Raising Wages in China?

The Chinese government has announced wage increases that will stretch into the future. There are four major considerations that lead to an increase of the wage rate: the slowed down population growth, to improve their living standard, to reasonably adjust the wage rate according to China's economic development and to resolve labour unrest.

Due to China's one child policy, infant growth rate has decreased significantly. This also leads to a relatively small labour supply than the old days. Because of a smaller supply of labour, different enterprises have to raise their wage rate, so as to attract more labour and increase their competitiveness in the market.

China's economy is developing rapidly and that the living standard is being raised simultaneously. Inflation is everywhere. Workers' wage rate must be raised, as only by raising their wage rate, can they have enough money to support their own lives. Most of the labours are migrant workers, and they do not receive much welfare in the city in where they are working. When facing inflation, less welfare and subsidy from the government, their expenditure will increase more than other city-dwellers. If they cannot support their living, they might move back to the rural areas and that the factories will lose more potential workers. Thus, the factories must raise their wage, so that the workers can improve their living standard.

When the global financial crisis erupted in 2008, one fear was that factory layoffs in China would lead to social unrest. Yet, that didn't happen, in part because Chinese workers were willing to endure stagnant wages and unemployment as the national economy slowed. But now that Chinese growth has rebounded, workers are not so patient. While workers may have been willing to give their bosses the benefit during the 2009 downturn and accept low wages or pay cuts, now times have changed. "The economy is booming again and the same workers are forced