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Minimum Wages in China
A lot of attention has been focused on the level of wages in China recently, particularly since the extensive media coverage relating to the spate of suicides at Foxconn, the Taiwanese manufacturer with over 300,000 employees in Guangdong Province. One of the consequences has been increased domestic pressure on the government to look at the issue of distribution of income within Chinese society.
One of the measures that a number of local governments have taken has been to increase the minimum wage payable to employees. There is no fixed minimum wage across the whole country - different governments adopt different amounts based on the situation in their area. Hence Guangzhou's minimum wage stands at RMB1,100 - an increase of around 22 percent since early 2009. At the other end of the scale the minimum wage in Xi'an is just RMB760, which is still relatively low compared to other second-tier cities in China like Dalian (RMB920), Shenyang (RMB900), Kunming (RMB830) and even Changchun (RMB820) and Zhengzhou (RMB800). Please refer to the chart on page 6.
One phenomenon that is very clear to see is the tendency for foreign invested companies to locate new operations in cities further out west. Of course the lower minimum wage levels are just one factor in their decision - arguably more important factors in their decisions are the growing necessity to service the domestic Chinese market (rather than just the export market) and the abundance of skilled labor in some of these cities.
To read the full version of this article, please purchase the September 2010 issue of China Briefing, which can be found in the Asia Briefing Bookstore. Companies requiring assistance may contact any Dezan Shira & Associates' nine national offices at china@dezshira.com for advice or visit www.dezshira.com.
