First, Shenzhen announced that it would raise local minimum wage from Rmb1,320 ($210)?a month to Rmb1,500, the highest in the country. Then, a Guangzhou?newspaper reported that cities in Guangdong province were planning to raise wages by 13 per cent on average this year.
The reaction from factory workers is cynical.
?If inflation doesn?t push prices up too fast, we may be able to buy 100 catties of pork each month, compared with 200 catties last year,? a blogger on the popular Sina Weibo service says.
?Sure, the minimum wage is going up. All it means is that the factory will deduct more from our wages to cover our social insurance payment. You and I won?t receive the extra money. You all know that,? another one says.
The reaction from factory owners is, predictably, more negative.
?I guess it means that Shenzhen doesn?t care whether businesses struggling under the harsh economic environment are going to live or die,? says Stanley Lau, deputy chairman of the Federation of Hong Kong Industries.
Guangdong officials have not confirmed whether it is their intention to raise wages by 13 per cent?but Lau says it would be unreasonable for wages go up too soon considering the last raise happened in March 2011.
?Orders received by exporters in the Pearl River Delta have fallen by up to 30 per cent from a year ago. The situation is dire, so I hope wages will not increase until demand picks up again. If the orders don?t come back by the end of the year, whether Guangdong raises minimum wage or not will be irrelevant as many businesses will have closed down,? he says with gloomy certainty.
Ironically, the Wenweipo, a pro-government publication based in Hong Kong, cited Shenzhen officials saying the wage increase was a pre-emptive measure to make sure there is no labour shortage after the Chinese New Year, when many migrant workers traditionally choose to quit jobs.
Labour shortage is a systemic feature in Chinese manufacturing sector because of an aging population, and the younger generation being offered more career options than their parents.
However, it is not at the top of factory owners? concerns at the moment, as there is little work to be done, Lau says.
Related reading:
China: not enough elves for the factory, beyondbrics
A workshop on the wane, FT
Bangladesh: a Chinese stitch-up? beyondbrics
The end of cheap: China?s tipping point, beyondbrics
Supply chain: Inflation encourages trend to ?near-source? production, FT
Source: http://blogs.ft.com/beyond-brics/2012/01/04/china-minimum-wage-hike-leaves-few-smiling/
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