Pay productivity in China, Flexibility of wage determination in China Essay

Pay productiveness in China, Flexibility of profit aspiration in China - Essay ExampleEldies (2003) explains wages be the returns of press as a component of production and wage flexibility as the ability of wages to respond to changes in the crave and put out for labor. According to Gordon and Li (1999), under perfect wage flexibility, wage is determined at the point where the bare(a) revenue of labor is equal to the marginal cost of labor.Policy changes such as the household adjustment system reforms and the shift of labor market from a centrally planned to a market point market direct to increased labor mobility Sweeney (2014). The increased competition saw a huge demand for increase in capacity building as labor sought for higher education so as to remain competitive. As a result a relatively uniform wage order in most of the sectors in china has moved towards the set market clearing wage.Government owned enterprises wages are highly regulated through policies such as m inimum wages and wage setting. People in different job groups earn different wages. Then private sector labor market since 1990 economic reforms has adopted the labor contract system. Under this system, the employees are not permanently utilize and wage is set through an agreement between the employer and the employee. This system has since led to massive layoffs which have led to government intervention through policy reforms.Dong and Bowles (2002) defines comprise as the returns of labor as a factor of production and productiveness as the output per unit of labor input. They point out that productivity can be increased through capacity building and motivation among other factors. According to Cowen (2010) pay is one of the motivational factors and an increase in pay leads to an increase in productivity as workers are highly motivated to work.The global financial crisis led to a decline in the Chinese productivity growth. The productivity growth went to a decline for the first ti me since the