Report: as China’s economy grows, wages go up

11/21/2018 8:39:24 AM

As the economy of China grows and develops, the wages of China’s workers go up. Cities like Shanghai, Shenzhen, Beijing, and Guangzhou have the highest demand for talent in the country, causing wages to increase. To tackle some of the myths about labor cost skyrocketing in some cities, let’s compare the pay, focusing on the minimum, average and white-collar average wages. 

Experts from Dezan Shira & Associates* compiled the numbers to allow their customers - foreign enterprises and investors - to keep an eye on cost efficiency and business viability.  

First: there is a reason why wages go up. It is growth. China’s first-tier cities have plenty of that. They are still growing at high pace, their GDP even more so. In the first half of 2018, first tier cities, Shanghai, Shenzhen, Beijing, and Guangzhou, showed a GDP growth of more than six percent, with Shenzhen even reaching eight percent.  

Minimum Wages 

According to Dezan Shira & Associates’ report, the four first-tier cities have recorded the highest minimum wages in China this year, with all four cities having adjusted their minimum wage rates within the last 12 months. Shanghai is the city with the highest monthly minimum wage in China. This year, the monthly minimum wage and hourly minimum wage increased by five percent to RMB 2,420 (€304) and RMB 21 (€2,64) respectively. Over the past decade, the minimum wage in Shanghai has increased by a factor of 1.7. 

Shenzhen raised its minimum by 3 percent to RMB 2,200 (€276). Similarly, its hourly minimum wage for part-time labor increased by four percent to amount to RMB 20.30 (€2,55).  

Ranked in third place, Beijing’s monthly minimum wage is RMB 2,120 (€266) and hourly minimum wage is RMB 24 (€3), increasing by six percent and nine percent respectively. Of the four first-tier cities, Guangzhou has the lowest monthly minimum wage. Guangzhou has adjusted both its monthly minimum wage by 10 percent – to RMB 2,100 (€264) and RMB 20.30 (€2,55) respectively. This was the first minimum wage adjustment in Guangdong province (excluding Shenzhen) since 2015. 

Average Wages 

In Shanghai, the monthly average wage in 2017 for all types of businesses went up 9.7 per cent to RMB 7,132 (€897), RMB 8,348 (€1049), Guangzhou: RMB 7,210 (€907), Beijing: RMB 8,467 (€1065). Beijing’s monthly average wage was almost 20 percent higher than that of Shanghai. Dezan Shira: “This is, at least in part, due to headquarters of many financial institutions, state-owned enterprises, and information software industries often being situated in Beijing.” Wages vary greatly with the type of business ownership. For example, in Beijing, while the average wage was RMB 14,615 (€1,838) in foreign enterprises, it was ‘only’ RMB 5,894 (€741) in private enterprises. 

White-collar Average Wages 

According to the 2018 Report on Chinese Employers’ Demand and the Supply of White-Collar Talent in Summer, released by Zhaopin, the top three average white-collar wages in China are Beijing, Shanghai, and Shenzhen, with average monthly wages of RMB 10,531 (€1325), RMB 9,796 (€1233), and RMB 9,309 (€1172) respectively. Guangzhou came in at fifth place with RMB 8,019 (€1009), just behind Hangzhou RMB 8,585 (€1081). 

Who pays best in China’s first-tier cities?  

In Shanghai, investment funds, securities funds, intermediary services and professional services offered the highest-paid white-collar jobs. The average monthly salary in Shenzhen’s financial sector, at RMB 14,646 (€1844), is far higher than that of other cities in the region. Additionally, Shenzhen also offers wage advantage in other pillar industries, such as information technology (IT) as well as the city’s energy, mineral and mining industry. Similarly, in Beijing, finance, IT industry and real estate pay the highest wages.  

*Dezan Shira & Associates assists foreign investors throughout Asia, with offices in China, Hong Kong, and across the region. 

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