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BEIJING, Jun. 22 – The Beijing municipal government has raised the monthly minimum wage in the city to RMB960, effective from July 1.
The notice, issued June 4, raises the monthly minimum wage to RMB960, up from RMB800, and the hourly minimum wage to RMB5.5, up from RMB4.6.
Furthermore, the notice stipulates that social security fees, housing funds, overtime wages, allowances or subsidies for meals, transportation and housing for working in special work environments, or conditions such as night shifts, high temperatures, or working underground should not be regarded as components of standard minimum wage.
The part-time hourly minimum wage was raised from RMB9.6 to RMB11, during national holidays the minimum hourly wage was increased from RMB22 to RMB25.7.
The notice was implemented in accordance with the “Green Beijing” concept which aims to maintain social stability and promote economic development.
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These are wage hikes (against minimum wage) of 20% for permanent workers and 19.56% for hourly rates respectively. That is currently eight and a half times of China’s official inflation rate of 3.1%. There’s no justification for it on an economic basis, especially as China has said it has suffered from a downturn of buying from the US and Europe, so employers volumes and profits are also down. The only reason therefore is the ‘social stability’ aspect – somewhat unique to China as a one-party state – purely to put more money in workers pockets than in businesses to keep them happy. The dividing line between when raises such as these are not enough and Chinese workers start striking and demanding more than factories can afford is going to be an interesting one to assess. It’s going to be a very close call by the Government for social stability over commerce and the demand for profits, and some major corporate casualties must be on the horizon both in China and for foreign investors. It’s the beginning of the work environment getting scary out there. – Chris