Let a billion pay packets bloom

Mar 14 2007 by Nic Paton Print This Article

Western multinationals hoping to benefit from China's huge and cheap labour market could be in for a rude shock Ė the booming economy and the rising expectations of its workforce mean growing numbers are unhappy with their pay and benefits.

Research by consultancy Watson Wyatt Worldwide had found Chinese workers to be far less satisfied with their pay and benefit than workers in the rest of Asia-Pacific and even in the U.S.

This, it argued, could start to pose a severe headache for multinational employers in China's rigid labour market.

The finding comes just a day after research by consultancy Hay argued that pay rises for managers in China (along with India and Eastern Europe) would this year outstrip those for managers in Western economies.

The Watson Wyatt study of 180 companies and 60,000 employees found that barely more than a quarter (28 per cent) of mainland Chinese workers rated their compensation and benefits favourably.

This compared with 38 percent in Asia-Pacific as a whole and 47 per cent in the United States.

While Chinese workers cited communication as a main driver of job satisfaction, many did know how performance was measured or received a consistent message from their company on the link between high performance and an individual's pay.

"The challenge for employers to create monetary compensation and benefit satisfaction for Chinese workers is great," said Robert Wesselkamper, director of international consulting for Watson Wyatt.

"Raising pay will not solve this problem alone. By demonstrating how pay is determined and the value of a total rewards package, companies can help employees understand how financial return is only one part of a larger compensation strategy," he added.

Satisfaction with pay has in China has been on a downward trend for some time now.

In 2003/04 38 per cent of Chinese workers rated pay favourably, a figure that fell to 33 per cent in 2005/2006.

Similarly, in 2003/2004, 27 per cent of Chinese workers gave their total compensation package (pay, bonus and incentives) a favourable rating, compared with only 21 percent in 2005/2006, said Watson Wyatt.

"As Chinese workers express dissatisfaction with pay more and more, multinational companies may find it helpful to address these concerns as they attempt to establish a base in China," said Patrick Huang, managing director of Watson Wyatt's Greater China offices.

"A first step could be to provide clear communications that educate the workforce about their compensation and benefits programs and reassure employees of the importance and meaning of their work," he added.