The impact of Better Work is assessed on costs, profits, productivity and business terms for firms in Vietnam, Indonesia and Jordan. Participation in Better Work has a positive productivity effect on Vietnamese and Indonesian firms. Productivity gains are captured by workers in the form of higher pay. Unit costs rise due to increased compliance with payment requirements such as the minimum wage, paying as promised and mandated promotions. Despite the increase in wages, profits for firms in Better Work Vietnam and Indonesia increase due to improved business terms such as larger orders and possibly an increase in price. The impact of Better Work Jordan suggests that exposure to the program for individual firms may have temporarily increased costs and lowered profits. However, the Jordanian apparel industry becomes more profitable over time, suggesting a positive country reputation effect. Participation in Better Work and firm performance are not jointly determined by manager quality. Early entrants into Better Work are, on average, high cost-low profit firms.
Discussion Paper 27: The impact of Better Work – Firm performance in Vietnam, Indonesia and Jordan
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