Labor Market and Salary report 2016/17

China’s Cooling Economy Impacts Wage Increases at German Companies – Results of the 2016 German Chamber Labor Market & Salary Report

Beijing, Shanghai, Guangzhou, 18th October 2016 – China’s transition into a more sustainable growth model continues to show effects on the labor market. The findings of the 2016 German Chamber Labor Market & Salary Report represent the lowest growth expectations since the German Chamber started collecting data at China level in 2012. Accordingly, German companies operating in China expect wages increases of 6.23% for 2017, 0.87 percentage points lower than last year’s figures. The survey was carried out between July 19th and August 24th 2016 by the German Chamber of Commerce in China among its member companies, in partnership with Direct HR.

German companies expect record low in wages increases

With generally higher than the average wage levels in China, wage growth at German companies has traditionally been below the major national indicators for wage developments. The results of this year’s poll with a total of 553 responses continue following this trend and show an expected average wage rise at German companies of 6.23%, a slowdown of 0.87 percentage points compared to last year’s expectations, and 3.87 percentage points below the actual Chinese average wage increase of 10.1% in 2015.

As China is moving from an export-oriented economy towards an increased focus on domestic consumption, high-value added manufacturing and the services sector, overall GDP growth is slowing. This year again, the highly correlated salary developments reflect the cooling of the economy and were adjusted downward accordingly, across the major economic centers in the Yangtze River Delta, the Bohai Economic Rim and the Pearl River Delta where the majority of German companies are clustered. This year, the highest average growth expectations are recorded for Guangzhou and Shenzhen (7.12%), whereas companies in Beijing put forward the lowest growth expectations with only 5.66%.

The slowdown in wage growth among German companies in China is reflected more strongly across certain industry branches: Construction (5.10%), machinery/industrial equipment (5.88%) and plastic/metal products (6.10%) are among the lowest while increases in consulting and legal services (7.10%) medical supplies (7.03%) and automotive (7.01%) are above the average wage growth of German businesses.

Similarly, differences appear across different company sizes, levels of seniority, or city tiers measured in this survey. Beijing and Shanghai remain the cities with the highest compensation levels, this year however, for the first time, Beijing has surpassed Shanghai by around 4%.

Top three HR-Challenges remain consistent

The top three HR challenges German companies face in China have remained fairly consistent throughout the years: increasing labor costs (86.4%), hiring qualified staff (85.2%) and retaining talent (81.9%) are the issues with the highest impact on business operations, when combining high & medium impact scores. Engineering and R&D are the positions most difficult to recruit. An insufficient level of professional skills is considered a major problem for filling open positions by 33.1% of the respondents. Given the proliferation of German companies in the industrial sector, the lack of qualified staff continues to negatively impact German business operations across China. German Industry & Commerce Greater China (GIC) addresses the issue by offering its dual vocational training system and supporting companies in finding the staff they need.

Presentation of the Results of this Year’s Labor Market and Salary Report

The results of this year’s Labor Market and Salary Report will be presented by the German Chamber of Commerce in China at the following locations: Shanghai (24th October 2016), Suzhou (25th October), Taicang (25th October), Beijing (26th October), Tianjin (27th October), Shenzhen (1st November) and Guangzhou (2nd November). For more information and registration details please click here.

The full report will be available free of charge to all members of the German Chamber of Commerce in China. A short version of the survey can be downloaded here.

This report was conducted in partnership with  



Dr. Sigrid Winkler

Executive Chamber Manager

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