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Times are tough but they could be much worse when it comes to pay raises
2015-03-16
By Doug Young

AS someone who has lived and worked in both China and the West for roughly equal periods over the last quarter century, I can say that Chinese pay scales are one of the things that vex me.

The many pay-related inconsistencies in today’s China were on display in a couple of news reports this week showing how many people continue to have high salary expectations despite signs of a maturing economy.

One report showed how a huge number of Shanghai workers are considering leaving their jobs due to discontent with annual pay raises that seem quite acceptable by Western standards. At the same time, another report showed annual salaries in Shanghai and other top Chinese cities are starting to drop due to a slowing economy, reversing years of rapid gains.

Of course, many of the inconsistencies in the convoluted world of Chinese pay scales are the result of the nation’s transition from a planned economy to a market-driven one. Another factor is the huge gap between living standards in big cities and the countryside, which means people can often make 4 or 5 times more money performing the exact same task in a big city like Shanghai as they can in their much smaller hometowns.

As someone who has worked back and forth for both Western and Chinese employers over the last 25 years, my own salary has gone on its own roller-coaster ride as I moved back and forth between the two. My earliest job teaching English at a Beijing university in the 1980s paid a meager 500 yuan per month, or about US$100 at the exchange rates back then. Of course that was still far higher than most Chinese earned at the time, and it also helped that meals and other daily necessities were all quite cheap.

I returned to the US in the early 1990s and instantly made more than 10 times that amount by simply working as a clerk at a bookstore. That job set me on an upward trajectory as I pursued a journalism career that peaked with a middle management position. But then I took a major pay cut in moving back to the world of academia with my current job teaching here at a university in Shanghai.

Those kind of inconsistencies were apparent in the pair of reports I read this week, starting with one that said a whopping 90 percent of Shanghai workers were contemplating leaving their jobs after receiving disappointing salary increases last year. It seems the latest increases averaged only 6-8 percent, which marked a sharp slowdown from the double-digit increases most people had become accustomed to.

That kind of slowdown is probably inevitable as income levels rise and China’s economic growth slows, and I can indeed remember a time not long ago when a 10 percent annual pay raise was considered very average for many Chinese.

But to put things in perspective, most Western companies are far stingier, usually matching the rate of inflation plus maybe a percentage point or two for their annual raises. I can remember several years at my journalism jobs when we got tiny raises or none at all, usually accompanied by an apologetic line like “Times are tough” or “We’re all making sacrifices.”

Consistent trend

The second report this week said average monthly salaries in Shanghai actually fell by 1.5 percent last year to 7,108 yuan, even though they were still the highest in China. That fall was consistent with a trend that saw average salaries drop by an even larger 6 percent in China’s four largest cities, according to a survey by the online recruiting site zhaopin.com. But the broader trend was still upward in other cities, with average salaries rising by 9 percent in the five largest second-tier cities of Hangzhou, Tianjin, Chengdu, Chongqing and Suzhou.

I’ll openly admit that a major attraction of living in China versus the West is the relatively low cost of labor, especially for low-skilled jobs like housekeepers, masseurs, hair dressers and taxi drivers. That means both foreigners and local Chinese can enjoy many luxuries that would be quite costly in the US or Europe, such as frequent taxi trips or visits to the nail salon.

But even the costs for those services are rapidly rising, as I’ve learned over the last two years when the woman who cleans my home each week has demanded 20 percent raises each year.

All that said, the big inconsistencies in Chinese pay structures could finally be starting to ease, as increases in big cities like Shanghai start to slow and smaller cities play catch-up. But it may still take a year or two for the newer reality to sink in, perhaps when many of today’s frequent job hoppers finally discover that a 4-5 percent raise is still far better than the “times are tough” years that are all too common in the West.


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