Guangdong Province of China will begin implementation of a new minimum wage system in December 2004, a move that will likely increase financial burden on manufacturers in the region. Earlier in November, the provincial government announced a seven-layered standard for minimum wage applicable to enterprises in Guangdong. Minimum wage per month in the first category will be 684 RMB (US$82.6; US$1=8.3RMB), a 34% increase from the present level, whereas that in the seventh category will stand at 352 RMB (US$42.5). City governments in the province will be given discretion on deciding which category to adopt.

 

The city government of Guangzhou, has taken views from all parties involved and suggested Guangzhou impose the minimum wage system by industry. At present, the Ministry of Labor and Social Security is in favor of the first-category standard, citing the city's political and socioeconomic importance and the resultant higher living costs in Guangdong province. However, the final decision is still pending at the moment. 

 

According to Taiwanese Merchant Association in Guangzhou, over 70% of manufactures based in Guangzhou offer wages higher than the first category requires, and thus the impact would be limited. However, subsidies for over-time work, now also applicable to the new minimum wage system, will likely increase 10% to 20%.