Calculating the power of your hard-earned yuan

Closing the gap

Liu Junsheng suggests several ways in which the gap between the low and high income groups can be reduced and the income of low earners raised to a more secure level.

"Workers in monopoly industries should have their wages raised at a much slower rate," he said. "And the monopoly in some of those industries should be broken to get rid of the conditions and environment that encourage big wage increases for high-ranking employees."

Liu added that the government's fiscal policies should favor SMEs more to help them increase profits, so they can afford to raise their workers' salaries.

The transfer of labor-intensive industries from coastal regions to western areas and the further development of industries in advanced areas should be carried out promptly, as this would help increase workers' pay, he said.

Experts also highlight the importance of collective negotiations between employers and workers to achieve steadier and fairer wage increases.

A recent industrial collective contract will give more than 100,000 software workers in Dalian, Liaoning province, a pay rise of at least 6 percent this year. Another contract will mean an 18 percent increase this year for 11,600 working for sports appliance manufacturers in Yangzhou, Jiangsu province.

For its part, the central government has pledged in its 12th Five-Year Plan (2011-15) that incomes will "keep pace with economic growth" and wages will "increase in line with improvements of productivity".

Delivering the government work report in March, Premier Wen Jiabao said the government is to set up a mechanism for scheduling income increases and to raise the minimum wage by at least 13 percent a year, in order to curb the widening income gap.

Wen also promised more effective adjustments to taxation to balance the incomes of different social strata. He said the government will strictly regulate the income of senior managerial staff at State-owned enterprises and financial institutions, and raise the income of low earners.

If successful, the plan will create a much larger middle-income group and narrow the gap in wealth generally. It will also be interesting to see if the ILO rates the purchasing power of their hard-earned yuan stronger or weaker than it is today.

Contact the writer at chenxin@chinadaily.com.cn