Wage Growth for Migrant Workers Set to Accelerate

Manufacturing wages in the Pearl River Delta region in southern China are expected to rise 9.2 percent this year, compared with the 7.6 percent rate of growth respondents reported for wages last year, Standard Chartered said in a report on Monday.

The rise is partly policy-induced and partly a reflection of labor shortages, the survey said.

Sixty-three percent of respondents said that minimum wage hikes have had at least some impact on the wages they pay, while 88 percent believe the current labor shortage is at least as bad as last year. Additional pressure is coming from stricter enforcement of companies' social insurance payments and wage negotiations with labor representatives.

Higher productivity helps to explain and absorb higher wages, the survey showed. The majority of companies said that output per worker has risen faster than wages, a positive sign.

When asked how companies are responding to labor shortages, a larger share of respondents than last year said that they plan to relocate their factories - move inland or leave China - but the majority still aim to boost capital investment to save on labor costs. Beyond wages, orders appear to be improving, and yuan-appreciation expectations are back.

This was the fourth annual survey of its kind, conducted by Standard Chartered in February after the Chinese New Year holiday. It received a record number of responses - 302, versus 204 last year - from manufacturers operating in the Pearl River Delta region.