'Asia losing its labor competitiveness'

'Asia losing its labor competitiveness'

SINGAPORE (Reuter): Asia's potential as a market is a bigger draw for foreign investors than its cheap labor, according to a survey of labor competitiveness published here.

"Many countries in Asia may have already lost any competitive advantage they once enjoyed over more developed Western countries due to their labor situation," the Political & Economic Risk Consultancy (PERC) said.

"There is still plenty of inexpensive labor in Asia, to be sure. But much of this labor lacks the skills required to perform efficiently all but the most basic assembly tasks," it said in its latest "Asian Intelligence" report Friday.

It said that increasingly the key reason foreign direct investment in Asia continued to expand was not because of cost considerations "but because they need to invest if they hope to benefit from Asia's potential as a market".

PERC was commenting on its survey of labor competitiveness in 16 countries that contrasted Asia with some of the main developed economy in the West.

Asia did not come out well in the survey of 223 expatriate managers who were asked about quality, cost, availability and stability of skilled and unskilled labor.

India came out top and Hong Kong last.

But Australia, Britain, the United States and Switzerland all ranked in the top six. The bottom 10 were all Asian.

On a scale from zero to 10, with zero representing the best situation possible and 10 the worst, India drew the best average grade of 2.80, followed by Australia, the United Kingdom, and the Philippines.

Hong Kong's average grade was 4.92, putting it 16th, just ahead of Malaysia. Singapore was 14th and South Korea 13th.

Factors in India's favor included the fact that labor was cheap and plentiful, the survey said. At the other end of the scale, Hong Kong was hurt by high costs and a tight labor market.