GUANGZHOU: A new minimum wage in Guangdong - effective April 1 - will give the southern province the mainland's highest wage standard, but it isn't expected to put unbearable pressure on companies.

Migrant workers at the Guangzhou Railway Station. The Guangdong government plans to raise the minimum wage for migrant workers on April 1. CNS

A labor official and some company representatives spoke yesterday about the forthcoming hike, which will give minimum-wage earners an average salary raise of 12.9 percent in the province.

Analysts say the hike will actually benefit some companies by improving the industry standard - which suffers when companies rely solely on cheap labor.

The new minimum-salary standard was announced yesterday and includes five salary levels in Guandong. The monthly minimum in Guangzhou will be highest at 860 yuan, and a low of 530 yuan will be found in the province's underdeveloped areas.

Chen Siyi, director of the Salary Management Office in the Guangdong Provincial Labor and Social Security Department, said the 12.9 percent average increase is being implemented to attract more qualified workers and make the province more competitive.

"And it won't put significant pressure from increased labor costs on enterprises," Chen said, "especially those Hong Kong-invested ones."

But earlier media reports have said that up to 1,000 Hong Kong-invested companies in the Pearl River Delta region have closed due to increased labor and production costs.

Chen downplayed the situation, calling it "just normal", as the province is currently making efforts to move companies that pollute and use a lot of energy.

She said the increased minimum wage has "little to do" with the closing there of Hong Kong-invested companies.

"We conducted a province-wide survey before issuing the standard," Chen said. "We found that most enterprises here pay more than the upcoming minimum salary."

The number of Hong Kong-invested enterprises in Guangdong - an economic powerhouse in South China - currently accounts for about 70 percent of the province's total overseas-invested companies.

Han Zhaozhou, a professor with the Guangzhou-based Ji'nan University, agreed with Chen and added that the new standard will help push enterprises to upgrade their industrial structures.

"If enterprises pay migrant workers the minimum-wage standard, those may find it hard to hire new workers," said Han.

Low salaries were once blamed as a major reason for workers leaving the Pearl River Delta region, Han said.

"Actually, the average-salary level in most cities here is higher than the minimum standard," Han told China Daily yesterday.

At a job fair in Guangzhou last weekend, companies were offering an average salary of up to 1,160 yuan per month in a bid to attract more migrant workers.

Peter Chu, who runs a shoe factory in Guangzhou, said: "The new minimum salary will certainly help attract more migrant workers. That is good news to us".

The Hong Kong investor added that workers' salaries account for about 10 percent of his company's total production costs.

(HK Edition 02/21/2008 page2)