China needs to increase salaries to stimulate economy

Updated: 2007-05-28 17:33
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The Ministry of Labor and Social Security announced it will increase incomes of employees and is currently in discussions about when and how this will be implemented.

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China News agrees with the government. In an editorial, the paper said if employees' incomes are too low, it could hit the economy hard. For example, a software engineer in China only can earn 40 percent salary of what an Indian software engineer makes. The huge gap between salaries leads to brain drain of Chinese software engineers to India.

According People's Daily Overseas Edition, improving salaries will entice high-tech workers to get better education, and in the end get better-paying jobs. This is also the case in India, which has shown the country has become successful in this field.

However, compared with India, China has a faster growinggross domestic product(GDP) but the salaries aren't keeping up. Statistics from the International Labor Organization show the average output in China increased 63.4 percent from 2000 to 2005, much higher than the 26.9 percent in India. But this economic success is not reflected in the employees’ incomes. The slow increase of salaries leads to low consumption, which depresses the national economy.

This conclusion is similar to aWorld Bankstudy released in February. It also said the economic downturn in China is because of the low salary, not high savings. China News suggests China stimulate the domestic economy by improving people's salaries.