Great Graphic: Asian Wages

This Great Graphic was posted on the Wall Street Journal's China Real Time blog.  It looks at wage increases in a number of Asian countries, including Japan and China and is derived from survey data by Hays, the recruitment firm.  The survey included 2600 companies in the professional sectors, like sales, engineering, accounting, finance and human resources. 

The focus of the story is on how Chinese companies in the survey gave 2/3 of their employees raises of 6% or more in the latest review period, more than any other country in the survey.  A little more than half of the Chinese companies surveyed gave raises of 6-10%.   

Across the countries in the survey, a little more than a fifth of the the companies surveyed gave raises in this ranges.    In the forward looking component of the survey, the proportion of companies planning of 6-10% wage increases remain the same in China and in the rest of the surveyed region.  

Rising wages is thought to be a key driver for the re-balancing of the Chinese economy.  It is expected to help fuel consumption and a more domestic orientation.   However, as we have pointed out previously, this has not been the case for mature economies, like Germany, Switzerland, Finland and Sweden.  

The other country that stands out in the survey is Japan.  Despite the cajoling from the government, Japanese companies in the survey were the most miserly.  The vast majority of Japanese workers (80%) captured in the survey received raises of 3% of less.    Even though a couple large manufacturers have boosted base pay, we remain concerned that about the squeeze on Japanese households. 

Wages, economy-wide, according to government data, are not keeping pace with inflation.  The return on their savings has not kept pace with inflation and starting in April, their purchases will cost 3% more as the retail sale tax hike is increased from 5% to 8%.  That said, it appears that the Abe government's enthusiasm for the the second part of the sales tax increase (to 10% in 2015) is waning.