China’s ongoing anti-corruption initiative is reputed to be moving in a new direction.  After arrests, trials and convictions of generals, senior politicians and top executives at state-owned enterprises, the new focus appears to be much more humble state employees such as teachers and doctors.

Teachers are being targeted for charging extra fees, requiring gifts in return for granting good grades.  Doctors are targeted for seeking kick-backs from drug companies and for charging extra fees to patients.

While these activities are deeply corrosive and should be stamped out, attacking them directly addresses only part of the problem.  Teachers, doctors and many other government employees are simply not paid enough to become full members of China’s new middle class.

Twenty years ago, low pay in these professions did not matter so much. The professions were highly respected, and the best students from universities were selected and allocated to these roles.  Private sector roles were not a draw for students as there weren’t very many of those jobs anyway.

Why would a talented graduate start a career in these professions today?  Respect from society has eroded (as a result of the behaviors above). Doctors fear physical violence from family members of their patients.  And the financial rewards are insufficient to acquire middle class trappings of a new home and car.

Many who have made their career in these professions are retiring early or switching out mid-career into the private sector.  The quality of members in the professions is at risk of rapid decline. A new aggressiveness in stamping out corruption will accelerate these trends.

What is missing is a long term plan to pay teachers, doctors, civil servants and even the police higher wages.  These need to come close to matching equivalent roles in the private sector.  As the private sector education and medical services industries grow, establishing such benchmarks will become easier and easier.  But today wages lag so far behind that a benchmark is not required.  Several years of double digit increases is clearly needed.

However, is local government ready to fund such a move? Hardly, as most are in fact deeply in debt and constrained by their need to repay outstanding loans.  It is much less costly in the short term to push the anti-corruption priority than it is to deliver any wage increases.

This problem is not going to be fixed any time soon, allowing erosion in the professions to continue.  But it will not go away and one day the government will have to pay up.

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