Press Release: Continued Lower Wage Growth Increasingly Aligns Labor Cost with Productivity - Results of the 2017 German Chamber Labor Market & Salary Report

14.09.17 AHK China - News-Hauptkategorie, Press Release, Chamber, German Industry & Commerce

Continued Lower Wage Growth Increasingly Aligns Labor Cost with Productivity - Results of the 2017 German Chamber Labor Market & Salary Report

Beijing, Shanghai, Guangzhou, 14th September 2017. Expected wage growth at German companies in China continues to slow down. German companies in China expect to increase wages in 2018 by an average of 5.90%, showing the lowest growth expectations since the Chamber started collecting data at China level in 2012. However, as German companies continue to put forward lower wage increases, the gap between salaries and productivity narrows. The survey was carried out between June 16th and July 21th 2017 by the German Chamber of Commerce in China among its member companies, in partnership with Direct HR Group.

Expected wage growth at German companies continues to slow down – however reaches lowest year-on-year decrease since 2015

With generally higher than 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 433 responses continue following this trend and show an expected average wage rise at German companies of 5.90%, a slowdown of 0.33 percentage points compared to last year’s expectations, and 3 percentage points below the actual Chinese average wage increase of 8.90% in 2016.

China’s transition from an export oriented economy towards increased domestic consumption, high-value added manufacturing and a growing services sector, has led to an overall slower GDP growth, paired with lower wage increases over the past years. This year’s slowdown in wage growth however, represents the lowest year-on-year decrease since 2015, possibly also indicating a more moderate cooling of the economy for 2018. Among the regions, Shenzhen remains with the highest expected salary growth. Guangzhou which last year was among the highest expected salary increases – experienced a drop of almost 2 p.p. in expected salary growth compared to last year’s mark, accounting for 5.16% this year. Only Beijing (+0.34 p.p.) and the cluster Taicang / Kunshan (+0.11 p.p.) expect higher wage growth compared to their expectations last year. In the case of Taicang / Kunshan, the growth driver is Kunshan with an expected increase of 6.43%, whereas Taicang remains with an increase of 6.07% fairly stable, compared to last year’s results.

Gap between labor cost and productivity further narrows down

As German companies continue to expect lower wage increases, the gap between salaries and productivity narrows. A total of 64.0% of the respondents declare productivity gains have been similar to wage increases (+15.5 p.p. over last year’s), while 22.5% finds productivity gains did not make up for the wage increases, 6.3 p.p. down from last year’s mark. Moreover, while rising labor costs remain one of the major concerns, with 87.5% of the companies considering it as having a high or medium impact on business, the number one concern that is topping the labor cost issue this year is recruiting qualified staff (88%). 

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

The results of this year’s Labor Market & Salary Report are presented by the German Chamber of Commerce in China at the following locations: Shanghai (15th September 2017), Suzhou (18th September), Taicang (18th September), Beijing (20th September), Shenyang (21st September) Tianjin (22nd September), Shenzhen (26th September) and Guangzhou (27th September). For more information about these events and registration, please visit our website .

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.

About the German Chamber of Commerce in China 

The German Chamber of Commerce in China is the official member organization for German companies in China. By providing up to date market information and practical advice, the German Chamber helps its members to succeed in China. It offers a platform for the Sino-German business community and represents its members' interests towards stakeholders including government bodies and the public. The Chamber was founded in 1999 and currently has around 2,400 members in mainland China. For more information, please visit: www.china.ahk.de

This report was conducted in partnership with   

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