INTERNATIONAL REWARD
Survey reveals wage costs are higher in China than India
Multinational companies seeking to set up lower-cost operations in Asia will face higher wage costs in China than in India, according to a survey by Mercer Human Resource Consulting.
The report shows that for 95% of the 42 job roles examined, average base pay is higher in China than in India. While pay differences are less stark at lower levels, some senior managers and professionals in China earn more than double their counterparts in India.
Mark Sullivan, worldwide partner at Mercer, said: "China and India have become prime locations for investment by multinational organisations because of their skilled labour and low wage costs. Companies are increasingly looking to outsource their back-office operations to these countries to reduce overheads. While it is far cheaper to employ staff in both China and India than Europe or the US, India appears to have the advantage of slightly lower wage costs."
Key survey results
Mercer's survey survey found:
At the lower end of the salary scale, customer service assistants receive £1,300 a year in China compared with just £800 in India, while skilled production workers earn £1,200 compared with £1,000 in India.
"Although wage costs are lower in India, there is a high demand for skilled workers there, particularly at the executive level," said Mark Sullivan. "If demand continues to outweigh supply, then we can expect wages to increase substantially over the next few years. The challenge for employers is to make sure they retain their top staff and equip lower-level employees with the necessary skills to move up the organisation."
Annual base pay
Download a table of comparative pay rates for China and India at www.mercerhr.com/pressrelease/details.jhtml/dynamic/idContent/1201340
A final word
"When global companies compare China and India as places to outsource their operations, wage rates are only one factor in the equation. Organisations need to weigh up other operational costs, as well as factors such as proximity to markets, to determine the most cost-effective option. They can then focus on the type of rewards programme that will attract and retain the right level of skilled workers." -- Steve Gross, a worldwide Partner who leads reward strategy consulting at Mercer and who advises US-based multinationals.
Want to know more?
Title: China and India: Comparative HR advantages, Mercer Human Resource Consulting.
Availability: To purchase your copy visit the Mercer web site atwww.mercerHR.com/china-indiareport
Mercer Human Resource Consulting is the "global leader for trusted HR and related financial advice, products, and services". It has more than 15,000 employees serving clients in over 190 cities and 41 countries and territories worldwide. To find out more visit www.mercerhr.com
Posted 6 January 2006