Minimum Wage in China for 2024

June 25, 2024
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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 salary 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. Explore more insights into salaries in China.

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 in China, 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 circumstances

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What is the minimum wage in China? A Comparison between 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 – 2,490 / 24
  • Suzhou – 2,490 / 24

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.

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Q&A about HR & Payroll management in China

What is an Employer of Record?

An Employer of Record (EOR) in China is a third-party service provider that acts as the legal employer of a company’s employees in China. The EOR handles employment aspects such as payroll, taxes, social insurance, benefits, compliance, and legal issues.
An EOR is useful for foreign companies looking to establish a presence in China without setting up a legal entity, which can be time-consuming and expensive. By partnering with an EOR, companies can hire employees in China while retaining operational control, as the EOR manages the administrative and legal responsibilities, ensuring compliance with Chinese labor laws and timely payment of salaries and benefits.

What are the advantages of Using a Local Employer of Record in China?

Using a local Employer of Record (EOR) in China provides several benefits for foreign companies:

  • Legal Compliance: An EOR ensures the company remains compliant with complex Chinese labor laws and regulations, reducing the risk of legal disputes and fines.
  • Cost Savings: Avoid the time-consuming and expensive process of setting up a legal entity in China, allowing the company to focus on core business operations.
  • Faster Market Entry: Expedite the hiring and onboarding process, enabling quicker and more efficient market entry.
  • Flexibility: Easily scale the workforce up or down without worrying about administrative and legal employment aspects.
  • Local Knowledge and Expertise: Benefit from the EOR’s in-depth understanding of the local labor market, culture, and regulations, helping to navigate cultural or legal barriers for a smooth market transition.

Overall, a local EOR in China offers a cost-effective and efficient solution for foreign companies, handling administrative and legal employment aspects while the company focuses on its core business and strategic goals.

What are the Payroll Taxes in China?

In China, employers and employees must pay various payroll taxes, including:

  • Social Insurance: This system includes five types of insurance: pension, medical, unemployment, work-related injury, and maternity. Both employers and employees contribute to these funds.
  • Housing Fund: Both employers and employees make contributions to the housing fund, which assists with housing-related expenses.
  • Individual Income Tax: Employees pay individual income tax on their salary and other income. The tax amount depends on the income level, with higher earners paying higher rates.
  • Other Taxes: Employers also pay other taxes such as enterprise income tax, value-added tax, and consumption tax.

The exact tax amounts vary by location and income level, but the total tax burden is generally high, with significant contributions from both employers and employees.

What is required for a labor contract to be legally effective in China?

For a labor contract to be legally effective in China, it must be written in Chinese and customized based on the company’s location. The contract should specify the employment terms, job description, working hours, vacation days, and benefits package.