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Asia Economy Last Updated: Aug 24, 2010 - 3:44:42 PM


South China's industrial heartland of Guangdong to raise minimum wage by average of 21% to range of $96 to $150 a month
By Finfacts Team
Mar 19, 2010 - 5:06:31 AM

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The minimum wage in South China's industrial heartland Guangdong Province, is to be raised by 21 per cent on average to a range from RMB 660 renminbi to 1,030 ($96 to $ 150) a month from May 1st in a bid to attract migrant workers, local authorities said Thursday.

Guangdong, north of Hong Kong, in the Pearl River delta region, which is responsible for a third of China’s exports and would rank as one of the world’s 10 largest exporters if it were a country, is finding it harder to attract migrant labour as other regions develop. So on Thursday, it was announced by the Guangdong Provincial Human Resources and Social Security Department that the minimum wage of both full-time and part-time workers will be raised.

The adjusted minimum wage is divided into five categories ranging from RMB660 to 1,030 yuan/renminbi ($96 to $ 150) a month, depending on the financial situation in different cities in the province. The move came a month after the country's second biggest exporter, Jiangsu Province, raised its minimum wage by about 12 per cent to 960 yuan ($140.64) from the current 850 yuan ($124). East China's Fujian Province increased its minimum wage by 24.5 per cent from March 1st.

China is making huge investments in its rail network and last December, it launched the world’s fastest passenger train service between  Guangzhou, Guangdong's provincial capital, and the central city of Wuhan, covering 1,100km in just three hours. The railway investment will result in more balanced regional development.

"A 20 per cent raise is a big jump because many other provinces offer around 10 per cent. That's because Guangdong wants to stand out from among other competitors," Lü Xuejing, professor of social security at Capital University of Economic Business, told the Global Times Thursday.

"However, I don't think the adjustment is attractive enough as it doesn't make much of a difference to work as a farmer at home or as a migrant worker far from home in Guangdong," she said.

She explained that the higher minimum wage might attract some older migrant workers but won't appeal to skilled workers who are less willing to do manual work.

According to the Beijing Times, Beijing will raise its monthly minimum wage levels by 10 per cent from the current RMB 800 ($117.2) possibly next month.

Wage pressure is coinciding with pressure on China to raise the value of its currency.

"It is unfair and harmful to continuously depreciate a country's own currency and ask other countries to revalue their currencies in the meantime," Foreign Ministry spokesman Qin Gang said at a regular press conference on Thursday in Beijing.

The China Business News news service reported Friday that the Ministry of Commerce and the Ministry of Industry and Information Technology are expected to disclose the results of a study on the effects of yuan exchange-rate appreciation on exporters by April 27th..

Zhang Wei, deputy director of the China Chamber of International Commerce, is quoted as saying the Ministry of Commerce's yuan stress test involves over 1,000 companies in 12 industries.

Zhang Wei, vice chairman of the China Council for the Promotion of International Trade, said at a press briefing in Beijing on Thursday that exporters in labour-intensive sectors such as garments and furniture worked on margins as low as 3 per cent, he said. "If the yuan rises, these companies will face the immediate risk of going bust as their profit margin is already very narrow," Zhang told reporters. "So for these companies, the consequences would be disastrous."

China has the yuan/ renminbi pegged at 6.83 to the US dollar since July 2008

SEE also Finfacts articles:

Demographic outlook for the BRICs varies greatly; India's working-age population to rise by stunning 240m in 20 years compared with 10m in China

Obama may have to play the Nixon card with China in 2011

US Treasury wants China to raise its currency and Senators are back with a protectionist trade threat against China, with Andy Busch, BMO Capital Markets and John Rutledge, Rutledge Capital:

 

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