How Should Minimum Wage Promise a Decent Living for Workers?

How Should Minimum Wage Promise a Decent Living for Workers?

  • Report Abstract

Shenzhen Dagongzhe Migrant Worker Centre

February 2013

(click here for full report: 2013年調查報告 最低工资应如何保障工人体面生活)

As a grassroots civil organisation concerning migrant workers in Shenzhen, the Shenzhen Dagongzhe Migrant Worker Centre (hereafter Dagongzhe) have been paying attention to work and living conditions of frontline workers in the city. Reform in the income distribution system has been proposed by the state in recent years, in which improving the mechanism of primary income distribution is emphasised – “regulating the distribution order, boosting residents’ income, and regulating the high-income group”. We believe that a good minimum wage system plays an important role here. The adjustment of minimum wage is closely followed by both workers and employers, yet how it is determined is not known by the public.


Earlier in 2013, the minimum wage of Shenzhen was raised to 1600 yuan, 100 yuan higher than in 2012. Regardless of the media frenzy to boast Shenzhen of having the highest wage level nationwide, it does not mean that workers in the city live a better life. In fact, to many workers, the minimum wage is the highest basic wage they can get. Also, since it is still too low that it can just barely satisfy basic needs for the workers and their family, they are compelled to work overtime for higher income.


How is living in Shenzhen like for workers who pay their effort to build the city and produce for enterprises in exchange for a minimal level of wage? In late 2012, Dagongzhe investigated living and work conditions of workers in Shenzhen by conducting a questionnaire survey, a market survey of basic commodities, case studies of monthly expenses of different types of households, as well as a focus group session with workers. From the study we try to learn more about what criteria should be considered in the minimum wage adjustment mechanism, so that decent living for low-wage earners can be guaranteed.


Decent living does not necessarily mean living in luxury. A normal and nutritious diet, comfortable and stable shelter, entertainment and social security should be included, and none of the above should be forgone out of economic reasons. Our study found that factory workers nowadays do not live the worst life, at least with their basic needs in food, clothing, shelter and other basic services fulfilled. However, there are also items which they regard as “something a normal person ought to enjoy”, such as healthcare, leisure, educational and cultural activities, but are eventually given up because they cannot afford them. Even worse, such a relatively indecent living has to be maintained by overtime work. If they adhere to the standard working hours (8 hours per day, 5 days per week), earning a wage for decent living is absolutely impossible.


When the state repeatedly stresses on narrowing income disparity and establishing a normal wage increase mechanism, we consider the adjustment of minimum wage by no means a haggle among the government and businesses, and it should not be a focal point in the competition between cities for human resources. Rather, it should serve its real functions of guaranteeing workers’ basic needs, ensuring that they enjoy their fruit of labour, narrowing disparity between rich and poor and eliminating social conflicts, so that a harmonious society can be realised.


Therefore, we propose the following criteria for minimum wage adjustment –


  • The minimum wage level should reach 40% of the average wage in society, making sure that income of the lowest-wage earners would not fall too far behind the rest of the population. The average wage of Shenzhen in 2011 was 4595 yuan, so the minimum wage should be at least 4595 x 40% = 1838 yuan.


  • The minimum wage should be determined on the basis of workers’ daily needs, including basic expenditure on food, accommodation, daily commodities, transport, communication, clothes, medical services, transport back home once a year, entertainment, etc. It should also cover expenditure of a 3-person family in Shenzhen, as well as their parents at home. If two adults (presumably husband and wife) in the family work at the same time to fulfil the basic family needs and their responsibility to support their parents, we estimate the approximate monthly cost as 5783.2 yuan, and therefore 2891.6 yuan for each working adult. This amount is approximately 60% of the average wage in Shenzhen, which is a benchmark proposed by the All-China Federation of Trade Unions in 2010. Since the current level of minimum wage in Shenzhen is far lower than this, we propose lifting it to 40% of the average wage promptly, and a progress to 60% in the long run.


  • Commodity price fluctuation should be taken into account. An adjustment of up to 3-5% should be added to the basic expenditure, so that workers are more protected in price fluctuation of commodities.


Workers contribute their labour power to businesses. The latter could only produce and make a profit because of the former’s hard work. It is fair to conclude that workers actually create profits for businesses. As the most important component of the production line, workers and businesses should enjoy equal say on wage level. This report attempts to explore workers’ conception on basic needs and what affect their living standards, but indeed they should be investigated by the government systematically and comprehensively for the sake of better adjustment in minimum wage. In the long run, an open, transparent and well-established minimum wage adjustment mechanism, or even collective negotiation on wage should be the best way to guarantee a decent living for workers.