With the exception of some Western service industries, labour costs have become significantly smaller in many businesses. But the value created per head has risen as the manual elements have been replaced whilst the ‘brain’ costs have increased. High and regularly assessed levels of competence make such folk worth keeping. Thoughtless cost-cutting in these areas quickly erodes the know-how and know-why that give businesses their edge and allow them to charge premium prices. Corporate amnesia can set in quickly, especially if such folk are replaced by cheap but inexperienced substitutes.
