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Labor costs in the private sector are modified by consumer demand and competition. Salary and benefits increases must be accommodated by raising prices, improving productivity,

Labor costs in the private sector are modified by consumer demand and competition. Salary and benefits increases must be accommodated by raising prices, improving productivity, and increased marketing. If labor costs rise and products or services are hiked to accommodate these increases, consumers are likely to go elsewhere or refrain from using the services or products. Hence, these market-based factors tend to hold down wages and benefits in privately-owned organizations

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