Updating the method of monetary conversion of remuneration for work within the concept of assessing the value of human capital

Abstract

The economic formation of the present time is characterized by innovative processes occurring at all levels of organization of economic systems. The object of the study is a complex of knowledge, skills, abilities that characterize conscious human activity and form the concept of human capital. The subject of the study is salary as an economic category that reflects the cost of remuneration for a person’s labor activity within the framework of the economy of the People’s Republic of China. The purpose of the study is to update the method of monetary conversion of the cost of remuneration for the labor activity of a person. The objectives of the study are: 1. The study of theoretical sources of the subject area; 2. Consideration on a scientific basis of the traditional method of monetary conversion of remuneration for work adopted in the People’s Republic of China; 3. Scientific substantiation of the actualization of the method of monetary conversion of the remuneration of labor activity within the framework of the concept of human capital; 4. Practical approval of the proposed method of monetary conversion of remuneration for work in the activities of the subject of economic relations of the People’s Republic of China. The research methodology is a theoretical and heuristic approach, based on economic methods of cognition.The results of the study are a calculation formula for the method of monetary conversion of remuneration in the form of the cost of future salary in accordance with modern economic and social conditions. The essence of the proposed updating of the method is to divide the income from the monthly remuneration of employees into direct income (salary after taxes, allowances, overtime pay, bonuses, etc.) and indirect income, which is not paid to the employee and is a monthly compulsory national insurance, paid by the company to employees (retirement insurance, health insurance, work injury insurance, unemployment insurance, and maternity insurance). The authors also presented the evaluation of the method at the Chinese enterprise Goertek to calculate the value of the human capital of the enterprise for seven years, and at the same time, the advantages and disadvantages of the improved model in practice were analyzed.