Labor Cost
Expense of employing workers; wages, benefits, training, administration.
Formula
Labor Cost = Wages + Benefits + Training + Employer NI Contributions
Real World
Nike shifted garment production to Vietnam and Bangladesh, where labor costs are roughly 10–15% of those in the US, enabling lower retail prices and higher profit margins.
Exam Focus
Don't just state labor costs are lower abroad — evaluate trade-offs such as quality control, lead times, and reputational risk.
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