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those data actually refer to city employees and their earnings. By contrast, the term “town and village enterprises” (TVE’s) seems to cover not only rural areas, but also factories in urbanized places outside narrow city boundaries. Accordingly, the text uses the word “noncity” to refer to TVE data.

The concept of compensation

The BLS measures of hourly compensation costs include both data on hourly direct pay (which includes pay for time worked, pay for vacations and holidays, bonuses, in-kind pay, and other premiums) and data on employer social insurance expenditures and other labor taxes (which include employer expenditures for legally required insurance programs and contractual and private benefit plans, as well as other taxes on payrolls or employment).

China’s statistical authorities at the NBS also try to use an internationally recognizable definition of employee compensation in the calculation of China’s gross domestic product. The NBS defines what it variously translates as “compensation of employees” or “laborers’ remuneration” (laodongzhe baochou) as follows:

Laodongzhe baochou refers to the whole payment of various forms earned by the laborers from the productive activities they are engaged in. It includes wages, bonuses, and allowances the laborers earned in monetary form and in kind. It also includes the free medical services provided to the laborers and the medicine expenses, transport subsidies, social insurance, and housing fund paid by the employers. 100

This passage suggests that China’s government either collects data on these various components of worker compensation or at least estimates them for its calculations of China’s gross domestic product.

The subsequent analysis begins with a description of Chinese earnings statistics on manufacturing workers and then describes the sources and methods of estimating the nonearnings portions of compensation--that is, the social insurance expenditures that employers must pay on behalf of employees. Two issues that are relevant to the estimation of social insurance expenditures, namely, the difference by city in mandatory social insurance contribution rates and the likely underreporting of earnings to minimize tax and social insurance contributions, are discussed. The report then examines the difficult issue of estimating working time in manufacturing in order to construct estimates of compensation on a per hour basis. Following an analysis of the compensation of workers in export-oriented industries and of migrant workers, the discussion touches on how manufacturing earnings in China have changed over time and how the compensation estimates in this report compare with those published in other venues. Finally, the implications of the current research results for China’s competitiveness are explored.

Throughout the analysis, separate estimates are made for urban workers and TVE workers, because the data sources and the working situations that relate to each group are different. Where possible, national estimates combining the two groups are made as well.


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