The minimum wage in China is a dynamic factor that changes not only over time but also between different provinces. Despite being a dynamic factor, it is often a significant consideration for international companies who are in the process of a China market entry, and who are planning to hire local employees in China (even if these same employees will be paid far above the minimum wage).
What does the minimum wage in China represent?
The minimum wage in China, just like anywhere else, is the lowest salary threshold paid to an employee by an employer, as required by law. That is to say, the minimum wage does not include additional payments provided by the employer, such as overtime pay, night shift allowances, transportation allowance, bonuses, etc. However, this is where the variations across China come into play. For instance, in Shanghai, the minimum wage excludes social insurance premiums and housing fund contributions, while in other regions, these payments are actually incorporated in the minimum wage calculations.
Minimum wage standards in China come in two forms: monthly minimum wage, which applies to full-time employees, and hourly minimum wage, which applies to part-time or temporary employees.
Why isn’t the minimum wage uniform across China?
The local governments around the country set their own levels of minimum wage in accordance with their unique local conditions, such as living costs, employment status, and the degree of development in the area. Thus, urban areas with a higher socio-economic status would determine a higher minimum wage class and vice versa. In fact, China is so heterogeneous in terms of socio-economic and employment levels, that it holds some of the highest income disparity in the world.
Who determines the minimum wage, and how often does it change?
Local governments are required to update the local minimum wage every two years. Yet, they are given some flexibility to adjust the minimum wage based on the changing cost of living and other relevant local circumstancesOur services assist international companies in the Chinese market. Contact us
The minimum wage in China’s major cities
The following list presents the minimum wages in some of China’s largest cities.
The wage appears in local currency RMB (updated to May 2022):
City Monthly / hourly
- Beijing – 2,320 / 25.3
- Shanghai – 2,590 / 23
- Shenzhen – 2,360 / 22.2
- Guangzhou – 2,300 / 22
- Hangzhou – 2,280 / 22
- Suzhou – 2,280 / 22
As China’s economy is becoming more innovation-driven and technologically-focused, international companies doing business in China are finding themselves competing for a high-skilled workforce. In recent years, international companies in China have had to raise the wages and overall incentives offered to local employees significantly in an attempt to stay competitive and attract top-notch talent who could push the company forward in the Chinese market. Precisely because of this, the local minimum wage cannot be used as a sole gauge of the hiring costs in China. International companies often hire senior executives, and are therefore advised to pay attention to industry-specific factors and the availability of qualified workers in their field.
Then how should one calculate the hiring costs in China, before entering the Chinese market?
Every year service providers in China issue comprehensive salary reports that specify minimum, maximum and median salaries of various job functions in different industries seniority levels. While this data could serve as a sound basis for an initial estimation of the hiring cost in China, our experience has taught us that this data is often too imprecise and even exaggerated. Nevertheless, at PTL Group, we offer a free employee salary estimate, based on a specific job description within a particular industry. That way, you could get a more personalized and reliable estimate that meets your unique needs.
This is only one example of the variety of solutions and business services we offer our clients in China. For more information on HR services in China, recruitment in China, payroll services in China, or any other China business support – Get in touch and we’d love to help.