China Freezes Minimum Wage to Help Companies

Government is also considering reducing medical and accident insurance premiums

China's labor ministry has told local governments not to increase minimum wage levels in a bid to help companies cope amid the global financial crisis, state media reported on Nov. 18.

Local governments should also consider reducing medical and accident insurance premiums to ease burdens on businesses and employees, Xinhua news agency cited the Ministry of Resources and Social Security as saying. "In the light of the current economic situation and real conditions in companies, minimum wage increases have been suspended for the near term," the ministry said.

China's labor-intensive manufacturing sectors have been hit by a combination of rising labor costs, rising materials costs and the appreciation of the Chinese currency, along with the downturn in demand from the US.

The ministry had said earlier that in the first nine months of the year at least 19 Chinese provinces and cities raised their minimum wage by an average of about 15%.

China announced a four-trillion-yuan (US$586 billion) stimulus plan last week to help the economy weather the financial crisis with infrastructure and other projects that will create jobs.

Copyright Agence France-Presse, 2008

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