Global Times - Chinese local govts mull raising minimum wages

Chinese local govts mull raising minimum wages

Source: Global Times
[00:56 January 28 2010]
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By Chen Yang

With China's economic recovery on track, many local governments are mulling raising minimum wage levels as early as next month.

Beijing will raise its minimum wage level by 10 percent from the current 800 yuan ($117.2) per month as early as April 1, the Beijing Times quoted an anonymous official in Beijing's Department of Human Resources and Social Security as saying Wednesday.

Provinces including Zhejiang and Sichuan as well as cities such as Chongqing, Guangzhou and Dongguan are also considering raising minimum wage levels, after Jiangsu Province initiated a minimum wage adjustment over the weekend.

The provincial minimum wage level will be raised by at least 12 percent starting February 1, the Department of Human Resources and Social Security of Jiangsu Province announced Saturday.

Jiangsu's highest monthly minimum wage will be increased to 960 yuan ($140.64) from the current 850 yuan ($124.53), the same level as in Shanghai and Hangzhou.

The minimum wage level is usually adjusted every two years. The Ministry of Human Resources and Social Security issued a circular November 2008 freezing minimum wag-es at their current levels due to the global financial crisis. Currently the minimum wage ranges from 580 yuan ($84.97) to 1,000 yuan ($146.50) per month around the country.

"The economic recovery and inflationary pressure are encouraging more local governments to raise their minimum wage levels, and it will improve low-income groups' living conditions and boost domestic consumption," said Hu Ronghua, a professor at Nanjing University of Finance and Economics in Jiangsu Province.

China reported an 8.7 percent year-on-year economic growth in 2009, and the Consumer Price Index also rose 1.9 percent in December from a year earlier, according to fig-ures released by the National Bureau of Statistics Thursday.

Hu said the wage adjustment would benefit low-income groups first, then boost domes-tic demand and the economy in the long term.

However, there is controversy over raising the minimum wage level in Dongguan, Guangzhou Province. Currently its minimum wage is 770 yuan ($112.81) per month.

Liu Zhigeng, secretary of the Dongguan Municipal Committee of the CPC, said at a seminar last week that Dongguan's minimum wage level should be raised to solve the employment shortage problem.

Increasing raw material and labor costs will make it difficult for export enterprises to survive, said Liao Yongjia, manager of Dongya Group, a leather bag manufacturer, at the seminar.

"Dongguan's minimum wage level is lower than those of Jiangsu and Zhejiang provinces and should be increased," said Li Youhuan, a researcher at the Guangdong Academy of Social Sciences. "But it is not a good time to raise it now, as many small- and mediumsized labor-intensive enterprises are still struggling to survive."

Li said raising the minimum wage level would not relieve the region's employment shortage, as there are other factors such as technology requirements and social welfare limiting employees' choices.

Hu said the government should cut taxes and offer subsidies to help enterprises reduce financial burdens from increasing labor costs.