Guangdong raises minimum wage as inflation hurts workers

China’s manufacturing powerhouse, Guangdong, will raise its legal minimum wage again tomorrow, 1 March, in a bid to offset rising food prices and address the serious labour shortage that has affected the province for more than a year.

The minimum wage in the provincial capital Guangzhou will increase by 18 percent to 1,300 yuan a month, while the monthly minimum wage in major manufacturing centres such as Dongguan, Foshan, Zhuhai and Zhongshan will increase by nearly 20 percent to 1,100 yuan, the same as the current level as Shenzhen.

Shenzhen is expected to increase its minimum wage by 18.6 percent to 1,320 yuan this year in order to keep on track with Guangdong. Both Guangdong and Shenzhen increased the minimum wage by an average of 20 percent last summer.

But even with the new increases, workers are unlikely to see much benefit. Food inflation in China is currently running at more than ten percent, with the cost of some daily necessities increasing much faster. Prices have risen so fast in Shenzhen that many residents are know traveling to neighbouring Hong Kong, where the average income is at least twice as high, to stock up on essentials.

The China Daily quoted a business woman in Shenzhen who travels to Hong Kong every two weeks, as saying: “The cost of soy sauce, egg and bean curd as well as shampoo are all higher at home than they are in the Hong Kong market I go to.”

As a result, many factories in the Pearl River Delta are reportedly offering basic wages several hundred yuan higher than the new minimum wage. One packaging factory owner in the Dongguan township of Shipai said “In general, ordinary workers at our factory can earn a basic wage of 1,500 yuan. If they work well, that can go up to 1,800 yuan.”

Many factories are using Guangdong’s highly publicized minimum wage increases to lure more workers into the region but so far the response from the workforce seems lukewarm. Small, low cost factories are still reporting difficulties hiring and keeping staff, although larger factories that pay better and offer better prospects generally have no problem recruiting the workers they need.
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