China wage growth slows in respite for bosses

Pace of increases for mainland workers halves from the previous year, a reflection of the strains in the manufacturing sector, factory owners say

PUBLISHED : Tuesday, 28 May, 2013, 12:00am
UPDATED : Tuesday, 28 May, 2013, 4:34am

In a breather for Hong Kong manufacturers, mainland wage increases are showing signs of slowing down.

A survey conducted by the National Bureau of Statistics that was released yesterday showed the average monthly wage of migrant workers grew 11.8 per cent to 2,290 yuan (HK$2,900) last year, about half the 21.2 per cent increase seen in 2011.

While minimum wages are ordained to jump 13 per cent in each of the five years to 2015 in order to attain the target of making them 40 per cent of the average local salary in a province, manufacturers and labour rights activists expect wage increases to slow further as economic growth tapers off in the country.

"Wages jumped 53 per cent over the three years to 2012, which translates into an annual average growth of 17.6 per cent," said Liu Kaiming, the director of a Shenzhen-based labour rights group.

"So it would be natural for wage growth to slow down at some point. I believe it will slow further in the next two years."

Shenzhen's workers enjoy the highest minimum wages on the mainland but the pace of wage rises slowed to 6.7 per cent in the annual adjustment this year - compared with an increment of 11 to 17 per cent in major cities such as Beijing and Shanghai, and in Zhejiang province.

The minimum wage in Guangdong, meanwhile, surged 19.1 per cent in the annual adjustment completed this month.

The provincial government had suspended a pay increase last year because of a poor economy.

The Federation of Hong Kong Industries, 90 per cent of whose members operate factories in the Pearl River Delta, said the slowing of wage increases last year was a warning that manufacturers could no longer bear the recurring double-digit salary rises.

"Hong Kong enterprises have downsized their mainland operations because of the cost pressure," said Stanley Lau Chin-ho, the federation's vice-chairman.

"By 2015, our workforce would only be 60 to 70 per cent of that in 2010.

"The government should bear that in mind when they propose drastic wage rises."

Manufacturers have had to pay more than the stipulated minimum in recent years to compete for talent as more and more migrant workers leave the industrial hubs to find jobs closer to their homes, reflecting a narrowing of the wage gap between cities and villages.

The National Bureau of Statistics' survey showed the number of migrants working outside their hometowns grew at a slower pace of 3 per cent last year, compared with 3.4 per cent in 2011.

The proportion of migrant workers in the Pearl River Delta and Yangtze River Delta - which together account for half the mainland's 163 million migrant workforce - were down 0.3 and 0.5 percentage points, respectively, last year from the previous year.

Chong Shing-hum, the president of the Hong Kong Exporters' Association, said he expected wages to grow annually by an average of 10 to 12 per cent in the next two years because labour supply is shrinking faster than demand.

"Few youngsters want to join the manufacturing industry these days," Chong said.

The proportion of rural workers aged under 40 dropped to 59.3 per cent last year, compared with 70 per cent five years ago.