Minimum wages in China are a crucial factor for businesses and employees alike, and as they continue to evolve, understanding these changes is essential, even when considering leisure activities like watching Euro 2024 in Shenzhen, China. While seemingly unrelated, the economic landscape shaped by minimum wage policies indirectly influences consumer spending and the availability of leisure options in cities like Shenzhen. As of February 18, 2025, significant updates to minimum wage standards across Chinese provinces impact the financial health of businesses and the disposable income of residents, factors that can play a role in how people in Shenzhen might choose to enjoy international events such as Euro 2024.
Decoding China’s Minimum Wage System: A 2025 Guide
China’s minimum wage system is designed to protect the basic rights of workers, ensuring they receive a fair baseline compensation for their labor. According to China’s Provisions on Minimum Wage, this is defined as the minimum labor remuneration employers must pay employees who provide normal labor within standard working hours or as stipulated in their labor contracts. These standards are not arbitrary; they are meticulously calculated by provincial governments. They take into account a range of socioeconomic indicators such as the minimum cost of living for local employees and their dependents, the urban consumer price index, social insurance contributions, housing funds, average employee salaries, local economic development levels, and employment conditions.
Alt text: DSA logo representing payroll and human resource administration services in China, relevant to understanding labor costs and minimum wage regulations.
Minimum wage standards in China are presented in two forms: monthly and hourly rates. The monthly minimum wage is applicable to full-time employees, while the hourly minimum wage is designed for non-full-time workers, including part-time and temporary staff. It’s important to note that the minimum wage is a base salary and does not encompass overtime pay, night shift allowances, high-temperature subsidies, special work environment allowances, or subsidies for meals, transportation, and housing. However, in most regions, China’s minimum wage standards do include social insurance and housing fund contributions paid by employees. This means that in some areas, an employee’s actual take-home pay might be less than the stated minimum wage due to these deductions. Shanghai is an exception, explicitly excluding these contributions from its minimum wage calculations. Local governments are mandated to review and update minimum wages periodically, typically every few years, adapting them to reflect local economic conditions. Many provinces also implement a tiered system, setting different minimum wage levels for various areas within their jurisdiction, reflecting the varying levels of development and cost of living between major cities and less developed regions.
2025 Minimum Wage Standards Across China: Key Provinces and Cities
To provide a comprehensive overview of the minimum wage landscape in China, the table below details the minimum wage standards across various provinces and regions as of 2025. For those planning to watch Euro 2024 in Shenzhen or considering business operations in different parts of China, understanding these regional variations is crucial for cost analysis and compliance.
| Minimum Wages in China 2025 |
|---|
| Province/region |
| Anhui |
| B |
| C |
| D |
| Beijing |
| Chongqing |
| B |
| Fujian |
| B |
| C |
| D |
| Gansu |
| B |
| C |
| D |
| Guangdong |
| Shenzhen |
| B |
| C |
| D |
| Guangxi |
| B |
| C |
| Guizhou |
| B |
| C |
| Hainan |
| B |
| Hebei |
| B |
| C |
| Heilongjiang |
| B |
| C |
| Henan |
| B |
| C |
| Hubei |
| B |
| C |
| Hunan*** |
| B |
| C |
| Inner Mongolia |
| B |
| C |
| Jiangsu |
| B |
| C |
| Jiangxi |
| B |
| C |
| Jilin |
| B |
| C |
| Liaoning |
| B |
| C |
| Ningxia |
| B |
| Qinghai |
| Shaanxi |
| B |
| C |
| Shandong |
| B |
| C |
| Shanghai |
| Shanxi |
| B |
| C |
| Sichuan*** |
| B |
| Tianjin |
| Tibet |
| Xinjiang |
| B |
| C |
| Yunnan |
| B |
| C |
| Zhejiang*** |
| B |
| C |
Notes：
*Certain provinces set minimum wage standards at the county or district level. The cities listed in the table are examples and are not exhaustive.
**Highlighted areas denote jurisdictions that updated their minimum wage in 2025. The monthly minimum wage is for full-time employment while the hourly minimum wage is for part-time employment.
*** Hunan, Zhejiang, and Sichuan provinces allow each city to decide which minimum wage level to apply. The cities given as examples are therefore subject to change.
How Minimum Wage Increases Ripple Through Employee Benefits
An increase in minimum wage is not just about the base pay; it triggers a cascade of adjustments across various employee benefits. These changes are crucial for both employers managing labor costs and employees planning their finances, perhaps even when budgeting for leisure activities like watching Euro 2024 in Shenzhen.
Impact on Housing Fund Contributions
In many cities, the minimum housing fund contribution base is directly linked to the local minimum wage. Therefore, when minimum wages rise, so does the base for housing fund contributions. While the upper limit for housing fund contributions is typically capped at three times the local average monthly salary from the previous year, the lower limit often aligns with the local minimum wage. It’s worth noting that adjustments to housing fund contribution bases may not always coincide exactly with minimum wage changes. For example, during the COVID-19 pandemic, Shanghai delayed aligning its housing fund base with the 2021 minimum wage to ease financial pressures on businesses. Companies need to stay informed about local government announcements regarding these adjustments.
Probation Period Wages and Minimum Wage Compliance
China’s Labor Contract Law, Article 20, sets clear guidelines for wages during probation periods. It mandates that an employee’s wage during probation cannot be less than either the lowest wage for the same position within the company, 80 percent of the agreed-upon wage in the labor contract, or the local minimum wage standard – whichever is highest. This provision ensures that even new employees are protected by the minimum wage floor.
Sick Leave Wages and the Minimum Wage Benchmark
Sick leave wage standards vary by city, but a common principle is that sick leave pay must not fall below 80 percent of the local minimum wage. This is outlined in the Opinions on Several Issues concerning the Implementation of the Labor Law of the People’s Republic of China (Lao Bu Fa [1995] No. 309). Consequently, as minimum wages increase, the minimum threshold for sick leave wages also rises, providing a safety net for employees during illness.
Severance Pay Calculations and Minimum Wage
When it comes to severance pay, Article 27 of the Implementation Regulations for the Labor Contract Law of the People’s Republic of China stipulates that the monthly salary used to calculate severance must be at least the local minimum wage. If an employee’s average pay in the 12 months preceding termination is lower than the minimum wage, the severance pay calculation must be based on the local minimum wage standard. This ensures a minimum level of financial compensation during job transitions.
Suspension of Work and Minimum Wage Linked Allowances
In situations where businesses suspend operations due to internal or external factors, such as pandemics, wage payment regulations come into play. If the suspension is within a single wage payment cycle, employees are entitled to their regular salaries as per their labor contracts. However, for suspensions extending beyond one wage cycle, companies must provide a living allowance. Referring to provinces like Zhejiang, Hubei, and Shaanxi, this living allowance is often set at 70-80 percent of the local minimum wage, providing a basic income during operational disruptions.
Minimum Wage as a Floor for Dispatched Employee Wages
For dispatched employees, Article 58 of the Labor Contract Law mandates that labor dispatch agencies must pay remuneration at least equivalent to the local minimum wage standard during periods when the employee is not assigned work duties. This provision ensures a minimum income level even between assignments.
Injured Worker Wages and Disability Allowances
The Regulations on Work-Related Injury Insurance (Articles 35 and 36) detail benefits for workers with work-related injuries resulting in grades 1 to 6 disabilities. These include a one-time disability subsidy and a monthly disability allowance. The monthly disability allowance is typically 60-90 percent of the worker’s average monthly wage in the 12 months before the injury. Importantly, if this calculated allowance falls below the local minimum wage, the work-related injury insurance fund covers the difference, ensuring injured workers receive at least the minimum wage equivalent.
Unemployment Benefits and the Minimum Wage Connection
The Guiding Opinions of the Ministry of Human Resources and Social Security and the Ministry of Finance on Adjusting the Criteria for Unemployment Insurance Benefits (Ren She Bu Fa [2017] No.71) aims to progressively improve unemployment benefits, targeting 90 percent of the local minimum wage standard, provided the unemployment insurance fund remains sustainable. Currently, unemployment benefits are often paid at 70-80 percent of the local minimum wage, linking social safety nets to minimum wage levels.
The Broader Impact on Labor Costs and Economic Considerations
Minimum wage levels are just one piece of the puzzle when assessing overall labor costs in China. As China’s economy advances, transitioning towards innovation and service-based industries, many foreign-invested enterprises already pay wages significantly above the minimum wage. For instance, in Shanghai, average monthly wages in 2020 were nearly four times the local minimum wage. Furthermore, mandatory employer contributions for social insurance and housing funds add approximately 37 percent to labor costs on top of gross salaries.
Alt text: Dezan Shira & Associates logo, a business advisory firm, indicating expertise in China labor costs and payroll, assisting businesses in understanding financial implications.
For foreign investors, rising wages are a reality of doing business in China. However, when factoring in China’s high productivity, advanced infrastructure, efficient transportation networks, and access to a vast domestic market, China can still present a more cost-effective investment destination compared to countries with lower statutory labor costs alone. Minimum wages serve as a valuable benchmark for comparing labor costs across different regions within China. Beyond minimum wage, a deeper analysis should consider industry-specific wage benchmarks, talent availability, and regional incentives to gain a more comprehensive understanding of labor costs in any given area. This understanding is not only crucial for businesses but also for individuals planning their finances and leisure activities, such as enjoying Euro 2024 in a vibrant city like Shenzhen, where the economic environment is partly shaped by these minimum wage policies.
(This article was originally published on January 2, 2020, and last updated on February 18, 2025.)
(Credit)
