Labor Costs In China'S Manufacturing Sector Rose Significantly

The rise is mainly due to the increase in the number of workers, the increase of skilled workers and the rise in wages, among which wage increases are the main reason for pushing up labor costs.

In the 1-2 month of 2011, Zhang Xuechun, Xu Zhong and Shen Ming held a sample survey of 588 manufacturing enterprises in 5 provinces of Jiangsu, Guangdong, Hubei, Jilin and Sichuan, focusing on the causes of wage increase, the coping strategies and their structural implications of the enterprises, providing reference for the assessment and formulation of macro economic policies.

Based on the economic development level of each province, the sample survey has sampled the developed, medium and underdeveloped areas, and selected the sample enterprises with different industries, ownership and scale according to the local economic structure.

In the sample enterprises, the proportion of medium-sized enterprises accounted for 48.3%, small enterprises accounted for 39.6%, and foreign and private enterprises accounted for nearly 70%.

At the same time, 52% of the sample enterprises have export business and the rest are non export enterprises.

The global economy is still in a slow and unstable recovery stage after the financial crisis.

Through the sample survey, we found that since last year there has been a relatively widespread wage increase in the whole country, and the wage increase in the central and western regions is even faster than that in the coastal areas. One of the important reasons is the increasing demand for leisure for the manufacturing workers.

If this trend continues, China will enter a new wave of mechanization. Macroeconomic regulation and control will need to adapt to the structural characteristics of relatively high inflation. The development of consumption and services will become the main growth point of China's economy.

In recent years, enterprises

The survey data showed that raw materials accounted for the highest proportion of total cost, exceeding 62% in 2010, and the rest were sales, labor and financial costs, accounting for over 13%, 12% and 4.5% respectively.

The cost of raw materials and labor increased over the past 2008-2010 years, and the cost of raw materials increased from 63.1% in 2009 to 64% in 2010. The proportion of labor cost increased slightly faster than the cost of raw materials and increased from 11.1% to 12.3%.

At the same time, the sales and financial costs of enterprises are steadily decreasing.

From the industry perspective, energy materials,

The increase of labor costs mainly stems from three aspects: the increase of the number of workers, the increase of skilled workers and the rise of wages.

In 2010, the average number of employees in the sample enterprises was 1737, exceeding the level of 2008-2009 years, and 1670 people increased by about 4%.

During the same period, the proportion of skilled workers in the total number was 54.4%, 56.2% and 56.6% respectively, showing a rising trend, which appeared in all regions, ownership and scale enterprises.

Wage increases are more important reasons for pushing up labor costs.

Survey data show that in 2010, the number of unskilled workers in 2009 was flat or down, accounting for only 14% of the total number of enterprises. Almost few enterprises appeared to have a drop in wages, while the sample enterprises with an increase of more than 15% were close to 26% of the total number of samples, and nearly 50% of the sample enterprises' wages rose by 5%-15%.

The wage increase of unskilled workers in the central and western regions is faster than that in the coastal areas.

In the survey enterprises, the proportion of Sichuan's wages rose by more than 15% in 2010 was close to 1/3, 32.7%, and Hubei and Jilin provinces were 25.2% and 23.6%, respectively.

In contrast, the proportion of Guangdong province is as high as 27.3%, but the proportion of enterprises whose wages increase by more than 20% is only 8%, the lowest in 5 provinces, while only 20% of enterprises in Jiangsu province exceed 15%.

According to the industry, it is divided into textile and clothing industry and electronic light industry. The proportion of workers whose wages increase by more than 15% is over 37%. According to the ownership system, private enterprises are divided into small and medium-sized enterprises according to their size.

Skilled workers earn more than workers on the frontline.

On average, the wages of skilled workers rose by more than 15%, accounting for 32% of the sample enterprises, while only 26% of the unskilled workers in the sample enterprises increased by more than 15%.

By region, industry, ownership and scale, the most significant increase of skilled workers' wages is the distribution of unskilled workers, which are the central and western provinces, textile and garment industries, private enterprises and small businesses.

Hubei and Sichuan, respectively, 35.6% and 40.2% of the average wage of skilled workers rose by more than 15%, indicating that the central and western enterprises increased efforts to attract workers, especially skilled workers.

2010 is the turning point for China's rising labor costs.

According to the data released by the National Bureau of statistics, the average annual wage of the employed personnel in the private sector of the city was 20759 yuan in 2010, compared with 18199 yuan in 2009, an increase of 2560 yuan, an increase of 14.1% over the previous year, an increase of 7.5 percentage points.

According to our estimated wage increase, the average output of the 5 unskilled workers is 12.2% and skilled workers are 13.5%.

According to the ratio of skilled workers to 56.6%, the average wage increase of workers is 12.9%.

If we consider non wage expenditure, the actual labor cost of enterprises may be higher than our estimate.

According to the provincial data of the sample survey, the wage rise in the central and western regions is slightly faster than that in the coastal areas, for example, the wages of skilled workers in Hubei and Sichuan provinces rose 14.4% last year, faster than those in Jiangsu and Guangdong provinces.

This is also in line with the data released by the National Bureau of statistics. The data show that the average wage of employed personnel in the private sector in the eastern, central, Western and northeast areas increased by 14.5%, 12%, 14.8% and 12.9% respectively in 2010.

It should be noted that our survey data show that the wage increase of the surveyed provinces in 2010 is still significantly lower than the nominal GDP growth rate of the provinces in the same period.

On the whole, the correlation between wage increase and labor cost also reflects the relative change of labor intensity in different industries.

The most obvious impact of rising wages is the textile and garment industry. The rapid rise in wages has brought about an increase in the proportion of labor costs in enterprises.

The wages of electronic light industry and chemical industry increased rapidly, but the proportion of labor cost increased slowly, which meant that the labor intensity of these two industries decreased.

Similarly, the labor intensity of machinery and energy materials industry is on the rise.

The survey shows that fast wage rises are still difficult to meet the employment needs of enterprises.

The average number of workers in the sample enterprises is 9.4%, with the largest gap of 14% workers in the light industry.