In recent years, however, real wages have begun to rise, rising by around 5% per year since 2006 due to sustained economic growth, tighter labor markets and increasing demand from foreign firms in manufacturing centers. However, wage growth remains below China’s. Meanwhile, although overall productivity levels remain relatively low due to limited domestic technological capabilities, reliance on assembly operations, and weak spillovers from foreign firms, labor productivity growth has outpaced regional counterparts, driven by capital accumulation, technology transfer through foreign direct investment, and participation in global value chains.
