Business

Wages in Croatia Lower Than in China

By 12 October 2017

Croatia is falling behind.

By the level of median wages in some of its cities, China has overtaken certain parts of Europe. The median salary in Shanghai (1,135 dollars), Beijing (983 dollars) and Shenzhen (938 dollars) is higher than in Croatia, the newest member of the European Union, where the median net salary is 887 dollars, according to the Forbes magazine, reports Index.hr on October 12, 2017.

Median wages in Shanghai are higher than in the two newest eurozone members as well: Lithuania (956 dollars) and Latvia (1,005 dollars), while in Estonia, which entered the eurozone in 2011, the median salary is 1,256 dollars.

In the past ten years, many workers from Eastern Europe have appeared in the European Union labour market. On the other hand, China has achieved a higher degree of integration into the global labour market by joining the World Trade Organization. All this has led to stagnation of wages for lower-qualified and factory workers in some countries in Europe. “The impact of globalisation and China's entry into the World Trade Organization in 2002 have significantly increased the labour supply,” said Neil MacKinnon, an economist at VTB Capital.

The increased supply of Chinese labour and the supply of cheap commodities from China to the global markets were positive for consumers, but they forced Eastern European producers to face a new competition and try to be less expensive than the Chinese.

Given that China, in some ways, defines wages for manufacturing workers, and salaries in logistics sector related to e-commerce in the future as well, Eastern European countries can only hope that the growth of wages in the most populous nation in the world will continue.

The Chinese share of the global trade has risen since 1990, when it was just two percent, to as much as 15 percent. At the same time, since the 1990s, Eastern European countries have emerged from the influence of Russia and moved towards the West. Before the fall of communism, these countries were in smaller or higher degree of isolation. The labour force was relatively well-educated, and the flow of capital was limited.

On the eastern side of the Adriatic, opposite the rich Italy, there is a large pool of cheap labour. Chinese workers in Shanghai, Shenzhen and Beijing earn on average more than workers in Albania, Romania, Bulgaria, and Montenegro.

Salaries in Shanghai are not much lower than those in Poland, where the median is 1,569 dollars. The Czech Republic is not far ahead of China, with pays in Prague averaging about 1,400 dollars.

The salary growth in China is impressive, and this is excellent news for the Chinese. But, it is clear that salaries in China, as a major industrial force, will also determine wages in many countries of Europe.

Translated from Index.hr.

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