Canada has lowest labour costs

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|Canadian HR Reporter|Last Updated: 04/09/2002

Canada continues to be one of the most affordable industrialized countries to set up shop in largely due to the low cost of labour.

A study of nine nations from North America, Europe and Asia looked at factors affecting the cost of doing business including labour, transportation costs and corporate and income taxes. Canada was found to have a significant advantage over the United States. Labour costs, comprising salaries, statutory benefits and other benefits, is the most important cost factor and Canada had the lowest overall labour costs.

“The good news story for Canadians, both businesses and individual, is that Canada has a very competitive cost structure and a lot of the fundamentals are right,” said Stuart MacKay, of MMK Consulting, the firm that conducted the study, Competitive Alternatives, on behalf of KPMG.

The differences in labour costs are simply a result of market forces, he said. In the U.S., the high demand for skilled labour forces wages up and while people are leaving Canada for the U.S., a steady supply of qualified technical people from other places means wages are kept down in Canada.

Benefit costs are also lower in Canada compared to the United States and that is largely due to the national health-care system, said MacKay.

The United Kingdom was found to have comparable wage and salary levels as Canada, but higher costs of providing benefits.

Canada was also the most affordable when it came to land and construction, and electricity costs, but sixth when it comes to office lease costs and seventh for transportation rates.

After labour, taxes are the second most significant factor and Canada placed second behind only the U.K. The researchers looked at the effective combined corporate income tax rates, (federal, regional and local) and concluded the U.K. had a rate of 29.7 per cent and in Canada it was 30.8 per cent. The United States had the second highest rate at 37.3 per cent.

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