The minimum wage was raised in Guangzhou on December 1, answering calls to improve people's livelihoods and addressing the problem of a lack of migrant workers in the city.

The Bureau of Labour and Social Security of Guangzhou Municipality set out two different standards, which were applied to various districts in the city based on their economic development.

In short, more affluent districts must pay a minimum wage of 684 yuan (US$82) per month, less well-off districts 574 yuan (US$69).

Most districts will have to pay the higher rate.

Guangzhou's former minimum wage of 510 yuan (US$61) a month became law just a year ago, on January 1.

But the bureau considered this rate did not reflect Guangzhou's true economic development, and was not enough to secure the lowest standard of living for low-income families.

Factory owners have complained that raising wages will increase production costs, but the new policy has been warmly received by others.

Ye Guoyao, vice-president of Guangzhou Labour Union, said the new wage included 155 yuan (US$18) for social insurance.

"That is to say, the pure income has only grown by 19 yuan (US$2.2)," said Ye.

Director of the labour and social security bureau Zhang Jieming said: "Improving the standard is necessary. It can give incentives to workers."

Zhang Zhong, an official with the Guangzhou municipal government, said as the standard of living improves, people are more concerned about how the rich are doing, while the poorer get neglected.

Increasing the minimum wage shows the government's concern for low-income groups and is good for social progress and social harmony, Zhang said.

Previous media reports have indicated a shortage of migrant workers in Pearl River Delta cities, partly because of low wages.

Employers say they have already started paying their employees according to the new standard.

The Guangzhou-based Jetta Group is one of them.

The group manufactures toys and household electric appliances in Guangzhou's Baiyun District.

Li Zhiyuan, honorary board chairman of the Group, said that the group has almost 40,000 workers.

"We will pay 90 million yuan (US$10.88 million) more each year because of the new policy," he said. "I have to say it is really a heavy burden."

Li is also a member of the Guangzhou Municipal Entrepreneurs Association.

He said the cost of manufacturing had been calculated at the beginning of the year, and the new policy had caught them unprepared.

Wu Zhenchang, president of the Guangzhou association of Taiwan entrepreneurs, suggested different minimum income standards should be applied to labour-intensive factories and technology-intensive factories, with a lower standard for the former and higher for the latter.

He said increased costs would affect investors' confidence in investment and they would shift their capital to other cities with lower minimum wages.

Zhang Zhong said these were not good enough reasons to reject the new wage.

He said increasing incomes was good for maintaining social stability.

While many employers are adhering to the new policy, doubts have been raised about whether all employers will. The Guangzhou bureau of labour and social security promised they would do more to monitor employers.

(China Daily December 24, 2004)