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MANUFACTURING EMPLOYMENT AND COMPENSATION IN CHINA - page 53 / 106

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approximately 50 cents per hour, in earnings; their total compensation might be about 77 cents an hour. If so, then the estimate of 40 cents per hour is too low for China’s urban garment workers, but correct for noncity employees in garment manufacturing.

In general, global media-published estimates of manufacturing earnings or compensation in China are in the ballpark of reasonable estimates.

Labor compensation costs and China’s competitiveness

It is widely agreed that low earnings and low total labor compensation costs make manufacturing production in China competitive in the international market. One of the leading reasons that some of China’s own domestic manufacturing industries can sell their products at home and abroad, and that multinational and other foreign companies are moving their manufacturing operations to China, is the low cost of employing manufacturing workers there. Here is a sampling of statements to this effect from a variety of sources and perspectives:

China’s emergence as one of the world’s leading export nations is driven by a huge disparity in the cost of producing goods, caused primarily by hourly wages that are a fraction of those in the United States and Western Europe. This is not news. 147

China’s textile industry: China has become the largest fiber production and export nation in the world…China’s garment and other industries are relatively competitive. The comprehensively large size of the industry and the low labor cost enable China to take a comparatively large international market share with low value-added production. Juergen Peters, president of Germany’s IG Metall union and IMWF [International Metalworkers Federation] president, told a conference in Dearborn, Michigan, that the rapid development of the Chinese auto industry, coupled with the low wages paid to Chinese workers, make it inevitable that China will become a net exporter of vehicles. 148 149

The truly low cost of labor makes China particularly competitive in a number of manufacturing industries, including labor-intensive, assembly, and reprocessing industries; industries with low value added; those with simple repetitive steps in the manufacturing process; and food-processing industries. As one source puts it, “China has become an essential link in the global production chain for many labor-intensive products...a manufacturing hub for the rest of the world in low-end labor-intensive goods.”150 Labor productivity (output per employee) is low by world standards in these kinds of Chinese factories, and earnings are correspondingly low.151 In the 1990s and beyond, China’s employees experienced widening earnings inequality, as earnings rose for city-born workers, but basically stagnated for the least skilled and least educated workers.152 China is not particularly competitive in capital-intensive and materials- intensive industries.

However, China is beginning to compete successfully in some kinds of moderately skills-intensive kinds of manufacturing. Large proportions of China’s young

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