| Can salary rise ease prices hike? | |
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| Nov 30, 2007 01:23 |   |
 | At present, prices of food, vegetables, oil and other products have been rising and caused much pressure. To cope with this potential menace, the central and local governments have tried to regulate the prices through administrative means. But it did not work well. Therefore, some people suggest that the most effective way is to increase people’s salary. It is reported that China has produced about 30 percent consumables for US since it adopted Reform and Opening up policy. However, Chinese people’s salary only takes 4 percent of its counterparts (US citizens). As GDP is growing very fast, the per capita income is dragging behind GDP. Since people do not have enough money or savings at banks, they can not consume randomly. Considering this issue in this way, it seems that salary increase might help ease prices hikes. Actually, some foreign companies including McDonalds and KFC in China have increased their staff’s salary. The salary of McDonalds’ staff has been raised 30 percent. How do you view this? Can salary rise ease prices hike? Your views are welcome. |
| Nov 30, 2007 11:27 | #1 |
| Earning more money is the answer. Sometimes people must change jobs to get higher pay. There is a story about Henry Ford, the founder of Ford Motor Company. He was asked why he paid his employees so much more than the common wage of the time. Henry Ford answered that he paid his employees well so that they could buy one of the cars that they made. That philosophy worked for Henry Ford. I feel China will come up with its own variation of that concept. :-) |
| Nov 30, 2007 12:17 | #2 |
| The problem with the wage rises is that they will add to the inflation. But I would argue that workers have a right to maintain their wages, so the wage increase should go ahead and the government will have to find ways to control inflation. One interesting point you made is that wages are not keeping up with the GDP growth. So where is the money going? Two places: it is being paid to a minority as business profit, and being retained by the government as reserves. The government does this so as to have finance in the future if the economy slows, to have funds for emergencies, AND to hold demand back - because all the money went into consumers hands we would really see some inflation! |
| Dec 11, 2007 20:54 | #3 |
| Griz, if those bosses could do what Henry has done, that would be very good. Quote: One interesting point you made is that wages are not keeping up with the GDP growth. So where is the money going? Two places: it is being paid to a minority as business profit, and being retained by the government as reserves. Well, the money is mostly paid to a minority as business profit. Who contribute most to GDP growth? Those state-owned enterprises and companies and those who work in those enterprises and companies earn much than their counterparts in those private enterprises. Why? The state is backing up and protecting those stated owned enterprises. In other words, those state owned enterprises monopolize the market. Have a look at PetrolChina, Chinamobile and China Unicom and you will understand it. Perhaps, the government should retain more money as reserve since it can help curb inflation risk. The source said that central government might raise prices of tapping water and electricity from next year. If people's salary are not raised, how can they afford the 'extra fee'? In this aspect, I suggest that salary should be increased. |
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