Only two cities, Shanghai and Shenzhen have set their own minimum wage in 2017, although all regional governments are authorized to do so, and this usually occurs within the first half of the year.
Three provinces, Shandong, Fujian and Shaanxi have also followed suit and set a new minimum wage for 2017.
This reluctance by the majority of regional governments to increase the minimum wage seems to reflect the concern to keep wages in check, especially as the economy in China slows, and they strive to maintain a competitive edge.
Employers in the regions that have increased the minimum wage, will need to check if this has affected their payroll, which will then have a knock on effect for the Compensation and Benefits, C & B (social welfare) contributions.
Shanghai increased its minimum wage by 5% to RMB 2,300 effective 1st April 2017. This represents the lowest percentage increase over the last five years. The minimum hourly rate also increased, from RMB 19 to RMB 20. Shanghai continues to have the highest minimum wage, both monthly and hourly in China.
Shenzhen meanwhile increased its minimum wages to RMB 2,130 monthly and RMB 19.5 hourly, making them the second highest minimum rates after Shanghai. These changes were also effective from 1st April 2017.
The rest of Guangdong province currently has a minimum wage freeze for 2017, Shenzhen acts autonomously to the rest of the province.
The three Provinces that increased the minimum wage operate a group system, effectively separating the Tier cities.
For instance in Shandong from 1st June 2017 group A cities like Qingdao, Jinan and Yantai now have a minimum monthly wage of RMB 1,810, while the minimum hourly rate is RMB 18.1. In group B cities Jinning and Binzhou the rates are RMB 1,640 and RMB 16.4 respectively. Group C cities are RMB 1,470 monthly and hourly RMB 14.7.
In Fujian they have increased wages for the first time since 2015, and have increased the grouping to five groups. Xiamen is group A at RMB 1,700 monthly and RMB 18 per hour. Similarly alone in group B is Fuzhou at RMB 1,650 and 17.5. Group C includes Quanzhou and Zhangzhou at RMB 1,500 and RMB 16. Group D RMB 1,380 and RMB 14.6 and finally Group E RMB 1,280 and RMB 13.6.
Shaanxi province has four groups and also increases the wage for the first time since 2015, with Xi’an alone in group A with RMB 1,680 monthly and hourly at RMB 16.8. Group B (includes Yan’an and Huayin) RMB 1,580 and RMB 15.8. Group C is RMB 1,480 and RMB 14.8 and lastly group D at RMB 1,380 and RMB 13.8 respectively.
Although these increases will be welcomed by the very lowly paid, the fact remains that the vast majority of the Chinese working population earns well above the minimum wage, and wages continue to increase. In 2016 the average wage in 34 cities throughout China equaled RMB 7,605.