China trumps Southeast Asia in white-collar wages

by Hannah Norton26 Apr 2016
Research by Willis Towers Watson shows that the labour cost advantages enjoyed by some Southeast Asian economies – including the likes of Vietnam and the Philippines – go beyond factory jobs.

The report – covering the professional level and middle, senior and top management – shows that, across the board, China base salaries are about five to 44 per cent higher than Indonesia, the most expensive labour market in the emerging Asean economies.

Entry-level white-collar professionals in China receive an average annual base salary of about US$21,000, or 30 per cent more than their counterparts in Indonesia, WTW's 2015/2016 Global 50 Remuneration Planning Report says.

"Wages in China have been rising for a while," Sambhav Rakyan, WTW's data services practice leader for the Asia Pacific, told The Straits Times.

"The lower salaries in Association of Southeast Asian Nations economies are giving them a real competitive edge and we feel this will lead companies to reconsider whether they need to relocate operations that were once based in China. The aging workforce and shrinking workforce in China suggest salaries there will remain higher than in the Asean markets minus Singapore."

Rakyan said companies would be able to move their operation from China to Indonesia or Malaysia, they would be able to save on labour costs.

“That's just one factor among a lot of other factors that affect moving operations, such as infrastructure and the availability of labour.

"We have certainly seen a trend where companies have been taking amore conscious approach to looking at whether there is now a competitive advantage for them being in China based on the labor cost alone, which is a big cost."

However, China still enjoys some advantages that mean it remains attractive to some employers, he said.

"Though China is much more expensive, its more mature infrastructure and skilled workforce will likely continue to attract companies."
 

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