Manufacturing earnings and compensation in China: on the basis of published earnings data, estimated compensation ratios, and estimated hours, China's manufacturing employees averaged about 57 cents compensation per hour worked in 2002

Monthly Labor Review, August, 2005 by Judith Banister

Table 6 and chart 2 present trends in real annual earnings (not including required employer payments for social insurance plans or other nonwage labor costs) for urban manufacturing staff and workers in China. In 1990, the 53 million urban manufacturing staff and workers earned an average of 5,058 yuan (in constant 2002 yuan). As the number of urban manufacturing staff and workers shrank to 29 million in 2002, the earnings of those remaining averaged 11,001 yuan, more than double the 1990 average earnings. There was a shift in the composition of the "urban manufacturing staff and workers" category over that 13-year period. (51) In 1990, the lowest-paid subgroup, urban collective manufacturing workers, was large (18 million) and held down average real earnings, while the highest-paid subgroup, private-sector enterprises, was minuscule. By 2002, the highest-paid subgroup constituted more than half of urban manufacturing staff and workers. This trend toward the better paid private sector raised average earnings among urban staff and workers in manufacturing.

Estimates of manufacturing employee compensation

Many media and other sources around the world have published very rough estimates of hourly or monthly earnings or total compensation for manufacturing workers in China. A comparison of their estimates with those in this article is instructive. For example, one journal stated that manufacturing wages in China average about 60 cents an hour, (52) very close to the 57 cents estimated here for total compensation. One newspaper wrote, "A Chinese factory worker earns the equivalent of less than $1 per hour," (53) a statement supported by the preceding analysis, and one that holds true even for urban manufacturing workers, who are better paid than their counterparts outside the cities.

Regarding particular manufacturing sectors, a newspaper article said that, in China, employees of auto-parts suppliers have average wage costs of 90 cents an hour. (54) Another author said that employees of big global automakers in China "make the equivalent of $1.50 per hour in wages and benefits." (55) Table 2 indicates that China's urban transportation equipment manufacturing workers had average 2002 earnings of 14,409 yuan, which would translate into about 80 cents an hour for earnings alone and $1.23 per hour for total compensation. Therefore, the overseas reports of the compensation of auto workers in China are compatible with the data presented in this article.

One journal wrote, "China is already by far the biggest garment exporter in the world, with average wages in the industry of 40 cents an hour." (56) That figure is close to the 41 cents an hour that the foregoing analysis has posited for the compensation of China's TVE manufacturing employees. Garment workers outside the cities are paid less than that, because they are among the lower paid manufacturing employees in China. Table 2 indicated that urban garment workers average 9,066 yuan per year, or approximately 50 cents per hour, in earnings; their total compensation might be about 77 cents an hour. If so, then the estimate of 40 cents per hour is too low for China's urban garment workers, but correct for noncity employees in garment manufacturing.