Shanghai’s Minimum Wage to Rise April 1

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The authorities in Shanghai announced that they plan to increase the statutory minimum wage in the commercial capital from April 1, 2018.

Following the increase on April 1, wages for full time workers will be raised from RMB 2,300 (US$363.70) to RMB 2,420 (US$382.67) per month, while wages for part time workers will be raised from RMB 20 (US$3.16) to RMB 21 (US$3.32) per hour.

The five percent increase is identical to Shanghai’s 2017 minimum wage adjustment, but lower than in previous years. Shanghai currently has the highest minimum wage in China, followed by Shenzhen and Beijing.

In 2017, Shanghai’s GDP grew by 6.9 percent, surpassing the RMB 3 trillion (US$467 billion) mark and mirroring the national growth rate. Earlier this year, Shanghai mayor Ying Yong set the city’s GDP growth target at “around 6.5 percent” for the next five years.

Zolzaya Erdenebileg, Business Intelligence Senior Associate at Dezan Shira & Associates in Shanghai, commented, “It’s no secret that wages in emerging Asia are rising quickly. Foreign companies have to make sure that they’re on top of these changes in order to compete in the labor market.”

In China, regional government set minimum wages according to local conditions. This year, several other regions in China have already updated their minimum wages this year, including Guangxi, Jiangxi, Liaoning, Sichuan, and Tibet.

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Employers should expect more regional governments to revise their minimum wage in 2018. Although regional governments typically revise their minimum wage in the first part of the year, last year many were slow to announce reforms and its possible this may have a knock-on effect in 2018.

Employers should further note that minimum wage revisions can be linked to social insurance or other forms of compensation in some areas of the country. HR and payroll professionals should therefore monitor local announcements carefully and prepare to adapt accordingly.

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