Several cities in China's export hub of Guangdong province are poised to increase their minimum wages by up to 20 percent in April, say manufacturers and business groups in the region with close ties to local officials.
The wage increases, if realised, could potentially create a greater cost burden for exporters of China-made goods in the Pearl River Delta which has been dubbed the "world's factory floor", though they might help alleviate recent labour shortages.
With China's coastal manufacturing belts like the Pearl River Delta and Yangtze River Delta finding it increasingly difficult to find extra workers to ramp up production lines as Western orders pick up, places like eastern Jiangsu province have recently acted to raise minimum wage rates by around 13 percent.
Guangdong's Communist Party boss Wang Yang recently said the province would also consider increasing the minimum wage given the labour shortfall, though the scope and timing of such increases hasn't yet been publicly announced.
Senior managers at Nasdaq-listed Flextronics, one of southern China's largest manufacturers, however, say at least one city in the Pearl River Delta could adjust wages as early as next month, and the scale could be more aggressive than in Jiangsu.
"I think they will (increase the minimum wage)," said Jun Fu, the head of the Flextronics sprawling industrial complex in Zhuhai which employs around 44,000 employees.
"I wouldn't call it a drastic adjustment but definitely more than (the) normal adjustment," Fu told Reuters.
Jayesh Menon, a senior director of human resources at the Flextronics plant, said the rise would most likely come in April.
"It's about a 15 to 20 percent increase," said Menon, citing indications from Zhuhai labour bureau officials. "Roughly to about 930 yuan (per month)," he added.
Chinese media have reported factories in coastal regions have had trouble finding workers after the Chinese New Year in February, as migrants take up more abundant and higher paid jobs in third-tier cities in China's poorer interior.
Flextronics, however, by providing higher average wages and superior work conditions including leafy dormitories, cyber cafes and sports facilities, doesn't see any great problems in finding an extra 12,000 workers by September to meet a rebound in orders.
In nearby Dongguan, a gritty, densely packed manufacturing hub in the PRD, factories have also been provisioning for a minimum wage hike from the current level of around 780 yuan.
"It will be implemented soon, in April I believe," said Eddie Leung, a Hong Kong industrialist and honorary president of the Dongguan Association of Enterprises with Foreign Investment, who attended recent meetings with officials in Beijing.
Leung, however, said the impact for larger factories like his own that makes watches for global brands, might anyway be largely immaterial, with many firms already having stomached inflated wage costs amid the tightening labour market.
"The factories can't hire people with the minimum wage anyway because most are already paying much more than it right now," he added. "It's (the minimum wage) just a reference point."
Scores of the region's smaller factories, however, in labour intensive and low technology sectors like garments, shoes and toys could be squeezed by the wage increase, he added.
Source: Reuters, James Pomfret
labor shortage is very serious after New Year in February.actually,increasing the minimum wage only solve the temporary problem ,but not the Long-term profits