Shanghaiist: As China's wages increase, so does its rich-poor gap, says study

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher.

2 July 2014

A recent study by the Hong Kong-based China Labour Bulletin shows that while China's wages have increased over the past two decades, so has the chasm between rich and poor.

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The map above shows how minimum wages differ across the Middle Kingdom. The developed coastal regions boast the highest minimum wages while less developed central and western regions are home to the lowest. And disparities attain shocking levels in many cases. For instance, Shanghai's minimum wage is twice as high as Qinghai's or Guizhou's.

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Shanghai retains the title for "highest minimum monthly wage in China" for the fourth consecutive year. At 32.2 percent of the region's average monthly wage, it is the closest to the 40 percent target set by China's current Five-Year-Plan, which states all regional minimum wages should reach 40 percent of the average monthly wages eventually. However, the graph above shows that this isn't happening anytime soon.

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When stacked up with the rest of Asia, China's minimum wage is sandwiched between Thailand's and Malaysia's, and falls well below that of Japan, South Korea and Hong Kong (above). This indicates that even though China is distancing itself from low cost, labour intensive industries, it currently remains the world's manufacturing mecca.

This means that it will increasingly need foreign workers. Even though the migrant workers' average monthly wages have increased along the national's ones, the gap between the two is growing with each passing year (see graph below).

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Disparities between professions is also becoming widespread. The chasm between what tech professionals' wages and those of agricultural workers is ever-growing, and won't be bridged anytime soon.

The research concludes:

Tackling the widening gap between the rich and the poor in China is now one of the top priorities of the new leadership in Beijing. In February 2013, the State Council issued a wide-range of policies, including boosting the wages of low income earners and capping SOE executive pay, but these measures are unlikely to really get to the root of the problem. One crucial issue that remains unresolved, for example, is the lack of an effective social and medical welfare safety net that would allow low income earners to spend more freely on goods and services rather than having to save a high proportion of their income, as is currently the case.

Ultimately however, for wages to rise to a decent level, China will have to develop a system of enterprise-level collective bargaining that will allow managers and workers to negotiate reasonable pay and conditions, based on company profitability, worker productivity and the local cost of living.

By Aliaume Leroy

[Images via China.org.cn and China Labour Bulletin]

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