Forty million government employees will receive a 15 per cent pay rise this month to stimulate domestic consumption. The increase, which follows a 15 per cent pay rise in January, will swell the government payroll bill by 30 per cent this year. It follows the unprecedented 30 per cent pay rise in 1999. The salary increase, to be complemented with a first year-end bonus package worth an extra month's salary, is part of the central Government's initiative to boost domestic demand and stabilise the civil service. The package will cover not only civil servants but also the 30 million staff working at administrative units such as research institutes. Retired cadres also will benefit through increased retirement benefits. The pay rise for government employees working in the richer provinces of Guangdong, Fujian, Zhejiang, Jiangsu, Shandong and Shanghai, as well as Beijing municipality, will be supported by local governments, but the central treasury will shoulder the extra cost for other poorer provinces. 'We consider this as natural pay growth in response to the GDP growth. It is also a move to keep our talents, as salary increases among staff at commercial enterprises are much faster and higher,' said Wang Xinxiang, from the Income Distribution Department of the Finance Ministry. 'The bonus package, to be introduced for the first time to Chinese civil servants, is in accordance with a reform programme proposed in the early 90s. 'The year-end bonus arrangement was first decided in the 1993 salary reform programme but was not implemented due to the treasury's financial difficulties,' he said, adding that now was the right time to carry out this reform. Mr Wang said central authorities had taken into consideration the present global economic downturn but were still confident that the state treasury would be able to support the inflated budget. The Government is expected to spend an extra 80 billion yuan (HK$74.4 billion) boosting government employees' wages this year. After the January pay rise, the monthly salary of a director-grade cadre was about 1,200 yuan. Average pay for the mainland's eight million civil servants is about 500 yuan a month. But Professor Zhou Dongtau, of the Chinese Academy of Social Sciences, said: 'There may be strong criticism from deprived workers about the further salary increase of government staff.'