China announced today that it has given raises - the first in 14 years - to more than half its factory and office workers in what seems to be a major effort to accelerate economic growth and win support for the new post-Mao leadership.
Vice Premier Yu Chiu-li, head of the state planning commission said in a Sunday speech released by the New China News Agency today that about 46 per cent of the urban work force, particularly "those workers and staff with many years of working experience who receive fairly low pay," had their wages raised Oct. 1. "In addition," Yu said, "another 10 per cent or more are able to get small increases in pay."
About 40 million to 50 million workers are expected to benefit from the increases. So far no raises have been announced for the hundreds of millions of peasants and farm workers.
Since the last major across-the-board pay hike in 1963, the country often has been plagued by strikes and slowdowns. Many foreign visitors have been surprised by the leisurely pace of work even at model Chinese factories.
After a group of party dogmatists who allegedly opposed wage hikes were purged a year ago, rumors spread of a general salary increase. Nothing happened immediately, however, and bus strikes were reported in some areas and production continued to lag for some months.
Yu's speech, which included an unusually frank assessment of problems in the Chinese economy, not only officially announced the wage increases but suggested strongly that a bonus system to spur individual effort was in the works.
"We must study and settle the problems of how to . . . raise labor productivity . . . and how to apply better the principle 'from each according to his ability, to each according to his work' and to incure 'more pay for more work and less pay for less work' in distribution," Yu said.
Much of the drag on wages over the last several years seems to have come from the insistence of the late Chairman Mao Tse-tung that workers would be better motivated by patriotism and belief in socialism than by more money. Emphasizing material rewards, many of Mao's disciples argued, would only create a new elite class like that of the Soviet Union, always used as a bad example in any Chinese ideological discussion.
Yu did not detail the new wage increases.
The Kyodo News Agency said last month that Japanese visitors to China had learned that the two bottom rungs of China's eight-grade wage system would be raised to the next highest grade. This would result in increases of about 15 to 20 per cent for those workers, or an increase of from about $18 to $21.60 a month for the lowest-grade workers.
This is a pittance by Western standards but in China a dollar goes a long way. Urban workers, for example, often pay no more than $1.50 a month in rent. Yu acknowledged in his speech, however, that workers still had little to spend extra money on. Such sought-after items as cloth and vegetable oil are strictly rationed.
Speaking to the fourth plenary session of the standing committee of the fourth National People's Congress, which serves as China's parliament, Yu painted a black portrait of the economy. He said it had just begun to recover from years of low tax revenues, corruption, mismanagement and sluggish growth in key industries such as fuel and power.
The situation was particularly bad last year, when Western economists estimate that Chinese economy grew by no more than 2 per cent compared to its usual 10 per cent average annual growth rate. Yu said that in some areas the economy had been plagued with troubles long before last year. A rise in state revenues of 7.8 per cent in the first nine months of this year "put an end to several years of failure to fulfill state quotas" for revenue.
The "Gang of Four" - the name now given to leading Politburo dogmatists like Mao's widow Chiang Ching who were purged a year ago - "undermined our planned economy so seriously that for the past few years the national economy was in fact developing in a seminarchical fashion," Yu said.
Now, however, Yu said, "the tide is turning on the economic front." He said industrial output in the first nine months of this year had jumped 12 per cent over the same period last year. Despite drought, severe cold and typhoons, agricultural production was "fairly good" and production of cotton and oil-bearing crops exceeded last year's, Yu said.
"On the basis of the gradual improvement in the national economy and state revenue, Chairman Hua [Kuo-feng] and the Party Central Committee decided to increase wages starting on Oct. 1," Yu said. Western economists who have studied the wage question in China note that Peking's unequalled success at preventing inflation has derived in large part from the lack of wage increases and are waiting to see if these raises will affect monetary stability.
Alluding to the exclusion of the rural workers from the pay raise, Yu said, "For commune peasants the major issue is to solve such problems as increasing production and income and supplying more consumer goods and building materials needed for house construction."
Yu called for nationwide effort to continue the resurgence of the economy, including mechanization of agriculture and attention to encouraging new techniques. He identified several serious problems that have yet to be solved. "The growth of agriculture and light industry falls short of demand . . . The development of the fuel and power industries and the primary goods industry is not keeping pace with the growth of the whole national economy . . . and no significant improvement has yet been made as regards the poor quality of products, big consumption of material, low labor productivity, high product cost and the tying up of too many funds . . . "