Inflation-hit manufacturers brace for new round of hefty pay rises

The Guangdong government is considering raising the minimum wage for the second time in less than a year, with pay in Dongguan rising as much as 15.6 per cent, the city's Communist Party boss said.

But the convenor of Hong Kong members of the Shenzhen city Chinese People's Political Consultative Conference said yesterday the wage rises could be meaningless as soaring inflation would force many Hong Kong-owned factories out of business in the coming months.

Dongguan party secretary Liu Zhigeng said on Sunday at a panel discussion with deputies of Dongguan's CPPCC that the average minimum wage would be raised by 15.6 per cent, starting from June. Local media reports other cities in Guangdong are also considering an increase, some as high as 18 per cent.

The official announcement of the rise is expected in the next two months.

The announcement came after Beijing pledged to raise the minimum wage by at least 20 per cent annually over the next five years to boost domestic consumption. But manufacturers in Guangdong said it would do little to solve the region's labour shortage and reverse the wave of factory closures in the region last year.

In May, Guangzhou lifted the monthly minimum wage from 860 yuan (HK$1,015) to 1,030 yuan and Shenzhen to 1,100 yuan in July. Another demand for wage increases among mainland workers has again emerged as the increases were quickly eaten up by runaway inflation.