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Rising pay signals industry upgrade

By Wang Xinyuan Source:Global Times Published: 2012-10-25 23:25:04

Wages and salaries will continue an upward trend this year, labor authorities said Thursday. 

The rising labor costs remain a major concern for companies and will prompt moves from low-end labor-intensive to high-end manufacturing, market analysts said. By the end of September, 18 provinces had raised their local minimum wages, with an average growth of 19.4 percent from a year ago, Yin Chengji, spokesman for the Ministry of Human Resources and Social Security, said at a press conference Thursday.

Shenzhen has the top minimum monthly salary benchmark at 1,500 yuan ($240) while Beijing ranks highest in wages per hour at 14 yuan, Yin said.

Meanwhile, 20 provinces had issued guidelines for salary growth with average growth of 14 percent year-on-year, Yin said.

The local salary guidelines are not compulsory but serve as reference for employers.

"Salary growth is a long-term trend in China's economic growth," Geng Junhua, a senior consultant at China International Intellectech, a human resources and talent management company, told the Global Times Thursday.

Increased food and housing prices, as well as a slowdown of labor supply, also contribute to rising labor costs, Zhang Yi, a researcher with the Institute of Sociology at the Chinese Academy of Social Sciences, told the Global Times Thursday.

"Rising labor costs remain the main concern for companies, followed by recruiting and retaining qualified staff," according to a report the German Chamber of Commerce in China (GCC) e-mailed to the Global Times Thursday.

On average and depending on job position, salary increases are expected to be around 8 percent for this year, compared with 10.2 percent salary growth in 2011, the GCC said, citing results from its latest survey of 220 companies.

China's salary growth is driven by the war for talent currently taking place, and skilled professionals are in high demand and short supply, Max Price, partner at Antal International China, said in a research note.

"It is not uncommon for good professionals to receive a 30-40 percent salary increase when they move to a new position, though the average increase when changing companies is around 15-20 percent," he said.

The rising labor cost will prompt companies to upgrade technologies and move up the industry chain, which is consistent with China's efforts to restructure its growth model from low-end to high-end manufacturing, Geng said.

Rising labor costs have led some multinational companies to relocate their labor-intensive production to Southeast Asian countries including Vietnam and the Philippines, he said.

German sportswear producer adidas closed its factory in Suzhou, Jiangsu Province in July this year due to rising labor costs.

Apple's manufacturer Foxconn plans to reduce labor costs by replacing some of the workforce with 1 million robots within three years.

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