Chinese Wages on The Up and Up

China's official statistics agency has confirmed what some of us have been suggesting was the case for some time now: labor costs have been rising fast. The National Bureau of Statistics reported on Tuesday the fastest growth in average wages in six years. But the figures mask a widening gap between workers in privileged occupations that receive heavy state protection and their counterparts in bricks-and-mortar manufacturing and extractive industries more or less exposed to the full brunt of competition.

The mean annual wage for a typical urban Chinese employee grew at a 18.72% rate in 2007, to 24,932 yuan ($3,556.63), or 99.32 yuan ($14.17) per day, the National Bureau of Statistics said, adding that it was the fastest growth in six years and higher than the 14% on average of the preceding six years.

While the news hardly came as a surprise to foreign investors grappling with the rapidly climbing costs of doing business in China, it was met with incredulity from Chinese critics, who were quick to highlight the stark disparities in fortune among Chinese workers that the national average wage figures hide.

The statistics agency did not release a detailed industry-by-industry profile, but China Business News, a business daily, pointed to earlier data released by the Beijing municipal government indicating that state-protected industries--in securities, banking and aviation--had reported average yearly wages exceeding 100,000 yuan ($14,265.34) in 2007, more than five times those for nonmetals mining and extraction, farming and traditional manufacturing lines such as textiles and sportswear, which paid less than 20,000 yuan ($2,853.07) to their workers. The figures were for Beijing itself but were broadly in line with those issued in recent years by the central government.

Industries enjoying a monopoly or near monopoly position, such insurance, legal services, telecommunications, tobacco, oil and gas are now paying a mean annual wage of between 80,000 yuan ($11,412.27) and 100,000 yuan.

In addition to the stark discrepancies among industries, complaints targeted the yawning gap between highly paid executives and low-level staff, as well as the geographical disparities in wages between workers living in the prosperous cities, especially those near the coast, and those in outlying districts. Attention was also directed to the increasing number of migrant workers who have dropped out of the national statistics as a result of employers' reluctance to put them on staff, as they strive to reduce their cost basis.