ABSTRACT
In post-industrial countries, wages account for approximately 6570 per cent of final product prices. It is therefore quite important to consider the effect of higher wages and, most particularly, of the weight of entitlements such as healthcare for retirees whose lifespan has greatly increased over the post-World War II years. Western governments have failed to properly notice that modern telecommunications and transportation facilities have made international arbitrage on salaries and wages much easier, as firms and service providers can scan the globe for lower costs. An issue on which pros and critics seem inclined to agree is that off shoring is a process of creative destruction with plenty of challenges for: labour, companies and governments. They must also concern themselves with the growth in inequality and introduce measures to reverse this trend. Lifetime employment and the seniority-wage system have gone, but social cohesion must be preserved and the middle class protected from its many enemies.
