Category Comp, Salary & Benefit

WORLD – KORN FERRY: CHINA LEADS THE WAY IN SALARY GROWTH

Real wages in China saw an annual average growth of 10.6% in the last 8 years, the highest among the G20 countries, according to a research report by Korn Ferry Hay Group.

China’s salary growth was followed by Indonesia (9.3%), and Mexico (8.9%). The worst were Turkey (-34.4%), Argentina (-18.6%), Russia (-17.1%), and Brazil (-15.3%). Growth averages for all other developed nations fell in between these figures.

“In the countries that are seeing tremendous salary growth, the issue is supply and demand,” Benjamin Frost, Korn Ferry Hay Group Global Product Manager, said. “With countries like China seeing a whopping 75.9% GDP growth since the beginning of the recession, universities and corporations simply can’t train people fast enough. This leaves an acute talent shortage and points to the reason skilled employees are seeing steep pay increases.”

The firm’s research focused on the G20, nations with the world’s leading economies, and compared inflation-adjusted pay and GDP in each. The US fared poorest in pay recovery among Western developed nations. Canada’s recovery was the best, with 7.2% real salary growth on average and a GDP gain of 11.2%. Other developed nations experienced flat to modest real salary growth, with Australia at 5.9%, France at 5.2%, Germany at 5%, Italy at 2.4%, and the UK down 0.1%.

“While global economists point to this recovery overall as one of the worst in history, there are political, economic, and social reasons for the disparate salary fluctuations in different countries,” Frost said. “It examined how salaries have fluctuated globally since Lehman Brothers fell eight years ago, marking for many experts the start of the worst economic crisis and recession in generations.”

The Korn Ferry Hay Group pay data was drawn from the firm’s PayNet database, which contains salary and job data for more than 20 million workers in more than 25,000 organizations across 110 countries.

Survey: Shanghai salaries up 6.7% in 1st half of 2016

SHANGHAI employees saw their salaries increase 6.7 percent on average in the first half of the year, but the raise was the lowest of all China’s first-tier cities, according to a survey.

Pay rises in Shenzhen, Beijing and Guangzhou ranged from 7.1 percent to 8.8 percent, while the average level in second-tier cities was 7 percent, according to the survey by China International Intellectech (Shanghai) Corp.

It said 64 percent of Shanghai companies said they had increased pay for all employees, second only to Guangzhou, and no decreases were reported.

The state-owned human resources agency said the Shanghai increase was no surprise given that city pay levels were already high.

“The cost of employing people in Shanghai is very high after decades of fast growth,” said the CIIC survey center’s Pang Limin.

“The result matches our prediction of from 5 to 7 percent at the beginning of this year.”

Across the country, average pay rises dropped to 7 percent from 8.7 percent in the same period last year.

Pang attributed to the downward trend to China’s slowing economy.

Real estate replaced the Internet industry at the top of the pay rise list with an increase of 8.6 percent following a surge in house prices.

Pang said companies in Shanghai were entering a period of low pay rises as they had more mature human resources management systems with multiple staff incentives and flexible benefits, such as stock shares and allowances.

“Employers in other cities are learning such practices but they depend more on salary adjustment at this moment,” she said.

There were also more foreign ventures in Shanghai while Guangdong had more local private companies, which had the highest increase in the survey, Pang said.

Only 39 percent of companies surveyed in Shanghai said they would expand recruitment with budget increases for recruitment of 22 percent, both lowest of the four first-tier cities.

Shanghai white-collar best paid

Shanghai overtook Beijing to be the best paid city for white-collar workers in the first quarter of this year, recruitment portal Zhaopin.com said yesterday.

White-collar workers in Shanghai were the best paid on the Chinese mainland with a monthly average salary of 8,825 yuan ($1,362), followed by Beijing at 8,717 yuan.

Shenzhen was third at 8,141 yuan, Zhaopin.com said in a report based on job positions posted on the website.

The best paid jobs in Shanghai were in professional services such as treasury, legal and human resources drawing an average monthly salary of 13,449 yuan, ahead of 13,049 yuan paid for positions in the energy sector.

Joint ventures and listed companies were the most generous employers, while private companies and government-backed organizations paid the lowest salaries, the report said.

But state-owned companies remained the most popular among job seekers who preferred stability.

Chinese migrant workers’ wages up 13.9 pct

The average monthly wage for China’s 166 million migrant workers rose 13.9 percent last year, said the Ministry of Human Resources and Social Security on Thursday.

Migrant workers, defined as those who have worked away from home for more than six months, earned an average of 2,609 yuan (429.2 U.S. dollars) per month, said the ministry.

China had a total of 269 million farmers working in non-agricultural sectors by the end of 2013, up 2.4 percent year on year, according to the ministry.

China’s consumers take eagerly to credit

A few years after finishing university, Jack Dai thought he had scored the holy trinity of success for a young Chinese man: a government job, an apartment and a wife. But he had not counted on one additional factor, less visible from the surface, that soon drove a wedge between him and his conception of the good life.

To buy his Shanghai house, Mr Dai, 30, took out a hefty mortgage. Monthly repayments now swallow up half his salary. Plus he has the other expenses of Chinese middle-classdom – overseas holidays, shopping excursions, movies and restaurants.

Mr Dai is hemmed in by debt. “Every second month or so, I can’t pay off my credit card bill. I save nothing,” he sighs.

This experience for a young professional, hardly unusual in the west, is a radical departure for China. The older generation, that of Mr Dai’s parents, was famous for its saving prowess. Memories of deprived childhoods in the Maoist era led them to squirrel away most of their earnings even as their fortunes improved alongside China’s fast-growing economy from the 1980s on.

But the young urban Chinese who have entered the workforce over the past decade grew up amid plenty, and their views about saving and spending bear little resemblance to those of their parents. Their willingness to borrow for today and worry about repayment tomorrow is beginning to reshape China’s debt dynamics.

Lower expectations

Beijing college graduates expect a monthly salary of 3,684 yuan ($600) as they hunt for jobs, which is around 1,000 yuan less than graduates in 2012 expected, the Beijing News reported Thursday.

The Beijing Youth Stress Management Service Center said that based on its analysis of its survey of 16,000 graduates and 1,015 valid questionnaires, the average monthly salary expectation has decreased to the lowest level in three years, 2,000 yuan less than expectations in 2011, the report said.

PhD students expect the highest salary, at 6,000 yuan, 1,160 yuan less than 2011’s expectation.

Balancing Paychecks

Thirty-year-old Ye Lei had worked in a state-owned factory in her hometown Jiangxi Province for seven years. Although she had been promoted to the position of the department head, she quit her job last month to work as a sales representative in a marketing company in Beijing.

“The first thing I want from the job hop is a higher salary. Career opportunities come second,” Ye said.

Ye had already received a 13-percent pay raise over the year earlier period before she quit the factory. On April 1, Jiangxi Province increased its minimum wage for the eighth time since 1995. Many workers in Ye’s factory have benefited from these wage increases.

Currently, in the most economically developed areas of Jiangxi Province, the minimum wage is 1,230 yuan ($196) per month, or 12.3 yuan ($1.96) per hour. Whereas in some less developed areas in the province, the minimum wage is 900 yuan ($143) per month or 9 yuan ($1.43) per hour.

Even with the raise, Ye still felt her income wasn’t keeping up with the increasing cost of living. With profits of the factory dwindling and some of her workers leaving for greener pastures in the service sector, it was time for Ye to jump ship as well.

China’s fast-growing service industries are luring workers away from the manufacturing sector. Modest hikes in local minimum wage ordinances do little to staunch the flow of personnel, to which the recruitment postings near the gate of Ye’s factory can attest.

A report of The Wall Street Journal presents data showing that in the previous five years, the service industry created 37 million new jobs in China, much more than the 29 million created in manufacturing.

Labor shortage for the manufacture sector in China is not seasonal or short-term, said Kelvin Lau, senior economist of Standard Chartered Bank. Competition for labor is expected to drive up wages.

Stories of wage earners

On May 17, the National Bureau of Statistics of China released last year’s average annual wage of the workers in urban non-private sectors, which mainly comprises state- and collectively-owned enterprises and public service institutions. The data show that in 2012, workers in those sectors made an average of 46,769 yuan ($7,459), a nominal 11.9-percent increase over that of the previous year. After deducting inflationary factors, the real annual growth rate was 9 percent.

As often, the release of national salary statistics sparked discussions and prompted people to share their income-related stories.

Lu Mengying, a 31-year-old resident in Beijing, is happy about her current income. She was recently hired as sales representative by a company selling luxury goods.

“My base salary and commission usually add to about 8,000 yuan ($1,276) per month. If things go well, I can make more than 10,000 yuan ($1,595),” she said.

Lu had previously earned rather little at a marketing company in Beijing’s Zhongguancun area, China’s Silicon Valley, where she had worked for six years after she graduated from university.

Promising earnings prospects drew her to the luxury industry. She enrolled in an expensive training program on luxury industry management. The 15-day training program cost her more than one year’s income, but Lu found it worthwhile, as it helped her land her current job.

According to Lu, a “buyer” of a product line under a luxury brand in her company can make at least 500,000-700,000 yuan ($79,700-$111,600) a year. The buyer’s duty is to run around the world to collect product information, contact suppliers, place orders and procure products to meet the needs of various consumers.

Currently, buyers are in short supply in China. Lu said that because of her limited ability and her 3-year-old child, she doesn’t want to become a buyer, at least not right now. She’s more confident about working her way back up to management—of a boutique rather than a factory. Few people in China meet the qualifications for store manager, so such individuals are highly sought after by luxury brands.

Lu’s optimism is not unsubstantiated. Last year, a number of international brands exploring markets in second- and third-tier Chinese cities discovered significant demand for sales, human resources, training, business development and leasing professionals, according to a 2013 global salary survey by leading recruitment consulting firm Robert Walters.

Although business executives in many industries get fat paychecks, as indicated by the Robert Walters survey, most first-line workers do not.

Twenty-year-old Li Min, from Huainan City in Anhui Province, is a waiter in Shanghai. His parents also work in Shanghai, and they must support Li’s two younger brothers.

As much as he’d like to chip in, Li can barely cover his own expenses, and he doesn’t expect his 1,000 yuan ($159) monthly earnings to rise anytime soon. He plans to borrow some money from acquaintances and open a car wash.

Liu Guobao, a 43-year-old welder in Shanghai, also barely makes ends meet. His monthly salary increased to 3,800 yuan ($606) last year from 1,800 yuan ($287) in 2006. Yet having to raise two school-age daughters, he has little money to squirrel away.

The National Bureau of Statistics said that, although average wages in 2012 grew quite fast, income levels differed across regions, industries and positions, and the income gap is yawning wider.

Income disparity in China is quite high. Last year, the country’s Gini coefficient, a gauge of income inequality, reached 0.474 after four consecutive years’ drop from its peak level in 2008. Nonetheless, it shows an alarmingly wide gap between the rich and the poor in China.

“Since the implementation of the reform and opening-up policy in 1978, China has already established an income distribution system suiting its national conditions and development stage. Yet some salient problems still exist in this area,” said Zheng Gongcheng, a professor researching social security at Beijing-based Renmin University of China.

Zheng is also a member of the Standing Committee of the National People’s Congress, the country’s legislature. He cited such problems as front-line workers’ income is still too low, the income gap between various groups is too big, and some people get “grey” and “black” income.

“Increasing ordinary workers’ income is a long-term task in the income distribution reform,” Zheng said.

Reform suggestions

Public concern over income disparity has prompted government regulatory measures.

Income distribution reform is not as simple as salary reform, said Su Hainan, Deputy Director of the China Association for Labor Studies. Su said that it should involve reform of taxation, social security, social welfare, and other systems.

On February 5, the State Council approved and published opinions on deepening income distribution reform.

The document says that the government will strive to double the average real income of urban and rural residents by 2020 from the 2010 level and let the poor enjoy faster income growth.

Through the reform, the government also aims to expand the middle-income group, sharply reduce poverty, and adjust and regulate excessively high and hidden income.

The government also seeks to raise the share of residents’ income in total national income, and increase government expenditure on social security and employment.

The urban-rural disparity is a major contributor to the income gap in China. Some experts say that the urban-rural income gap can explain more than 40 percent of China’s income disparity.

Some experts suggest that to shrink the income gap, the government should reform the household registration system, eliminate discrimination against migrant workers, and give farmers greater pricing power when they transfer their contracted farmland.

Monopoly is also another cause of income inequality. Monopoly industries usually pay well, not because their employees work harder, but because of their monopoly of national resources, said officials from the Ministry of Human Resources and Social Security.

Even inside state-owned monopoly industries, income is very unevenly distributed. The Ministry of Human Resources and Social Security and the National Development and Reform Commission once conducted a survey on salaries in dozens of large and medium-sized state-owned enterprises in several monopoly industries, such as petroleum, telecommunications, aviation and electric power generation. The survey showed that in these companies, the highest-paid employee takes home five to nearly 100 times as much as the lowest-paid employee.

Zeng Xiangquan, Dean of the School of Labor and Human Resources at the Renmin University of China, advocates breaking up the monopolies to let markets determine executive salaries as a solution for this particular form of income inequality.

In addition, income distribution reform should not only be an “incremental reform” but also a “stock reform,” said Zheng. That is to say, previous unequal income distribution, as reflected in unequal distribution of accrued wealth, should also be adjusted.

To bridge the gap between the rich and poor, both income and property should be regulated, Su said.

The State Council’s opinions on deepening income distribution reform indicate the government may soon levy property taxes beyond the scope of the current trials in Shanghai and Chongqing. The possibility of a consumption tax was mentioned, and the government is exploring the feasibility of levying an estate tax in the distant future.

Zheng also suggested that on one hand, the reform should address some pressing issues, and on the other hand, it should set up stable systems to accommodate rational public expectations. He said that confidence in the future can alleviate people’s uneasiness and anxiety.

How Much Does a Chinese Automotive CEO Earn?

It’s a well known fact that Chinese labor is somewhat cheaper than what is available in the West, however in recent years Chinese salaries have sky rocketed at a rapid pace for the average white collar worker. Entry level jobs for a recent graduate in Shanghai will net around 5000RMB (812USD) per month at the minimum, post grads can look forward to around 8000RMB per month (13,000USD), even more if they have previous work experience and international experience.

So how much does a CEO take in, specifically the CEO of major Chinese automotive companies? Those that are listed on the HK stock exchange have to reveal the director level payment packages so investors can clearly see where their money is going. Of course, some Western CEO’s take a token 1USD salary but have decent stock options instead and we’re sure the situation in China is largely the same in China as well. If they lead the company well their stock returns will be much higher than their salaries and of course have lower tax on them as well.

In 2012 BYD’s billionaire chairman netted a 2.77 million RMB salary (438,525USD), but that was down from his 4 million RMB salary in 2011, of course BYD’s total income was down by around 800 million over the same period so its nice to know that even CEO’s are taking austerity seriously. Wang Chuan Fu nets the highest salary in the Chinese auto business, but the gentlemen is also China’s richest man so his BYD salary is likely chump change to him.

Li Shu Fu, the Chairman of Geely and the brains behind the Volvo saw profit rise 32.2% at the Hangzhou based company, but his salary is just 327,000RMB per year ($53,122USD), probably on par with some of his own mid level white collar staff.

JMC’s GM Chen Yuan Qing hasn’t seen a payrise in three years on his 238,240RMB per year salary (37,500USD), his salary is reportedly paid in USD so he is losing money whilst the RMB appreciates against the USD.

Geely’s CEO Gui Xian Rui brings in just over 2 million RMB with his salary approaching 2.36 million RMB per year, a nice increase over 2011?s salary where he netted 1.96 million, a further 3.41 million RMB was given to him in stocks, bring a total of 5.77 million into Mr. Gui’s bank account. nice.

Great Wall’s Board Chairman Wei Jian Ping’s salary rocketed from 1.74 million RMB to 2.47 million RMB over the course of 2011 to 2012.

Four companies are offering salaries between one million and two million RMB per year: Foton, SAIC, Ningtong and GAC. Ningtong Coach didn’t see any major salary upgrades in 2011, with CEO salary staying at 1.2 million RMB. SAIC’s CEO Chen Hong’s salary jumped from 917,000RMB in 2011 to 1.36 million RMB in 2012.

Foton and GAC saw a salary drop in 2012, probably due to a poor financial show in 2011. Foton’s General Manager Wang Jin Yu saw a salary decrease of 3.1% with a net salary of 1.88 million, Foton’s total income dropped 20.7% in 2012 with profit increasing 17.4%.

Average wages in the Chinese automobile industry still far behind the US

Recent statistics from the National Bureau of Statistics show that the average pre-tax salary for workers in the Chinese automobile industry is now at 13.58 yuan ($2.178) per hour, according to a report appearing on auto.163.com today. The salary level is considered average in the overall Chinese manufacturing industry. Furthermore, statistics from the US Bureau of Labor Statistics further reveal that wages in the Chinese manufacturing industry have doubled from 2002 to 2008, while those in the US have only increased by 20 percent. Despite these advances, average wages for workers in the industry in China are just four percent of the average level in the US.

As far as the country’s automobile industry is concerned, it is also important to differentiate between domestic own brand manufacturers and Sino-foreign joint venture enterprises. Statistics from Aon Hewitt Consulting show that wages in that monthly wages for first-class workers at Chinese automobile manufacturers can vary between 1,800 yuan and 4,000 yuan ($288.81-$641.79). This difference is most noticeable in yearly bonuses. Last year, FAW-VW awarded its workers with a yearly bonus of between 50,000 yuan and 80,000 yuan ($8,022-$12,836), nearly ten times greater the bonuses granted by domestic manufacturers Chery and Jianghuai.

The large discrepancy in pay between the Chinese and American automobile industries is also evident among company executives. The combined annual salaries of 15 top level executives from nine of China’s largest domestic manufacturers–BYD, Great Wall, Geely, JMC, Foton, GAC, SAIC, Yutong and Sinotruck–in 2012 was calculated to be 24.78 million yuan ($3.97m), only around one-fifth of Ford CEO Alan Mulally’s annual salary of $20.99 million.

HKMA staff to get 4.5pc pay increase

The Hong Kong Monetary Authority will give its staff a pay rise of 4.5 per cent this year – slightly more than the market average but less than that at the Securities and Futures Commission.

The city’s de facto central bank announced all its staff would get a general increase of 4.5 per cent of their fixed salary, while 0.8 per cent was being set aside to reward good performers, with the increases for individual staff depending on performance.

The annual pay rise is effective from the HKMA’s new financial year, which started on April 1.

Variable pay, equivalent to a bonus at private firms, averaging about 2.7 months’ salary will be paid to staff according to their performance last year.

The HKMA’s pay rise is in line with the 4.5 per cent inflation forecast by the government for Hong Kong this year.

It is, however, below the average pay rise of 5.5 per cent budgeted at the Securities and Futures Commission.

The HKMA’s pay rise is higher than the 4.1 per cent given this year at 93 companies in nine industries surveyed by the Employers’ Federation of Hong Kong in January.

Banks and financial services companies, which are regulated by the HKMA, awarded an average pay increase of 2.5 per cent.

Employees in property and construction got 5 per cent, the survey showed.

The HKMA’s pay rise was determined by Financial Secretary John Tsang Chun-wah, who took into account a review by the governance subcommittee of the Exchange Fund Advisory Committee, market surveys of pay, as well as input from human resources consultants.