC and industrial
            economies. But differences between labor cost levels in
            terms of per capita output are not so large. This suggests
            the importance of different capital-labor ratios.
repnme: repnme: International differences in wage and
            nonwage labor costs
display_title: International differences in wage
            and nonwage labor costs
listing_relative_url: /research/1989/04/437020/international-differences-wage-nonwage-labor-costs
topicv3: Agriculture and Food Security m1326205 435,Labor Markets m1326488 855,Manufacturing Sectors m1326521 1281,Labor Earnings m1504041 2738,Labor Productivity m1504060 2756
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Finance and Financial Sector Development
origu: Policy Plan & Prog Review Dept
no_of_pages: 63
author_keys: 0: author_key: 773255
model_extractions: The ratio of nonwage labor costs (for social security, pensions, vacation days, severance compensation, and the like) to direct wage costs is proportionately higher in Europe and Latin America than in Asia and Africa - largely because workers there are protected more by regulations.

The distortionary growth of labor costs because of increasing nonwage costs is not common in the less developed countries (LDCs), however. The author of this paper found that international differences in labor costs are attnbutable largely to differences in labor productivity and capital-labor ratios.

He also found that labor costs declinmd significantly in almost all LDCs in the 1980s, and that the impact of declinng labor costs on manufacturing employment was statisdcally significait - and bodes well for the growth of nontraditional exports.

This decline was not accomplished through deregulation ofthe labor market - the ratio of nonwage costs to labor earmings remained - persistently significant but mainly thrugh macroeconomic factors, particularly inflation and nominal devaluations.

Ihe opportunity cost of labor was distorted more by nonwage costs in the poorest LDCs, where the small size of the formal sector conbasts with the relatively high degree of worker p20tecdon. **Tbe** countries that do better in nanufactuirng exports seem to have both iulatively few labor market regulations and, in the long run, rising labor costs.

Adjustment prop-'ams that favor export promotion and higher labor mobility should probably also favor reducing government intervention that increases labor costs. Nonwage costs do not seem to be the most distortionary labor market factor in LDCs, however. Job - security laws and regulations by reducing worker mobility -between labor and agriculture - permit manufacturing labor costs to increase. This presents a major difficulty in carrying out industrial adjustnent based on opening up the economy and realigning the-exchange rate.

International diferences in labor cost levels are important, especially when one compares LDC and industrial economies. But differences between labor cost levels in terms of per capita output am, wt so large. This suggests the importance of different capital-labor ratios.

This paper is a product of the Macroeconomic Adjustment and Growth Division, Country Economics Depaitment, Copies are available free from the World Bank, 1818 H Street NW, Washington DC 20433. Please contact Raquel Luz, room Nl 1- 061, extension 61762 (56 pages with tables).

'Me PPR Working Paper Series di inates the frlouNgs of wPRk undr way m tin Bans Poliy, Pluiing an ReseDh Complex. An objective of the series is to get thesc fldings out quicldy, even if pfesetations are less dun fiilly polished.| 'Me findings, inteMprtations, and conclusions in these papers do not necessrily repreet official policy of the Bank.l

Produced at the PPR Dissemination Center
# finterational Differences in Wage and Nonwage Labor Colts

by Lui A. River

## Tabl of Cosaw

|L 1<br>|......<br>.do*t|2|
|---|---|---|
|H.|Basic Mushoduiogk01l 1w1<br>Meuwiqg Wag .d Non-Wap Co4s|4|
|m.|PeviWo<br>inteAa.<br>.... .......|7|
|IV.|Noo-W4c CoatRo.............. .|8|
|V.|TotalLaborCostLvels<br>.<br>..|11|
|VI.|Enforcemet of NWC Regulations<br>..............|16|
|VU.|LaborMktDistotm<br>XdNWC Ruatim<br>Ls<br>.<br>...<br>in|20|
|Vm.|Inanational Diffatnces in Labor Cost Levels|23|
|IX.|ConclUsions<br>..<br>..|26|
||Tables......|28|
||References<br>..<br>.<br>........|35|
||Appendicies<br>.......|39|
-2-

# I. Introduction

Export promotion is paramount to macroeconomic adjustment programs **aimed** at achieving stable and self-sustained growth in LDCs. Exchange rate policies and market deregulation play a prominent role in those programs, In combination vith other ad-hoc schemes aimed at promoting non-traditional exports. Two basic assumptions supporting these programs are* **(a)** that LDCs are internationally competitive with regard to non-traditional exports -- particularly labor-intensive manufactured exports -- and (b) that deregulation of **the** labor market would allow the achievement of both greater labor nobility and wages reflecting the opportunity cost of labor, thus being a cruclal factor in promoting non-traditional exports.

Knowledge of total labor costs is important in designing adjustment programs &ad in assessing the degree of competitiveness of LDCU exports, while at the same time considering the likely important role played by government intervention in the labor market. Expenditure-witching policies combined with expenditure-reduction polities and market deregulation &Is at a decline of total labor costs in ters of tradables -- partlcularly exportables -- to foster inter-industrial labor reallocation. Even though a comprehensive analysis of this expected labor market response in the adjustment would require the use of a thorough concept of labor costs which includes **non-wage** costs of labor, studies are usually based on standard measures of wages. The study of observed changes in NWC during periods of adjustmnt and on the likely sigaLficant impact of total labor costs on non-tradLtional exports constitutes **a** priority in the research agenda on labor markets and trade. Labor markets in LDCa are segmented mainly due to the role played by government intervention and the existence of a signiflcant body of regulations on waps and employment. In general terms -- and in associatLon with
-3-

conditions like lar. **scale** production, complex administrative procedures and homogeneity in the presentation of the final product -- the industry which produces non-traditional exports is part of the formal sector of the economy. Hence, although non-wags costs of labor mainly relate to the formal labor market, analysis of thoir role is extr mely relevant in **assessing** the international competitiveness of non-traditional exports. In this study, we analyze prevailing regulations on non-wage costs of labor in a set of 21 LDCs, and present empirical evidence on **the** quantitative aignificance of non-avge costs of labor across countries. The main purpose of thie study is to compare total labor costs among countries and to analyze factors underlying obsorved international differences through tin. With that **purpose** in mind, **ve** compute total labor costs In dollar terms for the period 1965-85 and **we** compare the set of LDCs included in the study with **some** Industrial **economits. We examine** the enforcement of non-wage regulations in the sample of LDCs--and we analyze **the degree** of distortion they likely create in **the** context of their tim trends and in connection with the performance of manufactured ciports.

**The set** of countries in the study includes LDCr in Africa, Asia, Latin America and Europe. For comparison purposes we also use eight Industrial countries from Europe, Amrica and Asia. The countrLes covered In **tbe** study **ares**

Latin Amrica South **Asia Africa** Europe Argentina India Kenya Greece Brazil Pakistan Morocco Portugal Chile Sri Lanka Malawi Colombia Nigeria Mseico East Asia Tanzania **Peru** Zambia Hong Kong Zimbabwe **Korea** Singapore 7!dustrial Xc. Austria France Germany Spain Sweden Unlted Kingdom Canada USA Japan
-4-

The structure of the paper is **as** follows. In Section II we discuss some basLc methodological **issues as** regards the eWpirical measure_ent of wages and non-wage costs. Section III presents **a** brief description of the prevLous work in the area, which indicates the lack of comparative studies on labor costs in LDCs. Section IV discusses the evidence vith regard to the ratios of non-wage costs to wags aand non-wage costs to per capita income, wbile in Section V similar analysis is done in connection vith total labor cost levels. The enforc ment of non-wage cost regulations in the countries is analyzed in Section VI, with their like-y distortionary role in terms of time trends and across countries examined in Section VII. Section VIII **examines** international dLfferences in labor cost levels and in labor costs ezpressed in units of percapita output. _Finally,_ **some** conclusions are presented in Soction IX.

II. Basic Methodological Isues Neasurntg **Wage** and **Non-Wage Costs Use** of a simllar concept of labor costs across the countries covered in this study is crucial to **a** proper Interpretation of the results. In fact, in comparing labor costs across countries, consideration of the definitional content of the statistical information on wages and non-wage coats and its coverage in term of industries is Important.

The empirical data used In this study for all the countries correspond to the mantifacturing sector. The basic Information **vas** obtained from national sources and originates in manufacturing surveys containing wages and data on other paymants to labor. Given that segmentatLon is a distinctLve feature of labor markets in LDCs, it should be noted tbat **these data** correspond to **the** urban formal sector of the labor market; i.e., the one covered by different types of regulations and labor protection laws. Thus, this information does not necessarily describe the level -- nor probably the
trends -- of labor incomes in the urban informal sector and agriculture. As said above, analysis of total labor costs is extremely relevant vith regard to non-traditional ezports, which is an industry included **almost** entirely in the formal sector of the economy in LDCs.

The information on labor costs used in this study corresponds to production workers **(i.e.,** those directly involved in production). In so e countries, available statistics report wages data for this specific group of **the** labor force. In others *and due to lack of information concerning only production workers, **we** had to resort to data corresponding to all blue collar workers in **the** manufacturing **sector.** It **is** important to note that **the** wage data used in this paper correspond to an average for the entire asnufacturing sector, not only to **the** group of export industries, a fact that **may** prove crucial in interpreting some comparative statistics. Data on non-wage costs of labor vere obtained froa different national and international sources, thus reflecting unaudited and actual payments and contributions to s*voral rrograms associated to employment of a worker in formal activities. In **general** terms, however, our empirical labor cost data **are** comparable amoag countries, and they can be interpreted **as** the cost of unskilled labor in LDCs' manufacturing. Availability of comparable total labor costs among countries **has** preoccupied international agencies for a long time **[see,** for instance, ILO (1983)]. However, a standard compilation of similar labor cost data for LDCs to perform up$irical comparisons is non-existent. Most sources report **measures** of LABOR KAININGS, which include all the gross payments made to **the** workers before any deductions.1 In this paper, we **use** this concept **as** synonymous with WAGE COST OF LABOR (WC). **Given** that aeployers also face other outlays in employing labor, it is useful to distinguish between two other concepts. First, that of TOTAL
"A3OR COSTS, in which employer contributions to legally required eployees' benefit plans and other prevailing taxes existing on payroll or employment are added to labor earnings. Among those, the main statutory payments are contributions to certain funds, wiLch &,a generally **expressed as a** proportion of total labor earnings.2 Second, we use the concept of labor coste net of labor earnings as a synonym of 0ON-WAGE COSTS Or LARol (MfC). It is important to nate that, because of lack of adequate information, **we** do not account for other costs associated vith employment - like training and hiring costs **as** well **as** outlays associated vith the provision of certain plant facilities for the use of the workers. Consideration of these items would form the concept of CO MSIV LABOR COSTS.

In order to construct the serLes of total labor costs presented in this paper, we used information on **wages** and non-wage costs of labor provided by national sourcea. However, for the latter, we complemented these data with information from international agencies **(e.g.** ILO or BLS)<sup>3</sup> concerning social security contributions or other regular payments made by employers in LDC6.<sup>4</sup> The informtion arrived at is basically comparable among LDCs, given that we used the sae definitions with regard to WC and similar INC items. A basic difference, however, appears in connection with the industrial countries, in whose case ve reproduced the informtion prepared by the Bureau of Labor Statistics of the U.- Department of Labor (BLS), in which the Implicit cost of days of vacations and the value of vacations bonuses **are** not Included In the calculation of NUC.

**The** labor cost levels presented b,low **are** In dollars, and they correspond to WC and NHC expressed in hourly terms.5 Data on hourly labor costs In each country are also reported in domestLc currency units. In order
to convert that into similar units, we used the Atlas exchange rate provided by the IBRD (see Appendix 2), which corrects for certain distortions in exchange markets and allows us to compare the trends of labor costs and per caplta CDP. We did not convert our labor cost data to dollars through any purchasing-power-parity exchange rate, because our data are relevant to study international competitiveness of production, and the product embodying these labor costs must compete on tho basis of the actual current exchange rate in each country.

**I P.** lPevio,s **bzk** In the **Area.**

International comparisons of labor costs have remained an important issue in applied econouics. Zarly, Nelson (1965, 1968), lardhan (19b5) and Nerlove (1967), highlighted some key analytical assumptions involved in comparing wages and labor productivity between two economLes. Research soon expanded to more specific questions regarding international dispersion of wages. Krueger (1968) explained income dlfferentials on the basis of differences in human capital across countries, an issue also addressed by Kothari (1970) and Papola & Eharadwaj (1970), as well **as** by Mitchell (1968) in the context of modeling labor productivity.

Problems encountered in constructing a comparable international data base for labor cost comparisons were pointed out early by the Bureau of Labor Statistics (BLS (1966)3 [see also, Shelton & Chandler (1963)]. More recently, Bashir (1979) discussed comparisons of labor market trends In LDCs and lns4sted on **the** necessity of further efforts to improve wage data, an issue also highlighted by Krueger (1987) in analyzing employment, international competition and trade policies. Although several ILO recomme ndations aived at Improving methodologies of data collection,
availability of adequate information in LDCs is still a major stumbling block for further research in connection vith international comparisons CCapdeville & Alvarez (19S2)].7 This lack of relevant statLitics has also prevented the completion of more comprehensive analyses on the role of governmnt intervention in the labor market, and of empirical supply functions of nontraditlonal exports [Krueger (1987), Faini (1985), liveros (1989)1.8 A crucial issue raised in recent rosearch [see, for instance, Krueger (1987), Lipsey etal. (1982), Ranis (1985)3 deals with the prosumably high **negative** effect of increasing labor costs on non-traditional exports. Zmpirical research In this area and in assessing the role played by labor market distortions on export supply, has been hindered not only by data availability but also by lack of understanding of the structure of **the** labor market in LDCs. For instance, government regulations may introduco factor market rigidities, in whose presence almost anything could happen to trade flows and output composLtion **[see,** i.e. Jones (1971), Neary (1981) and **Magee** (1976)3. Similarly, **as** indicated by Kueger (1987) and Lipsey *t.. (1982), the Importance of labor market distortions may also be crucial in modeling foreign investment and choosing technology (see also Behrman (1982)3. All this suggests that conducting research aimed at comparing labor cost levels among countries and at assessing the impact of labor costs on non-traditional exports constitutes a significant challenge. 9

# ZV. So-n-age Cost Ratios

**The** relative imX,ortance of NWC is highlighted by figures Included in Table 1. Owing to its institutional nature, the ratio of NWC to wage costs (NVC ratio) for any given country does not change a great deal through tim. However, in **the** case of Latin America -- mostly due to the occurrence of
structural changes vith regard to the degree of government intervention in the labor market -- more significant changes are observed through time on a country basis. The variety of this ratio across countries is still more significant, and may be indicative of the degree of distortion introduced by government intervention in terms of the cost of labor in formal labor markets. In general, simple regional averages reveal that NWC ratios are higher in Europe and Latin America than in Asia and Africa. Latin American countries such **as** Argentina, Mexico and, notably enough, Colombia, have highest NWC ratios in the sample of LDCs. Chile, after social security reforms implemnted during the late 1970s, attained a NWC reductlon of one half (i.e., from 51 to 26 percent of total labor earnings between 1975 and 1980). In contrast, Colombia's NWC ratio has been growing significantly since the 1970s, with extroely stringent regulations on severance compensation **(see,** IBRD-ILO, 1982). In Argentina, the observed increase in the NWC ratio ls due to employer's contributions to housing and health benefits programs created after 1975.

With the clear exception of Singapore and Hong Kong the NWC ratio in the Aslan countries **has** remaine. fairly stable for the last 20 years, thus also being very similar among South Asian and East Asian countries. In general terms, the NEC ratio in Asia is about half that observed in most Latin American countries. It should be emphasized that in most Asian economies, particularly Hong Kong and Korea, there are not many programs demanding employers' contributions; even social zi,arity payments are discretionary, although most employers contribute a voluntary five percent of total wages to pension funds. Specifically, in East Asian economies, there are only a few regulations on hiring and firing.
- to -

In Africa, computed NWC for this study are mostly associated to vacation days and contributions to social security scheme. In the latter case, however, contribut. `ns vary usually between three to five percent of total labor earnings. In general, NWC of labor associated with more sophisticated social programs are nonezistent in Africa. This would suggest that the formal labor market in African countries appears to function more freely than in other LDCs, particularly Latin Amorica.

A good measure of the degree of protection awarded by NWC regulations in LDC ins a comparison of NWC levels with the per caplta income prevailing in each country. Assuming that in a cross country examination per capita incom is a satisfactory proxy for the shadow price of labor, a comparison with observed NYC of labor would provide an idea of the distortion **a** certain protection awarded to formal sector workers imposes relative to the diSree of economic development of any given country. Thus, we expressed the per capita GDP in hourly terms,<sup>10</sup> and we calculated the ratios NWC levels to hourly incomes which can be examined across countries in Table 2, (Colo. 2) It can be seen that the ratio NWC/por capita income introduces **som** changes from the original ranking we described above (Table 1, Cols. 1), in which Latin American countries exhibited the highest NYC relative to **wage** levels. In fact, India now appears with the highest ratio of NWC/per capita income, being closely followed by Zimbabwe, Greece and Morocco.<sup>11</sup> Interestingly enough, most of the African countries, with the exception of Nigeria, appear to have 'high NYC relative to the corresponding shadow price of labor, thus likely suggesting a large distortion and an important degree of segmentation of the labor market among formal, informal and rural sectors. However, in Latin America, although Argentina and Colombia rank among the countries with higher ratios of NWC to per capita income, the formei one is
11 -

-

not characterized by a high degree of segmentation, thus suggesting that this is not alwayc the crucial factor in play.

In assessing the importance of NWC of labor in LDCs, a comparison with the situation in industrial economies seems appropriate. According to data appearing in Table 1, USA, Canada and, notably, Japan, are characterized by lower NyC ratios than those observed in many LDCs, both with respect to wages and to por capita incones. This evidence mould **sees** to support the contention that formal labor markets in LDCs **are** lkiely subject to distortionary intervention and that deregulation will significantly reduce total labor costs, leading to gr**.tr competitiveness of their production in international markets. However, this is not always the **case** in comparing LDCs and developed economies, since most European industrial countries are characterized by substantially higher NVC ratios resulting from existing policies which finance several welfare programs. Hence, it is not convenient to arrive to any general conclusion regarding LDCs **as** a whole; examination of total labor costs may provide more definitive evidence in comparing LDC* and industrial economies.

# V. Total Labor Cost Level.

Simple regional averages of total dollar costs of labor are evidence of widening differentials between industrial and Latin American countries (Table 2). In fact, in 1975 the average labor cost in Latin America **was** 212 of that observed in Europe, 162 of the one prevailing in USA and 332 of the labor cost level ir Japan. In 1980, these averages were, respectivel-, 17, 17 and 28, while in 1985 they corresponded to 17, 11 and 19. Similarly, unit labor costs in Africa have experienced a decline over time with respect to the levels ezisting in the USA, Japan and, more moderately, in Europe. Thus, a
_ 12 long term decline of comparative labor costs levels has occur d in Latin America and Africa as well as in South Asia. In contrast, East Asia experienced **a** significant increase in total labor costs with respect to Europe and a lesser one vith rospect to the USA and Japan.

Simple **averages** as seen in Table 2 obscure the differences observed within **each** region, vith regard to both levels and tim trends. Most Latin American countries experienced an important currency overvaluation in the early 1980s, which usually reflected itself in higher dollar labor costs. **The** subsequent decline of unit labor costs has boen dramatic in Chile, Mexico and Peru, due to substantial macroeconomic strains after 1982 and the adoption of significant micro reforms in the cases of Chile and Mexico. Argentina adjusted labor costs downwards -- but only **since** 1987 -- mostly due to exchange rate corrections, while Colombia and Brazil, which did not suffer dramatically rising labor costs during 1980-82, displayed more stable levels from 1982 onward. Similarly, in Africa, som countries exhibited a sharp increase in labor costs during the early 1980s, and a subsequent decline during the remaining years. This **was** the case of Zimbabwe, Zambia and Morocco. The other African countries ezperienced steadier labor costs during the period being analyzed.

The growth in labor costs observed in last Asia relative to the industrial **economies is** probably associated with productivity growth and export expansLon In the presence of full employment, **as** opposed to a higher degree of Intervention In **the** labor market. However, in **the** case of Singapore **as** observed in Table 1, there has been a persistent increasing trend in NYC ratios throughout time India, Pakistan and Sri Lanka **are** characterized by a very steady trend of labor cost levels In nominal dollars over **the** long run.
**The** degree of competitiveness of each country's labor costs can be evaluated on the basis of labor costs deflated by the wholesale price index of the USA (Tablo 3),12 vhich constitutes an indicator of cost competitiveness relative to international production costs. An important conclusion derived from those results is that in contrast with the steady increase of real labor costs observed in the UA, most LDCs have undergon a significant drop in real labor costs in the 1960s. In fact, in Latin America, fluctuating real labor costs levels in the 1970s have been generally followed by a sharp decline during the 19600, **a** trend also seen in Greece and Portugal, although in the latter **case** this drop occurred since the mid-1970s. **The increase** of real labor costs during the 1970. and the observed decllne during **the** 1980. also applies to African countries, **as** well **as** to India and Pakistan. An exception to this coamon trend is Sri Lanka, a country that suffered a persistent decline in real labor costs during the 19709 and 1980s. Korea, Singapore and Colombia **have** experienced a steady increase, while costs in Hong Kong have stabilized after the continuous rise prior to the 1980s. Thus, countries which **are** more export-oriented have been able to support rising labor costs, at levels still competitive with those observed in industrial countries (Table 2).

Figures in dollar tems for LDCs are notably influenced by periods of overvaluationlundervaluation of the exchange rate, which must be considered in observing the results wLth regard to time trends. In analyzing real labor costs in domestic currency, both in terms of the CPI and the WPI in each country (Appendix 2), very different dynamic patterns appear in **the** set of countries. For instance, Brazil, Korea, Colombia, Greece, Singapore, Hong Kong, Pakistan and Zimbabwe are characterized by a clear groring trend in the long-run. Argentina, India, and Zambia are characterized by practically no
14

-

_ growth in real labor costs over the long run, while Nigeria, Halavi, Mcrocco, Portugai, Sri Lanka and Mexico show significant f'ictuations. It is also clearly seen that Chile, Peru and Tanzania (if one looks at the results in terms of the CPI) **are** the countries that underwent a steady decline in the period being analyzed. In general, real labor costs have declined in LDCU after 1981, with the clear exceptions of Colombia, Greece, Pakistan, Singapore, and torea (Table 2d).

Analysis of relative changes in labor costs is iportant in connection with the costs and benefits of export oriented strategLes. **T!** another paper **we** show the high negative correlation existing between changes in manufactured exports and changes in labor costs relative to the price of home goods, after controlling for the effect of other relevant variables (RLveros, 1989). It has also been observed that, in general, countries with steadily growing labor cost levels over time -- like Korea, Singapore and Hong Kong (Table 2d) -- are also characterized by a relatively large share of manufactured exports in total exports (kiveros & Hateus, 1988). However, Morocco, Greece, Brazil, and Portugal are also countries characterized by a high share of manufactured exports in total exports, but by stagnant average labor costs throughout time (Table 2d). In examining **the** trend in **aggregate** manufactured exports with observed labor cost levels, it becomes evident that countries showing a steadier growth in labor costs (last Asia) **are** at the same time the **ones** with a stronger export dynamac. This suggests that even though labor costs may negatively affect export growth, a better export performance **is** also associated with more dynamic wage growth over **the** long run. Moreover, an index of manufacturing employment in the countries under analysis (Table 4), suggests a hlgh correlation between employment growth and better export performance, as clearly shown by the cases of Southeast Asia and Brazil.
- 15 -

The influence of chgnge ln labor costs on manufacturing employment is *lgnific nt ( nd negatlve) in most of the countries where w were *ble to *stim te * labor deaand functlon (Table 3a) Thi suggest that sost of the observ d ch nges tn labor cost levelr would be *ssociated vlth changes in lzbor productlvity ln fact in the tatistical *sercise included in th *ppendix the *ffect of * veriable ludic-ting dintorticnzry intervention in th labor sarket -- the ratio N"C to per caplt- inco e -- protucet slgalflc-ntly B gatSve paraDeters only in th cases of M*slco Colo bla ladia nd Glgeria It is interosting to note thgt th se countrles *re char cterised by tiffernt trends ln labor costs through tlDe not necessarlly by * incr asing on The *ffect of NWC of labor on non-tratltlonal *xport is anoth r isportant lssu So th estent th t hlgh r NWC r^y reflect * tlstortion which i 8ativ 1y *ffects *sport growth lacreasing labor costs would l^t to deteriorating esports nd _ loytent An empirical cros-country *nalysis on -hir issue is presentet in Rlv ros (1989) wherc the degree of distortion is easur d by th rgtlo NWC to per czpit inco Thur b1 pooling countrler in * group chargeterlsed by a restrictive labor market regime -- *s measured by th burden impced throu p job security regulation -- versus nother group of countries characterized by * more llberal regime the concluslon is that th *ffect of hi p r distortionary NWC n g tiv 1y gffccts *xports Thls result is ladlcativ of th import nce of N"C of labor in *nzlyzing the relstionshlp between non-tr ditional *ports *nd labor sarkets *nd *lso sugg sts th t statisticsl *nalysec must *ccount for th *ntire set of regulations nd fin ncial oblig tions *sisting in LDCs labor markets
- 16 -

|**Ave**|Table<br>**raie Value Index**of Manuf|5<br>actured E|xports from LDCs|
|---|---|---|---|
||L .AMRICA<br>AFRICA|ASIA|URUOPC|
|1965|100<br>100|100|100|
|1970|169<br>264|203|227|
|1975|536<br>408|685|595|
|1980|1361<br>710|1793|918|
|1965|1993<br>1532|3517|911|

Soun **es Riveros** & **Kateus** (1988), Table 2.

# VI. **ftforc _nt** of **MHC I*ulatioms.**

Analysis of **the** actual enforcemnt of NMC **regulations requires** underssnading the institutions affecting the operation of labor markets in LDCs. In fact, in analyzing the impact of NWC on employment and exports, examination of mandatory **payments** is not enough, given the likely existence of a varying degree of *nforcem_nt across countries and through tim. A pure quantitative analysis of persistent wage differentials within the economy to **assess** the actual enforcement of NMC is not sufficient because there would still be the problem of sorting out labor cost **increases** that are *ndogenous to a growth process from **those** that **are** imposed through government regulations. Thus, quantitative examination of this issue is severely limited by lack of adequate empirical data. Consequently, in order to test the idea that **there are** enforcement mechanisms in most LDCs which keep labor cost levels above **the** supply price of labor, **we** must resort to more Indirect evidence One major characteristic of formal labor markets in LDCs **refers** to **the** existence of very detailed job security regulations. Recently, Lucas & Fallon (1988a,b) have investigated this issue in IndLa and Zimbambe, and **they**
1 17 concluded that enforcement of job security laws has been detrimental to labor mobility in both countries, permitting labor costs in manufacturing to increase. In the case of Mexico, Riveros (1988a,b) found that job securLty laws present a major difficulty in carrying out an industrial adjustment based on opening up the economy and exchange rate realignment. Reform in this area in Chile during the 1970s **was** considered crucial by entrepreneurs facing a more competitive environment associated vith substantial trade reforms (Corbo 1985). For Zambia, Colclough (1988) reports the existence of a demadning set of regulations enforced by **the** governmont, while Riveroc (1987), Collier & Riveros (1987), Collier & Lal (1986) and Collier (1988) suggest the same type of problem **ar*** prevalent in the Philippines, Nigeria, Kenya and Tanzania, respectively. Likewise, Pollack (1988) argues that these regulations **are** predominantly enforced in most Latin American countries.

By examining the Price-Waterhouse reports on prevailing job security regulations in the countries covered in this study, a ranking can be produced with regard to the obligations of employers when dismissing workers.<sup>13</sup> According to this, Korea, Singapore, Hong Kong and Nigeria rank among the countries with lesser requirements. On the other hand, Argentina, ColombLa, Mexico, Kenya, India, Greece and Portugal, are, among those where job security regulations are extremely stringent. By contrasting these results with those in Tables 1 and 2, there seema to be a very high correlation between the existence of relatively high NWC ratios and coercive job security laws. As comonly stated in Price Waterhouse's reports, compliance wLth the law is guaranteed through several controls imposed by the political authorities **as** well **as** by union activities. Thus, it is a reasonable hypothesis that NWC regulations are also significantly enforced in the countries studied. 1 4
- 18 -

In general terms, and **as** argued earlier, NWC and job security regulations are a dominant feature of formal labor markets. According to estimates of ILO (Riveroa, 1988c), the **size** of the formal urban economy in Latin America is about 60 percent of total employment, the public sector constituting about half of this. In South **Asia,** this proportion is even smaller, **as** well **as** in the case of African countries, **as** suggested by thke high share of agricultural productlon in GDP.<sup>15</sup> Thus, taking into account the relative size of the urban formal sector, it **is** also a sensible hypothesis that enforcement of all legal labor regulations imposed on the formal manufacturing sector is not at all difficult from the viewpoint of the required administrative machinery. FLnally, it is important to note that in almost all countries, procedures exist which allow workers to initiate legal demands if regulations are not complied with by the firm.

In order to test for the likely significant distortionary effect of NWC of labor one may use the existing differential between labor costs -- which are basically urban-formal wage plus NWC items -- and agricultural wages. If enforcement of NWC keeps labor costs (LC) growing substantially above agricultural wages, one could reasonably argue that this is indicating the existence of a distortion. However, the existence of labor costs growing faster than agricultural wages (WA) may also be due to more rapidly growing productivity in manufacturing **as** well **as** to faster human capital growth in urban **areas** which would be reflected in higher wages. **WV** conducted a simple analysis of this issue by exploring the statistical relationship between the ratio (LCIWA) and the ratio formed by the **average** labor products in manufacturing and agriculture. We first regressed the ratio (LCIWA) against a time trend in order to test the statistical significance of observed growth rates. If a statistically significant growth trend for a given country is not
- 19 -

simultaneously accompanied by a positive significant relationship between (LC/WA) and the ratio of average labor products in the two<sup>sectors, one may</sup> argue that NWC or other distortionary factors keep urban labor costs growing substantially above the opportunity cost of labor.

The regression of the ratio (LCIWA) **against** a time trend produced a negative or zero paramtor in 8 countries, while in Colombia, Portugal, Korea, India and Tansania the trend **was** significant and positive. The econometric estimates of the regression of the ratio (LC/WA) against the ratio of average labor products produced very mixed results. In 5 countries (Argentina, Mexico, Sri Lanka, Korea and Kenya) **we** found a significant positive parame ter maller than 1 thus suggesting the trend in relative labor cost is in fact associated to changes in productivity differontials. The estimated parameter **was** negative in Colombia and India, and insignificant in 6 other countries, thus leaving room for the argument that some inefficiencies are likely involved. Hence, in most of the countries there is not any clear time trend in relative labor costs which would suggest that enforcement of NVC introduces distortions in the form of an increasing wedge between labor costs in<sup>both</sup> sectors. In the cas3 of Korea, we found a significant time trend which may be associated with growing labor productivity -- **as** indicated by the regression of (LC/WA) on the ratio of average labor products -- thus being possible to argue that it responds to market forces. In Portugal, Colombia, India and Tanzania the observed increasing trend of the ratio (LC/WA) is not explained by relative changes in average labor products, thus suggesting that enforcement of NWC of labor has played a significant role in increasing<sup>labor</sup> cost dixferentials in these four countries.
## - _ 20

# **VIZ.** Labor **Market Distortions** and UM Regulatiaon in **LDCs.**

There is an inclination to think of NWC regulations **as** udistortions in the *ense that they would introduce a wedge b6tw*en the equilibrium (notional) wage and the actual prevailing labor cost. However, on the tide of the entrepreneur and under certain conditions related to his indifference with regard to paying labor in terms of different items, it may be possible that NWC **are** not the result of en optiLsiing condition but that rather they respond to en exogenously **imposed** distortion. Similarly, on the side of **the** worker end depending upon his intertesporal rate of discount and degree of risk aversion, a certain WC level associated to deferred payments or insurance systems may not be at all distortionary. In practice, however, what matters is **the** distortion introduced by MWC **as** regards the differential between actual labor costs and the opportunity cost of labor. Thus, the existence of labor costs above the level corresponding to the shadow price of labor would imply a distortion disregarding the allocative role of relative scarcities and introducing quantLty constraints In the employment decision of sectors covered by distortionary laws.

A comparison of labor costs and **the** per capita income in each of the countries is important in examaing the probable distortion created by nonwage regulations. The ratio of labor costs to per capita incomeo is affected by the relative size of the urban formal sector end thus by the share of agriculture in their economies. A relatively high ratio may be interpreted **as** en existing distortion, In **the sense** that labor costs In the fonal sector do not reflect the opportunLty cost of labor resulting from enforcement of _UM_ and/or existence of constraints to labor sobility. Hence, with **the sam** degree of enforcemnt a decrease in the ratio NWC to per capLta income would reflect a decline in the share of agriculture, and a more competitive labor
- 21 -

market in the sense that prevailing labor costs in the formal sector approach thc averago opportunity cost of labor.

**As** seen in table 7, the African countries, India snd Pakistan have labor costs substantially above their correspondin.g per capita incom. **Greece,** Colombia and Argentina also have a range of labor costs twice the hourly **per** capita incom, while **the** rest of **the** Latin American countries are such closer to the ratios observed in **Asia,** particularly Korea and Sri Lanka. Furthermore. the trend in almost all African countries (with the exception of Zambia and limbaube) **as well as** in Brazil, Mexico, Peru. Portugal, India and Pakistan, has been towards a closer relationship between labor costs In the formal sector and **the** prevailing average social opportunity cost of labor. This coincides with the observed decline in the size of the agricultural labor force between 1970-1980, which, in turn may reflect an increase in agricultural productivity and in intersectoral labor mobility. Nonetheless, the only **cases where** this distortionary ratio' **has** been notably increasing **are Greece** and Zambia.

These results are in agreement with the conclusion arrived at by Fallon & Riveros (1987) regarding regulations and minimum wages in LDCs. In fact, the observed declining trend in tho ratio of labor costs to per capita incomes throughout time in almost all LDCs indicates a higher dgiree of competition and integration of their labor markets. However, the significant differencos still seen in this ratio across countries are striking. On the one hand, it **is clear** that a larger ratio may be an indicator of a distortion that, though decreasing in time, is probably hindering the achievement of a more adequate labor allocation. On the other hand, it is important to consider that we are dealing with averages and that the existing wedge between labor costs in manufacturing and average per capita income is also responding
- _ 22

to differences in human capital **as** wvel **as** to the share of agriculture in the economy. As revealed by the relative importance of the agricultural labor force in the countries being analyzed (Table 6), countries with a greater wedge between labor cost and per capita income levels possess a more significant agricultural sector (and probably, also a larger informal urban sector), leading to the existence of important differences in education and specific humun capital. In the absence of statistics on distribution of education across sectors, this issue cannot **be more** formally analyzed.

To further analyze the distortionary effects of NWC levels in the economy, we regressed a time **series** of non-wage cost ratLos **against** the **rate** of GDP growth. If NMC increase in a **way** significantly out-of-line for the opportunities provided by economic growth, one would expect to obtain a significant and positive parameter greater than one, which **is** what we found only in **the** cses of India. **The** relationship approached zero in 80 percent of the countries (with Brazil and Colombia having signLficant negative parameters). At **the same** tine, with the exception of India and ColombLa, a regression of NWC ratLox against a tim trend also produced coefficients statistically equal to zero. This evidence seem to _%)vvide_ further support to the contention that in most LDCs the existence of KV1 does not necessarily constitute a distortionary factor. The evidence proviked in the Appendix also demonstrate that the effect of the ratio NWC to per capLta income -- an indLcator of the distortLon introduced by NYC regulations -- **is** not found significant in explaining the performunce of the demand for labor in LDCs, with the exception of Colombia, Indla, Mexico and Nigeria. This result was also confirmed when a pooling of countries characterized by high and low NVC ratios was used to test for the statistical effect of increasing NYC on employment.
# *23 -

# VIII. International Differences In Labor Cost Lvels.

A comparison of labor cost levols between LDCs and industrial countries raises som questions regarding the pattern of the international allocation of labor in a world characterized by growing internationsl trade. In fact, thore is evidence of very persistent and significant labor cost differentials among LDCs and industrial countries through tim. In particular, and in examining evidence like that produced by Lipsey t.al. (1982) -- in the sense that altinationals tend to choose location partly due to consideration of labor costs<sup>16</sup> -- one may wonder about the factors working against a marked trend towards equalization of labor costs across countries. Naturally, there are may Lasues involved here, like trade restrictions In industrial economies, constraints to foreign investment and high country-risk in LDCs, unstable macroeconomic environment, etc. For the sake of keeping this analysis within the domain of labor market issues, we will concentrate on aspects likely influencing labor productivity.

One factor explaining the persistent differentials $n labor costs botween LDCs and Industrial economies, **as well as** wLthin the set of LDCs, Is that labor is not a homogeneous factor. In fact, **the** average productivity of labor, which depends on the capital stock and quality of both capital and labor amohg other things, may significantly differ among countries. Thus, considerable differences in capLtal labor ratios or in the quality of productive factors may result In significant differentials in labor productivity across countries. If capital labor ratios affect differentials in labor productivity among countries, the trend to equalize labor cost levels through larger investment may be expected.
- 24 -

In order to carry out a comprehonslve analysis of this hypothesis and in order to account for all the variables affecting labor productivity, one would be required to study total factor productivity and factors explaining international capital flows. **Ue** will limit ourselves to the alternative of xamining labor costs per unit of output which can shed **some** light in **terms** of **a preliminary** analysiL of international cost dLfferentials. In Table 8 **wo include the** ratio formed by hourly labor costs and per capita production In forml sector manufacturing for 1970, 1975, 1980 and 17 1985, wiLch is Interpreted **as** labor cost per unit of production. It is noteworthy that this ratio correspond to the labor share, which is affected ; prevailing differences in capital labor ratios among countries. **The** trend observed in most of the countries indicates a decline in total labor costs relative to **per** capita production in manufacturing (labor shares). According to **the data, tho** only clear exceptions to this trend are Greece, Colombia, and possibly Morocco, Korea, and Austria. This declining trend is most likely associated with falling real labor costs, **as** it is, for instance, observed in Table 2d for **the** case of almsot all LDCs vith the exceptions of Colombia, Greece, Korea, Pakistan, and Singapore. Thus, in the cases of Greece, Colombia, and **Korea the Increase** in real labor costs is accompanied by increasing labor shares, whlch supports the idea that changes In labor costs are a major factor influencing the behavior of labor shares through time. A second observation based on the figures reported in Table 8 refers to cross-country differences. In general, the average value of the labor share in the case of LDCr **has** remaLned below that measured in industrial economies, thus suggesting that unskilled labor is proportionally more expensive In lndusttLal economies. Rowevr, the observed differences between LDCs and industrial economies in labor shares **are** relatively maller than
- 25 -

those observed in terms of labor cost levels (Table 2). Hence, even though labor shares **are** lower in LDCs, the resulting differential in labor costs per unit of output may not be important in order to justify increasing investment flows from industrial economies, as one would expect in observing the significant differentials in unit labor cost levels. In fact, the persistence of certain differential in labor costs among countries may **be** explained **by** fixed costs, country risk and cost of technological innovation.

**One** important conclusion can be derived from this discussion. In analyzing the behavior of labor costs in LDCs and industrial economies it is very important not to generalize. In fact, there **are** significant differences among the developing countries themselves, which, although not clearly revealed in comparing labor cost levels (Table 2), **are** shown through labor costs standardized by the average labor product in manufacturing. For instance, even though in terms of regional averages, Latin America is the region with lower labor shares, followed by Asia and Africa, countries like Argentina, Brazil and Mexico have higher labor shares than Korea, Singapore and Pakistan. Similarly, India, Kenya, Morocco and Tanzania are characterized by labor shares even larger than those corresponding to **som** industrial economies.

The above analysis must be carefully interpreted due to the aggregate nature of the statistical information used. For instance, the reliability of the information on production and employment in forml manufacturing varies notably across countries. In addition, the fact that figures in Table 8 correspond to an average for the entire manufacturing sector, and not only for the export industry, must be taken into account in assessing the existence of declining average labor products.
- 26 _

# I. ConcluiLons

The aLm of this paper has been to provide eMpirical evidence on **wage** and non-wage costs data for a representativ sample of developing countries. The saalysis has been based on cross country comparisons of dollar labor cost levels for production workers in manufacturing. The crux of the study involves the critLcal effect of labor costs on non-traditLonal exports, and the likely distortion ezerted by NC regulations in many LDCo.

ividence included in **this paper reveals a** major decline of real labor cost levels in LDCs during the l9SOs, both with regard to domestic WPI and to the WPI and labor cost levels in the U.S., whlch is taken as representative of the industrial economies. This decline, however, has not been generally accomplished through deregulation of **the** labor market, as **Indicated** by persistently significant ratios of non-wage costs to labor earnings, but mainly through macroeconomic trends, particularly inflation and nominal devaluations. The degree of cistortion introduced by NWC vith respect to the opportunity cost of labor is more marked in the poorest LDCs, where the small **size** of the formal sector contrasts with the relatively high degree of protection provided through NWC regulations. In general, it is possible to Infer that the countries achLeving more success in the manufacturing export industry exhibit both relatively few labor market regulations and increasing labor cost levels in the long run. This evidence supports proposals for carrying out adjustment prograwn favoring export promotion and higher labor mobility within LDCs, which also favor reduction in labor costs through lses government intervention. However, in analyzing the degree of distortion associated with labor cost differentials between wanufacturing and agriculture in any glven country, we found positive statistical evidence in only a mall
- 27 -

part of the sample. In general, we can indicate that NWC do not **seem** to be the most distortionary labor market factor in LDCs, sinco it is likely that the existence of job security laws or other regulations result in lower labor mobility, thus more significantly affecting l&bor cost differentials between manufacturing and agriculture.

International differences in labor cost levels are important, especially whon comparing LDCs and industrial *conauies. However, observed international differentials of labor cost levels in terms of per capita output **are** not **as** large, thus suggesting the Importance of different capital labor ratios. This finding provides a basis In interpreting labor cost differentials across countries in ters of differentials in labor productivity.
- 28 -

# Na-wa Cot f Labor (Per.antaoss)

||is"6|Iwo|1075|iWo|1S0I|
|---|---|---|---|---|---|
|Latin<br>Aeric<br>|(1)<br>(2)<br>|(1)<br>(1)<br>|(1)<br>(2)<br> <br>|(1)<br>(2)<br>|(1)<br>(2)<br>|
|_Argntina_<br>|0.43 (0.48)<br>|0.33 (0.51)<br>|0.3<br>(0.50)<br>|0.46 (0.61)|0.4<br>(0."4)|
|Iraz1l<br>|0.54(0.0)<br>|0.54(0.58)<br>|0.85(O.56)<br>|_O.6 (O.")_<br>|0.U5(0.42)|
|C.l ib<br>|0.81 (0.10)<br>|0.43 (0.24)<br>|0.52(0.46)<br>|0.62 (0.50)<br>|0.62 (0.60)<br>|
|Chile|O.3(O.$*)|0.48 (0.40)|0.51 (0.42)|0.26 (0.21)|0.25(0.24)|
|muxlc<br>|0.37 (0.75)<br>|0.8? (0.67)<br>|0.n6(0.71)<br>|0.41 (0.57)<br> <br>|0.45 (0.50)<br>|
|Foru|0.24(0.87)|0.24(0.86)|0.24 (0.37)|0.16<br>(0.)|0.5 (0.13)|
|Atrip<br>||||||
|Keny|n.n.|0.1(0.10)|0.18 (0.71)|0.18(0.46)|0.18(0."4)|
|mer.<br>|B..<br>"|0.14 (0.64)<br>|0.10 (0.66)<br>|0.10 (0.77)<br>|0.10 (0.7")<br>|
|Malawi<br>|.e.<br>|0.14 (0.61)<br>|0.14 (0.66)|0.18_(0.84)_|0.18 (0.46)|
|_Nigirl_<br>|0.06 (0.31)<br> "|0.10 (0.20)<br>|0.10 (0.14)<br>|0.10 (0.16)<br>|0.10 (0.#1)|
|Tanzani<br>|0.10(O.5)<br>|0.10 (0.6)<br>|0.10(0."°)<br> <br>|0.12 (0.10)|0.12 (0.44)|
|Zombie|0.06 (0.11)<br>|0.06(0.24)|0.0<br>(0.84)|0.06 (0.86)|0.06 (0.S8)|
|Zimbabe<br>|0.15(0.78)<br> <br>|0.15 (0.66)<br> <br>|0.15(0.07)<br> <br>|0.10 (0.65)<br>|0.16(0.62)|
|India|0.12<br>(0.96)<br>|0.12<br>(1.06)|0.14<br>(1.24)|0.8(1.16)|0.15(1.08|
|Pakistan<br>|0.15<br>(0.90)<br>|0.15 (0.65)<br>|<br>0.15<br>(0.41)<br>|0.15<br>(0.56)|0.15 (0.42)|
|Sri Lanka|0.26 (0.71)|0.215 (0.6)|0.215 (0.53)|0.16 (0.54)|0.U3(0.88)|
|**E_Bt**Asia<br>||||||
|Hong Kng|0.11(0.06)<br>|0.11 (0.06)|0.15 (0.10)|0.20 (0.10)|0.20 (0.10)|
|Kor--<br>|0.20 (0.24)<br>|0.10 (0.21)<br>|0.20 (0.20)<br>|0.20 (0.21)<br>|0.20 (0.21)<br>|
|Singpore|0.11 (0.14)|0.14(0.06)|0.21 (0.14)|0.3" (0.12)|0.85 (0.17)|
|Europe<br>||||||
|Greese<br>|0.58 (0.58)<br>|0.60 (0.46)|0.55 (0.54)|<br>0.5 (0.6)|0.5(0.90)|
|Portugal|0.16(O.n)|0.11 (0.24|)0.24 (0.40)|<br>_0.n0_(0.87)|<br>0.80(0.85)|
|Austria<br>|||0.76 (0.77)<br>|0.61 (0.78)<br>|0.0<br>(0.76)|
|Prace<br>|||0.70 (0.65)<br>|0.74 (0.66)|O.68 (O.7n)|
|Germany<br>|||0.60 (0.74)<br>|O."(0.78)|0.75 (0.77)|
|*psla|||0.90 (0.65)|0.40 (0.67)|0.40 (0.67)|
|Swede"|||0.45(O.56)|0.02 (0.70)|0.6?(O.6)|
|United Kingde|||0.21 (0.33)|0.6<br>(0.51)|O.3(0.36)|
|USA<br>|||0.81 (0.43)|0.85(0.44)|0.87 (0.44)|
|Caned|||0.<br>(0.81)|0.13(0.3)|0.56<br>(0.85)|
|Japan|||0.14 (0.16)|<br>0.16(0.16)|0.17 (0.17)|

*** NUC are** expressed as a proportion of labor "reinlg. Sooe brackets, the ratio _formd_ by the year equivalent _mentary value_ **of IC of laber end** the hourly par capita incoe.

Souree: fer industrial ceoutries, Bure" of Laor Statistics: Hourly Ctomeention Cost for Produ"ion **Worers** (ratl of aditional comptenstio to hourly *ernlngs); IC figures are nt totally camperabbo bl-m vacation days **and** _vwAtion_ besuose are net considered in the **case** of Industrial countries.

For LDCo, ***s** AAn_Ix 1.
- 29 -

# 7.11. .

_~~~~WSl **ta.**

|_Latin imel_<br>Areltn|0.16|0.|l.U0|1.4i|1.34|1.40|1.01|2.14|**1."**|**1.40**|1.00|**3.1**|3.06|3.83|<br>1.11|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|_great_|**0.81**|O."f|O."3|1.00|1.11|1.63|1.48|1.6a|1.04|1.63|1.11|1.16|1.33|1.60|1.40|
|coloi|0.U1|0.it|0.44|0.4"|O.it|O.|0.01|11.8|1a|1.631|1.64|1.67|1.U1|1.33|1.13|
|ail.|0.4|0.6|0.48|0.63|0.111e|1.01|1.36|_1.46_|**3.43**|**3.06**|**1.30**|1.1U|0.7n|0o.|0.9|
|**"*l.e**|Ca<br>|0.itit|.31|3.06|1.63<br>|1.73<br>|1.61|3.34|3.10|**3.18**|1.46|1.0|1.74|1.6|1.81|
|P...|04^|° di|0.6|O.--|0.1*|0.iti|0.it|o06|**006**|**0.6**|o.n1|0.06|0.n|o.|a..|
|**Av.r.e**|O.4"|O."6|1.6|1.63|1.63|1.11|1.81|1.S?|1.63|1.36|1.40|1.44|1.35|1.41||
|_KowaS_|**0.a**|0.34|0.78|0.71|0."8|0.63|0.01|1.18|1.63|0.46|0.09|**0.3**|0."8|**a.m.**|**us**|
|Noresse||**0.63**|1.46|**I1.13**|**1.63**|S"|11.013|63.06|1.63|1.411|11.311|1 1.38|1.24|1.311|<br>**u.**|
|lIuI|0.11|0.63|0.811|1 0.3|0.i|01 Y|0.43|C."|0.#1|0.63|0.46|0.84|0.itit|..*|**.. .**|
|Nlgrli|0.16|0.3|0.30|0.40|0.46|0.63|0.78|1.63|1.13|1.00|1.e0|1.1I|1..0|1.00|A.&.|
|Tansal.|0.3|0.34|_0.Wt_|0.6.|0.63|0.63|0.63|0.13|0.63|0.7.|0.73|0.01|0.61|||
|Zmbia|O.8W|0."|0."|1.37|1.04|1.3|1.40|i.e|1.46|l.8<br>|1.*.|0.04|0.63|_n.m._|**n.m**|
|Avoroga|0.31<br>|0.63|0.63|**0."**|0.90|1.01|1.30|.31|.**1.63**|1.31|1.14|1.04|1.06|||
|Idor4<br>|O.31|**03**|0.4|0."|O.81|0.63|0."|0.73|0."|**0.41**|0.4|0.63|0.Oii|||
|Patk.ta|0.16<br>|).n<br>|0.34<br>|0.<br>|0.54<br>|0.4o<br>|0."4<br>|0.41<br>|0.46<br>|0.48<br>|0.46|o.M|0.81|**n.m.**|a...|
|kLLsia|LS~~|a- 1JL|LU-|Lf|_LUL_<br>|_L3M_|_LUL_|LA-|2LM<br>|-LA|LU-|_LML_|_LU_|.*-|.3|
|**Meama**|0.24|**0.0**|**0.Ca**|0.23|0.it|0.43|0.44|0.4|<br>0.44|0.44|_0.46_|0.44|_0.4"_|||
|H-.g<br>"|0.16|0.6|0.70|_0.67_|1.06|_1.18_|_11_<br>1.81|_1.81_|_1.381_|<br>_1.611_|_7_1.6|1.60|1.76|1.63|<br>2.11|
||.orer<br>0.07|0.30<br>|0.8|44|0."|0.63|1.06<br>|1.01<br>|1.06|1.18|1.20<br>|1.06<br>|1.81<br>*|1.63|1.14|
|nwlarLa|2|_L_<br>_|O."|0.7|O."|1|L|L|_oJ_.r||LAL_|21|22|1.2|24|
|Avernge|o.21|0.6|0.6|0.70|0.06|0.07|1.16|1.37<br>**_._**|**1.1**|I.40|1.84|I.61|1.78|1.73|1.05|
|Or.e.e|0.i1<br>|0.63<br>|1.09|1.013|2.21|2.614|8.87|8.7|**8."**|4.13|3.76|**8.74**|**8.63**|4.00|**n.s.**|
|Det|~~.3|6<br>0.4i|106|l.3i<br>|1.ilO<br>|1.38<br>|1.06<br>|203<br>|2040<br>|1 06|131|1.44|1.06|3.04|Ai..|
|**Aver.ag**|0.40|0.63|1.4|1.79|1.94|2.|2.3.1i|2.00|2.11|8.00|2.U6|S."|2.30|S..07||
|**Austrim**|||4.84|**4.63**|**3.47**|**6.67**|7.67<br>r|<br>**.5.**|7.40|7.47|7.40|3.04|7.n3|10.21|12.i|
|Franc|||4.61|4.76|**8.31**|0.4i|**7.r04**|."<br>|**4.06**|7.u1|**7.74**|7.36|7.63|10.31|1u.n|
|Osrame|||**0.11**|6.73|7.u1|**S.0**|**11.26**|u1.n1|**_10.161_**|**10.n**|**10.63**|_0.46_|9."t|**1i.6**|16.4i11t|
|Spain|||3.30|3."|8.26|8.W0|5.40|8.06|8.63|8.86|4.64|4.16|4.70|0.47|7.63|
|Sden|||7.13|6.211|**8.**|S."|11.ti|13.811|11.ii|10.07|0.00|0.17|0.41|_12.46_|18.14|
|iMloedNinadm|||**8.63**|***1U**|1.40|4.it4|**1.31**|r43i|7.30|**3.06**|**3 3**|**3.06**|**6.n**|7.06||
|**Avetgg**|||**4.73**|**8.03**|**8.66**|**6.77**|**0.17**|**9.9**|**0.**|7.07|**C.**|7.34|_7.ii_|10.00|13.34|
|LOA|||**6.6**|**6.94**|7.i0|**0.3**|0.06|**0.64**|IO.4|11."4|18.10|**13.81**|13."|18.31|18."|
|_C&r.sz_|~<br>|~|**80**<br>_i_|**6**<br>**_.0_**|r.u*|7.0i|7.n|**347**|**0.S2**|10.30|1u.0r|**l1107**|**1006**|110|**11.06**|
|**AvMere**|||**6.10**|**0."**|7.81|**7.70**|**C.**|**9.16**|10.06|10.03|11.54|11.70|1."|**12.13**|12.73|
|**Japan**|||**8.06**|8.80|**4.06**|**8.54**|**8.4**|**8.81**|**6.78**|8.70|**.78**|**6.84**|6.47|0.47|**11.54**|

**_mtaree,_ S"** Appndixs 1.
- 28

# Tebl. I

# Nm-mw CUMs of Laber

**(poreenteg.e*)**

||1665|1070|~~~1075|3016||
|---|---|---|---|---|---|
|Latin amrle|(1)<br>(1)|(1)<br>(1)|(1)<br>(2)|(1)<br>(2)|(1)<br>(2)|
|Arj<br>lttna|0.33 (0.49)|0.33 (0.51)|0.35 (0.50)|0.4<br>(0.61)|0.46 (0.64)|
|Iresil|0.34 (0.60)|0.34 (O.U)|O.3(0.8)|0.80 (0.86)|0.U4 (0.42)|
|C.l_b1|0.31 (0.10)|0.48 (0.24)|0.52 (0.40)|0.61 (0.60)|0.62 (0.60)|
|Chil,|0.36 (0.30)|0.48 (0.49)|0.51 (0.41)|0.21 (0.15)|0.15 (0.24)|
|Mexlo<br>|<br>0.87 (0.78)<br>|<br>0.37 (0.67)<br>|<br>O.6 (0.71)<br>|<br> <br>0.41 (0.57)<br><br>|<br>0.45 (0.50)<br> <br>|
|Port|0.24 (0.37)|0.24 (0.36)|0.24(0.37)|<br>0.25 (0.13)|0."<br>(0.23)|
|Aft ie||||||
|Konya|n|0.13(0.U)|0.12(0.71)|<br>0.13 (0.69)|0.13 (0.44)|
|<br>mero|..|0.14 (0.64)|0.16(0.16)|<br>0.10(0.77)|0.10 (0.70)|
|slei|n.e.|0.14 (0.91)|0.14(0.66)|<br>0.13(0.64)|0.13(0.46)|
|Nigeri|0.00(0.31)|0.10 (0.20)|0.10 (0.14)|0.10 (0.10)|0.10(0.#5)|
|T-anzali|0.10 (O.63)|0.10 (O."6)|0.10(O.66)|<br>0.12 (0.50)|0.12 (0.44)|
|Zambia|0.50 (0.11)|0.06 (0.14)|0.06(0.34)|<br>0.06 (0.36)|0.50(0.37)|
|Zimb_be|0.15(0.73)|0.15(0.66)|0.15 (0.47)|0.16 (0.06)|0.15(0.31)|
|India|0.12 (0.55)|0.11 (1.06)|0.u4 (1.4)|0.13(1.13)|0.36 (1.0$|
|Pekieta|0.15 (0.60)|0.15(0.66)|0.15 (0.41)|0.15 (0.30)|0.15 (0.42)|
|Sri Lantk|0.25(0.71)|0.25 (0.62|0.n3 (O.5)|0.25(0.34)|0.33(0.28)|
|E..t**Asia**||||||
|HWo Kon|0.11 (0.06)|0.11 (0.06)|0.15 (0.10)|0.20 (0.10)|0.20 (0.10)|
|Korea|0.20 (0.24)|0.20 (0.25)|0.20 (0.20)|0.20 (0.21)|0.20 (0.21)|
|Slapore|0.11 (0.14)|0.14 (0.06)|0."1 (0.14)|0.20 (0.12)|0.35(0.17)|
|Europ.||||||
|a<br>c|O.<br>(0.53)|0.50(0.40)|0.15(0.54)|<br>0.55 (0.66)|O.56(0.90)|
|Portugl|0.16(0.21)|0.S1 (0.24)|0.14 (0.40)|0.23 (0.$3)|0.80 (0.")|
|AwlAril|||<br>0.76 (0.77)|<br>0.61 (0.73)|0."<br>(0.76)|
|Fr|||<br>0.70 (0.6)|<br>0.74(0.65)|0.63(0.73)|
|Germay|||0.60 (0.74)|0."<br>(0.76)|0.75 (0.77)|
|Siml|||0.50 (0.")|0.40 (0.67)|0.40(0.67)|
|b de|||<br>0.45 (0.66)|<br>0.61(0.70)|0.67 (0.66)|
|United<br>Kingo|||0.21(0.33)|<br>**0."**<br>(0.$5)|O.U(0.36)|
|USA|||O.31(0.43)|0.3 (0.4)|<br>0.37(0.44)|
|Canad|||O.1(0.81)|0.25(0.33)|0."1(0.35)|
|Japan|||<br>0.14 (0.16)|0.16 (0.16)|0.17 (0.17)|

a **N4C are** expresood **as a** proportion of labor earnings. Sotwoen breckot, tle *tae formd by the yeor eqivalont monetary value of _UC_ of lor enW the hourly per capita Ince.

Soure.s For industrial countries, Bureau of Labor Statiatle:s Hourly Com_eestio Cot for Production Workers (ratle of additioenl cempnotien to hoIrly earnings); NK figures are nt totlly comprable becaus vaction days and vacation are not coneidaerd In the cas_ of ldusrll countriee.

For UICe. * Ameedix_ 1.
- 29 -

t1 e1" e_( S [_ l. l.er Tulle ~~~~~~~~~4fil **I~** I7 166 147 16 17 1071 147 106i **141** l it im 1_ im tOn * 1.

|ArSeIas,|0.79|0.91|1.40|1.48|1.04|1.40|1.41|3.14|1.41|1."|1."|2..4|1.06|2.n|1.|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|IlVsil|0.3|O."|0.41|1.01|1.11|1.41|1."|1.'|1.64|I1.1|1.15|1.16|1.1|1.41|1.49|
|Clembeo#|0.5|**0.5**|0.44|0.4"|O."|0.73|0.91|1.18|1.1|_1._|1.64|I.6|1.4|1.41|1.18|
|Chile|0.4"|0.69|0.41|0.40|O."|1.0?|**1.1**|1.45|**1.41**|1.01|1.85|1.12|0.?7|o.8|0.9|
|"Oids,|0.4|0.65|1.81|3.01|1.06|1.71|1.9"|1.64|.10|2.18|1.46|1.4|1.74<br>|1.6<br>|1.81<br>|
|P....|0.51|o.S|06,|056|075|**o_8**|0.50|0.68|**01**|**01**<br>|01<br>|0<br>e.oo<br>|0.7<br>|0"<br>|".11.|
|Avers"|0."|O.6|1-.0|1.o0|1.06|1.18|-1.1|1.8?|1.|1.n|1.40|1.40|1.1|1.41||
|_Kamo_|_0.S1_|0.16|0.75|0.71|0.79|0.41|0.9?|1.8|1.06|0.|0.6|**0.0**|e0.79|||
|.m.d||0.0|_1.46_|1.|1.4|1.87|2.01|3.01|1.60|1.0|1.81|1.60|1.1|I.D1|f..|
|Obl..i|0.11|**0.n**|0.8|0.41|0.411|0 as|0.46|O."|**0.0**|0."|0.45|0.6|0.41|**a.*.**|**.**|
|mi.rlu|0.0|0.15|0.59|0.411|i.46|0.4|0.75|1.40|1.18|1.01|1.06|1.1|1.10|1.04|a.m.|
|T.aat.|0.r|0."|0.|0<br>0|.84|_0.4_|0.01|**.71**|0.4|0.77|0.76|0." 6|0.1|a.m.|a.m.|
|zoobis|0.67|0.4|0."|1.1|1.00|1..|1.40|1.40|1.40|1.87|1.13|**0.9***|**0."**|a.m.|a..|
|Avear"|0.81|0.41|**0e**|O."|o."|1.01|1.41|1.81|1.41|1.81|1.14|1.16|1.01|||
|Towle|0.n7|**_0.n_**|**_O."_**|0.40|0.81|**0.11**|_0."_|0.71|0.67|0.0|O."|0.u|0."|f.m.|A.M.|
|P.ak.ita|0.16<br>|0.<br>|0.16<br>|0.17<br>|0.16<br>|0.41<br>|C.4<br>|0.41<br>|0.48<br>|0.40<br>|0.48<br>|0.61<br>|0.81<br>|a.&.|&.a.|
|kLL~~~L|LU~-|1 JLS|L Lu-|LUL-|LUL-|LMU-|LUL-|Lu-|2LU-|L5L|LUL-|G.S|LW-|aa|a|
|Avftrf0|0-.1|**O.1**|0.8|O.-S|0.4|1 0.4|0.44|0.46|0.4|0.44|0.48|0.44|0.48|||
|HN<br>C|0.16|**0.41**|0.76|0.0|1.06|1.10|1.31I.|6|**1.4**|1.67|1.4|1.60|1.?8|1.4|2.11|
|Korea|0.0?|0.15|0.1|0.4<br>|0.59<br>|O.1<br>|1.01|1.01|1.06|1.18|1.411|1.11|1.01|1.41|I."<br>|
|alokl|0.2|2JL|gf|0.7|0.0|0411I|_|<br>J_|IJ._|i,6|jM|211|2.a|I,w|2, 0|
|Avers"|0.15|0.40|**0.41**|0.70|0.6|0.97|1.18|1.17|1.41|1.46|1.16|1.61|1.79|1.78|_1."_|
|_Crea"_|O.U|0.60|1.40|_1.61_|**2.39**|**1.10**|**8.87**|**8.78**|**8.41**|4.11|8.79|8.74|8.06<br>|4.09<br> <br>|**5.0.**<br>|
|P.,<br>0-4tF<br>1.<br>|U..I<br>1<br>St0.|0 0.46.||**1.66**|**14 **|i|||||||O|<br>3S0o<br>|<br>_a.s_|
|Avers"|0.40|0.4|_1.44_|1.79|1.94|3.65|2.41|S."0|**1.I**|8.00|2.0111|2.|**1.**|**8.07**||
|_Austrei_|||4.16|**4.4**|**8.47**|**6.07**|7.07|8.44|7.40|7.47|7.40|2.04|7.14|10.11|18.61|
|fPeao|||4.01|4.70<br>|_S.1_|6.48<br>|7.4<br>|8.94<br>|8.06<br>|**7.41**<br>|7.74<br>|**_7."_**<br>|7.U<br>|10.17<br>|11.41<br>|
|a. mo_|||**G.4**|**6.75**|7.0|**9.05**|**11.4**|**12.41**|**10.4111**|**10.1**|**10.TO**|**.48**|**9.6**|18.#1|16.0|
|Spain|||2.81|**3.41**|**8.41**|**8.90**|8.40|**6.9**|**8.6**|**8.11**|4.64|**4.41**|**4.79**|**6.47**|7.61|
|8..de.|||7.18|**_G._**|**0.11**|S."|**11.41**|**11.81**|11.60|10.07|G."|**9.17**|**O.6**|11.48|U.1|
|I.t.iX<br>Kl_i.|||g|**8.1**|**8.40**|*.4|**8.6U**|7.45|**68=**|**6.41**|**641**|**5.41**|***.1U**|7.6O|*0|
|Av.rsu|||4.73|5.06|**5."**|**6.77**|**0.17**|**9."**|**G..44**|7.9?|**9.41**|7.116|7.16|10.0|13.41|
|uA|||**6.U1**|**6.94**|**7.41**|**6."**|9.40|9.14|10.04|U."|U2.10|U2.81|11.6|181|18.40|
|Cma.de|||**56,**|**6.41**|*.U8|7.01|7.59|**5.4,**|**968**|10.41|10.07|11.07|1041|110.0|**11.4**|
|Av.gse|||6.10|6.90|7.4|7.70|**8.11**|**9.'**|10.61|1O.M|;1."|11.79|11.11|18.18|11.71|
|Japan|||8.06|8.41|4.06|6.U|8.40|8.61|6.79|8.70|6.79|6.84|6.47|9.47|11.84|

,.r..: S" 4pp.,dl 1.
# Tabl, J

# Real Hourly Cost of Labor (Iadx 1950 a 100)

||1i6|1970|1976|1976|1977|1970|1979|1910|1|901|19is"|1|994 10|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Argentino|**91.3**|105.1|107.9|76.9|80.0|84.0|90.2|100.0|**72.5**|2.7|32.8|102.s|**68.3**|
|Brazil|61.4|31.8|95.1|106.7|110.5|122.9|117.4|100.0|10S.l|120.2|80.4|**72.3**|76.4|
|Chile|94.3|116.0|45.8|61.2|U4.2|94.8|100.3|100.0|151.2|129.2|79.7|67.6|**46.5**|
|Colombia|**$6.5**|76.6|59.9|68.9|72.0|**62.3**|92.1|.100.0|107.7|**12.**|12.2|126.8|106.6|
|_Grece_|83.4|52.4|69.7|75.6|83.0|97.8|108.1|100.0|39.o|91.2|39.4|6.9|t6.4|
|Hong Kong|47.7|61.0|77.4|34.6|94.4|100.4|99.0|100.0|94.1|91.8|**39.8**|91.3|100.9|
|India|106.0|94.7|94.8|97.s|91.7|108.4|101.5|100.0|**86.3**|79.0|73.7|75.8|79.6|
|Kenya|79.8|116.0|101.8|92.0|91.6|101.2|91.2|100.0|U.6|75.4|66.1|86.4|60.6|
|Korea|20.4|47.6|**51.8**|84.0|80.9|101.7|119.6|100.0|98.2|100.5|106.4|109.|112.9'|
|Malawi|6.6|110.1|92.4|65.6|**9.8**|**96.6**|94.9|100.0|91.1|111.1|79.1|**56.6**|NA|
|Mexico|39.2|80.0|109.5|110.0|87.4|37.2|**3.1**|100.0|112.0|73.8|51.3|57.7|**5.6A**|
|Morocco|NA|100.2|107.0|106.8|104.8|116.6|112.4|100.0|79.9|78.8|6.0|54.9|54.6|
|Nigeria|40.4|46.2|5.2|U5.4|9.0|59.1|79.8|100.0|65.1|90.2|37.2|90.3|39.1|
|Pakistan|118.6|160.7|91.9|**91.5**|114.8|182.9|122.2|100.0|gy.1|102.0|7.6|109.4|106.9|
|PFru|140.3|146.1|191.8|198.0|125.4|**96.3**|77.0|100.0|106.4|106.7|79.0|".1|3.9|
|Portugl|87.6|54.4|117.9|118.4|106.2|101.6|91.1|100.0|80.7|32.0|39.8|60.6|U.4|
|Slgpore|74.1|".|94.8|90.0|90.5|**92.6**|9 .7|100.0|100.0|117.1|180.5|142.2|144.4|
|Sri<br>Lanka|233.9|**209.M5**|1.S|127.7|1$7.6|156.3|190.7|100.0|92.4|**91.9**|15.7|100.8|109.0|
|Tanzania|NA|115.1|122.2|109.1|109.0|109.4|100.6|100.0|102.0|**91.8**|**91.9**|73.6|74.0|
|Zambia|39.1|97.1|102.6|12t.7|97.5|110.8|107.8|100.0|60.6|33.1|67.4|5$.1|49.3|
|_Ziebabe,_|79.4|79.4|97.5|.5|9..1|92.7|90.6|100.0|106.5|100.9|91.4|51.4|**09.5**|
|USA|NA|NA|99.4|108.6|109.3|107.9|104.6|100.0|100.9|109.3|109.1|110.2|<br>114.7|

* Original dt weor In nominal dollor term. The deflator uoid mm the WPI of t* UlSA. Source: Table 2 **_and_** Wenrd Sank Filel (Audre)
- 31 -

## Table 4

# 9m.lormost Trends I. Usnutacturin

||1906|1yo|**197**|1360|1461|12|IM|1914|108$|
|---|---|---|---|---|---|---|---|---|---|
|LatinAmrica||||||||||
|Argntina|n.e.|100|110.5|31.5|7.6|78.4|75.3|77.0|74.9|
|Braz I|11.0|100|166.0|215.2|236.6|283.6|251.8|264.6|278.6|
|Colomlba|68.4|100|182.0|150.0|145.7|142.0|187.8|184.4|182.1|
|Chilt|100.8|100|**31.3**|**34.0**|**70.9**|J2.4|62.1|67.5|72.7|
|Mexico<br>|n.x.|100<br>|116.0|140.0|147.8|144.0|180.4|123.0|124.4|
|Form|91.7|100|ma..|181.3|122.4|140.4|158.3|153.4|168.1|
|Afric||||||||||
|Kenya|7n.2|100|15.4|**A.**|2M.1|227.6|2S7.1|246.3|256.|
|moro|R..|100.|130.7|100.9|111.8|173.0|104.0|132.5|201.8|
|Malawi|59.0|100|140.9|211.1|M2|133.2|13.0|n.*.|n.e|
|Nigeria<br>|61.8|100|17.5|88.5|851S.4|267.7|26.3|n.*.|r.|
|Tanzania|51.8|100|n.e.|200.0|**215.9**|2.4|_n4._|210.2|224.1|
|ZOWba|U.0|100|187.0|144.9|140.7|146.7|150.7|152.7|154.2|
|Zimabe|72.4|100|140.5|140.J|150.$|141.7|1n.3|140|158.1|
|India|91.0|100|110.7|147.2|146.72|1Q.C|146.4|149.5|152.7|
|HogKong|61.4|100|126.0|133.8|1U3.9|157.6|150.$|133.1|153.8|
|Korea|56.9|100|**1S.6**|248.6|248.1|240.8|268.8|273.4|291.6|
|Pakistan|3.0|100|107.6|106.0|107.0|118.4|118.7|114.0|114.4|
|Singapore|89.0|100|156.2|22.1|220.4|224.1|221.Q|224.1|206.9|
|Sri Lanka|"2.5|100|1209.|165.5|164.2|842.6|R.&.|n.m.|n.a.|
|Europe||||||||||
|arc|92.0|100|124.0|188.7|180.4|141.6|148.3|146.1|143.4|
|Portugal|64.5|100|186.8|158.6|154.5|152.|150.2|144.7|14506|
|Austris|93.8|100|102.0|106.5|108.5|99.8|99.5|00.0|00.1|
|Frae<br>|933.6|100|104.1|#3.9|96.7|94.3|92.1|39.4|66.7|
|Germany|93.1|100|**3.S**|U.1|33.0|62.9|30.2|70.5|40.6|
|Spain<br>|90.4|100|118.6|128.7|115.0|10.1|104.$|0.6|95.5|
|Sweden|00.6|100|101.9|94.0|90.9|33.9|34.0|64.4|34.6|
|United<br>Kingd|n.r.|100|38.0|31.8|72.4|J7.2|6.3|68.7|63.6|
|USA|94.3|100|92.9|106.5|108.4|07.4|06.5|97.7|95.7|
|Canad"|911.|100|106.4|118.1|118.2|104.0|102.1|106.1|107.2|

Source: Manufacuring Data Sase, The World Sank (KOD).
Table 3 _c_ Real Hourly Cost of Labor (Index 1960 1A00)

||1965|1970|1975|1976|197|1076|1970|1ow|1961|1962|1963|1964|19106|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Argentina|<br>96.3|10.1|107.9|79.9|90.0|64.0|90.2|100.0<br>|72.5|**62.7**<br>|32.4<br>|102.1<br>|**63.9**|
|Brazil|61.4|61.3|95.1|106.7|110.5|122.9|117.4|140.0|106.1<br>|120.2<br>|60.4<br>|72.3<br>|76.4<br>|
|Chile|94.5|116.0|45.5|61.2|64.2|94.5|100.6|100.0|15U.2|129.2<br>|79.7<br>|67.6<br>|46.5<br>|
|Colombia|6.6|76.6|59.9|65.9|72.0|**62.6**|92.1|-100.0|107.7|125.8<br>|129.2<br>|126.8<br>|106.3<br>|
|Creec-|58.4|62.4|69.7|75.6|C6.0|97.6|108.1<br>|100.0<br>|39.9<br>|99.2<br>|39.4<br>|36.9<br>|3i6.4<br>|
|Hong Kong|47.7|61.0|77.4|64.6|94.4|100.4|99.0|100.0|94.1|99.5<br>|59.1<br>|91.S<br>|100.9<br>|
|India|106.0|94.7|94.6|97.3|96.7|105.4|101.6|100.0|95.9|T9.0|79.7<br>|75.5|79.6|
|Kenya|79.3|116.0|101.5|92.0|-96.9|101.2|96.2|100.0|63.6<br>|75.4<br>|09.1<br>|65.4<br>|60.6<br>|
|Korea|20.4|47.6|61.3|_64.0_|60.9|101.7|119.9|100.0|93.2|100.6|106.4|109.6|112.9|
|Malaw1|66.6|110.1|92.4|35.6|**96.6**|96.6|94.9|100.0|96.1|41.1|79.1<br>|53.5<br>|NA<br>|
|MexIco|69.2|30.0|_109.6_|119.0|<br>87.4|67.2|<br>69.5|100.0|112.0|7|5.<br>$1.3<br>|57.7<br>|**59.6**|
|Morocco|NA|100.2|107.0|106.6|104.$|116.6|112.4|100.0|79.9<br>|78.5<br>|<br>**66.0**<br>|54.9<br>|54.6<br>|
|Nigeria|40.4|46.2|56.2|63.4|59.0|59.1|79.5|100.0|95.1<br>|90.2<br>|67.2<br>|90.6<br>|**36.1**<br>|
|Pakistan|113.6|150.7|91.9|96.5|114.5|182.9|122.2|100.0|97.1|102.0<br>|97.6<br>|106.4<br>|106.6|
|Peru|140.3|146.1|136.5|16S.0|125.4|**5.5**|77.0|100.0|106.4|106.7<br>|79.0<br>|6$.1<br>|36.9<br>|
|Portug|8 n7.6|54.4|117.9|118.4|196.2|101.6|96.1|100.0|90.7<br>|92.0<br>|09.5<br>|00.6<br>|6.4<br>|
|Slngapore|74.1|68.6|94.3|90.6|90.5|92.4|99.7|100.0<br>|109.0<br>|117.1<br>|**180.5**<br>|142.2<br>|144.4<br>|
|Sri Lanka|235.9|209.6|165.1|127.7|157.3|15t.9|119.7|100.0|32.4<br>|94.9<br>|65.7<br>|106.5<br>|106.0<br>|
|Tanxania|NA|116.1|122.2|106.3|106.0|106.4|100.6|100.0|102.0|96.5|*6.9|75.6|74.0<br>|
|Zambia|69.1|_97.l_|102.6|125.7|97.5|110.5|107.6|100.0|90.6<br>|33.1<br>|67.4<br>|55.1<br>|49.0<br>|
|ZImbbwe|79.4|79.6|97.5<br>|96.5<br>|36.1<br>|92.7<br>|90.3<br>|100.0<br>|105.5<br>|106.9<br>|91.4<br>|61.4<br>|U9.1<br>|
|USA|NA|NA|99.4|108.6|106.3|107.9|104.6|100.0|<sup>100.9</sup>|<sup>106.8</sup>|<sup>106.1</sup>|<sup>110.2</sup>|<sup>114.7</sup>|

a Original dat were In nominal dollar term.<sup>The defIator _sed</sup> _mm_ the VI of te USA.

Source: Table 2 and World Bank Fi law (Andre)
- 31 -

## Table 4

# **Eel*i'm** t Tront In Mfnutaeturlns

||190|170<br>Ia|1175|iW|1901|1902|1368|SW4|1935|
|---|---|---|---|---|---|---|---|---|---|
|Latin Americe||||||||||
|Argentina|n.o.|100|110.$|93|7.6|78.4|75.9|77.3|74.9|
|Brazil|33.1|100|166.0|215.2|216.6|238.6|251.8|204.6|273.6|
|Colombia|3S.4|100|182.0|150.0|<br>145.7|142.0|187.8|184.4|182.1|
|**Chil**|100.8|100|#.|34.9|79.9|62.4|S. 1|07.5|72.7|
|Mexico|**n.*.**|100|116.0|140.0|147.8|144.0|150.4|l".0|123.4|
|Peru|91.7|100|".m.|186.6|122.4|149.4|158.3|153.4|108.1|
|Kenya|78.2|100|154.6|306.5|<br>22.1|**237.9**|237.1|240.9|256.|
|Morocco|**n.o.**|loo*|180.7|160.9|110.8|176.0|134.0|192.5|201.8|
|Malawi|5.0|100|149.9|211.1|202.6|19J.2|1#93.|ne..|n.a.|
|**Nlgeriao**|**61.**|100|167.5|885.5|<br>831.4|267.7|232.9|n.&.|n.m.|
|Tanzania|56.8|100|n.e.|300.0|<br>215.9|206.4|214.5|219.2|224.1|
|Zambia|55.0|100|187.0|144.3|146.7|140.7|13O.?|152.7|154.3|
|Zimbee|72.4|100|140.5|140.6|<br>150.0|162.7|151.3|149.6|158.1|
|**lndle**|91.0|100|119.7|147.8|i46.7|150.9|<br>140.4|149.5|152.7|
|Hong Kong|01.4|100|**126.0**|**1JJ.8**|<br>1SJ.9|157.9|159.6|168.1|<br>159.8|
|Kora|**55.9**|100|1in.9|2348.|248.1|249.8|2J8.8|217.4|<br>291.9|
|Pakistan|6.0|**100**|107.6|106.0|107.9|118.4|118.7|114.0|114.4|
|SIngapore|$9.0|100|156.2|232.1|229.4|234.1|2231.|<br>224.1|206.9|
|Sri Lanka|**U6.5**|100|129.6|**141.5**|164.2|842.6|na.|n.s.|**n.m.**|
|**EuroDe**||||||||||
|a99|**01.**|100|124.6|1i.7|1S9.4|141.0|148.3|14.1|140.4|
|Portugal|34.5|100|16.8|1U6.6|154.5|152.8|150.2|144.7|148.6|
|Austria|**908**|100|102.6|106.6|<br>108.5|99.8|**99.5**|99.0|99.1|
|France|96.6|100|104.1|99.9|93.7|94.8|92.1|39.4|36.7|
|Gormany|9J.1|100|39.9|33.1|<br>36.0|62.9|J0.2|70.5|30.6|
|<br>Spain|90.4|100|118.3|12S.7|<br>115.0|107.1|<br>104.8|99.6|95.6|
|<br>Sweden|99.6|100|101.9|94.0|90.9|**36.***|34.0|94.4|84.6|
|United<br>Kingd|om n.o.|<br>100|90.0|**31.8**|72.4|**67.2**|**6S.3**|63.7|08.6|
|USA|**34.8**|100|08.9|**106.5**|108.4|07.4|**06.5**|97.7|95.7|
|Canad|96.9|100|106.4|118.1|118.2|104.0|102.1|106.1|<br>107.2|

Source: Manutacturing **Data Iae,** The World Sank (WAD).
- 32 -

Table 6 Agricultural Labor Force (AL) **and** Share of Manufactured Zxperts (SM) (percentages)

||19|70|19|80|1985|
|---|---|---|---|---|---|
||AL|SM|AL|SM|SM|
|Latin<br>America||||||
|Argentina<br>|16.0|13.9|13.0|23.2|21.3|
|Brazil|44.9|16.0|31.2|39.2|49.7|
|Colombia|39.3|8.0|34.2|20.4|20.8|
|Chile|23.2|4.4|16.5|9.5|8.5|
|Mexico|44.1|27.6|36.5|14.2|24.0|
|Peru|47.1|1.5|40.0|17.1|21.4|
|Africa||||||
|**Kenya**|84.8|11.2|81.0|15.1|12.8|
|Morocco|57.6|10.0|45.6|13.2|38.9|
|Malaiw|90.5|11.4|83.3|13.4|11.0|
|Nigeria|71.0|1.4|68.1|0.5|0.6|
|Tanzania|n.a.|<br>12.9|**n.a.**|<br>15.8|15.2|
|Zambia|76.6|0.8|73.1|0.9|2.5|
|Zimbabwe|77.3|15.9|72.8|28.4|34.5|
|**Asia**||||||
|India|71.7|52.4|69.7|62.0|70.8|
|Hong Kong|4.4|93.4|2.1|92.0|92.7|
|Korea|49.1|82.1|36.4|90.6|91.4|
|Pakistan|58.9|30.9|54.6|53.7|58.5|
|Singapore|3.4|30.9|1.6|53.7|58.5|
|Sri Lanka|55.3|1.7|53.4|18.8|34.6|
|Europe||||||
|Greece|42.2|35.3|30.9|46.8|49.4|
|Portugal|31.8|64.1|25.8|71.9|77.3|

Note2 There were no data on agricultural labor force AL: proportion of the total labor force.

SM: proportion of total exports.for 1985.

Source: World Tables, 1987, The World Bank.
- 33 -

# Table 7

Ratio. Total Labot Cost to Per Capita tonome

||19U5|1?70|1975|1900|101|1906|1968|1964|1905|
|---|---|---|---|---|---|---|---|---|---|
|LatinAmerlic||||||||||
|_Argetlna_|1.96|2.07|1.90|1.02|1.78|1.11|1.1|2.20|2.01|
|<br>Brazil|**2.87**|2.10|**1.52**|1.46|1.51|1.U8|1.0,|1.12|1.51|
|Colombia|2.11|2.11|1.04|1.31|2.00|2.22|2.42|2.59|2.40|
|Chil|1.4U|1.68|1.25|1.22|1.75|2.06|1.00|1.4S|1.22|
|Mexico|2.78|2.47|1.57|1.09|1."|1.74|1.61|1.U1|1.60|
|Peru|.<br>1|.9 1.00|1.9U|1.40|1.86|1.40|1.89|1.16|0.90|
|Atri<br>so||||||||||
|**Kenya**|0.41|7.95|0.86|S.5|5.57|5.70|5.74|5.98|5.6|
|Marose*|n.*.|0.01|5.74|4.01|5.20|4.76|4.n2|4.U6|4.90|
|Malawi|4.25|7.81|5.44|5.14|5.48|7.18|5.11|4.00|"n..|
|Nigeria|8.49|2.21|1.01|2.05|2.48|2.47|2.44|2.71|2.64|
|<br>Tanzania|n.m.|7.27|7.02|S.9U|S."|5.08|4.97|4.78|4.21|
|Zambi|2.67|1.02|4.16|4.92|4.42|4.44|4.87|4.00|4.52|
|Zimabw|S."|5.82|5.18|6.16|0.10|4.22|6.06|6.4U|0.07|
|A)||||||||||
|India|5.87|5.62|6.48|0.24|5.94|5.40|0.18|5.29|5.15|
|Nno" KCog|0.06|0.0|0.74|0.5"|0.57|0.50|0.50|O."|O."|
|Kora|1.49|1.49|1.16|1.10|1.24|1.16|1.7|1.16|1.20|
|Pakistan|0.07|5.20|$.16|2.97|2.78|2.75|2.97|8.28|8.24|
|Sinppore|1.80|0.70|0.75|O.6|0o.so|<br>O."|0.19|0.59|0.54|
|Sri Lanka|$.13|8.10|2.66|1.6|1.48|1.59|1.55|1.84|1.0|
|Eurome||||||||||
|creac|1.58|1.47|<br>1.62|1.06|2.00|2.16|2.20|2.26|2.26|
|Portugal|1.8|1.40|1.10|1.71|1.75|1.06|1.01|1.57|1.54|

Source: Table w and World Bank Files
-34-

Rati: V15 LkerTable S

||CottPer C|eeltaprodyat|is"|
|---|---|---|---|
|1970<br> <br>|175|16|,|
|Argenwt<br>0.60|0.60|0.40|0.36|
|OrallI<br>0.21|0.17|0.10|0.14|
|Colombia<br>0.16|0.16|0.17|0.10|
|Chi1e<br>0.16|0.11|0.10|0.17|
|Usule<br>0.6<br>|0.17|0.10|0.37|
|Per.<br>o<br>.<br>JJ<br>o9l|**JJs-**|||
|o0.n|0.1|0.24|0'f1|
|3d<br>(0.18)|(0.16)|(0.10)|(0.05)|
|Kaayp<br>O.51|0.441|0.4"|0.47|
|Mreeee<br>0.4t|0.54|0.40|O.5|
|Umlami<br>0.17|0.16|0.14|0.15|
|NigerIa<br>0.10|0.11|0.11|0.10|
|Teacania<br>0.40|0.U I|0.42|0.40w|
|Zeab1<br>0.36|0.24|0.21|0.20|
|31-^^E<br>0.14|0.15|0.16|**0.16**|
|U<br>(0.15)|(0.18)|(0.14)|(0.10)|
|India<br>O."|0.70|0.90|0.56|
|Pinkib<br>e<br>0.10|0.14|0.16|0.14|
|SriLak.<br>_AN_|J,Al<br>OUM|J4AMI||
|**sn**<br>0.41|<br>0.4n|0.48|0.18|
|3d<br>(0.22)|(0.14)|(0.11)|(0.21)|
|oW"ng<br>K..<br>0.44<br>|0.42|0.40|o.n7|
|Kores<br>0.20|0.17|0.22|0.1n|
|Singpore<br>0.14|0.22|0.16|0.11|
|**£**<br>0.21|0.22|0.16|0.28|
|SI<br>(0.18)|(0.11)|(0.11)|(0.05)|
|@r.ee<br>_0.84<br>|0.41|0.40|0.5U|
|Portugal<br>O.|0.87|AM|0.4|
|3<br>0.16|0.54|0.50|0.51|
|3d<br>(0.02)|(0.16)|(0.01)|(0.06)|
|Avetrim<br>64.0*|0.76|0.31|0.75|
|Goemny<br>62.70|0.07|0.70|O."|
|Spin<br>sO.?t|0."|0.57|0.46|
|<br>awed<br>.<br>71.70|O.S|0.7n|O."|
|United Kingdo"<br>5.1|0.62|0.61|0.51|
|<br>USA<br>U-.1|0.51|0.51|0.47|
|caned.<br>40.00|0."|O."|0.60|
|x<br>**0."**|0.01|0.00|O.5|
|d<br>(0.11)|(0.10)|(0.14)|(0.12)|

Save e Table 2 a*d UMnutctrlng Doaa S4e (610), The World Sbe". for OeMrGe o O? yonre lnd.ated with *, the source In World Tablo. 1597. **x:** Arlt&bmti averae; Sd **a** Stand"rd deviation. 1 Oata e uanstat4ri,e predwlefti correspod to 167. 2 Dat on manufacturing productieo cerre pend to 1964.