Minimum Wage in China - Frequently Asked Questions
Is there separate minimum wage legislation in China?
There is no separate minimum wage legislation in China. However, there is Provisions on Minimum Wage, promulgated by Ministry of Labor and Social Security on December 31, 2003 and enforced on March 1st, 2004. (Provision is not equal to Legislation).
Do one or more minimum wage/s, exists in China?
Yes, more than one minimum wage exists in China. As per Articles 5 and 7 of the Provisions on minimum wages, 2004 Minimum wage rates (standards) exist for each province. Autonomous Region and Municipality and there are also separate monthly and hourly minimum wage.
At what level is minimum wage determined?
In China, minimum wages are determined at regional level. As per article 7 of the Provisions on minimum wages, 2004 different administrative areas, within a province, autonomous region or municipality directly under central government may adopt different standards of minimum wages.
On what basis is/are minimum wage/s declared? As per article 5 of the Provisions on minimum wages, 2004 standards of minimum wages appear in two forms - monthly and hourly minimum wage standard.
In case of daily/weekly/monthly minimum wage, are number of working hours considered while fixing minimum wages?
Yes, number of working hours is considered while fixing hourly/weekly/monthly minimum wages. As per article 3 of the Provisions on Minimum Wages, 2004 "standards on minimum wages" refers to MINIMUM WAGE remunerations paid by the employing entities to the labourers, under the law, if they have provided normal labour within the statutory working hours or the working hours prescribed in the labour contracts. The Article 5 refers to the applicable scope of Monthly minimum wage and Hourly minimum wage, which means full-time workers may get Monthly minimum wage, and part-time workers can get Hourly minimum wage.
Who all are involved in setting minimum wages?
In China, Ministry of Labour and Social Security, China Entrepreneur Association, and the All China Federation of Trade Unions are involved in setting minimum wages. As per article 8 of the Provisions on minimum wages, 2004 the program for determining and regulating minimum wages shall be formulated by administrative department of labour and social security of a province, autonomous region or municipality directly under the central government in consultation with the labour union and the league of enterprises (employers association). And the report shall be submitted to the Ministry of Labour and Social security. Then Ministry of Labour and Social security collects opinions of China Labour Union and China League of Enterprises.
How are upratings (adjustments) of minimum wage/s decided upon?
Upratings or adjustments of minimum wages are jointly decided by the government, employer and trade union representatives. As per article 8 of the Provisions on minimum wages, 2004 the program for determining and regulating minimum wages shall be formulated by administrative department of labour and social security of a province, autonomous region or municipality directly under the central government in consultation with the labour union and the league of enterprises (employers association). And the report shall be submitted to the Ministry of Labour and Social security. Then Ministry of Labour and Social security collects opinions of China Labour Union and China League of Enterprises.
Which are the components of minimum wages in China?
China has fixed and variable components. As per the attachment of Provisions on Minimum Wage, 2004 Six components (that is the average living costs of urban residents, the social insurance premiums and the public accumulation fund for housing construction paid by the employees themselves, the average wage of the employees, the unemployment rate, the level of economic development and the adjustment factors) shall be taken into account when determining the standards on Minimum Wages. The adjustment factors are the expenses for the pension, unemployment and medical insurance premiums and the public accumulation fund for housing construction. Of course these fixed components vary accordingly with the development of society and economy.
How frequently is the fixed component of minimum wages updated?
Minimum wages in China are updated at least once in two years. As per the article 10 of the Provisions on minimum wages, 2004 the standards on minimum wages should be regulated at least once every two years.
What are the yardsticks on which minimum wage revisions are based?
As per article 6 of the Provisions on minimum wages, 2004 monthly minimum wage standard should include minimum costs of living of the local employees and the people supported by them, urban residents consumer price index, social insurance premium, public accumulation of funds for housing paid by employees themselves, average wage of the employee, level of economic development, status of employment and etc...Based on Monthly MINIMUM WAGE, Hourly MINIMUM WAGE shall take such factors into account as the basic pension insurance premiums and the basic medical insurance premiums paid by the entity and the disparities between the non-full time labourers and the fulltime labourers in the aspects of working stability, condition and intensity, and welfare.
What is National Poverty line?
Who all regulate minimum wages compliance?
In China Labour Inspector (or similar body), trade unions and independent body or special organisation regulate minimum wage compliance. As per article 4 of Provisions on Minimum Wages, 2004, "the administrative departments of labour and social security at country level or above shall be responsible for supervision and inspection…..” Also as per the article 86 of the Labour Law, 1994 the inspectors from administrative department of labour shall make investigations about the implementations of the labour laws, rules and regulations. In March, 1998 the Ministry of Labour and Social Security is established on the basis of Ministry of Labor. Ministry of Labour is abolished since then. Soothe two articles are consistent. Addtionaly, on March, 2008 Ministry of Human Resources and Social Security are founded on the basis of Ministry of Labour and Social Security and Ministry of Personnel.
Which legal sanctions can be applied if compliance is lacking?
As per article 13 of the Provisions on Minimum Wages, 2004 in case of violation o the MINIMUM WAGE provision the employing entity shall be ordered to make up the wages owing to labourers by the administrative department of labour and social security and may also be ordered to pay labourers compensation in the sum of one to five times of the wages owed within a time limit.
Are sanctions often being applied?
Are employer and/or trade union representatives involved in compliance procedures?
As per the article 4 of the Provisions on Minimum Wages 2004 trade unions at all levels shall conduct supervision over the implementation of the present provisions.
To whom/where can individuals complain, if they think they are earning less than minimum wages?
Employer/Management/Contractor coordinates, Labour Inspectorate coordinates and Trade unions coordinate. Article 14 of the Provisions on Minimum Wages, 2004 says that if any dispute arises over the standards of Minimum wages between the employer and the labourers it shall be coped according to the provisions on labour disputes. As per Chapter 10, article 77 of the Labour Law, 1994 if a labour dispute arises both the parties (employer as well as labourer) may apply for mediation, arbitration, take legal proceeding or settle them through consultation. As per article 80 a labour dispute mediation committee may be established within the employing unit and shall be composed of representatives of workers, employing unit and trade unions. A labour dispute arbitration committee (as per article 81) shall be composed of representatives of administrative department of labour, trade union at the corresponding level and the employing units. As per article 83 if the dispute is not settled by arbitration, parties can approach to the people's court.