Most Provincial-Level Governments Issue Hourly Minimum Wage Standards

November 3, 2006

Most of China’s 31 provinces, autonomous regions, and directly-administered municipalities now have hourly minimum wage standards, according to a Ministry of Labor and Social Security (MOLSS) third-quarter work progress report (Report) released on October 25. Only Guangdong province and the Tibet Autonomous Region (TAR) do not, according to the Report. This represents an increase over the end of 2005, when only 23 provincial-level areas had hourly minimum wage standards, according to 2005 statistics published on the MOLSS Web site.

Most of China’s 31 provinces, autonomous regions, and directly-administered municipalities now have hourly minimum wage standards, according to a Ministry of Labor and Social Security (MOLSS) third-quarter work progress report (Report) released on October 25. Only Guangdong province and the Tibet Autonomous Region (TAR) do not, according to the Report. This represents an increase over the end of 2005, when only 23 provincial-level areas had hourly minimum wage standards, according to 2005 statistics published on the MOLSS Web site. Based on those statistics, Fujian, Qinghai, Gansu, Shaanxi, Shandong, and Heilongjiang provinces have since issued hourly minimum wage standards. In addition, the report said that all 31 provincial-level areas have monthly minimum wage standards, the same number as at the end of 2005, according to 2005 statistics published on the MOLSS Web site.

The 2004 Provisions on Minimum Wages (Provisions) require local governments to re-evaluate their minimum wage standards (hourly and monthly) at least once every two years. The Report shows greater local government compliance with the two-year rule for monthly minimum wage standards in 2006 than in 2005. Out of the 20 provincial-level governments due to reconsider their monthly minimum wage standards in 2006, only Jiangxi and the TAR have not done so. In 2005, at least four provincial governments were out of compliance with this rule, according to the MOLSS statistics. The Report did not indicate the level of compliance with hourly minimum wage standards. Provincial-level governments in China have been reluctant to comply with the Provisions, fearing that higher minimum wages would cause companies to relocate manufacturing facilities to provinces where wages are lower, according to a May 9 China Daily editorial.

The Provisions require provincial-level governments to formulate the minimum wage standards for their area, in consultation with local unions and businesses. The MOLSS has two weeks to review draft standards submitted by the local labor and social security bureaus. The standards are deemed approved if the MOLSS does not raise objections during this period. The Provisions set forth a number of factors that provincial governments should consider in calculating the minimum wage, including the average salary, minimum living expenses, unemployment rate, and level of economic development in their area. The China Daily editorial criticized the Provisions, saying "central policy makers should work out a more clearly defined methodology for the calculation of the minimum wage level to ensure it is not artificially low." The editorial also called for closer monitoring of local governments' application of the methodology.

According to the Report, the highest monthly minimum wage is in Shenzhen, at 810 yuan (US$101.25), the highest hourly minimum wage is in Beijing, at 7.9 yuan (US$.99), and the lowest monthly and hourly minimum wages are in Jiangxi, at 270 yuan (US$33.75) and 2.7 yuan (US$.34), respectively. The Provisions allow local labor unions to request that local labor and social security bureaus punish employers who violate the minimum wage regulations, and mandate fines against employers for gross violations of worker health and safety.

For more information on minimum wages in China, see the CECC 2006 Annual Report, Section V(c), Protection of Internationally Recognized Labor Rights: Wages.