Pressure On The Textile And Garment Industry Under The Tide Of Rising Wages

Recently, the Ministry of human resources and Social Security announced that as of the end of September, 21 provinces, including Beijing, Tianjin and Shanxi, had raised the minimum wage standard, with an average growth rate of 21.7%. Up to now, 25 provinces have issued the 2011 annual salary guidance line, with a baseline of more than 14%.

For ordinary people, the news of salary increase is undoubtedly a good news, but for enterprises, raising the minimum wage standard is undoubtedly a big challenge. This is particularly evident in small and medium-sized enterprises and some low income industries. They have been greatly affected by the rising wage trend.

In recent years, OEM enterprises in coastal areas have been able to survive the financial crisis, and then have encountered the problem of rising raw material prices, labor shortage and exchange rate fluctuations. The business life is really bad. The news released by the Ministry of human resources reflects the survival situation of a number of enterprises from the side. For those enterprises that make foreign trade export orders, it is difficult for them to cope with the weak global market demand.

This situation is particularly prominent in the textile and garment industry. Faced with a series of pressure, the owners are afraid to take care of others. They are thinking about how to keep their profits. Even if they do their best, they should use various ways to digest the cost.

According to the common sense of economics, the appropriate salary increase in processing and manufacturing industry can stabilize a group of skilled skilled workers, and the orders taken by enterprises can also be transferred from middle to low grade to medium and high grade products, so that the profits of enterprises can be increased synchronously. In the long run, the biggest advantage of rising labor prices is to promote enterprises to move towards a higher level of transformation, or to raise production levels, or to integrate and extend existing industrial chains. In any case, the purpose is to urge enterprises to rely more on technological progress and technological innovation to enhance their competitiveness, so as to realize the upgrading of the whole industry and eventually transform China's existing economic growth mode.

This is probably a major factor in the affirmative attitude of policymakers in raising wages. But raising the minimum wage also has another effect. At present, when the supply of domestic labor exceeds demand, wage increases will probably result in the fact that a part of the labour force can not get employment, thus causing the actual unemployment rate to rise. Therefore, it is also different from the perspective of salary increase.

As far as the current situation is concerned, it is a fact that enterprises pay higher cost for labor force. We can only appeal again: after the minimum wage adjustment, we hope that the government can appropriately reduce some of the tax burden on those small and medium-sized manufacturing enterprises in distress, at least should enable them to operate normally and not bankrupt.