This great graphic was in a new report by KPMG “Competitive Alternatives Special Report: Focus on Tax“. It shows the labor costs of 10 large countries. Labor costs include wages and benefits. There are two parts of benefits, those that legally required and those that are not.
According to the table below, the US average wages are among the highest. The required benefits are the lowest, but the non-statutory benefits are the highest. This leaves total labor costs the second highest after Germany.
In contrast, Mexican wages are the lowest, of the countries examined here, the statutory benefits are middling, and other benefits are at the upper end. Nevertheless, KPMG reckons labor costs in Mexico are the lowest, 40% of the US and Germany. This should help prod our thinking into what is missing here. To appreciate the true cost of labor, one needs to take into account productivity. The measure that captures wages, benefits and productivity is unit labor costs.
Via International Comparison: Labor Costs Per Employee
Original KPMG report: Competitive Alternatives Special Report: Focus on Tax