Tuesday, February 15, 2011

Inflation pushes business and workers out of big cities - Marc van der Chijs

Chinese New YearMany do not return after CNY via Wikipedia
Tudou.com founder Marc van der Chijs warns in his weblog that higher prices and wages is forcing businesses and people out of Shanghai and other larger cities in China, getting critical after Chinese New Year:
For years prices have been rising steadily in China. The price of fuel is about 3 times as high as 10 years ago for example, but also daily necessities such as rice keep on going up in price. That is the same all over China, but especially in the big cities the housing prices are also going through the roof. They are now at such a high level that even white-collar workers cannot afford to buy apartments anymore.
I realized this for the first time about 2 years ago, when an employee came to me with a salary increase request. He wanted to buy a house and could not afford it without a higher salary. I did not grant him the higher pay so he left the company, but it made me contemplate about the relation between the level of salaries and the housing prices. They were getting out of sync fast. But housing prices only kept on rising after that, and at a much faster pace than the average salary increase.
Now the increases have reached a critical level, Van der Chijs writes:
There are signs that this may happen sooner rather than later: in Saturday’s English-language newspaper the Shanghai Daily a reporter wrote that so far 90% of the domestic staff did not return from their hometowns to Shanghai after Chinese New Year. Last year the figure was around 30% at this time. And the staff that come back are asking for wage increases of up to 30%, meaning that a full-time cleaning lady now earns around USD 500 per month. If these people are now all staying in their home towns because of better economic conditions very soon their white-collar colleagues will follow their paths.
More in his weblog.

mvanderchijsMarc van der Chijs 

Marc van der Chijs is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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