"The minimum wage for a Chinese city should be between 40 and 60
percent of the average monthly wage in that city," Liu Kaiming,
director of the Shenzhen Institute of Contemporary Observation,
said at a seminar on the social responsibility of enterprises held
at Peking University on April 22.
Echoing Liu's point, Su Hainan, chief of the Labor Institution
under the Ministry of Labor and Social Security, said: "This would
be according to international standards, but none of the provinces
has applied this standard."
Su added that from an economics standpoint, the minimum wage
isn't necessarily the best resource allocation policy because it
reduces the demand for labor and increases overall
unemployment.
He said: "But when the minimum wage in practice is too low and
the poverty gap continues to widen, adopting a fixed minimum wage
standard is the best way of protecting the rights of workers,
narrowing the income divide, and expanding domestic demand. Our
country belongs to the latter situation."
Although there is some semblance of a minimum wage system in
China, it is neither uniform across the country nor adequate.
For one thing, there is no unified method of calculation.
According to the "Regulations on Minimum Wage" implemented on March
1, 2004, there are three ways in which a minimum wage amount might
be calculated. The first one operates on the basis of proportion.
Taking a certain cross-section of families with the lowest per
capita income, per capita living expenses are multiplied by
expenses incurred for supporting a family or aged parents. The
second method uses the Engle Coefficient, which is the proportion
of expenses on food to a family's total living expenses. The third
is the international standard of 40 to 60 percent of the average
monthly income.
Most cities use the first two methods of calculation because the
third is, quite simply, too straightforward. If they were to use
the third method, local authorities at the provincial and
municipality level would have no room to move in terms of making
adjustments.
Second, discipline is lacking. According to the 2004
Regulations, as long as a laborer does his work as instructed, his
employer is obliged to pay him a salary, after the necessary
deductions, that is not lower than the local minimum wage standard.
In the event of violations of the regulations, the labor security
administration can order an employer to rectify the situation
within a certain period of time, failing which the employer can be
ordered to pay the salary and compensation up to five times the
amount owed.?
And therein lies another conundrum. The regulations make
reference only to employers. They do not provide for the
accountability of local governments if the local minimum wage is
lower than the national standard, thereby severely hindering
implementation.
Speaking at the China Development Forum 2006 that was held in
Beijing from March 19 to 20, Ma Kai, minister of the National
Development and Reform Commission, said: "We will try to raise the
minimum wage and make adjustments in line with economic
developments. Raising people's income is an important way of
increasing consumption."
(China.org.cn by Li Xiaohua, May 14, 2006)