Shenzhen Dagongzhe Centre, Worker Empowerment’s partner organisation in Shenzhen, has just released a report on the impact of minimum wage on workers in Shenzhen in 2016. The report is published in Chinese, and an executive summary in English is also available.
Full text of the report in Chinese:
An Investigation on Wage and Living Expenditure of Workers in Shenzhen in 2015 – Executive Summary
Shenzhen Dagongzhe Migrant Worker Centre
As the only legally binding wage rate at the moment, not only does the minimum wage guarantee income for workers in regular working hours, but also narrows down the income gap in society. Shenzhen Dagongzhe Migrant Worker Centre has long been advocating for a minimum wage rate which guarantees decent living for workers and is adjusted in a more systematic and transparent manner. In the past few years, regardless of the promises that the government makes to adjust the minimum wage rate progressively and have it linked to the local average wage, the minimum wage still fails to cope with soaring living expenses that workers bear.
A questionnaire survey was conducted between August and December 2015 to investigate working conditions and living expenses of migrant workers in Shenzhen, complemented by a focus group session for workers to elaborate on how their living expenditure is associated with wage and working hours, as well as strategies deployed by employers to cut labour cost. 89 valid questionnaires were collected. Workers participated in the survey work in the electronics, toy, metal, plastics, sporting goods, furniture, cleaning and service industries.
From the survey and discussion with workers, the significance the legal minimum wage in determining workers’ income is confirmed. The basic wage adheres to the legal minimum wage for almost 70% of the workers, which means that the annual or biennial adjustment of the minimum wage is the rare chance when their basic wage is lifted. It shows that most of their employers merely fulfill the minimal legal requirement in remunerating workers.
The minimum wage rate can hardly cover living costs in Shenzhen for most workers, partly because it does not catch up with inflation. Some of them cannot secure the minimum wage level after social insurance premiums are deducted from their basic wage. It is not new for workers to expand their income by working overtime, which severely endangers work-life balance. Nevertheless, some of them suffer from overtime work being cut as well due to recent economic slowdown. With the basic wage hardly enough for survival, they resort to resignation, which sets their employers free from paying them the economic compensation required by law. Apart from overtime payment, the employers also play an upper hand on other variable components of workers’ wage such as bonuses and subsidies. For instance, some employers start charging workers on accommodation, and making bonuses conditional upon harsh conditions. Therefore, it is important for the legal minimum wage rate to satisfy needs for a decent living, so that workers can be shielded from the risks brought by the unpredictability of variable payment.
In the midst of the investigation, there has been widespread news about nation-wide economic slowdown and rising labour costs. The Guangdong provincial government took the move to freeze the minimum wage rate in the coming 2 years. We believe that among many factors of the economic slowdown, workers already living on a shoestring should not be held responsible for that. Freezing the minimum wage would only further widen the income gap and strengthen social inequality. In order to secure workers a fixed wage which covers basic needs under the uncertainties at work, we urge the government to:
- Adjust the minimum wage according to changes in the average wage. The minimum wage should reach 40%-60% of the local average wage and take the living expenditure of workers and inflation into consideration under a transparent and orderly mechanism.
- Set the minimum wage level of Shenzhen in 2016 at 2971 RMB, after the living expenditure of workers and inflation are taken into consideration.
- Impose stronger regulation on charges on water and electricity to prevent landlords from overcharging workers.
- Enact the Wage Law to stipulate wage components and specify that social insurance premiums are not included as part of the basic wage for workers.