With China’s growing economy, worker’s expectations on salary are rising all the time. So too is their cost of living. The government periodically adjusts the minimum wages to cope with these changes. Minimum wages in China are decided at the provincial level. The Department of Labor and Social Security tracks a large number of economic development indicators: the local cost of living, the CPI, the housing funds, the unemployment rate as well as the area’s level of economic development and many others before issuing locally a minimum wage. China’s level of development and cost of living varies widely across the mainland. See Graph for breakdown by province for 2009 & 2010.
For info, RMB 1000 is currently worth US$ 147 as of August, 2010. Setting higher Minimum wages in China provide for better standards of living for employees. Compensation for their work has risen in 21 out of 31 mainland provinces in the first half of 2010. It is expected that the other provinces will follow these moves by the end of the year. Although raising wages every year may seem disruptive to business, China is still extremely competitive globally – proven by their strong GDP growth Year on Year.
The minimum wages are introduced by the local governments and communicated through major newspapers. Each company has to notify its employees within 10 days after the announcement. Gaps however remain between the period of announcement and the actual implementation of the law. Many factories will try to get around these laws by forcing overtime work at lower rates but the acute labour shortages these days give a lot more bargaining powers to employees.
Urban areas and areas along the Eastern Coast naturally have the highest wages with wages declining in provinces moving inland. As wages increase buying offices are increasingly pushing production to factories in lower cost regions.
See also articles on Hokou & getting visas for China and general Blog Category of China Living. (Syndicated on the PPI Blog).
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With a Rep office in Shanghai, on average you are paying more than 2 times the basic salary once you take into account Taxes & HR fees.
For more related info, have a look at our Blog on Hukou & associated taxes. https://www.theodmgroup.com/2010/08/24/what-is-the-hukou-system-in-china/
Not an inconsiderable amount.
Guangdong (Canton) http://www.list-china.com/Guangdong.php Government just announced that effective March 1st, 2011, the minimum wage for Dongguan will increase from RMB920 to RMB1,100.
This represents a 19.6% increase. Expecting lots more changes post CNY.
Shanghai Labor and Social Security Bureau, in cooperation with the General Labour Union, Confederation of Enterprises, and Entrepreneur Association, annually publishes the Salary Increase Guideline.
The guideline is created by considering the economic development of the city, consumer prices, employment, labor costs and wage levels. It includes guidance on average, upper, and lower level wage increases and is a useful reference for enterprises to determine salary increases and compensation distribution.
The key points of the guideline are:
Recommended average wage increase is 11%; upper limit wage increase is 16%; the minimum wage increase should be no less than 4%
Enterprises should establish a mechanism for normal wage increases including negotiations to set reasonable levels of wage growth across different positions
Enterprises in stable financial operation and with average economic returns are recommended to increase the employees’ wages according to the average guideline of 11%. Those with average wages lower than 60% of the city average should increase wages by 16%
When determining wage increases, focus should be given on improving the wages of front-line workers. Increases in front-line worker wages should be no less than the average increase in the company. In cases where front-line workers wages are not increased, management should also not receive an increase in wages