A survey showed that the salaries of the employees at foreign-funded companies in Shanghai increased by 10% in 2008.

At the start of October, CIIC HR Management Consulting Co. Ltd (CIIC) released a survey, showing that the salaries of the employees at foreign-funded enterprises in Shanghai increased in 2007 and the first half of 2008. Because of the perpetual increase of the Consumer Price Index (CPI), the average salary of the employees increased by more than 10% in the first half of 2008.

This was the first time that the average salary of the employees at foreign-funded companies in Shanghai increased by more than 10% in 5 years. According to the data, in the last four years, the growth rate of the average salary of the employees was about 8%. In 2007 it was 8.9%, which was the highest in years (excluding this year).

In the past two years, the performances of the companies and their employees were the main index of an employee’s salary adjustment. Second was the change of the talent resources market. This year, the market changed extremely. And then there was the rapid increase of the CPI with 11 percentages, which became the third factor determining the salary adjustment.

Among the salary adjustment of different positions, the adjustment of the technicians’ and management’s salaries were the largest in the extent. The data showed that the salaries of the senior technicians increased by more than 10%; the engineers with more than 15 years of experience got a 13.5% salary increase. Last year, the salary of a senior engineer was 3.5 times higher than the one of a junior engineer. This year, it is already 5 times.

Geng Junhua, a senior consultant of CIIC, said in his analysis that the problem of talent structure has not been solved, and that some enterprises could not find suitable people for 30 percent of their key positions. They also didn’t have enough people with special abilities. This is why the enterprises offer their engineers high salaries in order to retain them.

Besides the technicians, the managers also got a large increase in their salaries. According to the result of the survey the average salary of a top manager was 601 thousand Yuan (USD 85.9 thousand); of a chief inspector 429 thousand (USD 61.3 thousand) and of a manager 231 thousand Yuan (USD 33 thousand). Their growth rate all exceeded 10%.

The perpetual increase of the CPI forces people to admit that their dismissal is due to their salary. In this year, the salary became the first reason of people’s dismissal. More than 27% of the people who left their posts said that they chose to leave because of the salary. While in 2007 over 40% of the people attributed their dismissal to the need of individual career development.

In terms of different industries, the active dismissal in the manufacturing and composite trade increased, because those two industries were more greatly influenced by the entire economic situation. Yet in the high-tech industries, the active dismissal rate took on a downhill trend because of the high salary.

Though the foreign-funded companies are confronted with great cost stress, most of them keep optimistic attitudes towards their investment in China. Among the 618 American-funded companies receiving the survey from CIIC, 64% keeps an optimistic attitude toward the development in the coming 5 years; only 4% takes a pessimistic attitude.

In short, people think more about the increase of the CPI when they have to decide about a salary adjustment. The survey of CIIC predicts that foreign-funded companies will increase their employees’ salaries by 9.9% in 2009, in order to deal with the stress brought to the employees by the increasing CPI.