Guangdong, the province that produces about a third of China’s exports, on Thursday announced plans to raise its minimum wage more than 20 per cent, fuelling inflation fears and dealing a blow to manufacturers emerging from the global credit crisis.
The province, which borders Hong Kong and forms part of the manufacturing powerhouse known as the Pearl River Delta in southern China, was not the first to introduce a mandatory wage rise this year, but the increase was sharply higher than the 13 per cent introduced by Jiangsu province last month.(…)
The minimum wage increase of 21.1 per cent will take effect on May 1.
It added that wages were set to reflect rising inflation and the region’s acute labour shortage – a problem that is paralysing plants rushing to complete an unexpected surge in orders after Chinese new year in February.
One factory owner on Thursday said the move would bring limited benefits to business.
“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. Those workers who used to come here can now find work close to home. I don’t think we will see many of them moving back here,” said Au Yiu-chee, a Hong Kong owner of a textile factory in Dongguan.(…)
On Thursday a trade association in China published a survey of 1,000 businesses showing that exporters in labour-intensive sectors – mostly original design manufacturers making products to order for international brands – had profit margins as low as 3 per cent. The China Council for the Promotion of International Trade added that a renminbi appreciation would force many exporters to close.(…)
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