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Economy

China's workers left behind as wages lag in post-COVID recovery

Businesses focus on retaining employees instead of offering pay raises

A production-line worker at a JAC Motors plant in Weifang, Shandong province. Most provinces and municipalities decided against raising their minimum wages this year.   © Reuters

SHANGHAI -- Despite China overcoming the worst of the coronavirus pandemic ahead of the rest of the world, the country's workers have seen little improvement in pay as sluggish demand squeezes hours.

Evidence of stagnant wages was on display at a job fair last month at an in an open soccer stadium in Shanghai, where about 40 companies set up recruitment booths. The event drew many job-seekers, but the positions paid about 5,000 yuan ($760) a month -- not much of an increase from a year earlier.

"Our take-home pay is about the same as a year ago at around 4,500 yuan to 5,000 yuan a month, but benefits have been cut," said a representative of an electronics and telecommunications equipment maker based in Suzhou. Of the 19 companies that gave a comparison to last year's wages, just three had increased monthly pay.

Many Chinese cities and provinces opted not to raise the minimum wage this year. The actual pay for factory workers depends heavily on whether they work overtime and weekend shifts, and is unlikely to increase significantly given the pandemic's lingering effect on business activities.

"Orders are recovering compared to the first half of the year, but we're still closed two days a week," said a spokesperson at Surini Precision Mould.

Macroeconomic data supports such observations on the ground. Real disposable income in China increased just 0.6% on the year in the January-September period, according to China's National Bureau of Statistics. The full-year increase is also expected to fall significantly below the nearly 6% jump last year.

A job fair in Shanghai is held on a soccer field as a precaution against coronavirus infection. (Photo by Yusho Cho)

Employment in urban areas is showing signs of improvement, falling 0.1 point in October to 5.3% according to a Monday release. It is now approaching where it was at the end of 2019, before the coronavirus outbreak spread worldwide. But the focus on curbing unemployment has meant the individual workers are less likely to see a pay raise.

Only a handful of industries, like semiconductors and the automotive sector, have experienced a swift boost in conditions. "We have seen more orders, partly thanks to the government's push to boost domestic semiconductor production," a Carsem Semiconductor Suzhou spokesperson said.

"We overcame most of the impact from the coronavirus in the first half of the year," said a spokesperson at Suzhou Hechang Polymeric Materials, an auto parts maker.

Nonetheless, more companies are starting to increase hiring as earnings start to bounce back. Roughly 3,900 companies listed in the Shanghai and Shenzhen exchanges together booked an estimated 30% boost in net profit in the July-September quarter, escaping the red for the first time this year.

"We must fill empty positions to keep our production lines going and to make sure the necessary skills are passed on," said a spokesperson at Jiangsu Saiyang Precision Tools Technology, which produces abrasive equipment.

Some have raised alarms that employment numbers could soon hit a wall. According to staffing agency Zhaopin, its index measuring the health of the labor market recovered to 1.89 in July-September from 1.43 in January-March. But the index remains under year-earlier figures, and is expected to remain that way between October and December as well.

The Chinese government has exempted companies from paying 910.7 billion yuan in social insurance premiums as of September, in a bid to encourage keeping workers on board. But many economic relief measures introduced in response to the coronavirus outbreak expire early next year, and China's employment and consumption landscape could shift dramatically next year and beyond depending on whether the country decides to tighten its purse strings or prioritize measures to lift the economy.

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