South China’s Guangdong province is to raise the minimum wage by an average 19 percent from May to combat a labor shortage and rising living costs.
The pay raises will go into effect in all parts of Guangdong except Shenzhen on May 1, the provincial department of human resources and social security said in a press release on Thursday. Guangdong last raised the minimum salary in May 2013.
The minimum monthly pay for full-time workers in Guangzhou, the provincial capital, will be raised by 22.2 percent to 1,895 yuan ($300), the highest of four levels in the province.
Authorities in Shenzhen, which borders Hong Kong, separately announced a raise in the minimum monthly salary for full-time workers of 12.3 percent to 2,030 yuan ($320), the highest nationwide, from next month.
China is facing severe labor shortage due to tough birth control policies over the past three decades. Rising labor costs, coupled with falling orders, have left many manufacturers struggling and driven some to relocate to Southeast Asian countries.
Chinese Workers’ Salaries Rose 9.1% in 2012
Salaries of workers inChina were expected to rise 9.1 percent year on year in 2012 – in line with previous years’ rises.
Guangzhou, Shanghai, Beijing and Shenzhen led the growth in salaries for both the manufacturing and non-manufacturing sectors, the report said.
Manufacturing workers’ wages would increase by 10.1 percent, 9.8 percent, 9.8 percent and 8.9 percent, respectively. Non-manufacturing sector wages would rise fastest in Beijing (9.5 percent), followed by Shanghai (9.3 percent), Guangzhou (9.1percent) and Shenzhen (8.9).
The report was based on surveys with more than 4,000 Chinese and foreign enterprises. It covered a dozen important industries, including real estate, finance, pharmaceuticals, high-tech, automobile and retail consumer goods.
Wage differences between coastal and inland cities were expected to narrow, especially for low-skill workers, such as those working on assembly lines, the report said.
This lends credence to many economists’ claims that China is losing its demographic dividend, as the supply of cheap labor, mostly from inland rural areas, has declined in recent years.
Aon Hewitt also found that companies are having a tougher time keeping their workers. Quitting has become more common in many cities, as workers depart for higher pay at other firms.
Inland, in Chongqing, the rate of resignations jumped to 22.3 percent this year from 9.6 percent in 2006. The figure in Nanjing, a city near Shanghai, was 19.4 percent, up from 2006′s 7.3 percent.
Fast rising salaries were not a temporary phenomenon and would continue for years, the report said, meaning businesses would have to improve productivity to remain competitive.