Measure seen as way to reduce pressure on employers
The central government might extend the length of time before employers are required to raise minimum salaries for employees, according to a media report on Tuesday.
The Ministry of Human Resources and Social Security has decided to expand the required period before minimum salary adjustment amid an economic slowdown and operating difficulties for companies in the country, the 21st Century Business Herald newspaper reported on Tuesday, citing unnamed officials.
Under the current rules, employees' minimum salary has to be adjusted after two years. After the extension, that period could lengthen to three years, according to the report.
"With economic growth slowing down, it makes sense that salary growth should slow down as well," Su Hainan, vice president of the China Association for Labor Studies, told the Global Times on Tuesday.
China's economy grew by 6.7 percent in the first quarter of 2016, down from 6.8 percent in the last quarter of 2015, according to data from the National Bureau of Statistics (NBS) in April.
"The moderation in salary growth also indicates local governments' concern that high labor costs will weaken the competitiveness of manufacturers," Liu Xuezhi, a senior analyst at Bank of Communications, told the Global Times on Tuesday.
Some local governments have already taken measures to slow down salary growth.
The local government of South China's Guangdong Province announced on February 29 that the province would not change workers' minimum salary this year or next, as part of efforts to help reduce costs for employers, according to a report by financial website caixin.com in March.
Also, Shanghai raised the minimum monthly salary by 8.4 percent to 2,190 yuan ($335.53) on April 1 this year, compared with an average annual increase of 13 percent from 2011 to 2015 around the country, according to the Shanghai Municipal Human Resources and Social Security Bureau.
Salary adjustment needs to be based on several factors including the level of economic development, conditions for local manufacturers, the social security mechanism and the employment rate, said Liu.
More reforms needed
In face of the economic slowdown, the country needs to push forward reforms in many areas including the tax system, income distribution, social security mechanism improvement and enhancing employees' education and training, said Su.
An annual growth rate of at least 6.5 percent is required for the country to reach the goal of doubling its 2010 GDP and per capita income by 2020, Su noted, adding that the economic growth rate now is more sustainable than in previous years.
China will need "unswerving efforts" to implement supply-side structural reform to counter ongoing economic headwinds, Chinese President Xi Jinping said at a meeting of the Central Leading Group for Financial and Economic Affairs on Monday, according to the Xinhua News Agency.
The country needs to make more efforts to expand the middle-income group, improve the income distribution mechanism and strengthen intellectual property protection, said Xi.
China has to expand the middle-income group in order to reach the goal of building a comprehensively well-off society, Su noted.
In 2015, the national per capita disposable annual income of Chinese residents was 21,966 yuan ($3,365.45), a real increase of 7.4 percent year-on-year after deducting price factors, according to the NBS in January.
Chinese citizens still have considerable consumption potential, said Liu, adding that this could be one of the major forces to drive the economy in the future.
But some experts pointed out that it was not a good idea to slow down salary growth.
"The country does need to take further measures to ease the pressure of high costs facing enterprises, including reducing taxes, improving the market environment and making the economy more efficient. But it shouldn't reduce employees' salaries," Xu Hongcai, director of the Economic Research Department of the China Center for International Economic Exchanges, told the Global Times on Tuesday.
