More Chinese provinces are raising minimum wages this year, reflecting persistent labour cost pressure as the supply of workers shrinks in the world’s second-biggest economy. 17 provinces and municipalities have raised their wage floor so far this year, compared with nine for all of last year.

Jilin, on the border with North Korea, became the latest province to do so when it announced last month that it was lifting the minimum benchmark by 20 per cent to 1,780 yuan (US$270) per month from October 1. The inland areas of Henan, Shanxi and Ningxia also unveiled 5-12 per cent increases in minimum wages, effective from the start of this month. Shanghai leads the mainland with a statutory minimum wage of 2,300 yuan, followed by Shenzhen with 2,130 yuan, Tianjin with 2,050 yuan and Beijing on 2,000 yuan.

Zhao Yang, chief China economist at Nomura International in Hong Kong, said China’s minimum wages were set to rise further in the coming years as average wages increased and the economy expanded. “It’s also guided by the top leadership’s emphasis on poverty alleviation and sharing more of the fruit of growth with the disadvantaged,” Zhao said.

Chinese President Xi Jinping has pledged to wipe out poverty by 2020 as part of the Communist Party’s centennial goal to build a “moderately prosperous society”. Poverty alleviation is likely to be one of Xi’s main policy priorities during his second term in office after a key national party congress next week, according to analysts.

Tsinghua University economist Yuan Gangming said consumption had lost steam in recent years, showing incomes were not keeping up with economic growth. “If people cannot benefit from economic expansion, the growth will be unsustainable,” Yuan said. “Governments will have to raise minimum wages further in the future to offset rising living costs to attract migrant workers.”

Source: SCMP