Mumbai: Indian average wage is set to quadruple over the period in real dollar terms by 2030 to match Advanced economies says a new analysis published today by PwC. The wages in Philippines will triple in the same period. At the same time, real wages in the UK and US are projected to rise by only around a third over the same period, remaining at similar levels to each other. However, India and the Philippines remain at the lower end of wage projection in relative terms.
As per the report, current average monthly wage in India is around 25 times smaller than that of the UK and by 2030, it’s likely it be only 7.5 times smaller. Average wages in US are currently 7.5 times greater than in Mexico, but the gap could close to a factor of less than 4 times by 2030. Over the same time period, the average monthly Chinese wage could rise to around half that of Spain.
The increase in incomes may shift the consumer and production destinations. “Places like Turkey, Poland, China and Mexico will therefore become more valuable as consumer markets, while low cost production could shift to other locations such as the Philippines. India could also gain from this shift, but only if it improves its infrastructure and female education levels and cuts red tape,” says John Hawksworth, chief economist at PwC
While US companies will re-shore their business activities, middle income countries like Turkey, Poland and China will begin begin offshoring to relatively cheaper economies like Vietnam, India and the Philippines.
Current ‘Western’ offshorers will reorient their operations to sell their goods and services to increasingly affluent local populations.