Guangdong Revises Minimum Wage Levels

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Mar. 6 – The People’s Government of Guangdong released the “Notice on Adjusting Minimum Wage Levels for Employees in Guangdong Province (efuhan [2013] No. 27, hereinafter referred to as ‘Notice’)” on February 25, which raises the minimum wage levels across the province by an average of 19.1 percent from May 1, 2013. Detailed information can be found below.

According to the Notice, the new monthly minimum wage in Guangdong’s capital city of Guangzhou will jump by 19.2 percent from RMB1,300 to RMB1,550. At the same time, Guangzhou’s minimum hourly wage will increase from RMB10.5 to RMB15.

Minimum wages in “Class B” cities such as Zhuhai, Foshan, Dongguan and Zhongshan will rise to RMB1,310 a month and RMB12.5 per hour, while “Class C” and “Class D” cities will see their minimum wage levels increase by 19 percent to RMB1,130 and RMB1,010 respectively.

According to Han Zhipeng, a member of the Guangzhou People’s Political Consultative Conference, the Guangdong government has actually violated the central government’s requirement to raise the minimum wage at least once every two years. The last time Guangdong adjusted its minimum wage level was March 2011, which means that these updated wage levels should have come into effect from March this year, not by May.

Officially announcing the minimum wage increase news right after the Spring Festival is part of the local government’s efforts to attract migrant workers back to the region. The early-February Spring Festival sent an estimated 10 million migrant workers from Guangdong back to their hometown, which accounts for roughly 60 percent of all the migrants in the province.

Guangdong Province is currently facing a labor shortage of 1.2 million workers. The demand for workers in the province grew by 15.2 percent year-on-year at the end of last year, and it will continue to rise in the short-term with the stabilization of the economy.

However, with rising costs and the recent labor shortage in Guangdong, it has been reported that Foxconn and several of its chief competitors, including Quanta Computer, Pegatron, and Wistron, are considering opening new plants in western China and elsewhere in emerging Asia.

Update (March 11, 2013): Shenzhen raises monthly minimum wage levels to RMB1,600 per month, hourly minimum wage levels to RMB14.5.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

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