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CEES Report Release for the First Time: Seven Aspects Focusing on Employer-Employee Issues

June 27, 2017

On June 20, the China Employer-Employee Survey (CEES) report was jointly released by the Institute of Quality Development Strategy, China Enterprise Survey and Data Center and Coordination Innovation Center of Macro-Quality Management in Hubei.  This is the first large-scale enterprise survey based on between enterprises and labor forces in the developing countries. A lot of important research findings have been made based on the CEES dataset. Hereby, we will release a series of reports on these research findings.

 

Aspect One: The profitability of private enterprises is better than that of the state-owned enterprises?

The average profit rate of enterprises is 3.3%, which is higher than that of the state-owned enterprises and foreign enterprises.

 

According to CEES, it found that the average after-tax profit of enterprises reaches 3.3% while the median is 2.4%. The profit margin of private enterprises is 3.9%, much higher than that of the state-owned enterprises (2.2%) and foreign enterprises (2.1%). Business operators believe that labor cost and market demand are the main factors to impact on the development of enterprises.

 

Aspect Two: Is your salary really rising?

The average wage growth rate of employees is around 5-8%, but the proportion of wage among total cost is not very high

 

From 2014 to 2015, the average wage growth rate for employees who have been working continuously for more than two years is about 5-8 % while the salary of new employees has increased by 14.5%. One of the results of tightening labor market in China is the high turnover rate, and the follow-up survey shows that the turnover rate for employees between 2014 and 2015 is 26%.

 

Although the wage continues to grow, the share of wage in total cost is not high, covering 17% in 2013 and 2014, and 18% in 2015. At the same time, the proportion of social security cost in total cost is not very high, accounting for 17% of the total wage and 3% of the total cost. The main reason for the above-mentioned fact is that the wage that enterprises refer to when paying the social insurance is lower than the actual wage and the employee's social security coverage is incomplete, etc.

 

Aspect Three: Employees with no professional skills are easier to be laid off?

The number of employees of the enterprises in Guangdong and Hubei are declining, who are mainly non-skilled labor force

Responding to the rise in labor costs, enterprises tend to reduce the usage of labor. The total number of manufacturing employees of enterprises in Guangdong decreased by 2.2% between 2013 and 2014, and dropped by 6.3% between 2014 and 2015. The total number of manufacturing employees of enterprises in Hubei decreased by 3.3% between 2014 and 2015. The declining employees are mainly non-skilled labor force.

 

Aspect Four: The robot staff will become a trend in the future?

8% of the enterprises use robots. Industrial upgrades and innovation are needed to cope with rising labor costs

 

In addition to adjusting the structure of the labor force, enterprises can develop capital-intensive technology to cope with rising labor costs. This process requires more investment, especially the investment on robots and automation equipment.

 

In recent years, new fixed asset investment has declined significantly. The investment rate (the share of investment in sales) is 25% in 2013, 21% in 2014 and 19% in 2015. 8% of enterprises use robots, 10% of which are in Guangdong, 6% in Hubei. 44% of enterprises use automation equipment; Automation equipment accounts for 17% of the total value of equipment.

 

Aspect Five: Effective way to cope with challenges: strong management and high quality

The management efficiency of Chinese enterprise is 16% lower than that of the United States. Therefore, they need to further improve the management and product quality.

 

Companies are also trying to cope with rising labor costs by improving management. CEES inquires about many indicators of a number of business leaders or key decision -makers, which makes it possible for us to make a more comprehensive description of entrepreneurs. In terms of age, 76% of entrepreneurs are between 40 and 60 years old. 10% of the remaining entrepreneurs are over 60 years old. 13% are between 30 and 40 years old, and only 2% are under 30. The education level of entrepreneurs is relatively high. 61% of them are university graduates, 29% have high school degree, 10% have junior high school and below qualifications.

 

Entrepreneurs also have a higher proportion of political post. 37% of the entrepreneurs have worked in the related government departments. 23% are NPC representatives or CPPCC members. 37% are CPC members.

 

In addition, CEES covers the management efficiency of enterprises and employees for the first time in the world. Comparing these indicators with those of the United States, it can be found that China's management efficiency score is 0.54, 16% lower than that of the United States (0.64). Enterprises with poor management efficiency  accounts for 31%, only 4 % higher than that of the United States. The distribution of management efficiency scores indicates that China has a large number of poorly managed enterprises.

 

Aspect Six: Will China's position in the global value chain continue to improve?

China's position in the global value chain is improving, and its dependence on imported capital goods is higher than that of imported intermediate goods.

 

China's position in the global value chain is improving. The use of imported intermediate goods in 2015 accounted for only 13.3% and the use of intermediate goods accounted for only 3.7%. The dependence on imported intermediate goods is not very high. But the dependence on capital goods is higher than intermediate goods. The use of imported equipment in 2015 accounts for 27%.

 

Aspect Seven: Do more than half of enterprises accept government subsidies?

The Chinese government provides subsidies to support the development of enterprises. 52.8% of the enterprises have received subsidies

 

The government supports the development of enterprises through subsidies. CEES has made a comprehensive investigation into different taxation that enterprises have received for the first time. 52.8% of enterprises have accepted subsidies including tax breaks and tax returns; In 2015, the average subsidy rate for enterprises was 2.6%, close to the average profit rate (3.3%).