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Increasing Wages Triggers Heated Debates

Guangzhou based Yangchen Evening News published an article on the recent heated debates about increasing wages. Over the past year, the authorities in the central government have expressed an urgent need to increase the minimum wage. For example, in April 2010, at the executive meeting of the state council, Premier Wen Jiabao named the reform of income distribution and the social security system as the top agenda items. In May 2010, the National Development and Reform Commission released its study on income distribution in several provinces. The State Council circulated NDRC’s “Opinion on Key Tasks to Strengthen Economic Reform in 2011,” and vowed to make reforming income distribution its top priority. 

A study shows that the minimum wage in many countries is between 40-60 percent of the national average income, while the figure is only 17 percent in Beijing and 23 percent in Guangzhou. Over the year, cities or provinces including Shanghai, Shanxi, Chongqing, and Zhejiang have developed plans to increase the minimum wage. Some even proposed to double wages within the next five years. 
However these calls have been met with serious doubts. Some scholars question the government’s capacity to redistribute income to individuals. Some online commentators believe that it’s not difficult to double government employees’ salaries, but that for private enterprises, whose labor costs fluctuate with the market situation, the government directive will not work. Some Chinese netizens have expressed doubts as to whether wage increases will ever catch up with inflation.

Source: Yangchen Evening News reprinted in Chinese Economy online, April 27, 2011