Wage Growth Exceeds Labor Productivity And Labor Market Flexibility

At the annual meeting of the 50 annual forum of China's economy, Lou Jiwei said, "the protection of enterprises by the labor contract law is seriously inadequate. To a large extent, the flexibility of China's labor market is reduced, and the total factor productivity is not conducive to the improvement. Finally, the workers are harmed by the labor contract law". "This is not enough for the workers," said Lou Jiwei.

Su Hainan, vice president of the China Labor Association, told reporters: "over the past thirty years since reform and opening up, China's wage growth has been slower than the growth rate of labor productivity over a long period of time.

In recent years, wage growth has exceeded the growth rate of labor productivity, which I think is a supplement to the slow growth of the long term wage in the past.

China's economy has entered a new normal, and economic growth should change from relying on expanding factor input to relying on total factor growth rate.

But Lou Jiwei said in the above speech: "under the new normal, TFP has been increasing slowly."

The reason for this is Lou Jiwei's view of China.

To a great extent, the flexibility of China's labor market is greatly reduced, which is not conducive to raising total factor productivity, and ultimately will harm the interests of workers.

In addition, in Lou Jiwei's view, the law has strengthened the protection of jobs to some extent, resulting in the rigidity of the labor market, and also reduced the strength of human capital input.

According to the National Bureau of statistics, in 2015, the per capita disposable income of China's residents was 21966 yuan, and the actual growth rate was 7.4% after deducting the price factors. Among them, the per capita income of farmers increased by 0.1 percentage points higher than the national average level, which all exceeded the GDP growth rate.

"The central requirement is" two synchronization ", that is, the growth of residents' income should be synchronized with the speed of economic development, and the rate of wage growth should be synchronized with the growth of labor productivity.

Of course, if wage growth is longer than productivity growth in the long run, it is not sustainable. "

Su Hainan said.

At the annual meeting of the 50 Member Forum of China's economy, 2016, Minister of finance Lou Jiwei said: "the current employment system is divorced from labor productivity and wages are rising rigidly.

In the past ten years, especially in the last eight years, wages have exceeded two or three percentage points of labour productivity, making our competitiveness less and less competitive.

We have been talking about raising wages, but we have pushed it too early. "

Labor productivity is a measure of the number of products produced in the same labor time per unit time. If the wage growth exceeds the labor productivity, it means that the labor cost paid by the enterprise will exceed that of the enterprise, so that the competitiveness of enterprises will decline and wage growth will not continue.

Su Hainan told the daily economic news reporter: "in recent years, the population of our country

Gradually, the total supply of labor market began to decline, and labor shortage appeared in many places. This is one of the factors that accelerated wage growth. At the same time, in order to compensate for the slow growth of previous wages, especially the slow growth of migrant workers' wages, the government promulgated relevant policies to promote wage growth.

Su Hainan believes that in recent years

The improvement is indeed very fast, and we need to comprehensively analyze the reasons for this.

He said: "the data provided by experts show that the cost of business in the United States is only 3% higher than that in China, but the labor cost in the United States is several times higher than that in China.

This shows that the cost of labor in our enterprises is still not very high.

The cost of Chinese enterprises has increased rapidly in recent years, mainly due to the cost of circulation, raw material and fuel, and the high taxes and fees.

In the future, we must stick to the principle of "two synchronization" and control the wage growth in the same level as the growth rate of labor productivity.

"Enterprises have to pay a lot of cost to improve their occupational skills.

However, enterprises are unwilling to increase investment in this area because workers can leave for whatever reason.

If the employees are trained, the staff can go.

If companies want them to go, they have to pay a lot of money. "

Lou Jiwei said.

A civil law court official said that the stability of labor relations between the 80 and the 90s is not good now. Since the implementation of the labor contract law in 2008, the proportion of workers under 35 years of age has been increasing, which has increased from 38.49% in 2013 to 43.3% in 2014.

In his speech, Lou Jiwei said: "I think the next step should be to improve the flexibility of the labor market.

The labor contract law needs to protect workers, but it must balance the relationship between them, not only to protect workers, but also to protect enterprises.

Regarding this, Su Hainan told reporters: "the labor contract law itself has a foothold mainly to protect the rights and interests of laborers, which is based on the background of the obvious damage of laborers' rights and interests in the labor market.

Of course, in the face of the economic downturn, we should study how to increase the flexibility of employment so that employers and employees can negotiate on an equal footing.

This is not a violation of the labor contract law. In 2008, we did so in response to the international financial crisis. We can do better today.