SAFEGUARDS | Labor Standards NO. 174/16

According to the new Provisions on Minimum Wage, the minimum wage usually has 2 types- the monthly minimum wage and hourly minimum wage, and it should be updated at least every two years. In recent years, the local minimum wage in China has been steadily increasing and in some cases rates have been revised annually.

The official data from National Bureau of Statistic (NBS) & the Ministry of Human Resource and Social security showed that 27 regions increased the minimum wage with an average increase rate of 14.6% in 2015. However in 2016, only 9 provinces including Liaoning, Jiangsu, Chongqing, Shanghai, etc adjusted their minimum wage with an average increase rate of 11.2% up to November 1, 2016, which is less than the previous year and is the lowest increase rate in recent years.

Table 1: 2015-2016 Minimum Wage Updates (ranked by wage level, the province and cities which adjusted the minimum wage in 2016 showed in bold)

Region Provinces/cities Effective date Monthly(fulltime)
2015 (CNY) 2016 (CNY) Increase rate(%)
Eastern Region Shenzhen 2015/3/1 2030
Shanghai 2016/4/1 2020 2190 8.4%
Guangdong 2015/5/1 1895
Zhejiang 2015/11/1 1860
Tianjin 2016/7/1 1850 1950 5.4%
Beijing 2016/9/1 1720 1890 9.9%
Jiangsu 2016/1/1 1630 (2014 data) 1770 8.6%
Shandong 2016/6/1 1600 1710 6.8%
Fujian 2015/7/1 1500
Hainan 2016/5/1 1270 1430 12.6%
Northeast Region Heilongjiang 2015/10/1 1480
Jilin 2015/12/1 1480
Liaoning 2016/1/1 1300 (2013 data) 1530 17.7%
Central Region Hebei 2016/7/1 1480 (2014 data) 1650 11.4%
Shanxi 2015/5/1 1620
Henan 2015/7/1 1600
Hubei 2015/9/1 1550
Anhui 2015/11/1 1520
Jiangxi 2015/10/1 1530
Hunan 2015/1/1 1390
Western Region Chongqing 2016/1/1 1250 (2014 data) 1500 20%
Sinkiang 2015/7/1 1670
Inner Mongolia 2015/7/1 1640
Yunnan 2015/9/1 1570
Guizhou 2015/10/1 1600
Sichuan 2015/7/1 1500
Ningxia 2015/11/1 1480
Shanxi 2015/1/1 1480
Gansu 2015/4/1 1470
Guangxi 2015/1/1 1400
Tibet 2015/1/1 1400
Qinghai 2014/5/1 1270 (2014 data)

From the above table, it can be seen that there is a broad spread in minimum wages raging from Shanghai with the highest monthly minimum wage of RMB 2190 to Qinghai with the lowest minimum wage of RMB1270.  While only 9 provinces have implemented increases this year, with an average of 11.2%, some regions had higher increases with the highest rates in Jiangsu at 20% and Chongqing at 17.7 %, however this relatively higher rate is due to the fact that there has been no adjustment in the last 2 years.  In the meantime, the minimum wage in Shanghai and Beijing is “net income”, which means after deduction of social insurance and housing fund. So the employing unit will face additional costs in accordance with the latest regulations.

The minimum-wage levels of all the provinces and cities have seen large rises since implementing the Provision on Minimum Wages since 1 Mar, 2004.  At this stage, there is great downward pressure on the Chinese economy and the profitability of enterprises.  During the current period of economic downturn, some local governments have started to adjust their minimum wage in smaller increments and  to change extend the adjustment period for minimum wages from every 2 years to every 2 or 3 years, taking into account labour costs and profitability of enterprises.  For example, on 29 Feb, 2016, the government of Guangdong province issued its “Action Plan on Supply Side Structural Reform and Cost Reduction in Guangdong 2016-2018”, which proposes to build the minimum wage-adjustment mechanism taking into account the level of economic development. In this situation, Guangdong will suspend increasing the minimum wage in this year and next year.

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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