Minimum Wage in China Heading Up as Income Gap Shrinks

While taking steps to control inflation the Chinese government also has plans to raise the basic salary of Chinese workers over the next several years so that the wage gap between China’s average employees and its poorest workers will steadily shrink. The goal is to put more people into the middle-class category, further stimulating economic growth and increasing consumer power, a welcome development for investors in the Chinese economy like Benjamin Wey of the New York Global Group (NYGG.)

China's Minimum Wage Going Up

The plan to narrow China’s wage gap was recently released by the Chinese State Council and states that the minimum wage of Chinese workers should be increased until it reaches at least 40 percent of what an average person in China earns. The way this target will be reached, according to the plan, is that each year, beginning in 2011 and continuing until 2015, the minimum wage will go up by 13 percent, at least.

Currently wages in developed areas such as the coastal region of China, especially among small and middle-sized companies, there is no set wage distribution system. In these places worker’s wages are set to be either equal to or slightly higher than minimum standards. This can range from as low as 20 to 30 percent of China’s average salary. For instance, in Beijing the minimum wage comes to RMB 1,260 ($200) per month; while in Chongquing minimum wage equals RMB 870 ($137) each month.

This past March two important political meetings were held in China. The “two sessions;” the National Committee of the Chinese People’s Political Consultative Conference, (the country’s advisory body); and the National People’s Congress, (the legislative body) made closing the Chinese wage gap one of the issues of highest priority. More details about these economic moves will be forthcoming as China continues to move towards becoming a more affluent society.