However gummed-up the labour market and inflated the add-on costs of labour (the economy's two biggest problems), productivity is still rising.
On top of their lower labour costs, the mini-mills' electric-arc furnaces are much cheaper to build than iron-ore blast furnaces.
Employers and trade unions co-operated to keep a lid on labour costs.
Wages are up by 10-15%, he says, and a new labour-protection law that came into effect on January 1st increases costs by the same amount again.
ECONOMIST: Hard times loom for the world's biggest toymaking centre
Developing countries are concerned that American efforts to condition free-trade agreements on labour standards are designed to push up their costs.
Small and medium-sized businesses face high raw-materials prices and rising labour costs, but miss out on the low electricity prices and tax advantages enjoyed by big firms.
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.
Mr Clegg told LBC similar changes for three- and four-year-olds under the previous Labour government had had "almost no effect" on childcare costs for parents.
The rebels agreed to back the measure only after the government promised to ask a new commission on health and pension reform to extend its recommendations to ways of bringing down non-wage labour costs.
Expensive energy, poor infrastructure and increasing labour costs - known as "Custo Brasil" or the "Brazil Cost" - have weighed on growth, analysts say.
They will say that the competition and private-sector involvement which Labour introduced has already played a role in improving patient outcomes and putting downward pressure on costs.
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