Objective system is needed to calculate minimum wage

THE 19TH NATIONAL CONGRESS OF THE COMMUNIST PARTY OF CHINA stressed the importance of improving people’s livelihoods and increasing people’s sense of gain. Beijing News comments:

Local authorities have repeatedly increased their minimum wage standards over the past few years, a praiseworthy practice to protect the basic rights of workers.

But raising the minimum wage should not be regarded as a reward bestowed on people by the government. Raising the minimum wage is a conventional practice carried out by many national governments in light of the practical situation in their countries and economic laws.

In all, 17 municipalities, provinces and autonomous regions raised their minimum wage standards this year. Last year nine did so.

The declining number of workers in the country has necessarily driven up the cost of labor. Statistics indicate that the number of people of working age in China last year dropped 3.49 million compared with 2015.

Against this background, increasing their minimum wage standards is not what governments

should do, but what they have to do, according to the demand-supply law of economics.

In other words, local governments’ adjustments of their minimum wage standards, which should be proactive to better protect workers’ interests, lag behind the changes in the labor market.

But that does not mean simply the higher the minimum wage the better it is. If the payment threshold is too high, employers will have to spend more on labor costs which may lead to the collapse of industries.

A more objective and responsive system is needed to calculate the timing and margin for raising the minimum wage standards in different localities. The latest data on the supply-demand situation of local labor markets, economic and industrial development, consumption, taxation and living expenses should be taken into account, and the data should be updated on a regular basis.