China’s wage growth overestimated: Experts

By Chen Xin (China Daily)
Updated: 2010-12-16 08:26

The country's 2008 and 2009 wage growth may have been overestimated, a senior economist with the International Labor Office (ILO) said on Wednesday.

China has surpassed many countries in wage increases since the financial crisis caused some countries to experience negative growth, a new ILO wage report said.

The report said global growth in average monthly wages slowed from 2.8 percent in 2007 to 1.5 percent in 2008 and 1.6 percent in 2009.

Excluding China from the aggregate, global average wage growth dropped to 0.8 percent in 2008 and 0.7 percent in 2009, the report said.

China's wage growth stood at 11.7 percent in 2008 and 12.8 percent in 2009, it said.

"China's growth figures were provided by the country's National Bureau of Statistics, but they only covered wage earners in State-owned enterprises. The private sector was largely excluded," ILO economist Sangheon Lee said.

"According to a recent pilot survey, annual average wage growth in the private sector was 6.6 percent in 2009. So, wage growth in China may have been overestimated."

Workers in the country's private sector are earning lower salaries and experiencing slower wage growth compared with employees in State-owned sectors, he said.

Workers employed by State-owned enterprises earned an average annual income of 26,600 yuan ($4,000) in 2009. Private sector employees made 18,600 yuan, he said.

Beijing Normal University labor expert Li Shi said that although official figures showed China enjoyed remarkable wage growth over the past two years, around 30 percent of the country's urban workers and more than 60 percent of migrant workers remained low-income.

Experts have been warning that, despite rapid economic growth, income has been declining against GDP, while the gap between wages and productivity has been widening.

The government pledged in its 12th Five-Year Plan (2011-2015) that incomes will "keep pace with economic growth" and wages will "increase in line with improvements of productivity".

As of the end of September, every province, autonomous region and municipality had raised minimum wage standards, with the average increase hovering around 24 percent, officials said.

Zeng Xiangquan, a professor with the School of Labor and Human Resources at Renmin University of China, highlighted the importance of collective negotiations between workers and employers to achieve real wage growth.

"Although we lack experience in collective bargaining, perfect polices and mechanisms should be established to ensure the negotiations' smooth implementations," he said.

"Cultivating more efficient trade unions will also help."

Zeng also suggested tax cuts for some small- and medium-sized private enterprises that earn few profits but employ many migrant workers.

Besides, he suggested an introduction of annual group discussions among labor, trade unions and the statistics sector at the county level. This could help set wage standards according to local consumer prices and current wages.

"That would make yearly wage growth more precise and scientific," he said.

The ILO report also said that although global wage growth had slowed, it remained consistently positive in Asia and Latin America.

Eastern Europe and Central Asia experienced a dramatic fall, and advanced economies also experienced a drop. Real wages fell in 12 of 28 countries in 2008 and in seven in 2009.