Labor Prices Rise &Nbsp, Opportunities And Challenges Coexist.

Shenzhen Foxconn continuous suicide, the South China Sea Honda strike... In the first half of this year, conflicts between employers and employees increased significantly in the Pearl River Delta, which ended up with a substantial increase in salary. In addition, most of the provinces in the country have raised the minimum wage standard, generally rising by more than 10%, and some provinces and cities have even increased by 20%.

How do we view this series of labor conflicts? What should the government do to cope with the rise in labor prices? Reporters interviewed Cai Fang, director of the Institute of population and labor economics of the Chinese Academy of social sciences.

Question 1: China has ushered in. Labor force price The new stage of ascension?

The Foxconn incident is not a turning point. Since 2003, there has been a continuous upward trend in labor prices.

In the first half of this year, the minimum wage standards were raised in various provinces and municipalities, and some foreign-funded enterprises were also concentrated in "raising wages". This is doubtful. Is China ushered in a new stage of rising labor prices?

Cai Fang believes that the rise in labor prices is a major trend since 2003. From 2003 to 2008, the real wage growth rate of migrant workers was 10.2% per year, only in 2008 the impact of the international financial crisis slowed down. The events of Foxconn this year are just a symbol, a continuation of the rising wage trend since 2003, not a new stage. Behind them is the fact that China has ushered in the "Lewis turning point".

The turning point of Lewis, also known as the turning point of Lewis, is the turning point of labor supply from surplus to shortage, which means that in the process of industrialization, with the gradual spanfer of surplus rural labor to non-agricultural industries, the surplus labor force in rural areas is gradually reduced, and the labor force is no longer unlimited supply. In short, workers will not be recruited without wages.

"Lewis turning point is not a point, not a mutation. Since the beginning of 2004, the continuous emergence of labor shortage and wage increase is not a partial, structural and spanient disturbance, but an irreversible trend. "

The conclusions of Cai Fang's research are mainly based on the changes in the population structure of our country. In the past ten years, on the one hand, the growth rate of our country's working age population is slowing greatly, and on the whole, it is getting rid of the two yuan economic development characteristics of the unlimited supply of labor. Between 2004 and 2011, the increment of the working age population in China decreased at a rate of 13.6% per year. On the other hand, the demand for urban labor and agricultural labor is increasing continuously according to the rapid growth of China's economy. From 2002 to 2009, the increment of working age population decreased from 15 million 110 thousand to 6 million 650 thousand. In these two years, the number of new jobs increased by 8 million 590 thousand and 10 million 200 thousand respectively, and the increase in the employment rate of rural labor force was 20 million 710 thousand and 4 million 590 thousand respectively. Obviously, the increase in employment has exceeded the increase in the working age population.

Moreover, the new generation of migrant workers has higher demand for wages, welfare, labor environment and career development, and a stronger sense of rights protection. Among the 150 million migrant workers who go out to work in China, Cenozoic era "Accounting for 60%, enterprises may not be able to attract and retain these new generation of migrant workers with the original labor force prices.

A few years ago, Cai had made a prediction that the spanition from oversupply of labour to supply could not meet the demand, which would take place from 2004 to 2009. Facts have proved that the first two years of 2004 and 2009 are the highlights of the shortage of migrant workers. It is only due to the international financial crisis that the "shortage of migrant workers" that should be highlighted in 2009 has been postponed to 2010 after the Spring Festival.

Question two: will the rise in labour prices make us lose the comparative advantage?

The growth of wages in China is basically consistent with the growth of labor productivity in enterprises. Therefore, it will not lead to the loss of comparative advantage and competitiveness in manufacturing industry.

Cheap labor is the main content of China's comparative advantage. Since the growth rate of labor demand exceeds the speed of supply growth, it is bound to raise wages. Then, will the rise of labor prices lose us the comparative advantage?

"When we compare the competitive advantage of labor with foreign countries, we can not simply compare the absolute value of wages, and then pessimistic that our wage level is already higher than that of others, not competitive, but depends on whether the growth rate of wages exceeds the growth rate of labor productivity." Cai Fang made a popular analogy. "If I go to NBA with Yao Ming and play Yao Ming, Yao Ming will ask for 10 million yuan, I only need 1 million, will people hire me? No, because my productivity is not good, and the price performance is not high!"

Cai Fang believes that before the emergence of the "Lewis turning point", China's productivity growth was much faster than that of wage growth. "The rapid rise in labor prices is actually a matter of compensation in the past few years, but it is still making up lessons." Although it is a supplementary course, the wage increase must be based on national conditions and can not deviate from the laws of the market, and the improvement of labor productivity should be compatible with wage growth.

Since the beginning of this century, the wage growth in China has basically been consistent with the growth of labor productivity in enterprises. Therefore, the comparative advantage and competitiveness of manufacturing industry will not be lost. If we only rely on low wage and thin profits to survive in sweatshops, we will eliminate a number of irrelevant purposes. "On the other hand, our wage growth has been slower than that of labour productivity for a long time. This gives us room for a faster wage increase within a certain period of time. Only in this way can we really raise the proportion of laborers' remuneration to national income. Cai Fang said.

In recent years, some foreign investors have also moved to Southeast Asia and other countries because of the rising labor costs in China. However, after a period of time, a lot of investment has "returned". The reason is that China's labor force has obvious advantages in cost performance.

Question three: rising labor prices Labor conflict What kind of "annoyance" is it?

We should think about coping strategies from a historical perspective. The key to success in crossing the middle-income trap is to establish a normal mechanism for wage growth.

In addition to "labor shortage" and wage increases, another obvious sign of Lewis turning point is that labor relations have undergone dramatic changes and labor conflicts have increased significantly. Cai Fang believes that this is consistent with the development stage of the rule of change, is inevitable, should be seen as a "growing pains."

Cai Fang further put forward how to understand and deal with this "growing pains", whether we can cross the "middle income trap".

At present, China's per capita GDP has exceeded 3700 US dollars and has entered the ranks of upper middle income countries. The experience of many countries shows that during this period, the accumulation of contradictions in rapid development tends to erupt, which is prone to social problems and economic stagnation. This is what we call the "middle income trap".

From a historical point of view, many countries have experienced the stage of development from middle income to high income, while Europe, Japan, Korea and other countries have become high-income countries. Many Latin American countries have pause in the middle income trap for a long time. A very important reason is how to understand and deal with "growing pains", including labor relations.

Those countries and regions that have crossed the middle income trap have established a relatively perfect labor market system in their suffering and formed a system framework for settling labor disputes. The most recent example is the "four Asian dragons", such as Korea. In those years, they accepted the fact that labor costs were rising, they made active or passive labor legislation, improved the minimum income standard and social security system, and gradually established and perfected a series of labor market system in adjustment, and finally succeeded in achieving a leap from middle income to high income. However, some Latin American countries have failed to solve this problem satisfactorily, and their economic growth has slowed down or even stagnated. Until now, some countries are still in a stagnant stage, unable to jump out of the "middle income trap".

In CAI's view, it is urgent for the government to accept the fact that the labor costs are rising, and take the initiative to establish the normal mechanism of wage growth and the income growth mechanism of low-income families, and improve a series of labor market systems, such as the minimum income standard and the social security system.

A series of institutional construction, such as establishing wage negotiation and negotiation mechanism, improving the functions of trade unions, and opposing discrimination in labor and employment, may lead to loss of efficiency in economists. However, only by establishing a mechanism can we dredge and standardize. Just avoiding the dissatisfaction of workers' dissatisfaction with the government will be an ostrich strategy that ignores the conflict between employers and employees. Cai Fang believes that if there is no government participation in the labor consultation mechanism, the workers want to pay higher wages but dare not talk about it. They can only vote with their feet, leaving the post and flowing. Labor conflicts will gradually ease.

"Without growth, there may be no worries, but now there is great danger and risk. However, if we establish a sound labor market system and successfully achieve adjustment and spanformation, we will have the joy of growth, and ultimately it will be a good thing." Cai Fang said.