BOFIT Weekly Review 2017/44

Slight acceleration in pace of Chinese wage growth this year



China's National Bureau of Statistics reports that real average disposable household incomes per capita have risen this year by 6.6 % in urban areas and 7.5 % in the countryside, which is roughly the same rate as GDP growth. Income growth has picked up this year by about one percentage point from last year. While income growth in rural areas has long been higher than in cities, the income differences between cities and the rural areas are still substantial. Disposable monthly incomes for city-dwellers in January-September averaged 3,050 yuan (400 euros) and in the countryside 1,090 yuan (140 euros).

In contrast, figures released by the Korn Ferry Hay Group (KFH), an international consultancy specialised in business management services, give no signs of accelerating wage growth. According to figures updated in May, KFH clients operating in China had raised wages by 6 % over the previous 12 months and expect future wage increases to continue at the same pace.

Even if it is difficult to evaluate conditions in Chinese labour markets due to the lack of reliable statistical data, enhanced employment conditions may explain the acceleration in the rise of average incomes. Official figures for registered unemployed people are considered unreliable, as jobless people have very few incentives to register themselves as unemployed. Despite this, a slight reduction in registered unemployed this year could indicate improvement in the labour market. Moreover, household confidence surveys indicate stable and healthy employment conditions and prospects.