| Give workers their dues |
[Jan. 11th, 2006|01:26 pm] |
Give workers their dues
Recently, some researchers' viewpoints on the "low-wage model" have touched off heated debate.
Their opinions can be roughly summed up as follows:
We should guard against raising the spectre of egalitarian mentality while concerning ourselves with the working masses' low pay.
If the wages are too high, investors will shy away, which will help reduce the low pay to zero.
If the wage rises outstrip economic growth rate, jobs would be even harder to get, which drags on the growth of the income of the average Chinese person.
Their views mirror the ideas and logic that have figured in China's economic development over the last two decades or so.
In the late 1970s, the country embarked on the road of reform and opening up in the context of extremely low productivity under the planned economy. The old infrastructure was marked by egalitarianism in distribution and "the iron rice bowl," or life-long employment, among other things.
Naturally, one of the focuses of the reform was smashing "the iron rice bowl," which means abolishing life-long employment, and getting rid of egalitarian mentality and practice. This was embraced by the whole of society.
But now the argument in favour of maintaining low wage levels has created a rather unpleasant "big bang." This is because the reality is different from that of two decades ago.
First, pay rises are lagging farther and farther behind economic growth and, as a result, the working masses share less and less in the general economic boom, which can only serve to render social contradictions more acute.
Taking into account that the country's per capita GDP has been revised upward by 20 per cent by the recent nationwide economic census, the proportion of the total volume of wages in GDP could be still smaller roughly 10 per cent, excluding the income of the farmers and that of the small private business owners. Even if the income of the latter two groups was included into the wages' share in GDP, the figure would still be much lower than in developed countries.
Second, in the face of the fact that export growth is becoming increasingly difficult to achieve, consumption-powered development looks a way out. Consumption, however, is closely associated with wage levels.
Furthermore, we need to analyze what kind of and how much impact low pay has on the country's economic development and social progress today.
In the first place, the logic that low pay facilitates economic growth cannot be universally applied.
For a factory owner, it is best to pay nothing to workers, which means zero salary.
As a result, his products would be extremely competitive since the labour cost is zero, excluding other factors such as productivity, quality and so on.
But the question is: Can he do it?
The answer is definitely "no."
Social justice, the workers' right to survival and even a better life, their claim to wages, social stability and other factors far outweigh the sheer consideration of profits.
In other words, in a market-economy society, wage policies should not be and are not worked out exclusively according to the principle of benefiting economic growth.
Second, one question should be asked: Does low-pay policy really benefit economic growth in both long and short term in the real economic environs?
In the short term, low wages doubtless play a positive role in terms of individual enterprises' profits and the country's competitiveness on the world market.
In the long run, however, it does harm to the economy because in the final analysis low-salary practice is an act of "draining the pond to catch all the fish."
In the last two and a half decades, the low-wage model, while facilitating the rapid growth of the Chinese economy, has served to stifle consumption demand.
As a matter of fact, harm done by the low-wage model has, to a very large extent, cancelled out the benefits brought by it.
In view of all this, the two-decade-old low-wage model ought to be placed in a much wider perspective and in a much longer timeframe when being evaluated and assessed.
Those who favour the low wage model are worried about egalitarianism. To them, raising the wage levels would result in egalitarianism, which means equality achieved at the expense of competitiveness and development.
Their worries are unfounded.
First, the labouring masses' income has increased insignificantly, if not declined taking into account the price factors, in the last two and a half decades.
Second, the wage level of Chinese labourers in the manufacturing sector is 10 per cent lower than that of their peers in India, whose economy did not get on the fast track until the 1990s.
These two major factors render the talk about egalitarianism nonsense.
Moreover, even those who advocate wage hikes do not really believe that there would be huge salary hike in the short term. What they expect is that the extremely irrational wage patterns would be altered somewhat.
Some people of the low-wage school maintain that salary levels are exclusively dictated by market demand.
True, the relationship between supply and demand is a very important factor in determining the price of labour. But labour is a special commodity and its price is not exclusively determined by the market.
There are many other determinants such as negotiations between labour and management, their manoeuvring capability, government policies and so on.
In the case of China, all these factors have been working in favour of the management and against the labourers.
This has been multiplied by some non-market factors.
All this combines to make workers' pay extremely low.
In this context, it is absurd, nay hypocritical, to say that wages are decided purely by the relationship between labour supply and demand. Enditem
(Source: China Daily)
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