ABSTRACT

The salaries of engineers in China depend on whether engineers work for the government or private enterprise, for domestic or foreign firms. Among other things limiting the availability of labor in the information industry in China is that multinationals avoid older workers. Hiring practices that restrict the pool of the potential applicants and the dismantling of the isolation of the Chinese economy are contributing to the tremendous rise of engineers’ salaries. In the 1980s, 90 percent of the salaries of engineers at foreign firms went to the government in the form of taxes. Multinationals tried to circumvent the high tax rate by qualifying most of engineers’ pay as cost-of-living allowances. Competition for the pool of potential applicants sought by multinationals motivates many multinationals to poach the engineers currently working for competitors. Most notably, multinational managers believe that the nationalism of Chinese engineers contributes to theft.