China and Minimum Wage Essay

The wage level in china has persistently shown an upward trend for the past twenty years (Chiewping, 2009). The economy has developed in a recommendable way, thus enabling the private sector to create several job opportunities. Disparities, however, among industrial sectors, geographical regions and among regular workers have increased considerably. This has resulted to the widening of the gap between the poor and the rich. The high cost of living has caused the wage increment for the lowest paid workers in china to be severely eroded (Yongnian, 2013).

The average working week in China has eight hours per day and five days in a week, amounting to a total of forty hours. The 1994 labor act specifies that work done after the normal standard working time shall be paid as overtime. The overtime, however, should not exceed three hours in a single day (Chiewping, 2009). Wages should be paid to workers on a monthly basis and in a legal tender. Wage deduction and late payment of workers is firmly prohibited.

The labor law on article 48 specifies that the statutory minimum wage should be sufficient enough to sustain the needs of the employee. In March 2004, the ministry of social security and labor in China executed the minimum wage doctrine. The regulations were developed to establish a framework for adjusting and calculating the minimum wage (Zhao, 2010). The guidelines stated that the government should adjust and determine the cyclic minimum wage for full time employees by considering the following factors:

Minimum cost of living for local workers and their dependents.

The demand and supply of labor in the local environment.

Housing fund donations and social security paid by individual workers.

The relative wage of workers in the region.

Consumer or Customer price index of the city dwellers

The stage of economic development.

An extensive collection of minimum wage levels exists across the whole country since local conditions determine the calculations. Coastal regions are characterized by high minimum wages due to their economic strength. The western provinces together with the central regions on the other hand are characterized by low minimum wages. In an attempt to attract migrant labor force, governments in remote regions such as Xinjiang and Tibet have established high minimum wages levels. On May 2013, Shanghai recorded the highest monthly wage level with Shenzhen closely following behind. Anhui region located in the central province recorded the least minimum wage (Chiewping, 2009).

Regulations endorse that 40 to 60% of the regular monthly wage should be set as the minimum wage. Local governments should also embark on the task of carrying out an adjustment review regularly. In the middle of the international economic crisis in 2008, however, the government froze all the increases made on minimum wages (Yongnian, 2013). In 2010, provinces separately started raising their own minimum wages yet again. An average yearly increase of about 22% from 2010 to 2012 was witnessed. The ministry of Social Security and Human Resources reports that around 25 provinces were able to increase their minimum wage by 20.2% in 2012 only .The current five year plan proposed by China is presumed to increase the minimum wage by 13% annually. Sadly many cities are below the benchmark of the plan, which is set at 40%.

Labor intensive factories have made China to be a mega manufacturing economy worldwide. Chinese workers’ wages are still ominously high when compared with other Asian countries such as Vietnam, Bangladesh and Cambodia. Official statistics indicate that for the past one decade the minimum monthly wage for Chinese workers has been increasing overwhelmingly (Zhao, 2010).

These figures, however, do not indicate the type of workers .The groups are from either the geographical regions or industrial sectors. Migrant workers, for instance, have a very low minimum wages when compared to other workers in the country. A Survey conducted by the national bureau of statistics indicated just how migrant workers were lagging behind on the matter of minimum wage. A new hybrid generation of migrant workers has emerged and is unwillingly to be exploited. The new generation has zero tolerance to harsh working environment and poor pay (Chiewping, 2009).

The cohort of young workers is more educated than their parents are. Their education levels have boosted they capability to comprehend the rights they have as workers. The youth have high aspirations expectations and know their rights. Social media has made it possible for them to post their grievances and demands online on matters of labor dispute (Zhao, 2010). The move has made both local governments and management to be under negative publicity due to the matter. To avoid the disgrace the two have tried to have tried to resolve the row in the fastest way possible.

The single child policy has seen the decline of birth rates in China, meaning that very few young workers are getting into the job market. Unlike the past where the supply of migrant workers looking for work in the industries was almost inexhaustible, of late the supply has fallen to unconceivable levels. Employers are being forced to give high wages in order to acquire new staff and maintain existing workers (Yongnian, 2013).

Currently, the supply of youthful workers is very limited in China. The new form of workers is no longer willing to work under pathetic conditions or receive mere unsubstantial wages. Labor shortages have forced manufacturers to either pay higher salaries or move to areas where labor is much cheaper such as Cambodia or Bangladesh. Unfortunately, this positive change of occurrence has not changed the income disparity situation in China. Higher income payees are still much more far ahead economically when compared with low income earners (Chiewping, 2009). Low income payees still use up a disproportionately high amount of their earnings on day to day needs such as housing, transport and food.

The broadening gap between the poor and the rich is an encumbrance that the new leadership has to scrutinize it intensively. Tackling the burden is an issue the new leaders in Beijing have to think about. In 2013 the state council established policies to curb the situation. The policies involved improving the wages of low wage earners and reducing the earnings of top executive officials (Zhao, 2010). The policies are very provoking and may not handle the problem. The most vital issue that is still unsolved is the lack of an efficient health welfare security net. The safety welfare would ensure low wage earners spend more on services and goods instead of saving most of their wages.

China will be forced to establish an innovative collective bargaining system to have decent levels of wages for both low income earners and high income earners. This will be vital since workers and managers will be able to negotiate over appropriate or reasonable salaries and working conditions (Yongnian, 2013). The negotiations will be based on worker productivity, average cost of living, and company profitability.


Yongnian, Z. (2013). Hong Kong under Chinese rule: economic integration and political gridlock. Singapore: World Scientific Publishing press.

ChiewPing, Y. (2009).Minimum Wage Bill = “Zui di gong zi tiao li cao an”. Hong Kong: Hong Kong printing press.

Zhao, L. (2010). The Problem of Reforming the Wage System in Our Country. Journal of the M.E Sharpe, 37(7), 35-54.