Firms see pay floor rising 20pc a year up to 2015

Beijing plans to raise the minimum wage by at least 20 per cent annually over the next five years to boost domestic spending power and consumption, according to a powerful consultative body.

More than doubling the pay by 2015 would be top of the agenda of the nation's next five-year plan, said Huang Mengfu, vice-chairman of the National Council of Chinese People's Political Consultative Conference and chairman of the All-China Federation of Industry and Commerce.

Beijing is making a concerted push to lift domestic demand in an attempt to lower its reliance on exports and close the gap between the poor and the rich, he said.

In return for raising salaries, Huang said the CPPCC would propose to reduce government fees and administrative charges levied on factories.

'Chinese wages are too low and lagging behind the country's economic growth,' Huang told a 30-strong delegation of Hong Kong Young Industrialists Council yesterday. 'The wage increase may put some pressure on manufacturers, but this is inevitable during economic development.'

The wave of strikes at factories that swept the mainland earlier this year, plaguing foreign brands from Foxconn to Honda, was blamed on a lack of independent trade unions and an effective system for negotiating pay rises.