Op-Ed Contributors
Low-wage era not over yet
By Qin Xiaoying (China Daily)
Updated: 2010-07-08 08:03
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Ordinary employees, the largest wage-earning group, make up for the third group, and their incomes are mainly through basic monthly salaries, with bonuses forming just a small proportion of the pay structure.
Such a kind of wage structure has led to enormous income gaps among the country's different labor groups. It has also become one of the most difficult issues for the country to regulate.
In addition to the above two factors, the uneven level of economic development across the nation is also responsible for the prevailing low wage situation.
The experiences of developed countries suggest that the upgradation of a country's industrial structure, along with ensuing improvements to employees' educational level and labor skills, will catalyze its transition from a low-wage to a high-earning destination.
In this process, the labor-intensive industry will transform into one that provides high value-added services. Such a transformation means the elimination of some backward industries and the elevation of labor quality and technique.
Yet, things will continue to be different in China.
For a large developing country with a huge population, it is impracticable to eliminate the huge number of labor-intensive industries, the chief source of employment to many.
China must shift some of its labor-intensive sectors from developed coastal areas to the vast and comparatively less-developed central and western regions - a move that will only prolong rather than eliminate the country's low-wages scenario.
The Chinese government has adopted a series of tough measures to intervene in labor-capital relations in order to help raise employees' wages, but no obvious progress is expected in the near future given the lag effect of any government policy or regulation.
The country will have to go a long way before it can adopt a new and more reasonable wage system and then put that into effect.
Under these circumstances, it is still too early to conclude that the era of "cheap labor" has come to an end in China.
The author is a researcher at the China Foundation for International and Strategic Studies.
(China Daily 07/08/2010 page8)