Comparison of World Wages Shows Extreme Wealth Inequality in China
Comparison of World Wages Shows Extreme Wealth Inequality in China

Comparison of wage in China to the world. Blue bar: China, red bar: world. Items compared (left to right): percentage of minimum wage to GDP per capita; percentage of minimum wage to average wage; wage of public servants divided by the minimum wage; wage of top management in state enterprises divided by the minimum wage; percentage of inter-industry wage differentials.  (Courtesy of  Liu Zhirong)
Comparison of wage in China to the world. Blue bar: China, red bar: world. Items compared (left to right): percentage of minimum wage to GDP per capita; percentage of minimum wage to average wage; wage of public servants divided by the minimum wage; wage of top management in state enterprises divided by the minimum wage; percentage of inter-industry wage differentials. (Courtesy of Liu Zhirong)
Chinese scholar Liu Zhirong published an article based on financial data he has collected over the years. The data show that China’s wealth distribution is extremely unjust and the country has one of the largest gaps between rich and poor in the world.

Liu believes that if the problem of unjust distribution of wealth is not solved, the society will become more and more unstable.

In Feb. 7, 2010, Liu published an article titled “Report on the Research of World Wages and Lessons to Learn” in his blog and it has been quoted by many media in China.

His analysis shows that the minimum wage in China is only 25 percent of its GDP per capita compared to the world average of 58 percent; the minimum wage in China is 21 percent of its average wage compared to the world average of 50 percent; the wages of public servants are six times as high as the minimum wage but only twice for the world average; top management in state enterprises earn 98 times the minimum wage compared to 5 times the world average

Liu researched the wage structure of 183 countries and areas in the world. His numbers come from the World Bank, International Monetary Fund, banks in Asia and Africa, labor unions, European Union, Organization for Economic Cooperation and Development, the bureaus of statistics and departments of labor around the world.

State Statistics Not Up to Standard

The article further states that besides countries at war, all countries include every occupation including nannies, hair dressers, restaurant workers, waiters, free lancers, and seasonal agriculture workers in wage statistics. However, China’s National Bureau of Statistics only surveys the part of the population that receives wages from the state. The Bureau’s coverage is less than 15 percent of the working population. Thus Liu can only use the Bureau’s data to compare to the rest of the world. Even so, the result is astonishing.

The average minimum wage of 183 countries and areas included in his research is 41,535 yuan per year (US $6,108 per year). The lowest annual income in China is 6120 yuan (US $900), less than 15 percent of the world average. It ranked 158 out of 183 countries he surveyed.

According to the Bureau of Statistics in China, the average wage of public servants in 2008 is 33,869 yuan (US $4980), six times the minimum wage. Most of the world’s public servants have salaries twice the minimum wage. In this category, China’s has the highest ranking in the countries surveyed.

The inter-industry wage difference is enormous in China, Liu found. China Youth Daily reported on May 5, 2009, that workers in 14 listed banks have an average wage between US$ 67,088 and US$ 19,176 per year. But the average wage in businesses like construction, restaurant and the garment industry was around US$ 1,470. The inter-industry wage differential was 3000 percent, 43 times of that of the world average.

Liu claims that no one stops influential officials when they try to fleece the people but when the public wants even the smallest amount of benefit, the resistance is enormous. When Liu calls for a raise in the minimum wage, some officials and scholars would hysterically reject it saying that it would harm the economy and destroy businesses. However, every year when the state raises public servants’ salaries by a wide margin, no one makes a sound, saying that it would hurt the Chinese Communist Party and destroy the government.

China Still Poor

Liu’s calculated that the average minimum wage in 31 of China’s provincial administrative units is US $89 per month. By the end of 2009, there were 779.95 million people unemployed and a retired population of 57.96 million. The total population in China was 1.335 billion, which means each working person must take care of an additional 1.64 persons (the number is higher in the suburbs). This way, a person earning the minimum wage only has US$ 55 (89/1.64) for his living expenses per month.

The moderate poverty line, according to the UN, is US $2 per day ($60 per month). The living standard of the workers in China who receive minimum wage is below the poverty line.

According to Liu’s research, in 2005, the population that lives under the extreme poverty line in China was 20 percent of its total population. The percentage of population that lives under the moderate poverty line was 49.

Liu Zhirong is an independent scholar and media commentator. He is a former director of the World Bank Ethiopia Office and a former manager of Bank of Africa Cameron project.

Read the original Chinese article

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