Research On The Wage Adjustment Index In China

The wages of workers in our country has experienced a planned economy, transition economy, market economy, three major historical stages. Under the planned economy period, the wage system is characterized by a highly centralized, has carried out supply system, "wage score" and grade wage system. In this stage wages of the direct production sectors was higher than the non-directly productive sectors, heavy industry's was higher than light industry's, corporations' was higher than the departments', wage levels were generally low, increased a little, during the Cultural Revolution wages even decreased year after year. With economies in transition period, the state decentralized the right of wage distribution to enterprises, enterprise and government organizations and institutions linked wage increasing were taken off, the main of the implementation of this stage was the structure of wage system, in which part of the basis of wage indexation with prices to increase. In the period of market economy, the enterprise wage determination changed from the plan and administration determination to the market determination, the wage gap and bonus distribution between industries and enterprises are gradually enlarged. The state guides and macro-controls enterprises' wages through wage guide line system, labor market wage guide price, information on labor costs, the minimum wage system.With the continuous development of market economy, enterprises lacking of theoretical guidance to the wage distribution, there is no pay to establish a scientific management system, the state's macro-control wages is not enough, China's market mechanism is still not perfect and other factors. All the factors led to the problem of salaries of our employees constantly highlighted. To sum up there are three: first, the overall wage level is relatively low. The average wage in the manufacturing sector as an example, the wage level of workers in China is in the lower-middle-income countries of the world, and high-income countries are more than 10-fold difference to china. This was mainly due to China's gross wages of GDP was too low ,over the past decade had been maintained at more than ten per cent level, and developed a far cry from the 50 percent level. Second, the wage gap between industries, the regions, within enterprises continues to grow. This was mainly due to high wages in monopoly industries, unbalanced economic development between regions, the improper wage distribution within enterprises, too high wages of managers. Third, wage growth has non-standard, which is mainly manifested in the industries and enterprises. While some private enterprises and monopolistic enterprises do not strictly enforce the wage guide line system, resulting the market principles of wage increase and the principles of social justice have not been well reflected.Long-term low wage levels, slow growth, and large gap will affect the enthusiasm of workers, not conducive to the improvement of living standards of residents, be resistance to China's economic development. The country and government has pay attention to this. In October 2007, the 17th National Party Congresses brought forward that "gradual improve the proportion of residents' income in national income distribution, and raise the proportion of the reward for labor in the initial distribution ", establish the normal wage growth mechanism, at the same time regulate excessively high incomes and break out the monopoly business keeping, to reverse the trends of widening gap between income distribution.Under the above context, this paper studies China's index of wage growth. Research on this issue is divided into two parts, namely, the total amount of wages to be raised to what kind of a reasonable level, as well as the average wage of workers should be based on how the growth rate.First of all, papers combed the wage theory in the on the period of economics, laid the foundation for theoretical studies. Then collated and analyzed the foreign wage adjustment methods, and evaluated the advantages and disadvantages of methods, drawing an important role on the establishment of Chinese wage adjust index model.According to the reality of low wage levels in China and the spirit of the 17th National Party Congresses, that is "to raise the proportion of the reward for labor in the initial distribution", paper determined the total amount of wage growth theory. Through the mathematical and theoretical analysis of labor production factor coefficient, set the China's labor reward share of national income uniformly stepping up to the level of 75% from 2006 to 2050, and then stripped in accordance with the method of layers, and ultimately determined the total wages of urban workers, which as the upper limit of the target. Determination of the total wage model is: Here, W is the wage income of urban residents, G is the gross domestic product, H is the labor production factor coefficient, Q is the proportion of urban residents' labor reward,θis the necessary deducted proportion.By setting the parameter values in the model, the paper determined the future China's total target wages, educed the conclusion that in accordance with the growth to improve urban workers' wages, China will enter into the rank of high-income countries.Through comparative analysis of foreign wage adjustment methods, the paper determined the China's wage index growth model, choosing labor productivity, economic growth and consumer price index as the model parameters. Through the mathematical relationship analysis between the wage growth rate and parameters, paper determined the sub-industry econometric model of wage adjustment, and identified the high, medium and low three different types of adjustment programs.Low standard index model of the wage adjustment:ω_min =γ^*Ï€Benchmark index model of wage adjustment:ω=α₁^*β *lab +α₂^*β^* g +γ *Ï€High standard index model of wage adjustment:ω_max = max[lab, g] +Ï€Here,ωis the average growth rate of money wages,Ï€is the increase rate of consumer price index, lab is the labor productivity growth rate, g is the GDP growth rate,βandγare adjustment coefficients for the excessive increase of labor productivity/ economic growth and the consumer price index,α₁ andα₂ are the weight coefficients between labor productivity and economic growth, different industries have different values.Papers forecasted industries' wages on the benchmark programs and high standard program, and concluded that the wage index adjustment program can narrow the wage growth gap between industries. Then compared the forecasted total wages with the determined total wage target, that the upper limit of total wage set reasonable, high standard program making the total wage gradually move closer to the target are on the conclusion.Paper analyzed the fairness and efficiency of the wage adjust index from income distribution. Theil index calculated way from the perspective of empirical proofed the wage index adjustment can narrow the wage gap among industries, enterprises and institutions. From the perspective of the allocation of resources, paper analyzed the wage index adjustment program can improve the inefficiency caused by government controlling resources or directly allocating resources, and weaken unfair advantage of the monopoly industries and system business , and enhance labor market information.From the theoretical and empirical aspects, paper analyzed the wage index adjustment programs impacting consumption, savings and investment of Chinese urban residents. Chinese urban residents' income distribution gap is too large, too much income concentrated in the hands of a few, resulting in the large low and middle income classes have low levels of marginal propensity to consume and consumption structure, high savings rate, the lower conversion rate of savings to investment, which is not conducive to economic development. Wage index adjustment program will help to narrow the income gap and the expansion of middle-income class, so it will be conducive to the consumption structure optimization of china's urban residents and upgrading of the tendency to invest and expand consumer demand and investment demand, and promote economic growth.Based on wage adjustment index, a thought of appropriate wage gap and balanced growth was brought forward. And it designed a staged macro-control mechanism for wages. Some policy recommendations including improving the wage system of collective bargaining, wage guide line system, establishing the Government's macro-controlmeasures for wages, the rationalization of taxes and improving the social security system, were brought forward, and to cooperated the wage adjustment with those mathods. Improving the wage system of collective bargaining is to strengthen the functions of trade unions of state-owned enterprises, establish the coalition of trade unions, consult method for calculating wages and wage growth mechanism mechanisms, speed up collective bargaining legislation. Improving the wage guide line system is to establish the sub-industry wage guide lines based mainly on the wage index adjustment model, for the wages of workers in all sectors having a scientific, rational, sustainable growth, narrowing the irrational gap between the industry wages. Government macro-control measures of wages are as follows: First, the Government collects the excess profits from monopoly industries brought by monopoly control, to control the phenomenon of high-wage in monopoly industries from the root; the second, use the funds for wage subsidies to workers in those enterprises of long-term low wage levels and slow growth, as well as to raise wages of the young who have heavier family burden; the third, make subsidy beside wage policies normative, particularly to reduce subsidies in the government departments, implement monetary and transparency wages. Reasonable tax structure, deepening of tax reforms proposed through the indexation of tax threshold, reducing the duty-free items to increase the proportion of tax, making the family as a unit tax. That is from the vertical equity and horizontal equity to strengthen its income distribution role. The social security system is the most bottom-line that in line with wage adjustments to protect residents' living standards. Only if improving the social security system, worker have no worries, the fundamental goal of making wage growth, expanding consumption, promoting economic development and improving residents' living standards can be achieved.