Shanghai Issues Guidelines on Wage Increases for 2012

In order to adjust to the economic development, rising CPI levels and changing dynamics of the current domestic job market, the Shanghai government issued the “Notice on the 2012 Guideline of Wage Increase for Shanghai Enterprises (hurenshezongfa[2012] No. 31)” on May 21, specifying the government’s suggested 2012 wage increases for enterprises in Shanghai.

Wage increase guidelines

Average suggested wage increase: 12 percent
Enterprises experiencing normal business operations and normal economic growth can refer to the average suggested percentage. However, the wage increase for 2012 can be lower than 12 percent if an individual’s annual salary of the previous year is twice or more than the announced 2011 average wage in Shanghai.

Maximum suggested wage increase: 16 percent
Enterprises experiencing good business operations and good economic growth can refer to a 16 percent suggested wage increase if an employee’s annual salary in the previous year is less than 60 percent of the announced 2011 average wage in Shanghai.

Minimum suggested wage increase: 5 percent
Enterprises experiencing poor economic growth can refer to the minimum 5 percent wage increase. Enterprises that are in difficulties or in deficit can opt to offer a “zero increase” if approved by the workers’ congress.

Guiding opinions

1. Enterprises should build up a wage increase mechanism synchronized with productivity. Wage increases of the enterprise and of employees at different positions should be determined through collective negotiation.
2. Enterprises should pay special attention to the employees working at the frontline with relatively low income in determining wage increases. The wage increase of those employees should not be lower than the average wage increase of the enterprise.
3. Enterprises should take into consideration the wage distribution of the managing personnel and ordinary employees. If the wages of ordinary employees are not increased, it is not appropriate to increase the wage of the managing personnel.
4. Related departments at all levels in Shanghai should strengthen the guidance of enterprises in their responsible areas in wage distribution, and promote collective negotiations on wages between enterprises and their employees for a reasonable wage increase and distribution plan, which will not only benefit the development of the enterprises, but also protect the rights of the employees.

---