China minimum wage, what it is? In Beijing, the minimum wage for a factory worker was 3.75 USD per hour in 2022, and it will be at least 5.20 USD per hour in Shanghai and Guangzhou. China is slowly transitioning from a cheap labor economy to a service-based economy, and wages are increasing in tandem with prices. This article provides a quick overview of changes in China minimum wage since 2016.
Average annual salary in urban China
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According to the Bureau of Statistics, the average annual salary of non-private sector employees in urban China reached 14.38 USD in 2020, a modest increase of 6.8 percent compared to the previous year. The salary of non-private sector employees in China accounted for about 53 percent of the total increase in wages in the country. The report also showed that the income levels of workers in different sectors differed widely, with the IT sector earning an average of 26.300 USD and those in the agricultural sector making less than forty-six hundred dollars.
While the rise of the average annual salary of non-private sector employees in urban China has been slow, the increase in the salary of employees in certain sectors has been quite strong. Those working in the non-private sector’s capital market services sector saw their average salary increase by 21.2% in the year 2019. Meanwhile, the growth rate for employees in the private sector (hospitality and catering industry) rose by 9.8% and 10.8 percent, respectively.
Minimum wage levels in different provinces
China minimum wage levels vary from province to province. Local governments update these minimum wages each year. The minimum wage in Shanghai is currently 358USD a month, or about 20 cents an hour, while it may be as low as 192 $ in Sichuan or Liaoning. The amount of minimum wage will depend on the province as well as the cost of living and the supply and demand of labor.
The government of China has been raising minimum wages in various provinces, and this is expected to continue for years to come. In 2021, the government of Beijing announced plans to raise China minimum wage standards in each province, starting as early as January. These wage increases are part of China’s Employment Promotion Plan, which mandates that the minimum wage is raised every two years. As such, minimum wages in different provinces will likely vary.
Impact of minimum wage on labour costs in China
China’s low wages are a common source of controversy. In 2004, average manufacturing wages in China were $141 compared to $342 in Mexico and over $2,600 in the US. China minimum wagevary considerably across cities due to the decentralised setting of minimum wages. This endogeneity problem is further compounded by the fact that local authorities may fix minimum wages based on economic conditions, not on national average wage levels.
While there are differences in the minimum wage, many Chinese provinces have introduced minimum wages to curb the pressure on poorly performing firms. In Guangdong province, for example, the government issued a directive to increase the minimum wage by 8.5% for the better performers. The province will maintain the previous minimum wage level for 2016 and 2017. However, other Chinese provinces have frozen their minimum wages for the next two years. For example, in Heilongjiang and Liaoning provinces, no increase in minimum wages has been implemented since 2013.
Changes in minimum wage since 2016
A slow economic recovery has contributed to the reduction of wages in China, with four provinces and four major municipalities seeing only 10.7 percent increases in the minimum wage per month. Still, Shanghai remains the city with the highest minimum wage in the country, with workers being entitled to 324$ per month, while Shenzhen and Guangzhou have lowered theirs to 280$ per month. And while the MOHRSS only requires adjustments to the minimum wage every two to three years, many provinces didn’t make any changes this year.
Moreover, China minimum wage levels vary considerably within provinces. For instance, Anhui province had the lowest relative minimum wage in the country in 2004, while Jiangxi province had the highest relative minimum wage. Within-province variations in the minimum wage are much larger than between provinces. For instance, the minimum wage in Tianjin province is 15 percent higher than in Hubei province.
Impact of minimum wage on living allowance
Minimum wage levels have increased in multiple Chinese provinces since the beginning of the year. As China’s economy continues to recover from COVID-19, minimum wage standards have also increased. In recent months, statutory minimum monthly wages in Jiangxi, Heilongjiang, Shaanxi, and Xinjiang provinces have all increased. In July, a minimum monthly wage of 1,850 RMB was introduced in the Tibet autonomous region. In August, Beijing will increase its minimum monthly salary to 2,320 RMB.
The government issued legislation in 1994 that required employers to pay no less than the local minimum wage. It stipulated that minimum wage standards should be set by each government in line with five principles. The minimum wage must synthesize five factors: the lowest living costs of workers, average number of dependents, labor productivity, local employment and level of economic development. The legislation provided considerable latitude for local governments to set minimum wage standards, including those that promote economic development and attract foreign investment.
İf you want to learn Chicago minimum wage, you can click on it.
China Minimum Wage Conclusion
China minimum wage is not a new issue anymore. It always has some fire-starter issues and people are very focused on it now. For example, the General Secretary of Trade Union claimed that there are many factories in Guangdong Province asked their employees to work over the statutory working hours every day at that time. And recently, minimum wages in China have been raised several times and it will go up again in this Lunar New Year Festival, I predict that it might be over 3000 CNY by 2022.
China Minimum Wage FAQ
What is China’s minimum wage in USD?
China minimum wage varies by locale. In Liaoning, it’s RMB 1,120 per month or RMB 10.6 per hour; while in Shanghai the minimum wage is RMB 2,420 per month or RMB 21 per hour.
What is the minimum wage in China 2022?
China minimum wage is set locally,ranging from RMB1,000 per month in Guangxi to RMB2,190 per month in Shanghai. China’s minimum wage was last changed in 12-Nov-2016.
How much do Chinese make per hour?
According to a salary survey, a factory worker’s salary in China is $5.51 per hour. That’s pretty cheap compared with the US and Germany.