This lack of production meant wages delivered relativity little in the way of purchasing power.
But pay has lagged behind, and the wages of production workers have stagnated.
Prices, wages, production quotas and, in effect, nearly every detail of business practices in an industry were to be set by small groups of government, labor and industry leaders.
The ability to outsource production to Asia is holding down wages.
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It allocates an unusually large proportion of the budget to wages, and runs small production lines for airline headsets and aluminium windows.
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Under that system, state-sponsored industry cartels programmed every aspect of economic life, from wages and working conditions to prices, production levels and product specifications.
To top it all, the company may face difficulty in negotiating with workers in November over wages and jobs due to lower expected production, and this could lead to a new wave of strikes and general labor unrest.
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This is already underway in China, where the WSJ recently reported rising wages are causing local companies to shift production outside the country, in some cases to Bangladesh, in an effort to keep costs down.
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Offshore production is increasingly moving back to rich countries not because Chinese wages are rising, but because companies now want to be closer to their customers so that they can respond more quickly to changes in demand.
Yet the combination of Europe's high wages and strong currency means that some of Airbus's production will have to move into countries where the currency is linked to the dollar.
Indeed, he liked to stress that wages are irrelevant apart from how they factor into per-unit production costs.
Government spending once again pulls down wages, and similarly pulls down productivity enhancements that lead to the very production that drives up demand.
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For smaller, privately held companies, the trend to move production back to the U.S. from China could eventually put some pressure on wages, as more companies compete for skilled workers, McPeak said.
That increased productivity enables workers to earn higher wages, as wages in a competitive market equal the marginal productivity of labor (what the worker adds to production).
In Dongguan, factory managers face the choice of increasing wages (which they have hardly adjusted for years), shifting to less labour-intensive production or moving to areas where cheap labour is more abundant.
Meanwhile, the Chinese government can boast that it has established in Western China an economic zone for cloud computing and automotive and aerospace production resulting in 12.5% annual growth and 49% growth in annual tax revenue, with wages rising more than 10% a year.
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