Recent Trends in China’s Minimum Wage

SHENZHEN, China - Jan. 27, 2016 - PRLog -- Minimum Wage as a Tool

Legal minimum wages are the lowest amount employers can pay employees based on work performed within the legal standard working hours or specific working hours in a legal contract. Based on local living costs and industry standards, this minimum wage is adjusted by forward thinking companies to guarantee employees’ basic living standards and discretionary spending, and to reduce worker turnover and ensure that the workplace remains attractive to potential employees.

Ministry of Human Resources Reports on Minimum Wage Developments

Since the new minimum wage was implemented in China in 2004, the minimum wage standard has been required to be adjusted at least every 2 years in each region. According to the Ministry of Human Resources, the increase in minimum wages in 2015 showed a declining trend, with an average increase of about 10%, which is the lowest in recent years. Despite the downward pressure of the current economy, an increasing number of regions have applied an upward adjustment to minimum wages, indicating that regions are paying more attention to livelihood indicators such as the income of residents.

According to the official data from each Human Resources and Social Security department, a total of 12 provinces and cities raised minimum wage standards in the first half of 2015  (click to view SGS safeguard on China 12 provinces have updated the minimum wage 2015 (Jan-May) (http://newsletter.sgs.com/eNewsletterPro/uploadedimages/0...)), and a further 15 provinces and cities had raised their minimum wage by December 1st, 2015.

An overview can be found in Table 1: 2014-2015 Minimum Wage Updates (ranked by wage level) (http://www.sgs.com/en/Our-Company/News-and-Media-Center/N...) of the latest Safeguards bulletin.

From the above table, it can be seen that monthly minimum wage payments in Shenzhen and Shanghai have broken through CNY2000, with Shenzhen the highest paying region in China at CNY2030, whereas the lowest minimum wage in Hainan is CNY1270.  Up to now, minimum wages have not been adjusted in Hebei, Liaoning, Jiangsu and Qinghai. It should be noted that the 2013 minimum wage standard is still used in Liaoning province, which doesn’t comply with the stated policy on minimum wage.

Lower Paying Jobs Most Affected

In recent years, with the accelerated pace of adjustment of the minimum wage, the minimum wage in some places in West China has even exceeded those in some eastern provinces. For example, the minimum wages in Guizhou, Inner Mongolia, and Sinkiang are equivalent to or even higher than the minimum wage in Shandong and Fujian. This shows that in developed regions, residents are generally working in higher paid industry so that the monthly income is well above the minimum wage. However, in many remote areas there is no big gap between different jobs, and the majority are working in lower paid jobs, thus the minimum wage requirement has a bigger effect.

Monthly Income Among Factors Affecting Minimum Wage

The adjustment of the minimum wage is based on comprehensive factors such as cost of living, employment conditions, and so on.  The economic slowdown and the labor demand has declined, which indicates a contradictory force between labor shortage and low employment. Currently, some larger manufacturers are moving into inland cities such as Wuhan, Zhengzhou in order to attract more workers with good skills. This is causing employment gaps in these cities, which then need to pay a higher minimum wage than the surrounding area.  Due to the slower growth of the Chinese economy, the government is set to keep increasing the minimum wage but will control the increments accordingly.

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