There are not only lower labour costs but rock bottom labour costs.
Because of inflexibility in the labour market and high labour costs, German companies do much of their labour-intensive production abroad, keeping the capital-intensive operations at home.
This means that Ms Merkel will struggle to implement the main planks of her proposed reform programme: a flat-fee health-care premium to lower non-wage labour costs, further labour-market reforms, such as loosening Germany's strict protection against dismissal, and radical tax reform.
Italy and Spain have seen sharp rises in unit labour costs and their labour-productivity growth has stalled or gone into reverse.
"This is an impressive combination of extremely tight labour markets and extremely well-behaved labour costs, and that is the reason why the Fed (Federal Reserve) will continue moving at a very cautious pace, " said Anthony Karydakis of Bank One Capital Markets.
So now let us take a look at costs in the US. Given US labour costs, are we going to see Apple go the labour using route?
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Labour costs were getting too high for the productivity of that labour.
Bagehot recently met an intelligent Midlands car-dealer who believed that a Labour government planned his instant bankruptcy by importing German labour costs into Britain.
However, in the current weak economic climate, firms with lots of spare capacity find it hard to pass on costs, so rising labour costs are more likely to squeeze profits than to push up inflation.
However gummed-up the labour market and inflated the add-on costs of labour (the economy's two biggest problems), productivity is still rising.
This is chiefly linked to rigid labour-market rules and payroll charges on employers, which between them keep labour costs high and deter job creation.
Without the option of a currency devaluation, countries such as Spain, Portugal and Italy have no alternative but to restrain labour costs and bring in supply-side reforms that raise productivity, especially through the freeing of labour markets.
As welfare costs have swollen, non-wage labour costs have shot up too, from 36% of gross wages in 1990 to a painful 42% last year.
It uses a more labour-intensive production system than the Japanese firms it competes with to take advantage of low labour costs.
And of course total costs are what really interests people, not solely labour costs.
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The unit labour costs that is, the amount that had to be paid for labour relative to the value of the goods produced with it.
Like other manufacturers in China, Hon Hai faces rising labour costs, though it is better placed than most. (Mr Yang reckons that labour accounts for only 4.5% of the cost of goods sold.) A move up the value chain may help.
The most obvious benefit is lower labour costs: even when factoring in costs such as transport for employees, a maquiladora owner still pays less than he would for American labour.
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Labour costs per employee for foreign manufacturers were 50% higher than those controlled in Scotland.
In services, foreign-owned companies generated double the value added per worker, and had labour costs 30% higher.
This was largely due to rising fuel prices, although some firms also reported higher labour costs.
Since then it is largely because China's unit labour costs have grown much faster than America's.
That is, that unit labour costs were too high and that they needed to come down.
They deflated that part of the economy, driving down labour costs and up productivity.
The fall in unit labour costs over the past few years temporarily boosted profits.
As labour costs converge across new and old Europe, will the Logan remain a European car?
Cheaper labour costs are also encouraging foreign direct investment, which was up a quarter in 2007.
Foreign investors say this makes up for the second-highest labour costs in Central America.
To stop profits from falling, American companies must keep a tight lid on labour costs.
That meant their margins took a double hit from rising raw materials and labour costs.
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