Government and Policy

Wages to be pegged to CPI in new regulation

By Xie Yu (China Daily)
Updated: 2010-07-29 07:19

Beijing - China is expected to approve a wage regulation by the end of this year in a major effort to improve workers' lives and narrow the income gap.

Yin Chengji, spokesman of the Ministry of Human Resources and Social Security, said the regulation has been drafted since 2008 and will soon be submitted to the State Council, China's cabinet, for approval, the China Business News reported on Wednesday.

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In line with the draft regulation, the wage increase in the country will be pegged to the consumer price index (CPI), the report said.

Yang Yongqi, a labor law specialist at the China Institute for Labor and Social Security Sciences, under the ministry, said the regulation demands each province to submit its minimum wage guidelines to the central government, as well as to make them available to the public.

It clearly stipulates that overtime pay and subsidies, should not be included in calculating the minimum wage, China Business News quoted Yang as saying.

More than 23 provinces and cities increased their local minimum wages, but some enterprises have extended work time, Yang said.

The draft also said that wages should be increased in accordance with changes in the local CPI.

Employees, especially those at the senior management level in State-owned monopolies, will have their pay capped, according to the draft.

In China, the average monthly salary of employees at State-owned monopolies, such as telecommunications and natural resources, can be triple that of those who work in the private sector.

If benefits like housing are included in the equation, their actual income is five to 10 times higher than that of ordinary workers.

The widening gap in pay has resulted in public outrage and driven millions of college graduates to seek jobs at State-owned monopolies, where employees are assured better healthcare insurance and a more stable income.

He Li, a senior lawyer at the Beijing-based Yingke Law Firm, said the new regulation will be the first national regulation to specifically focus on wages.

While China is globally considered to be a strong economic growth engine, a survey conducted by the All-China Federation of Trade Unions (ACFTU) earlier this year showed that 23.4 percent of employees have not received a rise in salary in over five years and that 75.2 percent of those surveyed said they believe the current income distribution system is unfair.

The ACFTU also warned that the low pay, long hours and poor working conditions, faced by millions of workers are a source of conflict with the potential to trigger mass incidents, which would pose a threat to social stability.