GENEVA — China’s rapid annual wage growth and the shift in the largest emerging economy away from labor intensive industries such as apparel and toward sectors with high added value provides new opportunities for lower-income apparel exporting countries in the region, an International Labor Organization report said.
But it also concludes that successfully attracting international buyers and expanding export markets will depend on a range of policy choices.
“Global garment buyers increasingly prioritize productivity and reliability of supply and they are adverse to the reputational risks of poor working conditions,” said the report, alluding to the 2013 Rana Plaza disaster in Bangladesh and the violent protests in Cambodia in early 2014 for higher wages that prompted international call for immediate action on workplace safety and minimum wages.
In 2013, average real wages in China grew 7.3 percent, below the 9 percent gain in 2012, reflecting the cooling of the economy, but above the Asia-Pacific region’s 6 percent increase and the global average of a 2 percent gain, and the 0.2 percent advance by rich countries, including a 0.3 percent in crease in the U.S., the ILO said.
“In the last two years, more than half of overall global wage growth was accounted for by China,” said Sandra Polaski, ILO deputy director-general.
Polaski said between 1999 and 2013, average wages in the Asia-Pacific increased 143 percent, mainly due to large gains by China. In the same period in industrialized nations, they edged up 6 percent. The “Global Wage Report 2014-15” said there is a convergence in monthly wages and estimates that in terms of purchasing power parity, last year they averaged $3,000 in rich nations and $1,000 in emerging countries. In China they were $1,141, compared to the U.S. rate level of $3,581, said Patrick Beseler, ILO senior economist.
But the wage gains are distributed unevenly, the ILO said, noting that while wages have surged in China, earnings of wage earners in Southeast Asia and South Asia “have grown by little more than half.” In nominal, or in current U.S. dollar exchange rates, or what buyers use in sourcing apparel, for instance, last year the average monthly wage was $613 in China, $197 in Vietnam, $183 in Indonesia and $121 in Cambodia.