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SAFEGUARDS | Labor Standards NO. 219/15

Legal minimum wages are the lowest amount which the employers can pay to the 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 the employees’ basic living standards and discretionary spending and to reduce worker turnover and ensure that the workplace remains attractive to potential employees.

Since the new minimum wage was implemented in 2004, the minimum wage standard was 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 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 the minimum wage standards in the first half of 2015 (click to view SGS - SafeGuardS 080/15: China 12 provinces have updated the minimum wage 2015 (Jan-May)), and a further 15 provinces and cities raised their minimum wage by December 1st, 2015.

Table 1: 2014-2015 Minimum Wage Updates (ranked by wage level)

Region Provinces/cities Effective date Monthly(fulltime)
2014 (CNY) 2015 (CNY) Increase rate(%)
Eastern Region Shenzhen 2015/3/1 1808 2030 12.3%
Shanghai 2015/4/1 1820 2020 11%
Guangdong 2015/5/1 1550 (2013 data) 1895 22.3%
Zhejiang 2015/11/1 1650 1860 12.7%
Tianjin 2015/4/1 1680 1850 10.1%
Beijing 2015/4/1 1560 1720 10.3%
Shandong 2015/3/1 1500 1600 6.7%
Fujian 2015/7/1 1320 (2013 data) 1500 13.6%
Hainan 2015/1/1 1120 (2013 data) 1270 13.4%
Northeast Region Heilongjiang 2015/10/1 1160 (2012 data) 1480 27.6%
Jilin 2015/12/1 1320 (2013 data) 1480 12.1%
Central Region Shanxi 2015/5/1 1450 1620 11.7%
Henan 2015/7/1 1400 1600 14.3%
Hubei 2015/9/1 1300 (2013 data) 1550 19.2%
Anhui 2015/11/1 1260 (2013 data) 1520 20.6%
Jiangxi 2015/10/1 1390 1530 10.1%
Hunan 2015/1/1 1265 (2013 data) 1390 9.9%
Western Region Sinkiang 2015/7/1 1520 (2013 data) 1670 9.9%
Inner Mongolia 2015/7/1/td> 1500 1640 9.3%
Yunnan 2015/9/1 1420 1570 10.6%
Guizhou 2015/10/1 1250 1600 28%
Sichuan 2015/7/1 1400 1500 7.1%/td>
Ningxia 2015/11/1 1100 (2012 data) 1480 34.5%
Shanxi 2015/1/1 1280 1480 15.6%
Gansu 2015/4/1 1350 1470 8.9%
Guangxi 2015/1/1 1200 (2013 data) 1400 16.7%
Tibet 2015/1/1 1200 (2012 data) 1400 16.7%

 

From the above table, it can be seen that monthly minimum 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, the 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”.

In recent years, with the accelerated pace of adjustment of the minimum wage, the minimum wage in some places in West China even exceed 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 in such remote areas.

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. Recently, some larger manufactures are moving into in land 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 China economy, the government is set to keep increasing the minimum wage but will control the increments accordingly.

Data source: Human Resources and Social Security department (bureau) websites of provinces and cities listed in the table

Table design: SGS SAS

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