In recent years, rising labor costs in China have put significant pressure on foreign investors. Many companies have been forced to reduce staff or relocate to countries with lower labor costs. From 2011 to 2015, annual wage increases outpaced production rates by over 200%, significantly impacting China’s investment climate. This article serves as A Complete Guide To 2016 Minimum Wage Levels Across China.
The 13th Five-Year Plan took a different approach compared to the 12th. While the 12th plan advocated for a 13% annual increase in minimum wages, the 13th plan recognizes the need for more reasonable wage levels and introduces a controlled wage adjustment mechanism. By moderating minimum wage growth and stabilizing adjustments, the 13th Five-Year Plan seeks to enhance the competitiveness of businesses in China. The goal is to narrow the wage gap with other developing economies, making China a more attractive and stable destination for foreign investment.
Minimum wages in China are set and adjusted by provincial-level governments, considering factors like economic development, local employment conditions, the cost of living, consumption price index, social insurance and housing fund costs, and enterprises’ average labor costs. The 13th Five-Year Plan aimed for an average annual minimum wage increase of 10%, falling between 40% and 60% of an area’s average monthly wage. Additionally, an extended revision cycle, adjusting minimum wages less frequently than the previous bi-annual revisions, was anticipated to alleviate labor costs and better align them with production rates. For example, the Guangdong provincial government announced on February 28, 2016, that it would maintain the same minimum wage levels as in 2015 for both 2016 and 2017 to reduce pressure on businesses. They also recommended that companies with better performance raise wages by 8.5%, but no more than 12.5%.
As of 2016, nine provinces had adjusted their minimum wage levels, compared to 17 and 27 during the same period in 2014 and 2015, respectively. The average wage increase rate in 2016 was 14.5%, compared to the previous year’s 17%. This shift highlights the Chinese government’s attempt to ease the pressure on businesses caused by the imbalance between labor cost and production rate growth. Shanghai’s minimum wage increase rate decreased from 12.3% to 8.4% since 2015. Developed regions like Fujian, Jiangsu, Zhejiang, and Sichuan also controlled the growth of their minimum wages. However, Guizhou stood out as the only region with a substantial hike of 55% in minimum wages since the previous year, which held significant implications for foreign investors in China.
| Province | Minimum Monthly Wage (RMB) | Minimum Hourly Wage (RMB) | Effective Date |
|---|---|---|---|
| Shanghai | 2,190 | 19 | April 1, 2016 |
| Shenzhen | 2,030 | 18.5 | March 1, 2016 |
| Beijing | 2,000 | 21 | June 1, 2016 |
| Guangdong | 1,895 | 18.1 | May 1, 2015 |
| Jiangsu | 1,770 | 15.5 | February 1, 2016 |
| Zhejiang | 1,860 | 17 | November 1, 2015 |
| Shandong | 1,710 | 17 | March 1, 2016 |
| Tianjin | 1,950 | 20.8 | April 1, 2016 |
| Hubei | 1,550 | 16 | July 1, 2016 |
| Sichuan | 1,500 | 15.7 | July 1, 2016 |
| Chongqing | 1,500 | 15 | January 1, 2016 |
| Anhui | 1,350 | 14 | November 1, 2015 |
| Jiangxi | 1,390 | 13 | January 1, 2016 |
| Hunan | 1,390 | 14.5 | May 1, 2016 |
| Guangxi | 1,400 | 12.5 | July 1, 2016 |
| Guizhou | 1,250 | 13 | January 1, 2016 |
| Yunnan | 1,400 | 12.5 | May 1, 2016 |
| Shanxi | 1,620 | 17.6 | October 1, 2015 |
| Shaanxi | 1,480 | 14.8 | May 1, 2016 |
| Gansu | 1,420 | 14.8 | September 1, 2015 |
| Inner Mongolia | 1,680 | 14.4 | July 1, 2015 |
| Heilongjiang | 1,480 | 12.8 | January 1, 2016 |
| Jilin | 1,480 | 14 | December 1, 2015 |
| Liaoning | 1,620 | 15 | November 1, 2015 |
| Qinghai | 1,430 | 13 | May 1, 2016 |
| Ningxia | 1,480 | 14.5 | July 1, 2016 |
| Xinjiang | 1,460 | 16.1 | December 1, 2015 |
Note: Minimum wage levels vary within each province based on different economic zones. The data presented here reflects the highest level for each province.
China’s diverse income levels, characterized by smaller increases in developed regions and faster growth in less developed regions, necessitate careful consideration of investment locations for foreign investors. These figures and related government policies indicated that overall labor costs in China were not expected to significantly increase. It is important for business to carefully consider these costs as part of their overall labor dispute management strategy.
In conclusion, the 2016 minimum wage landscape in China reflected a shift towards controlled wage growth aimed at balancing the needs of businesses and workers. While some regions saw substantial increases, particularly in less developed areas, the overall trend indicated a moderation in wage growth compared to previous years. Foreign investors should carefully consider these regional differences when making investment decisions and planning their human resource strategies in China.
