Investigative Report on Workers’ wage and Living Expenses in Four Tier Cities in Guangdong Province

An advocate in minimum wage adjustments in China, WE had conducted and published a survey about wages and living expenses of workers in four cities of different tiers in Guangdong Province. It had been discovered that, after years of lack of adjustments, the current minimum wage level in Guangdong had become unsatisfactory in securing a basic living for grassroots workers.

 

 

Investigative Report on Workers’ wage and Living Expenses in Four tier cities in Guangdong Province

Investigative Report on Wages and Living Expenses for Workers in 4 Cities in Guangdong

 

Executive Summary

 

Worker Empowerment (WE) has been following minimum wage adjustment in China for years by conducting surveys on wage level and living expenses of workers. It is persistently found that the minimum wage policy is influential on workers’ base wage level, making a minimum wage level which guarantees workers’ livelihood of vital importance.

 

In April 2017, we notice that the Guangdong provincial government announced the plan to freeze minimum wage adjustment in the province for three consecutive years, given that a total of 22 districts in other provinces raised the local minimum throughout the year. Currently, the minimum wage level has exceeded 2,000 yuan in Shenzhen, Shanghai, Beijing, Tianjin and Zhejiang, which is the highest in the whole country.

 

However, the minimum wage in Guangdong did not only remain the same for three years, but also stay below 2,000 yuan, even in Guangzhou where the minimum wage level is the highest within the province. WE are deeply concerned about the impact of the minimum wage freeze on workers’ livelihood in the area. How much is the actual living cost of Guangdong workers for these years? How do they deal with basic necessities and other needs in life? How should the Guangdong provincial government adjust the minimum wage to protect workers and their families?

 

In a survey conducted between September and November 2017, we collected worker samples from 4 cities where different tiers of minimum wage are paid in Guangdong respectively – first tier (1,895 yuan) in Guangzhou, second tier (1,510 yuan) in Dongguan, third tier (1,350 yuan) in Huizhou, and fourth tier (1,210 yuan) in Heyuan.

 

We conducted a questionnaire survey on workers’ monthly wages, overtime hours, personal living expenses, social security contributions and family financial burdens. A total of 78 valid questionnaires were collected, including 16 from female and 62 from male workers. We also invited workers from three different types of household in Guangzhou and Dongguan to record their monthly expenditure record in detail in October 2017. In addition, a market price survey was also conducted from October to November 2017, in different shopping malls in Guangzhou and Dongguan to know the price of daily necessities for workers. As a result, we managed to compare and analyse wage levels and living expenses of workers in different cities in Guangdong and have a more comprehensive picture on the daily living needs of workers and their family, and the extent to which these needs are satisfied by the current wage levels.

 

After a series of survey on workers’ wages and expenses i4cities in Guangdong, WE have the following important findings:

 

(1) In general, wage level of workers in this survey is significantly lower than the local average wage.

 

Taking just the base wage into consideration, the wage level of most workers is below 40% of the local average wage. The ratio only rises to 60% only by including other wage components, such as overtime payment and other subsidies. In this survey, most workers earn between 3,000 yuan and 4,000 yuan per month, but their basic wage is a lot lower -more than 60% of the workers earn a base wage of less than 2,000 yuan, which is not much higher than the local minimum wage. Similar situations are observed in a variety of industries and sectors. This shows that employers are still accustomed to paying workers by the minimum wage. Hence the phenomenon that “minimum wage is almost workers’ highest base wage” still prevails.

 

(2) Workers expenses are severely imbalanced: workers get used to low consumption and burden high cost for development.

 

It is found that most workers economise hard on food, clothing and entertainment and personal development. They spend 1,015 yuan per month on average for subsistence (food, housing, clothing and other groceries). With all other costs included, the average expenditure rises to 3,073 yuan per month.

 

Across all categories, food accounts for the largest share of workers’ daily expenses, followed by housing. However, most of them can only afford cheap but poorly maintained accommodation. They seldom buy clothes regularly, and also strictly refrain from excessive grocery shopping and spending on leisure and entertainment. Many workers do not spend on transportation at all by commuting on foot instead of public transport, except visiting their hometown once a year. Most workers also has neither budget for skill training or further education nor the opportunity to do so.

 

On one hand, although workers’ wages exceed the survival cost (including basic food, housing, clothing and grocery), they are accustomed to consuming at low level to meet such subsistence requirement. For food, housing, clothing and such basic living necessities, workers live in lower quality than standard. On the other hand, workers invest more than double of their survival expenses in meeting development needs, particularly healthcare and family financial burden. It is argued that for those workers with low income, they still sacrifice their personal life quality to meet their family development needs, trying hard to catch up with social development.

 

(3) There is a clear differential between wage levels in different cities, but not much in workers’ daily living expenditure.

 

The survey finds that workers in higher-tiered cities earn a relatively higher wage and are better covered by social security, while the situation reverses in lower-tiered cities. However, the level of expenditure of workers in the 4 cities does not show a proportionate difference. Most workers save on food, clothing and living expenditure, but are generous to their children and parents. On average, workers in the 4 cities pay over 1,000 yuan a month to support their family. some spend even more, reaching 2,000 yuan per month, like workers from Huizhou.

 

Few workers live with their families in urban cities, since living costs in the cities are high. According to their expenditure records, workers who live with their families in the city spend at least 3,000 yuan a month for the whole household. The similar expenses among different cities also aggravate the burden on workers. For example, we see from the market price statistics that there is very little difference between Guangzhou and Dongguan on the necessary living expenditures. The investigation of workers’ daily necessities in four cities also display that the average expenditure on each item is mostly similar and within one-hundred-yuan difference in the four cities. It is argued that the market prices and living expenditures in different cities in Guangdong are slightly different, but the difference is not big at all.

 

(4) Social security fails to ease the financial burden of workers; workers’ capacity to save differ drastically.

 

Social insurance in the four cities does not fully cover the medical needs of all workers, while costs for many services and medication are not reimbursed but self-financed. From workers’ spending pattern, we can see that the social security model in China nowadays still heavily rely on individual families instead of sharing the risk across society as a whole. It is still common for people to rear children and expect their children to look after them when they get old. Family is also where they turn to in in need and retirement, making it essential for everyone in the family to go out for work, make money and contribute to their family members like children and parents.

 

Workers’ saving capacity also differs by age and consumption habits. For example, workers in Huizhou are above 40 on average, while those in Heyuan are under 30 on average. Huizhou workers, on one hand, spend the most on healthcare and supporting their family among four cities; on the other hand, they manage to save the most. On the contrary, young workers in Heyuan spend the most in entertainment, and they spend the least on saving and supporting their family and in the 4 cities. However, workers in all 4 cities become financially vulnerable to accidents or sudden illnesses, especially in condition that they are not under adequate social security protection.

 

In view of this, we make the following suggestions on the adjustment of the minimum wage:

 

(1) The minimum wage level should meet the needs of both workers and their family.

 

Taking data of local consumer prices, spending habits and actual needs of workers into account, we estimate the minimum level of earnings that a worker need to support a family of a 3 in an industrial zone in Guangzhou. We suggest that to live a decent life with no area of needs in life being particularly compressed, a family of 3 in Guangzhou would spend at least 7,510 yuan per month. Assuming that there are 2 working adults raising a child, the minimum wage per adult should reach 3,755 yuan. Likewise, a family of 3 in Dongguan would spend at least 6,877 yuan a month; and 2 working adults in the family should earn at least 3,439 yuan per month.

 

(2) Local minimum wage should reach at least 40% of the local average wage.

 

At present, it is impossible to have daily needs met if a worker earns the local minimum wage level in Guangdong. It is losing the guiding significance to workers’ wage that it had in the past. We argue that the minimum wage for Guangdong workers must be set back on track as soon as possible and the bottom line should be 40% of the local average wage. The Guangdong government should recognise that low-income workers should also share the fruit of economic development in recent years. Although there are regional differences, 40% of the local average wage should be the lowest standard for workers’ minimum wage, and this standard actually coincides with workers’ average base wage in the 4 cities in our survey. Therefore, we propose that the local minimum wage should reach 2,970 yuan in Guangzhou; 1,922 yuan in Dongguan; 2,159 yuan in Huizhou city; and 1,884 yuan in Heyuan.

 

(3) Ideally, the minimum wage level should meet 60% of the local average wage in order to meet workers’ developmental needs.

 

Our findings show that workers spend disproportionately on developmental needs. If 40% of the local average wage fails to meet the real developmental needs of workers, we suggest that the minimum wage should eventually be in line with 60% of the local average wage, so as to make up for workers’ developmental expenditures when they are not fully covered by social security protection.

 

Click to see the full report (in Chinese only):2017年广东省四类地区工人工资与生活开支调查报告

 

Click to see the Indonesian translation of the executive summary of this report edited by Redaksi KSN (in Indonesian only): Hasil Survei Upah Buruh dan Biaya Hidup di Empat Kota di Provinsi Guangdong, China