The minimum wage adjustments brought the number of provinces that have raised the legal minimum wage since it was unfrozen at the beginning of this year to around 20, with most other provinces expected to follow suit by the end of the year.
The increases were prompted in part by the recent wave of strikes and wage demands that have spread across China but also reflect Beijing’s desire to boost domestic consumption.
However, it is unlikely the increases will have a major impact on either of these issues. As demands from striking workers have shown, a 20 percent increase in wages and benefits is the minimum that workers are usually willing to accept. Auto workers at Denso (Guangzhou Nansha) Co, for example, demanded and got an increase in pay and benefits of between 800 yuan and 900 yuan per month, or an increase of about 60 percent.
It is not known exactly what the demands of the around 3,000 workers at Tianjin Mitsumi Electric Co are, apart from higher wages and benefits, but they will certainly be for much higher wages than the legal minimum. According to the Chinese government’s own guidelines, the minimum wage should be about 40 percent of the average wage, but in most jurisdictions it is between 20 and 30 percent of the average wage. In Beijing, for example, the average wage in 2009 was 3,726 yuan per month, while the minimum wage at that time was just 800 yuan a month.
Even with the recent increases, workers on the minimum wage will still only be able to afford basic daily necessities, accommodation, food, transport and clothing. As such, the increases will have little meaningful impact on domestic consumption.