JPMorgan Chase: Higher wages in agriculture and services

Pan Ying, the managing director and China Securities and Commodities chairman of JPMorgan, said in a study newsletter March 8 that while the discussion of rising labor costs in China is generally focused on manufacturing, wages in agriculture and the services sector will rise even more. On the labor shortage and the rapid economic development of inland areas caused by the general rise in wages, Jing Ulrich's study shows that the development of secondary industry and the development of the first and tertiary industries in the model of wage increase is not the same impact.　　The increase in productivity of the first and tertiary industries exceeds the secondary, and hence the increase in wages in agriculture and services. Ms Ulrich said that the first capacity depended on increasing capital investment and increasing automation to increase productivity, and that the tertiary industry tended to rely on human capital to attract and retain talents, and the service sector would naturally raise wages rapidly, especially for the basic retail, hospitality and hospitality industries, where the skills requirements were not high and wages were low.　　Wage expenditures are generally higher in the operating costs of these industries, and the impact of wage increases is particularly high.　　By contrasting the generally raised minimum wage level with the overall wage level of Chinese listed companies, Jing Ulrich found that in general, the wages of Chinese listed companies are much higher than the minimum wage, and the wages generally account for 11.5% of the operating expenses of Chinese listed firms, which means that these Chinese enterprises are generally less sensitive to wage increases. Jing Ulrich said that the minimum wage for the nine provinces, which announced the increase in the minimum wage in 2011, averaged 1079 yuan per month, and among the 129 listed companies that disclosed the cost of personnel in its sample survey, the average monthly wage in 2010 was about 6300 yuan, and the top company was 1722 Yuan,　　The Chinese-listed companies said in an interview that their biggest concern was not the rise in wages but the rising cost of raw materials. The same is the case for the entire manufacturing sector, with 21% of the 239 Chinese suppliers surveyed by Global Sources (Nasdaq:gsol) in August 2010 saying that rising raw material costs were a major problem for them, and 20% said price competition was the main problem.　　18% of those who think the labour shortage is the main problem, and 12% per cent are more concerned about rising labour costs. But Ms Ulrich also puts the emphasis on labor shortages, saying that while labour costs represent only a relatively small part of manufacturing costs, rising wages and labor shortages are motivating companies to increase the use of industrial robots. At present, the application of industrial robots by Chinese enterprises lags far behind other major manufacturing countries. According to the International Federation of Robotics, the practical stock of industrial robots installed in China will increase from 45,800 at the end of 2010 to 84,500 at the end of 2013.　　China will therefore become the world's fastest growing industrial robot market. Ms Ulrich says China's surplus labor force is shrinking, at 20-39 years old, which accounts for a very high proportion of workers in labor-intensive enterprises.Ratio) has fallen for several consecutive years.　　The dependency rate (the proportion of the non-working population aged 0-14 and over 65 years and 15-64 years of age) is also expected to reverse the downward trend over the past few decades, starting at some point from 2013 to 2015, which will exacerbate the labour shortage. (Stock market weekly Feeds) "Author:" Financial Network, "reporter Pan Ying" (Editor: Ursula)