“Global garment firms no longer bullish on Vietnam as costs rise”


So goes the title of a recent article about international textile companies operating in Viet Nam.  The first thought that always pops into my head whenever I read about rising labor costs is how much by local standards and how much is enough in terms of net profit?  Why not pay your employees a living wage and stop exploiting them in the name of a fatter bottom line? 

That, of course, is one of the fundamental problems with global capitalism.  Low labor costs used to be a major selling point for Viet Nam.  There’s nothing wrong with low labor costs by international standards if the local wage is more than enough to live on. 

As the article notes, Vietnam raised its minimum wage by an average of 5.3% last January to VND 4.18 million ($181).  I can assure you that $181 a month for a back-breaking job is not very much, not in 2019.  

Here’s an example that illustrates just how large the profit margin is in the clothing industry.  You can go to a market in Phnom Penh, Cambodia that sells Dockers pants, among many other products, and get a pair for $12, bargained down from $16.  The seller probably still makes 100% profit for slacks that sell for $50 or $60 in the US.  I mentioned that to a saleswoman in the men’s section of a Macy’s in the US and she just gave me a blank stare.  Minus source and destination country overhead and shipping costs, that’s still a huge profit. 

The silver lining in this rather dark and ominous cloud is that these greedy companies will eventually run out of countries and workers to exploit.  Maybe not in my lifetime but it will happen.  People over profit!  

Shalom (שלום), MAA