By Julia Gu
May 25 – Recently, soaring costs in China’s traditional manufacturing clusters, including land prices, tightening environmental regulations, and wage overheads, have been posing challenges for manufacturers.
The Chinese government is apparently shifting from creating preferential policies for foreign investors towards instead favoring its local labor pool due to the country’s widening income gap. In addition, wage hikes will boost domestic consumption to keep the country’s economy expanding while overseas markets remain weak.
To that end, China’s Ministry of Human Resources and Social Security revealed the latest minimum wage levels across China in a press conference last month. The table below shows that most provinces and cities have set up minimum wage levels of more than RMB1,000.
The minimum wage levels of each province, municipality, and autonomous region are set in accordance with each region’s local conditions.
Under the Minimum Wage Law of the PRC, provinces should revise the minimum wage levels on an annual basis, but some provinces, such as Hainan and Tibet, have not changed their minimum wage levels since July 2010. Last year, the Ministry of Human Resources and Social Security reported that as of December 2011, 24 provinces and cities had raised minimum wage levels at an average growth rate of 22 percent.
Sources say that Hainan and Tibet are in the process of revising their minimum wage levels, as well.
Dezan Shira & Associates is a specialist foreign direct investment practice and can advise international companies investing in China on the country’s complete legal, tax and operational issues. The firm was established in 1992 and maintains 12 offices throughout China, in addition to practicing in Hong Kong, India, Vietnam and Singapore. For advice on all matters of China HR, payroll and costs, please contact the firm at firstname.lastname@example.org or visit our web site at www.dezshira.com.
Human Resources and Payroll in China (Third Edition)
A firm understanding of China’s laws and regulations related to human resources and payroll management is essential for foreign investors who want to establish or are already running foreign-invested entities in China. This guide aims to satisfy that information demand, while also serving as a valuable tool for local managers and HR professionals who may need to explain complex points of China’s labor policies in English.
Social Insurance and Payroll
In this issue, we take a “back to basics” approach to China’s mandatory benefits. Where, exactly, is that extra 35-40 percent on top of an employee’s salary going? What are social insurance contribution rates, base amounts, and tax exemptions? How does all of this figure into the payroll process? We next look at mandatory benefits as a piece of the larger payroll puzzle, with highlights on two very China-specific pieces: FESCOs and hukou, China’s “domestic passport.”
<a href=”http://www.china-briefing.com/news/2013/01/28/a-complete-guide-to-chinas-minimum-wage-levels-by-province-city-and-district.html” target=”_blank”><strong>Update (January 28, 2013)</strong>: See our most recent – and more comprehensive – article on China’s minimum wage levels by clicking here.</a>