Labor Market and Salary Report 2019/20

After a Slight Uptick, Average Expected Wage Growth Resumes its Downward Trend - Results of the 2019/20 German Chamber Labor Market & Salary Report

Beijing, Shanghai, Guangzhou, 11 September 2019; After last year’s slight rise in the expected wage growth, the average expected wage growth of German companies in China resumes its downward trend reaching a record low of 5.53% for 2020 - the lowest growth expectations since the Chamber started collecting data at the China level in 2012. The survey was conducted between 11 June and 19 July 2019 by the German Chamber of Commerce in China among its member companies, in partnership with Direct HR Group.

Expected Wage Growth at German Companies Resumes its Slow Down

With German companies generally exceeding average wage levels in China (with a median total cost per employee amounting to RMB 15,000/month in 2019), 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 483 responses continue to follow this trend and show an expected average wage rise at German companies of 5.53% for 2020, a slowdown of 0.46 percentage points (p.p.) compared to last year’s expectations, and 5.47 p.p. below the actual Chinese average wage increase of 11% in 2018 (according to the National Bureau of Statistics in China). Hence, last years’ slight uptick shows to be a temporary deviation of the overall downward trend of the predicted wage growth.

Expected and Effective Wage Growth Aligned

Overall, the expected average wage increase for 2019 from last year’s edition (5.99%) is comparable to the reported effective average increase for 2019 (5.87%), showing only a deviation of 0.12 p.p. from the initial estimate. This year’s overall 5.53% expected wage growth in China shows significant differences across regions, where East and South China stand out. Suzhou, Taicang and Kunshan expect wage growth below China’s average, whereas Shenzhen (6.74%) and Guangzhou (6.63%) predict a wage increase above average. On the industry level, the automotive sector experienced the most drastic decrease in expected wage growth for 2020, being 1.37 p.p. below the expected wage growth of the automotive industry in 2019.

Productivity Perceptions Remain Stable and HR Challenges Consistent

Most German companies consider productivity to be in line with wage levels: Around two thirds (64.3%) of respondents consider productivity increases aligned with wage increases, and 52.5% regard their wage levels to be reasonable given productivity developments. However, rising labor costs remain the most impactful HR challenge in business operations with 89.2% of the participating German companies considering it having a high or medium effect on business. Still, the majority of German companies do not plan strategic changes due to rising labor costs. The challenge of finding qualified staff remains big with around nine out of ten (88%) of the companies considering it having a high or medium impact on business, even though the participants that regarded it as highly impactful decreased by 5.6 p.p. compared to last year. The impact of the challenge of retaining qualified staff (80.5%) also remains important in 2019.

The full report will be available free of charge to all members of the German Chamber of Commerce in China. Please use the "Member login" on this web page to view the full report.

A short version of the survey can be downloaded here.

This report was conducted in partnership with