Costs of Production - Research on wages and labor force | PDF

Costs of production Costs of production: UK is expensive to produce in, relative to other countries Producing goods in the UK is expensive UK is here We have to import a great deal of the raw materials that do not naturally occur in this country e.g. Cocoa...

Costs of production Costs of production: UK is expensive to produce in, relative to other countries Producing goods in the UK is expensive UK is here We have to import a great deal of the raw materials that do not naturally occur in this country e.g. Cocoa We have a high standard of living and a high national minimum wage in comparison to other countries Businesses that want to compete will need to move their production to another country but may keep the design or head office in the UK. What is the business term for this? Research: Cost of production, wages around the world Main cost of production is often the wages of employees It stands to reason that a country which pays lower wages would be more attractive as a production location Click the graphic to see how the UK compares – all amounts are in $US dollars which is the accepted method to compare countries Let’s check in with your table: The average wages in Mexico are very low so the country gets a high score (3) for having low costs of production. Skills and availability of labour force Skills of workforce Comparative advantage is the idea that some countries can make products better than others. This may be down to a range of factors such as skills of the locals, availability of raw materials etc. Canada exports maple syrup to the USA as they have a history and tradition of making the product, this gives them a comparative advantage over other nations Research: Availability of labour force The UK has low unemployment compared to other countries (3.9%)* A large unemployed population means a large pool of candidates for every position This will depend on what skills the business needs to succeed. If it is following a differentiation strategy then it may need more skilled staff than a low cost strategy Looking for highest number of unemployed for highest score Make sure you press the unemployment rate% column heading to sort the values correctly