Increase of wages and market performance in Chinese factories Essay

Increase of wages and market performance in Chinese factories - Essay Example The level of wages is usually considered as a criterion for evaluating the potential of a market to face local and global pressures. Indeed, in economies where economic instability is continuous, the decrease in wages is often used for controlling inflation. It is derived that increased wages denote the strength of an economy and its future prospects. Lipsey and Chrystal (2007) note that the increase of wages is feasible only in markets that are characterized by long relationships, meaning those markets where employees tend ‘to work for the same firm for many years’ (Lipsey and Chrystal 2007, p.576). In other words, the increase of wages reveals the market stability as it is reflected in the establishment of long-term employment contracts. The increase of wages has been often criticized as negatively affecting the performance of firms or industries involved. However, in practice, no such issue seems to exist. According to Trivedi (2002) the claim that the increase of wag es can lead to a series of problems for industrial relations and industrial performance should be rejected (p.640). It is explained that it is not the increase of wages that results to such phenomena but the decrease in performance (Trivedi 2002, p.640). It is also noted that the increase of wages can boost organizational performance since it can lead to the increase of employee satisfaction, i.e. to the increase also of employee performance which has a critical impact on organizational performance (Trivedi 2002, p.640).... In other words, the increase of wages reveals the market stability as it is reflected in the establishment of long-term employment contracts. The increase of wages has been often criticized as negatively affecting the performance of firms or industries involved. However, in practice no such issue seems to exist. According to Trivedi (2002) the claim that the increase of wages can lead to a series of problems for industrial relations and industrial performance should be rejected (p.640). It is explained that it is not the increase of wages that results to such phenomena but the decrease in performance (Trivedi 2002, p.640). It is also noted that the increase of wages can boost organizational performance since it can lead to the increase of employee satisfaction, i.e. to the increase also of employee performance which has a critical impact on organizational performance (Trivedi 2002, p.640). According to Taylor and Weerapana (2011) the decisions of countries in regard to the prices of the products imported can highly affect the potentials of the firms operating in the industry involved to keep the prices of their products at standard levels (Taylor and Weerapana 2011, p.58). Reference is made to the case of USA that ‘decided in 2002 to introduce trade restrictions related to the steel’ (Taylor and Weerapana 2011, p.58). This decision led to the increase of the price of steel as a material used in production. As a result, manufacturing firms producing goods based on steel had to increase the prices of their products, not being able ‘to produce the same number of products at the same price’ (Taylor and Weerapana 2011, p.58). The prices of goods based on steel had to be increased since the cost of the