Wednesday, November 09, 2011

Indonesia benefits as wages rise in China - Shaun Rein

Shaun Rein
Cheap production is shifting to countries like Cambodja and Indonesia, as the Chinese government targets a firm rise of the country's wages, to improve domestic consumption, notes business analyst Shaun Rein in CNBC, returning from a trip to Indonesia.

Shaun Rein:
The government has been actively trying to end the nation’s cheap labor force era by increasing wages and social security benefits and accelerate a consumption and services oriented economy rather than preserve low wages. 
Twenty one of China’s 31 provinces this year have increased the minimum wage by an average 21.7 percent. The government has also set a nation-wide target to increase salaries by 13 percent annually. 
These hikes are on top of minimum wage boosts in provinces like Sichuan that raised minimum wages by 44 percent in 2010. Cities like Shanghai have also been increasing social security benefits for native residents and migrant workers so that tens of millions get better access to medical care. The new regulations add about 30 percent to compensation costs per migrant worker.
More in CNBC

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