China played significant role in maintaining global wage growth, say experts

Average real wages nearly doubled in China between 2008 and 2017, even as other G-20 countries, including Japan, Britain and Italy, saw a slower rise and fluctuations.
Average real wages nearly doubled in China between 2008 and 2017, even as other G-20 countries, including Japan, Britain and Italy, saw a slower rise and fluctuations.PHOTO: AFP

BEIJING (CHINA DAILY/ASIA NEWS NETWORK) - China played a significant role in global wage growth from 2008 to 2017, reported Chinese state media, citing local analysts and a report by the International Labour Organisation (ILO).

The Global Wage Report 2018/19 released last month finds that in real terms (adjusted for price inflation), global wage growth in 2017 was not only lower than in 2016, but also fell to its lowest growth rate since 2008, remaining far below the levels obtained before the global financial crisis.

Global wage growth in real terms has declined from 2.4 per cent in 2016 to just 1.8 per cent in 2017.

If China, whose large population and rapid wage growth significantly influence the global average, is excluded, global wage growth in real terms fell from 1.8 per cent in 2016 to 1.1 per cent in 2017, said the ILO report.

"We see a worrying trend of global wage growth," ILO director-general Guy Ryder said at a United Nations press conference in Geneva, observing that the slow wage growth looks likely to continue this year.

The report says: "While wages have increased rapidly over the past decade in some countries, most particularly in China, in many other countries average wages remain low and insufficient to adequately cover the needs of workers and their families."

The ILO report was based on data from 136 countries.

 
 

Experts attributed China's influence on global wages to the country's steady economic growth and its changing growth drivers.

"China contributed to the global wage growth," said Dr Su Zhongxing, dean of Human Resources Management at Renmin University of China.

"China has a large labour population. What's more, its wages grew rapidly in recent years. These factors obviously will help the world's average wage rise."

Mr Xu Ding, an ILO economist for wage and labour relations and one of the report's authors, said changes in China's mode of economic development constitute another factor.

"The economy in China has been growing steadily over the last decade, despite the fact that the main drivers of growth have been shifting to different sectors," he said.

"All of them have translated into high levels of employment and an increase in real wages."

According to the National Bureau of Statistics (NBS), 33 per cent of China's employees worked in tertiary industries in 2008, compared with 45 per cent - or more than 349 million people - in 2017.

During the period, China's average wage increased by 8.2 per cent annually in the decade, much higher than the global growth rate, according to the ILO report.

Following the same pattern, average real wages nearly doubled in China between 2008 and 2017, even as other G-20 countries, including Japan, Britain and Italy, saw a slower rise and fluctuations.

Mr Xu said China's wages likely remained on an upward trend because the country has adapted well to changing international and domestic markets.

"When international trade slowed down, China promoted its domestic demand and employment in different ways," he said. "Also, in a number of provinces, minimum wage policies were used to foster local economic activity."

He said China's rapid urbanisation was another catalyst for wage growth.

"People who were farmers in rural areas now receive salaries in cities, increasing the pace of average wage growth," he said.

The NBS found that 813 million permanent urban residents accounted for 58 per cent of the total population in 2017 compared with 47 per cent in 2008.