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SAFEGUARDS | Labor Standards NO. 121/17

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Over the past two years, minimum wage adjustments have tended to be steady and conservative. In 2017, 11 provinces have increased minimum wage levels by an average of 9%.

The legal minimum wage is the lowest amount which the employers may pay to employees for work performed within the legal standard working hours or specific working hours in accordance with their employment contract. According to the new Provisions on Minimum Wage, the minimum wage is one of 2 types- the monthly minimum wage and hourly minimum wage, the monthly minimum wage applies to full-time employees, and the hourly minimum wage applies to others such as part-time and temporary employees. Over the past two years, minimum wage adjustments have tended to be steady and conservative. The official data from National Bureau of Statistic (NBS) & the Ministry of Human Resource and Social Security showed that 19 regions increased the minimum wage in 2014 and 27 regions in 2015. However in 2016, only 9 regions raised the minimum wage. So far this year, some provinces and cities have fined the minimum wage adjustment mechanism to provide further protections, for example, Anhui province has refined the minimum wage rules to guarantee workers’ right to appeal and arbitration application.

As of July 1, 2017, 11 provinces and cities have updated their minimum wages.  Further information is listed in the following table: (sorted by Class area from highest to lowest)

Provinces/cities Class Effective date Monthly (full-time) Hourly (part-time)
2017 (CNY) 2016 (CNY) Increase rate (%) 2017 (CNY) 2016 (CNY) Increase rate(%)
Shanghai A 2017/4/1 2300 2190 5% 20 19 5.3%
Shenzhen A 2017/6/1 2130 2030 (2015data) 4.9% 19.5 18.5 (2015data) 5.4%
Tianjin A 2017/7/1 2050 1950 5.1% 20.8 19.5 6.7%
Jiangsu A 2017/7/1 1890 (not include Suzhou) 1770 (not include Suzhou) 6.8% 17 (not include Suzhou) 15.5 (not include Suzhou) 9.7%
B 1720 1600 7.5% 15.5 14 10.7%
C 1520 1400 8.6% 13.5 12 12.5%
Shandong A 2017/6/1 1810 1710 5.8% 18.1 17.1 5.8%
B 1640 1550 5.8% 16.4 15.5 5.8%
C 1470 1390 5.8% 14.7 13.9 5.8%
Fujian A 2017/7/1 1700 1500 (2015data) 13.3% 18 16 (2015data) 12.5%
B 1650 1350 (2015data) 22.2% 17.5 14.3 (2015data) 22.4%
C 1500 1230 (2015data) 22% 16 13 (2015data) 23.1%
D 1380 1130 (2015data) 22.1% 14.6 12 (2015data) 21.7%
E 1280 --- --- 13.6 --- ---
Guizhou A 2017/7/1 1680 1600 (2015data) 5% 18 17 (2015data) 5.9%
B 1570 1500 (2015data) 4.7% 17 16 (2015data) 6.3%
C 1470 1400 (2015data) 5% 16 15 (2015data) 6.7%
Shaanxi A 2017/5/1 1680 1480 (2015data) 13.5% 16.8 14.8 (2015data) 13.5%
B 1580 1370 (2015data) 15.3% 15.8 13.7 (2015data) 15.3%
C 1480 1260 (2015data) 17.5% 14.8 12.6 (2015data) 17.5%
D 1380 1190 (2015data) 16% 13.8 11.9 (2015data) 16%
Gansu A 2015/1/1 1620 1470 (2015data) 10.2% 17 15.5 (2015data) 9.7%
B 1570 1420 (2015data) 10.6% 16.5 15 (2015data) 10%
C 1520 1370 (2015data) 10.9% 15.9 14.4 (2015data) 10.4%
D 1470 1320 (2015data) 11.4% 15.4 13.9 (2015data) 10.8%
Hunan A 2017/7/1 1580 1390 (2015data) 13.7% 15 13.5 (2015data) 11.1%
B 1430 1250 (2015data) 14.4% 13.4 11.9 (2015data) 12.6%
C 1280 1130 (2015data) 13.3% 12.4 11.4 (2015data) 8.8%
D 1130 1030 (2015data) 9.7% 11.6 10.7 (2015data) 8.4%
Qinghai A 2017/5/1 1500 1270 (2014data) 18.1% 15.2 12.9 (2014data) 17.8%
B -- 1260 (2014data) -- -- 12.8 (2014data) --
C -- 1250 (20154ata) -- -- 12.7 (2014data) --

For detailed information on the different regions, cities and towns, please refer to: SGS China’s Minimum Wage Map [1], or download the App.

SafeGuardS 0802 Figure 1

From the above table, it can be seen that monthly minimum payments in Shanghai, Shenzhen and Tianjin have broken through the CNY2000 ceiling with Shanghai the highest paying region in China at CNY2300. In fact, Shanghai has adjusted the minimum wage at least once a year except in 2009. Moreover, it is also clearly stipulated that the minimum wage in Shanghai doesn’t include “social insurance and housing fund paid by individual”, the employing unit is required to pay additional costs in accordance with the regulations. It is noteworthy that Shanghai will issue guidelines on wage levels for some positions to establish a labour cost monitoring system in the manufacturing industry this year.

For the provinces and cities detailed above, the minimum wage of all A-Class districts has exceeded CNY1500. In addition, some provinces not included in Class A have made increases and for example Suzhou which is not in Class A has increased the minimum wage to CNY1940 which is higher than the wage of Class A areas in Jiangsu province. Most regions have had higher increases; but this is mainly due to the fact that there has been no adjustment in the last 2 years. Qinghai has adjusted the class from C to A, which has resulted in a large adjustment with an average increase of 19%. Meanwhile, Qinghai has not adjusted their minimum wage levels since 2014 which is not in accordance with requirement that minimum wages in China are updated at least every two years.

Every province and city’s hourly minimum wage has been adjusted accordingly. Tianjin’s hourly minimum wage takes the lead with CNY20.8/hour, and Shanghai is ranked 2nd with CNY20/hour. In addition, there is a big differential in the hourly minimum wage in Fujian and Jiangsu. Data shows a gap of CNY4.4 per hour between Class A and Class E in Fujian, and CNY3.5 between Class A and Class C in Jiangsu.

In accordance with the regulations, the minimum wage standard adjustment frequency is at least once every two years, the provinces in the adjustment of the minimum wage should take into account a comprehensive review, including rising prices and employment conditions and other factors. At this stage, there is great downward pressure on the Chinese economy and the profitability of enterprises.  During this current period of economic downturn, some local governments have started to “adjust minimum wage range reasonably” and to extend the adjustment period for minimum wages from every 2 years to every 2 or 3 years, taking into account labour costs and the profitability of enterprises. Some provinces are now looking at introducing measures to slow down growth and make it more sustainable. For example, Sichuan and Guangdong have stated that they will suspend increasing the minimum wage and keep using the 2015 minimum wage standard in this year.

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

Table design: SGS SAS [2]

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