Peter F. Drucker Boxed Set (8 Books) (The Drucker Library)

CHAPTER SIX

Low Wages: No Longer a Competitive Edge

WAGE LEVELS FOR BLUE-COLLAR workers are becoming increasingly irrelevant in world competition. Productivity still matters—indeed it matters increasingly more. Quality, design, service, innovation, marketing, all are becoming more important. But blue-collar wages as a direct cost are rapidly becoming a minor factor.

The reason is, blue-collar labor no longer accounts for enough of total costs to give low wages much competitive advantage. A well-tested rule says offshore production must be at least 5 percent, and probably 7½ percent, cheaper than production nearby to compensate for the considerable ...