Flash Survey on Wage Trends 2014

Flash Survey on Wage Trends 2014
Results and Key Findings
Following up on our Annual Wage Survey, the GCC conducted
its second Flash Survey on Wage Trends to provide companies
with current trends on wage increases. In total, 411 responses
throughout mainland China were collected in our survey, which
ran from March 31st to April 8th 2014. The major findings of the
survey are:
n Wages for blue collar workers are expected to rise by 9.6%,
while those of white collar workers are expected to rise by 8.8%.
These figures are between 0.5-0.7 percentage points higher
than the results of our Annual Wage Survey 2013, indicating
that wage increases have been slightly revised upward over the
past months
Wage increases for companies engaging in manufacturing are
outpacing wage growth in service companies, with domestic
oriented production companies reporting highest increases for
blue collar workers (11.2%).
n 22.7% of companies report the highest individual increases
for blue collar workers, followed by engineering and sales
positions. Mid-level positions (53.4%) and senior positions
(29.1%) are most likely to receive the highest individual
increases. Nearly 50% of companies report increases greater
than 15% for the individual positions with the highest increases.
n
n 11.0% of companies signed collective agreements with the
ACFTU, and 7.5% signed them independently.
n The majority of companies (51.7%) evaluate wage increases
as neutral considering productivity increases and the company
performance. Unchanged to 2013, 39.3% of companies perceive
wage increases as high or very high.
For any detailed questions or recommendations for
improvement of our survey, please feel free to contact us:
Contact: Email: Phone: Fax:
1
Max J. Zenglein, Economic Analyst Greater China
[email protected]
0755-8635 0487
0755-8632 9759
Brief Analysis of Flash Survey Results
and Labor Market Environment
Summary of Flash Survey Results
Despite slower economic growth, with many macroeconomic indicators
cooling in the first 3 months of 2014, the labor market environment
continues to remain a major challenge for German companies in China.
Wage increases for 2014 are slightly higher than the figures of our
extensive Wage and Salary Survey in September 2013. Increases for
blue collar workers increased by 0.5 percentage points to 9.6%, while
increases for white collar workers increased 0.7 percentage points
to 8.8%. The results confirm a stabilization at lower wage increases
compared to previous years.
Regionally, wage increases in Beijing and second-tier Eastern cities are
slightly higher than in other regions, while secondary Northern cities
reported the lowest wage increases. Overall, regional variations in
wage increases at German companies across China are relatively low.
Wages for blue collar workers tend to be about 1 percentage point
higher than adjustments for white collar workers, secondary Northern
cities being the only exception. Companies engaging in manufacturing
(60.5%) report higher wage increases than service companies. Wages
for blue collar workers at domestic oriented manufacturing companies
are expected to rise the most (11.2%), while blue collar workers’ wages
at export oriented companies and service companies expect increases
of 10.6% and 8.1% respectively. Manufacturing companies tend to
generally have lower wage levels, are more likely to be located in
second-tier cities and can more easily achieve productivity gains, in part
explaining higher wage increases there.
Individual adjustments at companies for specific positions continue to
show great variation, with companies reporting over 50% increases
for certain positions. Mid-level positions are likely to have the highest
wage increases with 53.4% of companies reporting increases for these
positions to be among the three highest. 29.2% of companies report
senior positions receiving the highest increases while only 17.4% report
highest increases of junior positions. For individual positions however,
blue collar workers are most likely to receive the highest increases
(22.7%), followed by sales (21.0%) and engineering positions (18.2%).
For positions with the highest increases nearly 25% of companies
increase wages greater than 20%.
For the majority of companies collective bargaining agreements are
irrelevant (81.5%), while 7.5% engage in enterprise level agreements
independent of the official trade union. At present only 11% of
companies negotiate collective bargaining with representatives of the
ACFTU. As in 2013, 39.3% of companies evaluate wage increases as
being high if productivity and company performance are taken into
account. The largest share of companies, however. see wage increases
as neutral (51.7%). While a smaller share of manufacturing companies
report wage increases as being ‘high’ or ‘very high’, the share of service
companies reporting high increases increased by 14.9 percentage
points to 44.3%.
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Flash Survey on Wage Trends 2014
Minimum Wage Increases Q1 2014
Labor Market Developments Q1 2014
The central government aims to boost consumption over the
next few years as the economy continues its transformation
from high growth levels to more intermediate growth. The
slowdown in economic growth translates into lower overall
wage increases, but considering the already relatively high
base level in the coastal areas, wage increases continue to be
a challenge for companies. Economic policies under Xi Jinping
have reiterated the importance of increasing wage levels and
closing the income gap. Wage increases hence are expected
to remain fairly stable at between 8-10% despite lower GDP
growth. The labor market in general, however, remains tight.
This is especially the case in coastal areas, as the flow of
migrant workers from central and western regions is slowing.
Manufacturing hubs in eastern provinces as well as the PRD
have already reported a labor shortages in the first three
months.
Most important and most publically noticeable, a new round of
minimum wage adjustments have been announced in the first
few months of 2013. As of April 10th nine jurisdictions have
announced new minimum wage levels, averaging an increase
of 12.5%. This is still below average increases in 2011 (22.1%),
2012 (16.9%) as well as for the first 3 months in 2013 (14.9%).
Chongqing announced the highest increase, although it must
be noted that minimum wages had not been adjusted there
since 2012. At the lower end, Shandong’s adjustment of 8.7% is
because the adjustment is the second within 10 months. Other
adjustments are similar, and most other provinces are expected
to follow suit, increasing between 12-13% on average in 2014.
Jurisdiction
Average Increase
Chongqing
19.0%
Shenzhen
13.0%
Inner Mongolia
12.5%
Gansu
12.5%
Shanghai
12.3%
Tianjin
12.0%
Beijing
11.4%
Shaanxi
11.3%
Shandong
8.7%
Export Value
17.5
Import Value
18.4
Source: Local Labor and Social Security Bureaus
It should be noted that Guangdong province has drafted new
legislation regulating negotiation of collective agreements, and it
is widely expected that collective agreements will acquire a more
prominent role in the future.
After increasing over 3% in the autumn of 2013, inflation continued
to cool in the first months in 2014. Price level increases are generally
expected to remain stable at an average of below 3% for the
remainder of the year, with individual spikes over the 3% level.
CPI Development Feb. 2013 – Feb. 2014
5
4
3
2
2013
1
2014
0
Feb.
Mar.
Apr.
May
Jun.
Jul.
Aug.
Sep.
Oct.
Nov.
Dec.
Jan.
Feb.
CPI
2
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Flash Survey Results 2014
Regional distribution
Main business purpose
7.3%
Shanghai
10.9%
Manufacturing for
domestic market
Other East
4.6%
Beijing
43.3%
39.5%
Other North
7.8%
Manufacturing for
export markets
47.7%
Guangzhou/Shenzhen
Non-manufacturing/
Services
Other South & Southwest
26%
12.8%
Average wage Increases by region (in %)
12
National
East
North
South/West
10
8
6
4
2
0
China
Shanghai
Other
blue collar
3
Beijing
Other
Guangzhou/
Shenzhen
Other
white collar
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Flash Survey Results 2014
Average Wage Increases by business purpose (in %)
12
10
8
6
4
2
0
Manufacturing for
domestic market
Manufacturing for
export markets
blue collar
Non-manufacturing/
Services
white collar
Job positions with highest wage increases (share of companies)
2nd highest
Highest
Position
Level
Increase
3rd highest
Blue collar/operator
22.7%
Engineering
19.1%
Engineering
14.2%
Sales
21.0%
Sales
15.8%
Other
13.1%
Engineering
18.2%
Accounting
10.2%
Sales/Accounting*
11.6%
Mid-level
43.8%
Mid-level
61.4%
Mid-level
54.9%
Senior
33.5%
Senior
26.7%
Senior
25.0%
Junior
22.7%
Junior
11.9%
Junior
16.0%
>20
23.3%
>20
12.3%
>20
9.3%
15-20
26.8%
15-20
24.9%
15-20
19.1%
11-14
22.2%
11-14
23.3%
11-14
20.2%
* tied for third
4
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Flash Survey Results 2014
Signing of collective agreements
Overall
Manufacturing - domestic
Manufacturing -export
Non-manufacturing/Services
0%
10%
no
20%
30%
40%
50%
Yes, independent of trade union
60%
70%
80%
90%
Yes, with trade union
Evaluation of wage increases taking productivity and company’s performance into account (by business purpose).
Overall
Manufacturing - domestic
Manufacturing -export
Non-manufacturing/Services
0%
very low
5
10%
20%
low
30%
neutral
40%
high
50%
60%
70%
very high
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