How reasonable is the proportion of labor cost to the company's revenue?

The reasonable proportion of labor cost in the company's income varies from industry to company.

In different industries and companies, the reasonable proportion of labor costs to revenue is different. For benign enterprises, this ratio is usually controlled at around 20%; For manufacturing factories, this ratio may be lower, averaging around 7%. When making salary, enterprises will consider the average salary level of the same position in the same industry, market environment and company strategy, as well as the incentive effect of salary. If the fixed salary is too high, it may affect the enthusiasm of employees. Therefore, enterprises will comprehensively consider various factors when formulating labor costs to ensure that they can attract and retain talents while maintaining competitiveness and profitability.

Calculation method of labor cost:

1. Composition of labor costs: including direct salary, welfare, social security contributions, training fees, recruitment fees, etc.

2. Calculation of direct salary: usually refers to basic salary, performance bonus, overtime pay and other cash paid directly by employees;

3. Calculation of welfare expenses: It may include employee housing subsidies, transportation subsidies, catering subsidies, etc.

4. Calculation of social security contributions: calculated according to the proportion and base stipulated by the state, including endowment insurance, medical insurance and unemployment insurance.

5. Calculation of training expenses: including internal training and external training expenses, as well as related travel expenses and material expenses;

6. Calculation of recruitment expenses: including the expenses for publishing recruitment advertisements, the expenses for talent agency, the expenses related to interviews, etc.

To sum up, the reasonable proportion of labor costs in the company's revenue varies due to the influence of industry and company characteristics. Generally, benign enterprises are controlled at 20%, and manufacturing is around 7%. Enterprises should weigh industry standards, market conditions, company strategy and the incentive effect of salary when formulating salary, so as to balance the need of attracting talents and maintaining competitiveness.

Legal basis:

Provisions on the composition of total wages

essay

Total wages refer to the total amount of labor remuneration paid directly by each unit to all employees of the unit within a certain period of time. The calculation of total wages should be based on all labor remuneration paid directly to employees.

Article 4

The total salary consists of the following six parts: (1) hourly salary; (2) piece rate; (3) bonuses; (4) Allowances and subsidies; (5) Overtime pay; (6) Wages paid under special circumstances.