Recently, the city of Shanghai has increased its minimum monthly wage from RMB 2,480 to RMB 2,590, and it will take effect beginning July 1, 2021. Accordingly, its hourly wage also increased from RMB 22 to 23 per hour. This makes Shanghai the highest-paying city for workers in China.
Have a look at our previous article on Expatriates in China – Tax Updates on Allowances
Chinese cities are expected to raise their minimum wage every few years depending on the incremental cost of living. Both employers and employees need to pay attention to these changes in making business and personal decisions, respectively.
What is minimum wage?
Minimum wage refers to the mandatory payment an employer should provide to a regular employee. However, it does not include other types of remuneration such as overtime work pay, shift allowance, special condition payment, and non-cash benefits such as meal and housing allowances. Furthermore, the basic wage excludes social insurance premiums and housing funds contributed by the employee to the government.
The minimum wage of Shanghai has increased over the years to reflect the rising living costs. In general, increasing the minimum wage should be able to catch up with the pace of increased living costs.
Source: CEIC Data, Monthly Minimum Wage Trend in Shanghai (1993-2020)
What are the top 3 cities with the highest minimum wage?
Shanghai ranks as the top city with the highest minimum wage followed by Beijing and then, Shenzhen. While Shanghai has the highest basic pay monthly, Beijing pays more in terms of an hourly basis. The increase in Shanghai’s minimum hourly wage (from RMB 22 to RMB 23) still does not surpass that of Beijing which is RMB 25.3 per hour.
The comparison of monthly wages for the top 3 cities is shown below.
What is the minimum wage for foreign expats in China?
The minimum wage for foreign expats should follow that of the city local wage where they work. But normally, foreigners are paid more as compared to Chinese locals. Nevertheless, both foreign and local employees may earn more from foreign-invested enterprises.
China’s visa regulation for expats who wish to work in China is based on a points assessment system. Among the categories for evaluation is the foreigner’s annual salary. The higher it is, the better chances of getting more points. With reference to the overall visa qualifications, a foreign or local employer can adjust the monthly salary to foreign employees. See below the range of annual salaries and their corresponding points.
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Foreigners are required to obtain a work permit and work visa before they can join regular employment in China. Moreover, most companies hire expats for senior or specific skill-based positions. Expats who are hired from overseas will also have higher salary package offers than those recruited locally.
The minimum wage in other cities
Every local city in China has a duty to increase its local wage and more recently, three provinces raised their minimum wage standards amid the impact of COVID-19. These include Fujian, Qinghai, and Guangxi.
Due to the COVID-19 pandemic last year, many cities delayed their local wage adjustment plans. Thus, the increase in Shanghai is the first time since then. The table below shows the updated minimum wages for the three provinces:
Conclusion
As China continues to upgrade development, its cities also keep up with the rise of living standards. However, the minimum wage changes will depend on regional development. This means that local cities may adjust according to local conditions. In the meantime, six regions have already reached the RMB 2,000 monthly basic wage for workers – including Shanghai, Guangdong, Beijing, Tianjin, Jiangsu, and Zhejiang.
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