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More on China’s wage demands

From Paul French, China editor, in Shanghai:

My China Column this month – Pay Wages or Go to Jail – deals with the supposedly new ‘get tough’ policy on wages and non-payment in China announced the recent meeting of China’s rubber stamp parliament the National People’s Congress.

Perhaps the news that China was getting tough on wages violations helped the state (and only) trade union in Beijing reaching a deal with 100 foreign companies to pay employees fully 1.5 times the city’s statutory minimum monthly wage of Rmb1,160 ($177).

Pizza Hut, Siemens and Nestle have signed up but supermarket giants Carrefour and Wal-Mart (arguably a little more dependent on low paid employees for their profit margins than Siemens we can assume) have not agreed to the hike and did not take part in the negotiations.

It’s also fair to say that off the record many foreign managers agree that a concession on wages here by companies like Siemens should ensure they remain viable bidders for local contracts. Pure sellers to China like Carrefour have less to worry about on this score.

The government will be happy – wage demands are a by-product of China’s inflation at the moment and so getting wages up for anyone helps maintain harmony and stem the whiff of jasmine the party most fears.

Interesting that the same pressures are not being applied to local companies – less likely perhaps to cave to pressure? Or looking to give the home team an advantage?

Or, as some would say, with boardrooms of local firms packed with Party members they have the political ability to tell the state trade union to take a long walk of a short pier. Not so easy at Siemens or Nestle!

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