devaluation vs increased labor costs
devaluation vs increased labor costs
I know this is an older post, but it caught my eye. I did a report on the Chinese Yuan about a year ago and based on independent (and unconfirmable) analysis from sources such as "countrywatch" and EIU (economic intelligence unit) eventually, if the Chinese government allows the YUAN to pursue a true "float" versus the dollar, we could eventually see the dollar drop as far as a 1:4 ratio. Even such drastic speculation however, pushes that possibility out pretty far to about 2010.
Even though the current devaluation of the dollar doesn't affect pearl prices drastically, something we have been hearing from our pearl suppliers is that the cost of labor has increased significantly. This is very believable as we know that labor costs, all up and down the coast line is increased dramatically over the last few years in almost every industry. Pearl farms have to compete in the same labour markets, because if a basic laborer can make $.60 an hour at the pearl farm or $1.20 an hour at a die casting factory, they will choose the factory.
In the near term, I think that escalating labor costs will affect each of us more than devaluation of the dollar vs the yuan.
What are everyone else's thoughts on this?