THE CHINESE province of Guangdong, the country’s biggest export centre, announced yesterday that it would raise the minimum wage by an average of more than 20 per cent.
The move comes amid worries about inflation in China and complaints from factories in Guangdong and elsewhere about unfilled jobs as they rush to complete a surge in orders since February.
“A lot of our workforce traditionally come from the poorer regions in western China, but factories are moving out there to take advantage of cheaper wages and lower taxes,” said Au Yiu-chee of Hong Kong, who owns a textile factory in Dongguan.
Mr Au said that he had only about a third of the workers required to complete an order due in May from a European brand.
The People’s Daily, the Communist party’s flagship newspaper, has reported that factories in the Pearl River Delta have more than two million unfilled positions.
Guangdong, which abuts Hong Kong, said that the wage rise would help attract workers from other areas and improve the lives of low-income earners faced with rising inflation. China’s consumer price index rose by 2.7 per cent in February from a year before.
Jiangsu province, the region near Shanghai, and one of Guangdong’s closest export rivals, last month raised its monthly minimum wage rate by 13 per cent to 960 yuan (€102).
Guangdong’s rise, which takes effect on May 1st, will bring the minimum wage up to 1,030 yuan in Guangzhou, the provincial capital, to 920 yuan in Dongguan and three other larger cities, and to between 660 yuan and 810 yuan in smaller towns.
Mr Au said that the spectre of a yuan appreciation, which would make Chinese exports more expensive, rendered the wage increase doubly worrying, even if it helped counter the worker shortfall.
The United States kept up pressure on China yesterday to let the yuan climb as Beijing disclosed it was sounding out exporters on whether they could cope with a stronger exchange rate.
Washington wants Beijing to abandon a currency peg against the dollar that US lawmakers say gives Chinese exports an unfair advantage in world trade and so steals American jobs.
China faces important negotiations over the yuan in coming weeks, US ambassador Jon Huntsman said, adding Washington was not alone in wanting Beijing to unshackle its currency from the 20-month-old currency peg.
“We hope to see more flexibility on the exchange rate,” he told students at Tsinghua University, an elite Beijing school.
The comments, as well as a demand from 130 US lawmakers for sanctions unless China abandons the peg, did little to alter investors’ expectations that the yuan will start rising gradually by the end of June. – (Copyright The Financial Times 2010/Reuters)
