Businesses sourcing products from China should be aware of the changes recorded in the rate of the legal minimum wage in 2017. This is the lowest amount it is permissible for an employer to pay a worker. According to “Provisions on Minimum Wage”, the minimum wage should be a monthly minimum wage and an hourly minimum wage. The rules also state it should be updated at least every two years.
In recent years, minimum wage adjustments have tended to be steady and conservative, as demonstrated by the fact only nine regions reported changes in 2016. In general, there has been a drive across the country to introduce more ‘reasonable’ adjustments – from every two years, to every three years. This move reflected the economic downturn experienced in China and the Rest of the World.
The situation has changed in 2017, with twenty regions reporting adjustments to their legal minimum wage. On average the increase has been 9.69% across the whole country but stakeholders should be aware there is a great deal of variation.
The regions with the largest increases are Jilin, in the northeast, which has had an increase of 20.3%, bringing the minimum monthly fulltime wage to CNY1750, and Qinghai, in the western region, which had an increase of 18.1%, bringing the minimum monthly fulltime wage to CNY1500. These are not, however, the regions with the highest rates of legal minimum wage. These continue to be clustered in the coastal eastern area – Shanghai, Shenzhen, Zhejiang, Tianjin, and Beijing – which have all broken through the CNY2000 ceiling. Shanghai has the highest level for minimum wage at CNY2300.
The adjustment in minimum wage is closely related to social and economic developments in the region, which explains the higher minimum wages in the more developed areas of the east. Stakeholders should also be aware that some provinces have also merged grades together, creating one grade. This will distort the figures, meaning a larger percentage increase will be reported. An example of this is Qinghai, which has amalgamated all its monthly minimum wage levels into one amount for the whole province – CNY1500.
Increasing the base level of minimum wages is seen as an important factor in improving the livelihoods of lower-income families. It is thought the increases will also improve wage levels for other positions and overtime pay. Increases in minimum wage levels will also affect government benefits, such as unemployment insurance benefit, which, it is planned, will gradually rise to become 90% of the minimum wage level.
Data on minimum wages is presented by the National Bureau of Statistics (NBS) and the Ministry of Human Resource and Social Security. For a more detailed picture of the minimum wage levels across China, view our Minimum Wage Map.
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