Complicating price negotiations with Chinese suppliers, the Chinese yuan went a few days go above 6.6 to the dollar for the first time since 1993 amid indications that the Chinese government wants to use its appreciation as an anti-inflationary measure. However, the cost of labor, which is becoming more scarse in the shoe manufacturing sector, seems bound to increase further in the next months and years.
Reports indicate that the Chinese government is trying to put some order into wage negotiations between employers and their staff in order to reduce the number of labor conflicts, which increased by 12 percent to 406,000 last year. The Communist Party wants to ensure that all Chinese companies are involved in collective wage negotiations in concert with the unions within three years.
There are more than two million firms that have collective wage contracts now in China and their employees' wages are between 10 and 15 percent higher than those offered by other companies, according to a French newspaper.
A recent study by Credit Suisse projects average annual wage increases of 19 percent in China for the next five years, following major increases in the cost of food and housing.