The minimum wage system in China is designed to protect the rights of workers and especially those on low incomes. The minimum wage standard is generally adjusted for monthly minimum wage and hourly minimum wage through regional legislation at least every two years. 26 provinces and cities in China have increased their minimum wage standards in 2013.
Minimum wage is the lowest remuneration for work undertaken during standard working hours or in the hours agreed in a legal labor contract, it does not include overtime, special working condition allowances or other special benefits. Since China’s implementation of the minimum wage provision in 1993, 31 provinces have enacted and adjusted the minimum wage standards on a regular basis, and in order to ensure that that each enterprise can implement the minimum wage system exactly, the “Labor Law” and the “Regulation on Monitoring of Labor Protection” also explicitly require that employing units should pay workers’ salaries at a rate not lower than the local minimum wage standard, or face penalties. Strict implementation of the minimum wage is the responsibility of enterprises and is essential to attract and retain employees.
26 Provinces and Cities Raised the Minimum Wage in 2013
In recent years, as the economy has been recovering, States and Provinces have been continuously raising the minimum wage. According to the official data from each Human Resources and Social Security department, while in the first half of 2013, a total of 16 provinces and cities raised the minimum wage standards (SGS safeguard on China 16 provinces have updated the minimum wage 2013 (Jan-May) http://newsletter.sgs.com/eNewsletterPro/uploadedimages/000004/sgs-safeguards-08113-china-16-provinces-have-updated-the-minimum-wage-2013-jan-may-a4-en-13.pdf). Up to 5 December 2013, 26 provinces updated their minimum wage. Further information is listed in Table 1 within the latest SafeGuardS bulletin (http://newsletter.sgs.com/eNewsletterPro/uploadedimages/000006/sgs-safeguards-00614-china-minimum-wage-updates-2013-a4-en-14.pdf).
Updated Minimum Wage Standards
The annual update to the minimum wage is intended to ensure that the living standard for those on low incomes do not decline due to rising prices, but for labor-intensive manufacturing industries, the impact will undoubtedly lead to a new round of cost pressures. It was revealed by the media that recruitment difficulties are more significant in Guangdong, Jiangsu, Shandong and many other cities after the 2013 Spring Festival. According to public data, Wuhan faced an acute labor shortage for the first time reporting a shortage of some 100,000 people, whilst Guangdong was reporting a shortage of up to 1,200,000 people. In order to attract workers, some enterprises have to raise the basic salary above that required in the minimum wage standard. For example, in Shenzhen, the minimum wage standard has been updated every year which in return has increased labor costs, and coupled with rising raw material costs, it has been reported in the local press that some small and medium-sized manufacturers may be considering moving their factories to areas with lower labor costs like Huizhou, and other surrounding areas or even to inland China as a cost-reduction option.
It has also been announced that the Human Resources and Social Security department (bureau) of Shenzhen has launched a public consultation on its official website for the 2014 minimum wage adjustment.
Human Resources and Social Security department (bureau) websites of provinces and cities listed in the table.
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