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China Briefings

Reports on China issued by Samsung Economic Research Institute

Changes in China's Labor Market

Changes in China's Labor Market

KWON Hyuk-Jae, LEE Jeong-Il

Mar. 29, 2011

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Recently, China was a witness to a series of large strikes, which resulted in a surge in labor wages. Changes in the labor environment are expected to continue for the time being and the main reasons are: social conflicts caused by a wider income gap following rapid economic growth; the need to restructure industries to raise the share of domestic consumption and increase income to promote consumption; a shift in government policies to stress corporate social responsibility and labor rights; and labor shortages.

Although such changes continue, China seems to be able to maintain its competitiveness in manufacturing. Wage increases may force those who are burdened by the pressure to consider relocating their production bases, but those who are aiming at the Chinese market can expect business opportunities, as it will increase domestic consumption. Therefore, Korean companies should set up countermeasures in line with the transformation which include labor law reform, strict implementation of labor policies and stronger role of trade unions.

The Chinese government will pursue regulatory reforms, stressing autonomous resolution of disputes between labor and managements through trade unions. Businesses in China should pursue cooperative partnerships with trade unions. Also, they should put more energy in value added products and high productivity while pursuing localization by preemptively fulfilling their social responsibilities and raising investment in nurturing local employees.

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