China playing significant role in driving global wage growth: Report

Chinese workers manufacturing electronic keyboards at a factory in Tianjin. China's large population and rapid wage growth have been significantly influencing the global average.
Chinese workers manufacturing electronic keyboards at a factory in Tianjin. China's large population and rapid wage growth have been significantly influencing the global average.PHOTO:REUTERS

Experts attribute influence to country's economic growth

BEIJING • China played a significant role in global wage growth from 2008 to last year, 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 last year 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 had declined from 2.4 per cent in 2016 to just 1.8 per cent last year.

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 last year, 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.

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, 33 per cent of China's employees worked in tertiary industries in 2008, compared with 45 per cent - or more than 349 million people - last year.

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 last year, 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, adding that rapid urbanisation was another catalyst for wage growth.

A version of this article appeared in the print edition of The Straits Times on December 20, 2018, with the headline 'China playing significant role in driving global wage growth: Report'. Print Edition | Subscribe