China’s rising living costs, economic uncertainties leave lower-income groups unwilling or unable to spend
- Payroll growth had already started to decelerate in recent years, and the pandemic has dashed hopes for many people looking for a lifeline
- Beijing has set its sights on boosting consumption, but it may be difficult to convince people to spend what little money they are able to save as salaries are capped or cut
While overall income growth among many Chinese has yet to recover from the impact of the pandemic, demand among China’s lower-income groups is likely to remain subdued as pressure grows on the economy.
Tina Tang, an administrative secretary at a small-to-medium-sized enterprise technology company in Guangzhou, is one of those who have felt the chill from a slowdown of income growth over the past two years, as a result of her employer’s poor financial performance.
Many workers in her sector have been forced to take a pay cut or accept a pay freeze.
“For example, our boss withheld 20 per cent of everyone’s monthly salary in the company this year and turned it into a variable bonus, so many colleagues have quit,” Tang said. “The company’s performance and revenue are not good, and some of the payments from local government contracts have not been settled on time.
“There were more than 130 employees in the first half of last year, and now there are only 32 people left.”
Payroll growth had already started to decelerate in recent years, and it was only worsened by the pandemic. Calls from economists and government advisers have risen for more supportive measures to sustain economic growth, reduce costs for businesses and bolster consumption.