In recent years, China’s minimum wage has experienced significant adjustments, leading to higher standards for the lowest-paid workers in various regions. According to data from the Ministry of Human Resources and Social Security, 15 areas in China have set their minimum monthly wages at or above 2,000 yuan as of 1st April 2023. Shanghai currently holds the highest minimum wage at 2,590 yuan, followed by Shenzhen, Beijing, Guangdong, Jiangsu, Zhejiang, Hebei, Tianjin, Shandong, Sichuan, Chongqing, Anhui, Fujian, Hubei, and Henan.
The minimum wage regulations in China allow for different standards within provinces, autonomous regions, and municipalities. These standards are generally set as minimum monthly wages for full-time employees and hourly wages for non-full-time employees. Beijing currently has the highest hourly minimum wage in the country at 25.3 yuan.
The question of whether minimum wage standards include the “Five Insurances and One Fund” (五险一金) — the mandatory social insurance and housing provident fund contributions for individuals — varies across different regions. In most areas, the minimum wage standards do encompass this contribution. Anhui, for example, adjusted its minimum wage standard in March 2023 to include individual contributions for social insurance and housing provident funds, aligning it with other provinces1.
However, minimum wage standards in Beijing and Shanghai do not include these contributions. Employers in these cities must pay these contributions separately, making the minimum wage higher than the stated amount.
When minimum wage standards are raised, they not only directly increase the wages of low-income workers but also have a ripple effect on other benefits. For instance, unemployment insurance benefits, wages during medical leave, probationary period wages, and basic living expenses for workers during company shutdowns or business suspensions tend to increase along with the minimum wage[⁴^]. In Anhui, unemployment insurance benefits are set at 90% of the minimum wage and are adjusted accordingly. With the recent increase in Anhui’s minimum wage, several areas have changed their unemployment insurance benefits.
This upward trend in minimum wage standards could have several implications. For workers, higher minimum wages may improve living standards, reduce income inequality, and stimulate consumption. The higher wage floor could increase labour costs and compel businesses to improve productivity and efficiency.
However, some experts argue that raising the minimum wage could lead to job losses or push companies to cut back on other employee benefits. Additionally, there is a concern that higher minimum wages could contribute to inflation, as businesses may pass on increased labour costs to consumers.
In conclusion, the recent increases in China’s minimum wage standards signify a step towards improving the living conditions of low-income workers. However, it is essential to carefully monitor the potential economic consequences of these adjustments to ensure balanced and sustainable growth.
Reference:
- 长江日报最低薪资(2023.03) https://news.cjn.cn/zjzycsqpd/wh_20023/202304/t4515712.htm
- 人社通各省市最低薪资(2023.03) https://m12333.cn/policy/wrib.html