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China Wage Increases. Slowing Just A Bit.

By Dan Harris on Posted in China Business

Tom Orlick of the Wall Street Journal has an article entitled, “Exporters’ Gain Is Workers’ Loss in China’s Labor,” focusing on China wage rates. Though wages are definitely still rising, they are rising at 9% to 15%, not the 20% to 30% many had predicted. Orlick describes these lower than expected wage increases as “a short-term blessing and a long-term curse:

For now, it means a smaller contribution to inflationary pressure and contains costs for exporters, already facing a squeeze from yuan appreciation and pricey raw materials. Textile producers are absorbing a 150% rise in cotton prices over a year.

Longer term, exporters’ gains are workers’ losses. Tepid wage increases will do little to put more money in workers’ pockets or fulfill Beijing’s aim of rebalancing from foreign to domestic demand.

What do you think?  

 

  • Nancy P.

    What makes all of this so frustrating is that it is impossible to get accurate statistics on this so we do all have to just sit around and ask people what they are seeing. What I am seeing is that my company of 300 Chinese employees has been able to get away with 10% raises.

  • Richard

    It would be much more useful to see this broken down by geography. Wages are almost certainly rising faster in coastal provinces/cities than in China’s interior. Guangdong alone raised their average minimum wage roughly 20% in 2010, and I know that at least some companies are raising base wages at a faster pace.

  • dan berg

    I assume these are nominal wages; subtract inflation (pick a number) and real wages are not rising all that much. But I thought China – as explained in the latest 5 year plan – was going to be driven by consumption. How can these workers consume more if wages aren’t rising?