Report on Workers' Wages and Living Expenses in 4 Types of Regions in Guangdong

Page 1

Report on Workers’ Wages and Living Expenses in 4 Types of Regions in Guangdong Worker Empowerment

Introduction Minimum wage is a reference for adjustment of workers’ basic salary, and an important protection for the livelihood of grassroots workers. In April 2017, we were aware that the Guangdong government was planning to freeze the minimum wage for the third year1. A few months later, 22 regions in Mainland China announced increase of minimum wage standards in 2017. By the end of 2017, minimum wage in Shenzhen, Shanghai, Beijing, Tianjin and Zhejiang was over RMB2,000, leading the country’s standard 2. Meanwhile, minimum wage was not adjusted in the last 3 years in Guangdong, and the standard was below RMB2,000 even in the province’s most advanced city Guangzhou. We were deeply concerned with how the minimum wage standard in Guangdong would affect the livelihood of workers in the region. A research was launched in late 2017 to investigate the freeze of minimum wage by the Guangdong government, and to make our policy recommendations. Samples were taken from 4 types of regions from Guangdong during September to November 2017, including Type 1 region Guangzhou (present minimum wage RMB1,895), Type 2 region Dongguan (present minimum wage RMB1,510), Type 3 region Huizhou (present minimum standard RMB1,350) and Type 4 region Heyuan (present minimum standard RMB1,210). Questionnaire survey on workers’ wages and expenditures were conducted. The results were used to analyze and assess gaps between wages and actual living expenditures among workers in different cities in Guangdong. We also invited workers living in urban areas to record their expenditure for one month, to unfold the daily expenses of workers’ in real life. An on-site price recording was also made to estimate workers’ consumption needs and expenditure. Research methodologies used in our 2013 and 2015 researches were adopted 3. When using the methods of questionnaire survey and workers’ expenditure recording, daily expenses were categorized into 8 groups. Reference was taken from Research on Minimum Standard in Guangdong Province 4, and residence’s non-productive expenditure was categorized into 8 groups: food, clothing, shelter, miscellaneous commodities and services, household items and services, transportation and telecommunication, medical and health, and entertainment, education and cultural services. These groups of expenditures correspond to three levels of living standards: Subsistance Basic Living Development

Food, clothing, shelter, miscellaneous commodities and services Food, clothing, shelter, Household appliances miscellaneous commodities items, transportation and services telecommunications Food, clothing, shelter, Household appliances miscellaneous commodities items, transportation and services telecommunications

and and and Medical and health, enterand tainment, education and cultural services

Table 1: 8 groups of residential expenditures under the 3 level of living standards

These 8 groups of expenditure correspond to three levels of living standards: Subsistence, Basic Living and Development. Desirable expenditure on each level should be 30%, 35% 1 “Opinion on freezing minimum wage in Guangdong for 3 consecutive years”, 9 NGOs in Hong Kong, 2017-04-03 政策倡議 /348 2 “22 regions raised standard of minimum wage, 5 regions are more than RMB2,000”, China News, 2017-12-06. 3 Investigation report:How Should Minimum Wage Promise a Decent Living for Workers? Worker Empowerment, 調查報告 /359 4 韓兆洲等著,《勞動工資與社會保障:廣東省最低工資調研與統一測算模型研究》,經濟科學出版社, 2006 年。


and 40% of average social wages respectively. Families living under the Subsistence line are in absolute poverty and their survival might be threatened. Families living on Basic Living line are barely able to satisfy their minimum living needs. Families living on Development line are basically self-sufficient and able to meet modest living needs.

Research findings Research on wages and expenditures in 4 types of regions in Guangdong provided the following findings:

1. Compared to average standards, income of the workers in the research was obviously lower When only basic salary was considered (excluding overtime payment and extra subsidies), average monthly income of most of the workers was less than 40% of average social wage. When overtime payment and subsidies were taken into consideration, their income would be above 60% of average social wage. Location

Average basic Average month- Ratio of basic Average over- Average over- Average numsalary(RMB) ly salary (RMB) alary to month- time work per time work per ber of rest days ly salary day (hours) week (hours) p e r m o n t h (days) Guangzhou 2756 4350 63.4% 1.35 9.3 5.9 Dongguan 1767 3850 45.9% 2.54 20.3 2.75 Huizhou 2003 4009 50% 2.97 20.8 2.88 Heyuan 2155 3285 65.6% 2.56 15 3.19 Table 2: Level of basic salary, overtime work and rest-day entitlement in 4 regions of Guangdong

Though most of the workers were earning RMB3,000 to RMB4,000 per month, their basic salary was low. More than 60% of the workers were earning a basic salary of less than RMB2,000. Though their basic salary complied with local minimum wage standard, it was only barely above the standard, regardless of their industries and skill sets which were widely covered in the research. In general, employers were paying the workers the minimum wage. The phenomenon of “minimum wage as basic salary” was common. Level of basic salary % (RMB) 1000-2000 64.5% 2001-3000 21.1% 3001-4000 7.9% 4001-5000 2.6% 5001 or more 3.9% Table 3: Basic salary of 4 regions in Guangdong

2. Serious imbalance in expenditure: low subsistence expenditure, high cost of development needs The workers were saving every bit from their daily expenses to maintain their living. The research found that the workers spent RMB1,015 in average on survival need items such as food, clothing and shelter. When expenditures on other items were added, the average monthly expenses would be as high as RMB3,073.

Food took up a considerable proportion of workers’ daily expenditures. Cheap but


ill-furnished makeshift housing saved their rents and utilities while sacrificing living standards. They seldom bought new clothes, and controlled expenses on household items, leisure and entertainment. Considerable number of workers had no expenses on transport, as they communed on foot and did not use transportations. Most of the workers did not have budget or opportunity for education or self-enhancement. Location

Guangzhou Dongguan Huizhou Heyuan

Average month- Average month- Average month- Average month- Average monthly expenses on ly expenses on ly expenses on ly expenses on ly expenses on food (RMB) shelter (RMB) utilities (RMB) clothing (RMB) household items (RMB) 671 232.8 72.6 99 111 492 237 60.7 262 119 331 150 62.1 173 160 322 192.4 43.2 161 106

Table 4: Expenses on food, shelter, clothing and utilities in 4 regions in Guangzhou

Though workers’ income is higher than the needs of subsistence and basic living, they are accustomed to satisfying these needs with minimal expenditure. With regard to food, clothing and shelter, their living standards were lower than desirable standards. On the other hand, workers’ expenses to satisfy development needs were twice as that of subsistence needs, especially on medical expenses and support to family members. To catch up with social development, workers with low income have to sacrifice their quality of subsistence living and cut related expenses to meet developmental needs of the family. Location

Average expen- Average expen- Average expen- Average expen- A v e r a g e e x diture on trans- diture on leisure diture on tele- diture on med- p e n d i t u r e o n port (RMB) and entertain- communication ical and health supporting edment (RMB) (RMB) (RMB) ucation and living expenses of family members (RMB) Guangzhou 72 155 85.3 73 1380.4 Dongguan 79.2 193 88.7 82.5 1496 Huizhou 90 108 105 179 2205 Heyuan 116.7 364 119 130 1114.3 Table 5: Expenditure on modest comfort and development in 4 regions in Guangdong

3. Similar daily expenses despite disparity of workers’ income across regions From the statistics, it could be observed that workers’ income and social security were of higher level in Type 1 region, while in Type 4 region, the average income was the lowest and the coverage rate of social security was also the lowest. However, only small difference is observed in their spending. Most of the workers saved expenses on food, clothing and shelter, and were more relax with expenditures on children and older parents. The average spending on supporting family members among the 4 regions was more than RMB1,000 per month, while it reached RMB2,000 in Huizhou.


Some of the workers lived with their families in the city and have to bear with the high

living standard. According to their record on expenditure, workers have to spend more than RMB3,000 if they lived with their families in the city, while most of the expenses was on supporting the family. As gaps of living standards between cities are narrowing, workers have to shoulder bigger burden. For example, it could be observed from the prices index that differences in expenses on food, clothing and shelter between Guangzhou and Dongguan were very small. In our investigation on workers’ daily expenses on food, clothing and shelter, differences in average consumption between the four cities were less than RMB100, except a few cases. In other words, there were variation in price level and living standards between cities in Guangdong, but the difference was small. Location

National aver- Average basic Rat io of basic Average basic Ratio of average age social wage salary (This re- salary to nation- salary (this re- salary to nation(2016) search) al average social search) al average social wage salary Guangzhou 7425 2756 37.1% 4350 58.6% Dongguan 4804 1767 36.8% 3850 80.1% Huizhou 5397 2003 37.1% 4009 74.3% Heyuan 4709 2155 45.8% 3285 69.8% Table 6: National average salary, basic salary and monthly salary of 4 regions in Guangdong

4. Social security unable to support workers, personal saving varied among workers There was no full social security coverage in all 4 regions. Due to insufficiency in workers’ social security, they have to bear most of the expenses. We can observe from workers’ daily expenses that Mainland China is still a traditional society that families are the main source of help and elderly support. Workforce of the families joined the labour market and spent most of their income to support their children, parents and their personal developmental needs. Location

Old age in- Work injury Medical in- Birth insur- Unemploy- H o u s i n g Social secusurance insurance surance ance ment insur- p r o v i d e n t rity payment ance fund by worker (RMB) Guangzhou 88.9% 88.9% 88.9% 72.2% 77.7% 77.8% 521 Dongguan 80% 60% 60% 40% 48% 16% 237 Huizhou 57.9% 52.6% 47.4% 42.1% 42.1% 26.3% 257 Heyuan 43.8% 52.3% 50% 43.8% 43.8% 6.3% 255 Table 7: Social security coverage of workers in 4 regions in Guangdong Province

The amount of personal saving is related to age and consumption habits. The average age of workers from the four cities covered by this research varied. The workers in Huizhou were older in general and many of them were over 40 years old, while workers in Heyuan were younger and mostly under 30. Among workers in these 4 cities, Huizhou workers spent most of their income on medical and health, and supporting their families, and they were saving the most as well. On the other hand, workers from Heyuan were the youngest, their average spending on entertainment was the highest among the workers in 4 cities, and they were spending the least on supporting their families and saving. Due to insufficient social protection, in case workers have illness or accidents, they would have heavy financial burden.


Policy recommendations On 10 January 2018, in the first annual tripartite meeting, the Human Resources and Social Security Department of Guangdong Province reported on the province-wide assessment on minimum wage standard and claimed that economic and social development in Guangdong in recent two years were steady, and the minimum wage standard has to adjust as soon as possible to respond to the current status of economic social development5. With regard to adjustment on minimum wage standard, our recommendations are as follow:

1. Minimum wage should be able to support living expenses of whole family According to the spending habits and actual needs of the workers, we projected the basic monthly expenditures needed for a family of three members living in the industrial area in Guangdong. For a family of three living in Guangzhou, the minimum monthly income needed to support the family would be RMB7,510 (based on the assumption of 2 working persons in the family, each of them should have income of RMB3,755); for a family of three living in Dongguan, the monthly income needed would be RMB6,877 (based on the assumption of 2 working persons in the family, each of them should have income of RMB3,439).

2. The minimum wage would not be lower than 40% of average social wage The present minimum wage standard in Guangdong is far below the actual needs of the workers, its meaning as a reference to workers’ income has changed. We propose that minimum wage has to go back to the right track and its bottom line should be 40% of average social wage, to acknowledge that low-income workers should also share the results of economic achievements in Guangdong. Despite differences between the regions, it should be a protection of workers’ minimum income standard.

3. Strive towards a minimum wage level not lower than 60% of average social wage Moreover, our research found that workers’ expenses for developmental needs were increasing. 40% of average social wage is no longer sufficient to support workers’ developmental needs. We propose that in the long run, the minimum wage should be 60% of average social wage, to make up for the need for expenses on workers’ developmental expenses when they are still not fully covered by social security.

5 “Provincial government coordinate tripartite meeting on adjustment of minimum wage standard”, Southern Labour News, 2018-01-15. htm


About Worker Empowerment: Worker Empowerment (WE) is a Hong Kong-based labour organization which concerns labour rights in China. The mission of WE is to strengthen workers, particularly migrant workers, to reclaim labour rights and decent jobs. Adopting a community approach, WE supports workers through actions including workers outreach and providing legal advice. This is achieved by developing long-term supportive partnership with local community-based worker centers in the Pearl River Delta Region. WE also emphasizes the importance of research and policy advocacy. Having published research reports on employment difficulties, minimum wage and the Labour Contract Law, WE sustains the role as an monitor and advocate in Chinese labour policies. For inquiry please contact us through email: