Comparison of the Top Five Markets for Workforce Cost Efficiency
Traditionally, the lowest cost markets also tend to be some of the least mature and generally have less restrictive regulation and availability. The Philippines is an exception. Last year, the Philippines passed legislation to ban subcontracting and enforce restrictions on contract terminations. This speaks to another common trend among emerging markets, as investment increases in a market so too does the regulatory impact in that market.
These and other changes in the Philippines have resulted in a decrease in cost efficiency overall. This held the Philippines at third and allowed Morocco to rise from fourth to second place in the top five markets for cost efficiency this year. Despite being very appealing from a cost perspective, markets such as Morocco do not present significant opportunity for investment due to a lack of skilled and English-proficient talent, a small workforce and a restrictive regulatory climate.
Chile dropped from second to fourth due to an increase in the factors related to average wages and the inclusion of factors like business startup costs in the weightings of the Total Workforce Index™ metrics for this category. Vietnam makes its way into the top five this year due to a significant decrease in wages, despite a small increase to the minimum wage.