Economy

Employers give pay raises to prevent brain drain

(Xinhua)
Updated: 2011-04-30 15:56

BEIJING - Management from SOPO Group, a chemical products manufacturer in East China, recently promised to give its workers an average pay raise of 400 yuan ($61.6) following rounds of negotiations with worker representatives.

The promise was delivered after workers complained that the group's initially proposed quota of a 300-yuan increase for every employee was not enough to compensate for their losses during the global financial crisis or to offset the impact of inflation.

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"SOPO will lose its attractiveness to skilled workers if the payment structure remains unchanged after recent price hikes," said Zang Guoying, a worker representative who participated in the negotiations.

China's consumer price index (CPI), a major gauge of inflation, jumped 5.4 percent in March since the same period last year, its sharpest rise in nearly three years. Some price officials have warned that the country's inflation rate may remain high during the second quarter of this year.

As rising inflation erodes incomes and add to living costs, employers in Zhanjiang city of China's coastal province of Jiangsu, where SOPO is based, are giving pay raises or considering such schemes to prevent brain drain.

In February, minimum wages in the city increased from 960 yuan to 1,140 yuan.

Some employers have announced that they are mapping out pay-raise schemes this year, both as a compensation for workers whose paychecks remained almost unchanged during the financial crisis, and to offset the impact of inflation, according to Liu Yelin, an official with the federation of trade unions of Zhenjiang.

Company management worry that if the payment structure remains unchanged they will lose skilled workers, especially those who migrate between rural hometowns and big cities.

"The recruitment of technicians has become increasingly difficult, and many enterprises have felt the pinch since spring," said Xu Yizhong, labor union chairman of the SOPO group.

To retain skilled workers, local government administrations have formulated regulations to ensure that workers benefit from the growth of businesses.

Under Jiangsu's employment regulations, which took effect in 2005, workers are entitled to negotiate with their employers over pay raises or other welfare issues if their employers see net profit growth, labor productivity increases, the minimum wage threshold is raised by the local government or living costs increase.

Employers will be fined between 3,000 and 30,000 yuan if they refuse payment negotiation requests from employees, said Kang Changzhi, an official with the Bureau of Human Resources and Social Security of Zhenjiang city.

Government support and relevant policies have sent a clear message to workers regarding when and how they should safeguard their interests and fight for what they deserve, said Zang Guoying, the worker representative.

Zang believed that workers' demand for a pay increase was reasonable given that SOPO's net profit reached 3.95 million yuan in the first quarter of 2011, almost triple last year's 1.37 million yuan during the same period.

Unwillingess to leave

Inflation is an important factor for Li Deyong when he weighs his plan to work somewhere other than his hometown.

"Life is difficult (outside the hometown). A whole year's hard work only saves me thousands of yuan and I can make almost the same amount as a carpenter in a local factory," said Li, a villager in Zhulu township of Linyi city in East Shandong province.

Steep rise in the cost of living will consume his savings and, more importantly, will make life outside his hometown less attractive, according to Li, who is in his 40s.

Higher salaries and more job opportunities used to drive Li and people of his age to leave their hometown and seek jobs in big cities or more developed regions along China's coastal area.

However, the younger generation of skilled workers, most of whom are in their 20s and 30s, prefer jobs that would allow them to balance their lives and careers.

"Aside from income, workers are really concerned about whether the company can provide on-the-job training that would enable them to move upward on the social ladder, and more importantly, they care about their children's education," said Yang Li, a section chief with the poverty-alleviation office of Yunnan province.

The new generation of skilled workers is composed of the left-behind children, and they are increasingly reluctant to leave their homes and have their children repeat their way of life, he said.

As manufacturers begin to move factories from China's coastal regions into hinterland provinces or second- or third-tier cities where labor costs are low, migrant skilled workers now encounter more job opportunities in their hometowns.

In Xishuangbanna of China's southwestern Yunnan province, government administrations and local enterprises have jointly launched training programs tailored to the needs of skilled workers. The aim is to keep workers in the area.

Gao Mingzhai, deputy general manager of Xishuangbanna-based China Hanma Holdings Limited, said local government has encouraged the company to formulate training plans tailored to local people's needs.

"Pay increases are no longer enough to make workers stay. The company will need to take people-oriented measures to make both workers and their families feel it's a worthy job," he said.