Minimum Wage Comparisons Between China and India

[IndoCarib]

if you consider of the inflation rates and weak rupee，the wage of chinese increase far quicker than indian.

Inflation has been steady in the last few years, and Rupee has already started to rebound

 

[huskie]

This blogish article was from a small consulting firm that is losing its business in China and desperately wanting to expand the market in India. So the Indian tilt is obvious and I guess the readers are quite aware of it. Albeit some of the numbers provided are right, too bad the logic and conclusions are quite baseless as always.

There is nothing wrong in promoting their business on their own website, even by creating a false image. After all, they work on commission and the investor's interest is not something that they ultimately care about. Anyway, I remember a bunch of investors used to be amused by one of their articles in which they claimed that the Commonwealth Games was a huge success even compared to Beijing Olympics. As we all know that some foreign firms working on the projects were not even paid after a year, I mean, you would expect a professional consulting firm to at least try to do their job and remind their clients (in this case foreign firms!) of such risks rather than sweep dirt under the carpet.

Back to the topic, the raw demographic data and minimum wage status indeed give the Indian work force some edge. However, as far as an investor is concerned, there are many other equally important factors (if not more important) such as the efficiency, training of the work force, the bureaucracy and let's not forget the infrastructures. And quite frankly, India is not doing very well in those aspects (and I can not believe that consulting firm did not speak of any such factor, geez). As a matter of fact, if the Indian economy continues to grow at a fast pace, I would expect a labor shortage in the near future, simply because there are not enough professionally trained workers. Opportunities are there, it only depends on whether India seizes them.

 

[Shinigami]

How ? Care to explain ?

India would see the highest salary increase in the Asia Pacific region, followed by China and the Philippines, which are likely to see 9.5% and 6.9% salary hikes, respectively, in 2012.

Indian employees to get 11.9% salary hike in 2012: Survey - Corporate News - livemint.com

good news. thanks 4 the intel

 

[rcrmj]

Back to the topic, the raw demographic data and minimum wage status indeed give the Indian work force some edge. However, as far as an investor is concerned, there are many other equally important factors (if not more important) such as the efficiency, training of the work force, the bureaucracy and let's not forget the infrastructures. And quite frankly, India is not doing very well in those aspects (and I can not believe that consulting firm did not speak of any such factor, geez). As a matter of fact, if the Indian economy continues to grow at a fast pace, I would expect a labor shortage in the near future, simply because there are not enough professionally trained workers. Opportunities are there, it only depends on whether India seizes them.

rightly said``when we were doing market and labour researches in India we found out that the reality of India's labour market is in a terrible state....the vast majory are poorly educated and trained, there are no skills to be described about.

but their media always trying to sketch a picture of India where full of 'well educated' english speaking population, but this portion maybe only made up less than 1% of the population.

for a land with more than 1 billion population but even the lowerst end of manufaturing sectors are still a distant fantasy to them``why? this is a reality check question delusional Indians need to ask themselves.

for example, India has lots of fine raw materials from leather, shells and cotton to rare earth, however they do not have the capability to make/refine them into good quality semi or final products``these jobs are always done somewhere else``

and aslo when you look at WIPO's annual nation's competitiveness report, it categorized India as a primitive factor driven economy, which basicly means their economy has nothing to do with efficiency (categorized by the skilled workforce, the bureaucracy and the infrastructures as you mentioned), but heavily relied on external factors, like oil price, weather, political stability and primitive consuption by the mass population.

 

[jbond197]

^
Now Chinese Shoemakers have started doing Market researches.. You know you are a joke, right?

Let's assume you did the research, I have few questions

1. Where you did the research? Name the cities

2. What kind of resources you researched for? From your post it looks like you did an extensive research covering all occupations and skill sets in India. Kudos! Name Occupation/Skill sets.

3. You obviously would be having the data to substantiate what you just stated? Please share.

4. Show the data to substantiate your 1 % English speaker/user claims. (the fact is you, even after living in London for 10 years, do not have any command on the language)

5. "Lowerst(use spell check) end of manufaturing(use spell check) sectors are still a distant fantasy to them". Your research must have data pointers to substantiate the claim. Please share.

6. "They do not have the capability to make/refine them into good quality semi or final products these jobs are always done somewhere else" - Substantiate this claim.

Let's begin with this and see what all our Chini Shoemaker know about Market Research, Data collections, Data points, Graphs, Charts based on which he shared with us his such a funny ChinIQ loaded post.

 

[IndoCarib]

^
Now Chinese Shoemakers have started doing Market researches.. You know you are a joke, right?

Let's assume you did the research, I have few questions

1. Where you did the research? Name the cities

2. What kind of resources you researched for? From your post it looks like you did an extensive research covering all occupations and skill sets in India. Kudos! Name Occupation/Skill sets.

3. You obviously would be having the data to substantiate what you just stated? Please share.

4. Show the data to substantiate your 1 % English speaker/user claims. (the fact is you, even after living in London for 10 years, do not have any command on the language)

5. "Lowerst(use spell check) end of manufaturing(use spell check) sectors are still a distant fantasy to them". Your research must have data pointers to substantiate the claim. Please share.

6. "They do not have the capability to make/refine them into good quality semi or final products these jobs are always done somewhere else" - Substantiate this claim.

Let's begin with this and see what all our Chini Shoemaker know about Market Research, Data collections, Data points, Graphs, Charts based on which he shared with us his such a funny ChinIQ loaded post.

As usual they will come up with Indian poverty and child malnutrition figures, nothing else

 

[jbond197]

As usual they will come up with Indian poverty and child malnutrition figures, nothing else

That's fine, I know a life-cycle of how a Chinese behave once faced with difficult questions..

 

[darkhero]

Interesting comparison.

From another thread, 80 million jobs are flowing out China. I wonder who will get those jobs eventually.

better work hard.

 

[eddieInUK]

Why India cannot create values to make the GDP higher ? If Indians are slightly lower than Chinese in terms of salary, why they cannot make such a industry ? Management or Infrastructure or Corruption ? Please give some references and analysis.

 

[huskie]

interesting that this post was brought back to sunshine after one year.

according to the Planning Commission of India in 2007, about 94% of the Indian labors work in unorganized enterprises which are not registered nor pay proper taxes. according to "Economic Survey 2012-2013" conducted by the Indian Government, 70% of the labors in the Indian manufacturing sector work as temporary workers who are not well protected by the labor laws.

So on one hand, the minimum wage numbers quoted in the post do not apply to the majority of Indian workforce; On the other hand, the seemingly strict Indian labor laws and regulations turn into excuses of baksheesh and red tapes, and is actually stiffing Indian economy growth.

 

[tranquilium]

No, it's five.

According to the IMF, China has a $7.3 trillion GDP.

Indian Rupee has dropped from an average of 46 Rupees per U.S. dollar to 54.51 Rupees per U.S. dollar. Indian GDP is $1.43 trillion.

$7.3 trillion / $1.43 trillion = 5.04 times larger

----------

At IndoCarib, you can't selectively compare software project managers. Selective comparisons are misleading. Also, all three examples that you provided are service jobs, not manufacturing.

If India is interested in taking away manufacturing jobs from China, we need to do a country-to-country comparison.

Hence, overall average incomes in China vs. India is a better comparison. Chinese are approximately five times richer/"more expensive to pay" than Indians.

I'm saying that India has had dirt cheap wages for a very long time. It hasn't slowed down China's manufacturing one bit.

We can only conclude there is a lot more important factors in manufacturing than cheap Indian wages. For example, the lack of available land or electricity in India would deter any potential manufacturer.

I think you guys are also having problems collecting your potatoes and they're rotting in the field. Indian inability to deliver goods to warehouses would scare anybody off. If you can't deliver a potato chip, what are the chances that India can deliver a semiconductor chip to a port on time?

The reason you are looking for comes down to two things: infrastructure and education. I think we have seen enough infrastructure discussion so I will give that a rest. Let's talk about education.
While it is true that the Chinese min salary is significantly higher, in China, you can hire a fresh undergraduate student with that salary and keep them there for a few years. The same cannot be said about India. While Chinese labor cost may have moved up, in terms of labor cost to average years of education ratio, China still have one of the lowest rate in the world. Combined with good infrastructure, Chinese manufacturing is very competitive in term of cost. (Also, keep in mind that direct FDI made up something like 4% of the total Chinese manufacturing fixed asset, this means vast majority of Chinese manufacturing are Chinese.)

Interesting comparison.

From another thread, 80 million jobs are flowing out China. I wonder who will get those jobs eventually.

better work hard.

Dude, the total Chinese labor force is 800 million. If there are actually 80 million jobs flowing out from China, then it will mean a 10% rise in unemployment rate. Chinese unemployment rate has been holding at around 4.1% since the last decade, well after Chinese min salary exceeded Indian's or ASEAN's.

 

[3Idiots]

if you consider of the inflation rates and weak rupee，the wage of chinese increase far quicker than indian.

Another example of high iq.

Inflation and rupee revaluation cancel out each other, not add to each other.

PPP GDP accounts for different prices. For example, one minute of mobile outgoing call now costs less than 1 US cent (50 paise) per minute. In Singapore it costs about 13 US cents per minute.

 

[Raphael]

^He said 'weak rupee'. He's obviously referring to devaluation, not revaluation.

 

[gpit]

I think there is a reason for the manufacturing to still stay in China.

Wage is an issue, but for the bosses, output/wage ratio is more important.

If you pay a person (say, an Indian or other non-Chinese) that cost you $5 a day, who can only produce 1 piece of work, I'd rather pay another person (say, a Chinese) $10 dollars a day who produces 3 pieces of the same work.

We can't just compare the wage level.

That is why even Japan has very high wage level, but they still keep very good manufacturing industries. And there is no sign that they will let them go because of high wage in that country.

 

[3Idiots]

^He said 'weak rupee'. He's obviously referring to devaluation, not revaluation.

No doubt you also have a high iq.

Or you need a pair of spectacles to be able to read, and which you don't have.

Inflation in India has averaged 6-10% per annum over the last decade. Over the same period USDINR rate has increased less than 2% per annum. All this does is that the disparity in Indian prices and international prices have reduced.

But still, on average, they are 2.5 times less. And till that factor comes to 1.0, India can have a higher inflation rate than the rate at which USD increases.

Inflation and nominal exchange rate cancel each other, when they are exactly equal.

What matters is only the "real rate" of GDP growth which is unaffected by both inflation and the nominal exchange rates.