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Hong Kong continues to be the highest-ranked country for contingent workforce operations, followed closely by the United States and China, according to global HR consulting firm ManpowerGroup.
Manpower’s 2014 Contingent Workforce Index report concluded that while Hong Kong and the United States are both cost-effective markets, Hong Kong has the added benefit of higher productivity, defined as the amount of hours an employer can pay a worker at base pay.
According to the report, Hong Kong is attributed with a favorable regulatory environment, low cost of manufacturing labor and relatively high productivity due to no overtime, eight-hour workdays and six-day workweeks.
Manpower’s index measures the relative ease of sourcing, hiring and retaining part-time, temporary or contract labor around the world based on the availability, cost, regulation and productivity of each country’s contingent workforce.
A higher ranking indicates countries that are likely to support higher volumes of contingent hiring with greater cost efficiency, based on quality and productivity, according to Manpower.
Seventy-five countries where Manpower operates were analyzed for the index.
The lowest ranked country for contingent workforce engagement is Venezuela, primarily due to onerous regulations and the fact that Venezuela does not allow for redundancy dismissal.
Even though China is benchmarked as both less productive and cost effective than Hong Kong, and has increasingly complex regulations, it advanced in the index rankings from 16th place in 2013 to third due to its high availability of talent. Top-ranked China and India benefit from the sheer volume of contingent workers in their labor pool, allowing these countries to maintain an advantage in contingent workforce availability.
With a total workforce of more than 816.5 million people, and a comparatively large contingent workforce of more than 156.7 million, China remains the country with the highest workforce availability. This offsets its lower cost efficiency compared to the other top markets, according to Manpower.
Brazil, Hong Kong, Korea, Mexico and Russia all fell from the top 10 rankings for workforce availability despite the size of their markets primarily due to the inclusion of English language proficiency in the calculations.
India came out on top for most cost-efficient contingent workforce, primarily because average monthly wages for contingent labor (USD $121.37) are significantly lower than many competing countries. Average hourly wages for contingent manufacturing labor in India are particularly low at USD $0.68.
Interestingly, countries with no minimum wage were found to have higher costs in almost every aspect of contingent workforce operations.
New Zealand rose from the fifth spot in 2013 to the ranking for most favorable regulatory environment in 2014. Geopolitical risk led to Guatemala, India and Malaysia falling down the favorable regulatory rankings, and being replaced by Switzerland, Singapore and the United
Kingdom. In addition, Singapore and the U.K. do not have maximum contract requirements nor any severance requirements.
Singapore jumped to the top position for productivity in 2014. Singapore’s skilled contingent workforce accounts for 28 percent of its working population and the nation’s productivity benefits from a six-day workweek and an eight hour-workday, as well as relatively low (18 days per year) number of holidays and leave days.
Other countries ranking high for productivity include Canada, Hong Kong, Macau, the Netherlands, New Zealand, Norway, Switzerland, the United Kingdom and the United States.
Increased Productivity in Asia-Pacific
The top five markets for contingent workforce engagement in Asia Pacific are China, Hong Kong, India, New Zealand and Singapore. China has the largest contingent workforce but restrictive regulations around maximum contract limits negatively impact cost efficiency and productivity within the country, according to Manpower.
India has the second largest contingent workforce in the region, although much smaller than China, and also has the lowest productivity of all leading countries in the region, primarily due to the number of total days of leave permitted. However, India also benefits from being the most cost-efficient country, with the lowest manufacturing wages of any country in the study.
Hong Kong, New Zealand, and Singapore all have small pools of contingent workforce availability, but benefit from less regulations and high productivity.
The region’s overall performance for workforce availability remains high due to China and India representing more than 50 percent of the global workforce.
Asia Pacific Wages and Taxes
Manufacturing wages, aggregated tax ranges, and average monthly wages in the region vary significantly. The average manufacturing wage for the region has increased by USD $0.50 since 2013, a result of increasing wages in Korea, Japan, New Zealand and Singapore. Australia has the highest average manufacturing wages in the region at USD $38.29 per hour.
The regional average aggregated tax range remained unchanged from 2013 to 2014. China has the highest tax burden at 49.6 percent.
Australia and Singapore have the highest average monthly wages in the region, at USD $3,993.66 and USD $3,945.71 respectively.
Mixed Bag in the Americas
The leading contingent workforce markets in the Americas are Canada, Chile, Guatemala, Puerto Rico, and the United States. The U.S. and Canada are distinguished in the region for having substantially large contingent workforces, at more than nine million people and 2.5 million workers respectively, minimal regulatory impact, and high productivity.
While Chile has a large contingent workforce (2.3 million) and favorable cost factors, it is also burdened by restrictive regulations and lower productivity, according to the index. Puerto Rico has a small contingent workforce (156,048 workers) and lower costs than the U.S. and Canada, but also lower productivity.
Guatemala’s contingent workforce is large compared to its population, at more than three million workers, and offers favorable cost, however, it also has the lowest productivity of the top five Americas markets.
Of note, regulations in Latin America are often complex, particularly when it comes to worker classification and engagement, Manpower observed.
The Americas Wages and Taxes
The average manufacturing wage in the Americas increased from USD $5.38 in 2013 to
USD $5.87 in 2014. Canada and the United States still command the highest wages, with Canadians making an average of USD $29.30 an hour and Americans making an average of
USD $27.15 an hour.
The regional aggregated tax range is 18.8 percent. Costa Rica has the highest aggregated tax of 41.2 percent with Brazil following at 40.9 percent. Honduras has the lowest tax burden, at just 7.0 percent.
The average monthly wage in the region is USD $1,015. The Dominican Republic has the lowest monthly wages of the countries studied at USD $254.63.
Low Cost in EMEA
The top five markets in the Europe, Middle East and Africa (EMEA) region are Estonia, Israel, South Africa, the United Arab Emirates, and the United Kingdom, according to the index. Each of these leaders has a similar volume of workers, and all but the U.K. have relatively favorable cost efficiency. But while the United Kingdom is more expensive to operate in than the other top markets in the region, primarily due to high average monthly wages of USD $4,439.82, it benefits from favorable regulations and high productivity. Even though there are many standard regulations as a result of common legislation in the European Union, each member country maintains unique labor laws around contingent workers.
Many Central and Eastern European countries offer substantial cost savings, but are constrained by geopolitical conditions and the availability of skilled workers, according to the report.
The EMEA Wages and Taxes
The EMEA is made up of diverse economies and the metrics on manufacturing wages, monthly wages, and aggregated tax ranges reflect this diversity. The regional average of manufacturing costs in the EMEA has decreased from USD $17.37 in 2013 to USD $11.66 in 2014.
Notably, Norway’s manufacturing wages have decreased to be more in line with those of Denmark and Switzerland. These wages are still high, with an average hourly manufacturing wage of USD $52.03 in Norway, USD $48.95 in Switzerland and USD $43.80 in Denmark. The lowest manufacturing wages in the region of the countries studied is Tunisia, at USD $0.91 per hour.
The regional average tax is 23.5 percent, with France commanding the highest tax burden among all EMEA countries at 51.7 percent. South Africa has the lowest tax burden at just 3.0 percent.
The average monthly wage in the region is USD $2,587.00. Switzerland has the highest monthly wage compared to all other countries in the region, at USD $7,876.77. Tunisians have the lowest monthly salary of the countries studied in the EMEA, at USD $220.50.
Roy Maurer is an online editor/manager for SHRM.
Follow him at @SHRMRoy
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