Rise in minimum wages may push prices up: expert

In the first six months of this year, 18 regions have raised their minimum wage standards, which some experts say may add to the problems of price hikes and unemployment.

Yin Chengji, a spokesman of the Ministry of Human Resources and Social Security, announced Monday that 18 regions in China have adjusted their minimum wage standards.

Currently, Shenzhen in South China’s Guangdong Province adopts the highest minimum monthly wage of 1,320 yuan ($204), and Beijing uses the highest minimum hourly wage rate of 13 yuan.

Yin said that the ministry would continue to ask the remaining regions in China to raise minimum wage standards at a proper time. The ministry would also launch an enterprise wage evaluation system throughout the country, he revealed.

Yin said that the minimum wage standard policy aims at protecting the basic interests of workers and low-income groups.

But some experts hold a different view.

“The policy is not all good news for the low-income groups. The most direct result of the minimum wage increase will be higher labor costs for companies and factories. Many companies will choose to transfer the costs to consumers, which will push prices higher. The low-income groups will still suffer in the end,” He Zhengsheng, member of the Beijing Labor Law and Social Security Law Society and founding partner of Beijing Honor Base Law Firm, told the Global Times.

Also, higher labor costs may cause a decline in orders for Chinese companies.

“For sectors sensitive to prices, higher cost means less orders. A growing number of foreign companies are shifting their manufacturing and processing orders away from China to Southeast Asian countries, or other places where the labor costs are lower. Local companies may reduce the number of employees to control costs. This is not good news for the low-income groups and workers,” He said.

He suggested the government to provide more social welfare services to protect the interests of low-income groups.

Global Times

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