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Expert: The Era Of Low Wages In China Is Coming To An End.

2010/8/28 9:09:00 42

Lewis turning point

"Approaching" indicates a turning point in the growth of wage income. China will face the continuous rise of the low end labor costs in the next few years, thus forming a forced mechanism for China's economic pformation.

The wage surge is likely to become a turning point in the era of low labor returns in China.

In my opinion, salary increase can be regarded as a normal supplement to the "scissors difference" between labor prices and labor productivity in China for a long time.

Wage growth and labor efficiency growth are out of sync with China's economic structural imbalance.

China's economy should go from imbalance to balance. In essence, it is necessary to bridge the gap between labor productivity growth and wage income growth.

Over the past ten years, China's economy has maintained sustained high growth.

Labor remuneration

The share of GDP showed a downward trend.

In 1997, the share of labor remuneration in -2007 decreased from 52.7% to 39.74%, down by nearly 13 percentage points in 1997.

At the same time, capital gains account for

Gross domestic product

The proportion increased steadily to 30.6% in 2006.

The proportion of laborers' remuneration in GDP in developed countries is roughly 65% to 80%. China is not only lower than that of all developed countries, but also lower than that of the middle developed countries.

Over the past ten years, along with the rapid economic growth, technological innovation, talent and capital intensive, labor productivity in China's manufacturing sector has also increased significantly, and labour productivity has increased by 20.8% from 1994 to 2008, compared with 13.2% in the manufacturing sector during the same period.

Compared with most countries, the labor cost of our country is still very low, and the price of labor still has room for improvement.

Compared with the developed countries, the labor productivity of the second industry in China is equivalent to that of 1/16 in the UK, but the wages of employees are only 1/24, while the labor productivity is equivalent to that of the US 1/15, but the wage level is 1/20, and the labor productivity is equivalent to that of Japan's 1/16, but the wage level is 1/19.

Compared with the emerging countries, China's labor rate is equivalent to 1/4 in Korea, while the wage level is 1/9.

Compared with India, which belongs to the "BRICs", China's labor productivity is about 3 times that of India, but the wage level is 2 times more than that of China.

The contradictions in the current macro-economy are essentially the reflection of the imbalance of factor markets. They are the reflection of the low remuneration of labor factors and the high return of capital and other factors. Therefore, we must solve them from the labor force factor market.

However, it is still very difficult to make fundamental adjustments to the remuneration of labor.

The trigger mechanism of wage inflation spiral is conditional, that is, the monetary wage increase exceeds the growth rate of labor productivity.

Generally speaking, when the real wages and actual labor productivity increase synchronously, the increase of labor cost will be completely digested by the higher output of labor force, thus the labor cost and profit share the total output ratio.

The growth rate of nominal wages should be equivalent to the increase of actual labor productivity plus inflation rate. As long as labor productivity and wage increase synchronously or slightly higher than wage increases, wage inflation will not generate inflation or squeeze profit margins.

According to Japan's experience, after the "Lewis turning point" and the wage level rise, the labor productivity of Japanese manufacturing industry has been generally improved, and the average productivity of manufacturing industry in the 70s of last century has reached 10%.

Moreover, there is also a structural pformation within the manufacturing sector, and the low end manufacturing industry is facing a pformation to high-end manufacturing.

For example, in the 20 years from 1970 to 2000, the added value of Japanese textile industry accounted for 5.5% of the value added of manufacturing industry to 1.3%.

On the contrary, with the application of new technology, the high-end manufacturing industry has been developing rapidly. In the same period, the added value of the electrical machinery industry increased from 11% to 16%, and the proportion of metal products, general equipment and electronic equipment continued to improve, which smoothly realized the upgrading and pformation of the industry.

Therefore, the reduction of the scissors gap between wage increases and labor efficiency will not only cause the slowdown of China's economic growth, but will form a new driving force, so that China will gradually disappear while facing Lewis turning point and the first "demographic dividend". As a result of wage level rising, human capital accumulation and labor productivity increasing, economic development results will pform economic sustainable growth and shared growth through the promotion of human capital formation.