China Watch Blog has learnt that Hong Kong-founded manufacturers in the Pearl River Delta (PRD) region report a 10 percent hike in average wage this year compared with last year’s 11 percent, a study by Standard Chartered Bank shows.
The China Daily reported that wages are still on an uprising trend in the manufacturing heartland on the mainland in 2012, albeit the pace is at a slower pace over last year. After speaking with 204 Hong Kong manufacturers who operate their business on the adjacent PRD region in January, Standard Chartered said more than half of the respondents have already lifted the wages an average of 10.4 percent for the year.
About 30 percent of companies surveyed indicated that they will raise the wages some time in 2012 by an estimated 9 percent, while the remaining 12 percent did not plan any wage adjustment this year.
Kelvin Lau, the region’s senior economist from Standard Chartered said the wages growth rate among mainland-based Hong Kong manufacturers in the survey is also slower than the minimum wages in many PRD cities.
Effective from this month, Shenzhen’s minimum wage has been lifted to 1,500 yuan per month, up 13.6 percent from 1,320 yuan per month in the past. Some Guangzhou news reports said that the city’s minimum income is expected to reach 1,470 yuan per month this year, up 13.1 percent from the current 1,300 yuan per month.
“In line with the still-evident wage pressure, only 30 respondents considered it less difficult to find workers compared with the same time last year,” Lau added.
Stanley Lau, deputy chairman of Federation of Hong Kong Industries, said earlier that 30 percent of the mainland-based Hong Kong manufacturers may be eliminated by the year end given the rising material cost as well as the wage hikes.
“To these 50,000 to 60,000 Hong Kong small and medium enterprises (SMEs) in the PRD region, it means around 15,000 to 18,000 companies will contract, or close down their businesses this year,” Lau said, adding that these labor-intensive and low value-added businesses are among the high-risk group.
However, a majority of companies said higher productivity would help offset the rising labor cost as output per worker has risen faster than wage increases, according to the survey.
The business outlook for the next six months is also not too bleak for these manufacturers as over half of the respondents saw added orders in the first half this year, despite major importers, including the US and the Europe not seeing much economic improvement.