Research On The Impact Of Rising Labor Costs To The Development Of Small And Medium Enterprises

The development of SMEs and economy is complementary with each other. On one hand， Macro economy has driven the rapid development of SMEs，on the one hand, SMEs play an important role to the economy development. In recent years, along with the integration of world economy, domestic inflation and the change of relationship between supply and demand of labor, the development of SMEs suffered serious injuries. The labor shortage, financing difficulty and cost problems are increasingly prominent. Especially the rising labor costs put forward challenges to the comparative advantage of Chinese labor costs and the transformation of SMEs.This paper studies on the impact of rising labor costs to SMEs’ development by beginning with the labor costs and the way of enterprise development, the main contents are followed:The first chapter mainly provides the background, purpose, ideas, methods and limit of this study, including the concept of labor costs and the transformation of SMEs. The second chapter mainly discusses the Western and Chinese scholars’ research on the impact of labor costs to macro economy and micro enterprises. The third chapter mainly presents the labor costs rising trend and features, as well as suggests the status and causes which make the enterprises in trouble. The forth chapter introduces the reasons why labor costs rises and its positive and negative effects to the SMEs，as well as the trend in the future. The fifth chapter presents how to cope with the impact of rising labor costs. On one hand, one priority is playing independent role of the market to force the SMEs to transform and upgrade, on the other hand, the government should provide a large amount of human, material and financial to make sure labor productivity and the upgrading of industrial structure by helping SMEs to get a smooth transition, enhancing a large amount of efforts to support SMEs, increasing investment in human capital and developing employees’ innovating spirit and innovating sense. The sixth chapter is summary; it mainly describes the conclusion and the futurology direction.Article concludes that labor costs will weaken the competitive advantage of SMEs in the short term, but in the long term, it will help to force SMEs to improve labor productivity, and thus achieve the transformation and upgrading. This paper argues that the government and market should play the important role to establish an orderly wage growth mechanism for SMEs. This article has a unique innovation perspective, it main focus on micro-enterprise changes in labor costs, especially linked the change of labor costs with the economic development mode shift in research.