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compensation sysytem between expatriate and local staff----

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Maggie Mei Zhan

on 10 February 2015

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Transcript of compensation sysytem between expatriate and local staff----

Wage gap between expatriates and local employees in China and way to shorten the differences
Chinese Compensation System
Responsibility Overload
Cultural Inflexibility
Employees Integrity
Legal Provisions on Working Hours and Wages
Chinese proverb says : “Don't worry about poverty, but rather about the uneven distribution of wealth”

Team: Mei ZHAN Katrina Kanokvichitra Yun JIA
Wages in China
According to the 2014 Chinese Labor Bulletin:

Wage levels are augmenting.

Differences are increasing.
Chinese Labor law of 1994:

Standard workweek has 40 hours, 8 hours a day, 5 days a week.

Overtime shall be paid and should never exceed 3 hours a day or 36 hours per month.
Expatriates in China
There are
no specific articles
in the Chinese Labor law indicating differences in the compensation system of expatriates in China
China is the second country (only topped by Switzerland), for expatriates’ economics.

“The survey found
69 per cent of expats
moved to China for better job prospects (compared to
36 per cent globally
) and
59 per cent of expats
in China say they earn more than they did in their home country.”
Source: HSBC’s 2013 Expat Explorer survey
Trends Related to Expatriates Working in China:
• hired within China
< less than <
hired in from abroad.

• The better and expatriate speaks the native language, the more experience ,the more unique their
are, the highest the compensation will be.

The cost of Living
in China is a lot lower that the costs of living in other well pay countries of the world, which makes it attractive to work there, as an expatriate.

• Some employers may
be paid for
accommodation expenses but is not mandatory.
• Expatriate are expected to work under
the Chinese rhythm
, which can be exhausting for some of them.

• The employer of an expatriate must pay its
health insurance
, which is very high and can represent a reason to pick a local worker.

• Most expatriates are
around 20% of their monthly wage in China and it can rise up to 40% depending on the earnings.

• The price of
good-quality international education in China
is very high, so a compensation system including education expenses can definitely be a decision making point for an expatriate thinking on moving to China with its family.
list of Salaries for Different Roles and Position in Major cities of China, within the Private Sector
The incentives the companies started giving away were very high in the beginning and because of the success of the this strategy, companies created
a cultural pattern.
(1)Localization of human resource

(2)Localization of compensation

(3)Eliminating incentives
Narrowing the compensation gap
The reason of the conflict
The Wage Gap
The average income of a
local employee: US$ 7532,22
The range of salaries of an expatriate goes from US$
25,000 – 100,000 per year.
The gap between expatriates and local employees is around
three times
Wage Gap Trend
The best solution to avoid over cost because of the
expatriates high wages and the conflicts between locals and expatriates
is to start a process of localization based on equity.
Full transcript