Chinese Workers' Salaries Fail to Keep Pace with GDP Growth, Study Finds

China has enjoyed phenomenal growth in the past few decades despite a recent slowdown in GDP gains, but individual salaries have largely failed to keep pace, according to a recent study.

The country's gross domestic product (GDP) grew by 75.9% from 2008 to 2015 while salaries rose by just 10.6%, both on an inflation-adjusted basis, according to advisory firm Korn Ferry Institute. The pace of growth of both indicators was the highest in the world, but the gap between the two is also the largest.

It's a common problem among emerging economies like China and India. So, too, is the widening income inequalities between high- and low-end workers.

In China, senior employees, such as IT managers and chief accountants, saw their incomes rise 22% during the seven years covered by the study. But the pay of entry-level employees — such as clerical workers, network analysts, payroll coordinators and production line supervisors — actually fell, by 1.5%. And the income gap between the two groups in India was even wider, at 60.2%.

"With countries like China seeing a whopping 75.9% GDP growth since the beginning of the recession, universities and corporations simply can't train people fast enough. This leaves an acute talent shortage and points to the reason skilled employees are seeing steep pay increases," said Benjamin Frost, the group's Global Product Manager−Pay.

China's much-anticipated tax reforms, which will help reduce wealth gaps, haven't made much progress, with the changes not benefiting lower-end workers and married couples enough, and real estate and inheritance taxes still on their way, critics say.

Income gaps in several developed countries, such as France and Germany, were subtle. Growth in the pay of senior managers in France was actually lower than the gains made by entry-level workers.

Efforts by policymakers and worker unions have contributed to pay parity in these countries.

"Many governments regularly increase the minimum wage to keep pace with inflation, and labor laws usually favor employee rights," Frost said. "Also, strong unions bargain on pay and conditions, and in recent years, public pressure has kept senior-manager salaries in check amid a call for everyone to 'share the pain' on the road to economic recovery."

Contact reporter Coco Feng (renkefeng@caixin.com) ; editor Ken Howe (kennethhowe@caixin.com)