Beijing raises minimum wage, Shenzhen to follow next month

The Beijing municipal government increased the capital’s minimum wage by 8.6 percent on 1 January this year, and the Shenzhen government has announced it will increase its minimum wage to 1,500 yuan a month on 1 February, making it once again the highest minimum wage in China.

The announcements follow an apparent postponement of a minimum wage increase in Guangdong, after lobbying from local and Hong Kong business interests, and now could put pressure on the provincial government to reconsider, especially since the difference in the minimum wage in Shenzhen and neighbouring Dongguan will be 400 yuan a month after the Chinese Lunar New Year.

Beijing increased its monthly minimum wage by 100 yuan a month to reach 1,260 yuan, with the hourly rate increasing from 13 yuan to 14 yuan. This is the municipality’s third minimum wage increase in the last two years and represents an overall increase in the monthly minimum wage of more than 50 percent since the first half of 2010.

However, the most recent increases in Beijing and Shenzhen are noticeably lower, in percentage terms, than the increases of 2010 and 2011. According to figures released by the National Human Resources and Social Security Working Group at the end of December, the average increase of the 24 provinces that raised the minimum wage in 2011 was 22 percent.

It seems likely, given the gradual easing of inflation and the economic difficulties faced by some manufacturers that this year’s minimum wage increases will be less than 20 percent. However, it is still important to note that at current levels, the minimum wage cannot be considered a living wage, and employees are still dependent on overtime and allowances to make a decent living.
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