China’s Sichuan province minimum wage soars 23%

China’s Sichuan province increased the minimum wage in an attempt to attract workers in a region where cost of living is rapidly rising, the state-run news agency Xinhua said Thursday.

The country’s southwestern province of 80 million is the fourth largest administrative division in China and is a major economic hub for the agriculture, manufacturing and auto industries.

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The minimum monthly wage will now be raised to 1,050 yuan (US$166), 960 yuan, 880 yuan and 800 yuan in regions at different levels of development, provincial officials said in a statement.

Wage hikes have hit other regions in China. 

The minimum wage was raised by 12.5 percent in Sichuan province in 2007 to attract more workers. Beijing increased its minimum wage 20 percent in June 2010 and then another 21 percent in December of that year. 

Overall, 21 provinces, autonomous regions and municipalities have raised their minimum monthly wage by an average of 21.7 percent this year, according to the Ministry of Human Resources and Social Security.

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The government has made several past attempts to keep up with the rising cost of living and inflation, but many cities in China have been combating a rising cost of living, and an ever-increasing wealth gap between the rich and poor.

Many Chinese cities are experiencing severe labor shortages, which have contributed to the minimum wage hikes, the BBC reported. 

According to the news report:

“Rising wages have prompted analysts to predict that China, previously known for its low cost of labour, could lose its edge as a manufacturing hub.

Manufacturers could look to countries such as Vietnam, Bangladesh and Cambodia where wages are still low.”