Minimum Wages in China 2023: A Complete Guide (2024)

We offer a guide to minimum wages in Mainland China and discuss how labor costs are affected by changes to the minimum wage levels.

What is the minimum wage in China?

According to China’s Provisions on Minimum Wage, the legal minimum wage refers to the minimum labor remunerations that shall be paid by the employers to the employees under the precondition that the employee has provided normal labor within the promissory working hours or within the working hours that is prescribed in the labor contracts.

The minimum wage standards are determined by provincial governments by taking into consideration factors, such as the minimum living costs of local employees and their dependents, the urban residents’ consumption price index, the social insurance premiums, and the housing funds paid by the employees themselves, the average salary of the employees, the level of local economic development, the local employment status, etc.

In general, the minimum wage standards appear in two forms, namely the monthly minimum wage standard and the hourly minimum wage standard. The monthly minimum wage standard applies to full-time employees while the hourly minimum wage standard applies to non-fulltime employees, such as part-time and temporary employees.

To be noted, the minimum wage is just the basic wage that employers must pay their employees, which excludes overtime pay, night shift allowance, summer high-temperature allowance, the special working environment allowance, and subsidies for meals, transportation, and housing.

Nevertheless, China’s minimum wage standards do include the social insurance premiums and housing fund contributions paid by employees in most regions. In fact, it is possible that the employee’s take-home pay is lower than the corresponding minimum wage standard in these regions. Only a few regions, such as Shanghai, clearly stipulate in their local rules that their local minimum wage standards exclude social insurance premiums and housing fund contributions.

Local governments in China are generally required to update their minimum wages every few years but have the flexibility to adjust wages according to local conditions.

Most provinces set different classes of minimum wage levels for different areas depending on the given region’s level of development and cost of living. For example, a higher minimum wage class is established for the provincial capital and the most developed cities in the province, whereas smaller cities and rural areas fall under a lower wage class.

The minimum wage in China guide

A complete guide to China’s minimum wages can be found below.

Notes：

*Certain provinces setminimumwagestandards at the county or district level. The cities listed in the table are examples and are not exhaustive.

**Highlighted areas denote jurisdictions that updated theirminimumwage in 2023. The monthly minimumwageis for full-time employment while the hourlyminimumwageis for part-time employment.

*** Hunan, Zhejiang, and Sichuan provinces allow each city to decide whichminimumwagelevel to apply. The cities given as examples are therefore subject to change.

What is affected by theminimumwage increase?

As the minimum wage rises, minimum standards for other employee benefits, such as overtime pay, other allowances, and subsidies, increase in kind.

Housing fund

The minimum contribution base of the housing fund in many cities is the same as the local minimum wage standards. The change of the minimum wage means the adjustment of the housing fund contribution base in the following months. The ceiling of the housing fund contribution base is usually three times the local average monthly salary of employees in the previous year and the floor of the housing fund contribution base is usually the same as the local minimum wage standard.

To be noted, however, the adjustment of the housing fund contribution base is not always in sync with the change of the minimum wage standard. For example, to reduce labor costs and help struggling businesses survive in the wake of the COVID-19 pandemic, the Shanghai government decided that its minimum contribution base of the housing fund in 2021 will follow the 2020 minimum wage standard, rather than the 2021 one.

Companies are suggested to pay attention to announcements from the local government.

Wages during the probation period

Article 20 of the Labor Contract Law stipulates that the wage amount of a worker during their probation period shall not be less than the lowest wage amount for the same job position in the employer’s organization or 80 percent of the wage amount agreed in the labor contract and shall not be less than the minimum wage standard of the locality of the employer.

Therefore, the wages paid by the enterprise to the probationary employees who are on regular attendance should not be lower than the corresponding standard amount.

Wages during sick leave

Different cities have different standards regarding sick leave payments. But one universal rule is that the sick leave wage shall not be lower than 80 percent of the local minimum wage, according to the Opinions on Several Issues concerning the Implementation of the Labor Law of the People’s Republic of China (Lao Bu Fa [1995] No. 309).

Correspondingly, the minimum sick leave wage standard shall be adjusted with the increase of the local minimum wage standard.

Severance payment

Article 27 of the Implementation Regulations for the Labor Contract Law of the People’s Republic of China stipulates that the monthly salary used for calculating the severance payment to an employee shall be no less than the local minimum wage standard. If the average pay of the employee in the 12 months before the termination of the labor contract is less than the local minimum wage standard, the local minimum wage standard shall be used to calculate the severance payment.

Wages during the suspension of work or production

Companies may decide to suspend their businesses or production in the wake of internal or external difficulties, such as during lockdowns caused by the pandemic. According to relevant provisions on wage payment during the period of suspension of production:

• If the suspension period is within one wage payment cycle, salaries shall be paid according to the standards stipulated in the labor contract; and
• If the suspension period goes beyond one wage payment cycle, the living allowance shall be paid by the enterprise, and the living allowance shall be implemented in accordance with the relevant local regulations.

Referring to the regulations of Zhejiang Province, Hubei Province, and Shaanxi Province, the employer is required to pay a living allowance at 70~80 percent of the local minimum wage.

Wages of dispatched employees

According to Article 58 of the Labor Contract Law, during the period in which a dispatched worker is not assigned any work duties, the labor dispatch agency shall pay the worker remuneration on a monthly basis pursuant to the local minimum wage standard.

Wages of injured workers

Article 35 and Article 36 of the Regulations on Work-Related Injury Insurance stipulates that where a worker who sustained a work injury is certified grade 1 to grade 6 disability, he/she shall enjoy corresponding benefits, such as a one-off disability subsidy and monthly disability allowance covered by the work-related injury insurance fund in accordance with the disability grading, among other factors.

Regarding the monthly disability allowance, the injured workers shall be paid at 60-90 percent of their average monthly wage in the 12 months before the injury. Where the amount of disability allowance calculated is less than the local minimum wage standard, the shortfall shall be covered by the work-related injury insurance fund.

Unemployment insurance benefits

The Guiding Opinions of the Ministry of Human Resources and Social Security and the Ministry of Finance on Adjusting the Criteria for Unemployment Insurance Benefits (Ren She Bu Fa [2017] No.71) stipulates that:

With the development of the society and economy, all provinces shall, on the premise of ensuring a sustainable fund, appropriately improve the level of unemployment security step by step, to improve the unemployment insurance benefit criteria to 90 percent of the local minimum wage standard.

In practice, unemployment insurance benefits are usually paid at 70-80 percent of the local minimum wage standard.

Impact on China’s labor costs

Minimum wages only tell part of the story of labor costs in China.

As China’s economy moves up the value chain and makes the transition to innovation and services, most workers employed by foreign-invested enterprises earn above the minimum wage.

For example, workers in Shanghai made an average of RMB 10,338 (US$1,632) per month through 2020 – nearly four times the local minimum wage.

Moreover, employer social insurance and housing fund obligations add around an additional 37 percent to employers’ labor cost on top of the employees’ gross salary.

For foreign investors, rising wages are an unavoidable feature of doing business in China. Yet, when other factors like productivity, infrastructure, transportation costs, and access to a massive domestic market are considered – China may still emerge as themore cost-efficient optioncompared to countries with lower statutory labor costs.

When comparing locations for foreign investment into China, minimum wages are a helpful barometer to gauge labor costs across different regions.

From there, identifying industry-specific wage levels, availability of talent, and access to regional incentives offer a more nuanced view of ultimate labor costs within a given region.

(The article was first published on January 2, 2020, and was last updated on October 23, 2023.)

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