It's not a race, but...

At the heart of shifting work production to another location is a concept known as 'labor arbitrage.'  Basically, that it's cheaper to employ someone somewhere else. Workers in the new country are pulled into opportunities greater than what they previously had, and redundant workers in the home country are rapidly re-absorbed by a flexible labor market - hopefully up-skilled along the way.

Just as the reality for both new and displaced workers lacks the starry romanticism of such a simple model, there is another reality at play here.  A country's relative attractiveness as a source of cheap labor is not a fixed thing.  The cost savings for relocated work are not forever, but what comes next?

In recent months there's been a lot of coverage of the rising labor unrest in China, and the resulting - and often dramatic - increases in salaries for manufacturing roles in the factories in the south of the country that have benefited so much from labor arbitrage.

Here's a great graphic from the Economist Intelligence Unit which puts that increase into some perspective relative to south-east Asian competitors for low-skilled manufacturing work.

Vietnam - currently the 'cheapest' on the list - employs over 1.7million people in the textile industry, at a starting salary of about $84 a month. Little wonder they're reigniting the 'China Plus One' talk for spreading risk in manufacturing and sourcing locations.

The official word from China is that the time has come for salaries to increase, a position that has been taken proactively to the foreign owners of manufacturing facilities on the mainland.  What's less clear is what's next.

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Image © Todd Wheatland - Blogus Picturas