Beijing will raise the minimum wage by 20.8 percent in the new year, becoming the latest local government to lift pay in a country where inflation is running at the fastest clip in more than two years.
The increase to 1,160 yuan (US$175) a month from 960 yuan, the second boost this year, will take effect on Jan. 1, according to a statement from the Beijing Human Resources and Social Security Bureau yesterday. The city will also raise pension and unemployment benefits, the agency said.
Local governments are augmenting wages to head off worker unrest and help households cope with accelerating inflation, which reached a 28-month high of 5.1 percent last month. China’s leaders said earlier this month that boosting incomes is a major task for the nation in its next five-year plan, which starts in 2011.
“This is a belated move, but a good one in the right direction,” said Zhuang Jian (莊健), an economist with the Asian Development Bank’s China resident mission. “Most places froze wage increases during the global financial crisis and now they are just catching up.”
Premier Wen Jiabao (溫家寶) in June called on companies to build “harmonious employment relations” by gradually increasing incomes after labor strikes staged by workers demanding higher pay hit manufacturers such as Honda Motor Co and Toyota Motor Corp.
China last year suspended its requirement that the lowest salaries be increased at least once every two years to help companies weather the impact of the global financial crisis.
Chongqing, the biggest city in western China, said last week that it will raise the minimum wage to 870 yuan a month from 680 yuan. Guangdong Province, the country’s exports hub, may increase the minimum pay early next year to help ease the region’s labor shortage, the China Daily reported on Nov. 30.
Full-time workers’ hourly minimum wage will be raised to 6.7 yuan from 5.5 yuan, while that of part-time workers will be lifted to 13 yuan from 11 yuan, the Beijing government said. The city in July raised the monthly minimum wage from 800 yuan to 960 yuan.
Shanghai, the country’s financial hub, ordered an increase of 17 percent to 1,120 yuan per month earlier this year and Guangdong boosted five local minimum wages in the province by an average 21 percent, with the highest pay increasing to 1,030 yuan.
Rising wages may have a -limited impact on inflation because some of the higher costs can be absorbed by companies upgrading technology and improving efficiency, Zhuang said. Increasing pay may spur domestic consumption and economic restructuring by boosting the share of personal income in the economy, he said, adding that more raises are likely in the coming years.
The share of personal income in China’s GDP has fallen to 39.7 percent from 53 percent in 1999, according to economists at Beijing-based investment bank China International Capital Corp. That compares with 57 percent in the US and 51 percent in Japan, Ha Jiming and Xing Ziqiang wrote in a June report.
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