China increases wages amid social unrest fears

SHANGHAI - Agence France-Presse

Workers on strike blocking the entrance gate of Hi-P International factory yell slogans during a protest in Shanghai Dec 2. Labor actions in the country are increasing. REUTERS photo

China is raising minimum wages in some key cities and provinces as local officials try to combat labor shortages and growing worker unrest.

The southern city of Shenzhen, a major manufacturing center on the border with Hong Kong, will raise its minimum wage by nearly 14 percent to 1,500 yuan ($238) from February, according to a statement.
Authorities in the capital Beijing raised wages by almost 9 percent to 1,260 yuan from Jan. 1, while the southwest province of Sichuan also hiked wages by at least 23 percent, the official Xinhua news agency said.

Big shift in labor market
“The government policy is based upon changes in the market,” said Stephen Green, head of Greater China research at Standard Chartered Bank in Hong Kong. “China’s labor market has witnessed a huge change in the past three to five years. Lack of labor is quite common now.”

Shenzhen already has the highest minimum wage in the country, but manufacturing hubs typically face labor shortages after the Chinese Lunar New Year since many workers do not return after going home for the holiday.

Zeng Xiangjin, who manages a textile firm in Shenzhen, said he typically loses up to 30 percent of his workers after the holiday, which falls in January this year, and he will need to raise salaries to retain others.

“The workers leave for a variety of reasons, including better salaries in other cities. This year, I will definitely need to raise salaries another ten percent or even more,” Zeng told Agence France-Presse on Thursday.

The moves follow a series of strikes across China since November, as workers protest low salaries, wage cuts and poor conditions amid company cutbacks due to the global economic slowdown.
Persistently high inflation - which peaked at a three-year-high of 6.5 percent in July last year but has since retreated - has also cut into people’s spending power.

In the latest strike, some 2,000 steel workers in Sichuan’s provincial capital of Chengdu walked off the job Wednesday to protest low salaries, according to the U.S.-based rights group China Labor Watch.