Economy

Pay hikes good for 'long term'

By JIN ZHU (China Daily)
Updated: 2010-06-17 10:19

Job sector will benefit from higher wages despite worries over moves abroad

BEIJING - Wage increases in a number of the country's labor-intensive industries will be good for employment in the long term, a senior official with the Ministry of Human Resources and Social Security has said.

"For low-level enterprises developing extensively, such as those that involve earning only a few cents from making shoes or toys, it doesn't matter if they move out of China because of wage hikes," Yu Faming, director of employment promotion department in the ministry, was quoted by the Beijing News on Wednesday.

Yu's comments followed speculation that global consumer product manufacturers may consider moving their factories to nearby countries such as Vietnam, India and Indonesia, where wages are comparatively lower, as China faces rising wages.

On June 6, Taiwan-based Foxconn Technology Group announced a second salary rise that would increase pay by up to 65 percent for workers at its factories in Shenzhen, Guangdong province.

Earlier, Japan automobile giant Honda offered a 24 percent pay hike to its auto parts workers in Foshan, Guangdong, to bring an unprecedented strike to an end.

Also, 14 provinces, municipalities and autonomous regions in China have raised their minimum wage levels this year, with the highest at more than 20 percent.

"Although wage rises may negatively impact the country's employment at the moment, it will promote a healthy development of the job sector in future," Yu said.

Related readings:  Striking laborers back at work after pay jump  Foxconn announces another pay hike  Wage increase a healthy sign  China to tackle yawning wealth gap by hiking minimum wage

Yu also refuted allegations that the country was facing a labor shortage, amid a large number of enterprises reportedly facing pressure from labor recruitment earlier this year in the Yangtze River and Pearl River deltas.

"At most, only some enterprises in some areas have to deal with the difficulty of recruiting employees, which is caused by going for the cheapest labor cost," he said.

"Farmers who can find jobs with better pay near their hometowns will not be willing to go far," he said.

Pan Chenguang, a human resources expert at the Chinese Academy of Social Sciences, said companies should raise wages when they experience good business development.

"To set up a stable and high quality workforce, companies should offer competitive wages to attract more talent and maintain workers' enthusiasm," he said.

Yu also urged colleges to be responsible for cultivating graduates who suit market needs.

China is forecast to have 6.5 million college graduates next year.

On average, 6.7 to 6.8 million of college students will graduate each year from 2011 to 2015, he said.

"One reason for students who are finding it difficult to find jobs after graduating is their majors, which are not needed in the current market," he said.

"For future course offerings, colleges should take full consideration of the job market's actual needs."