31% Pay Hike For China’s Civil Service



BEIJING, Jan 21 – China has raised the wages of government workers by at least 31%, according to a document seen by Reuters today, as part of efforts to combat corruption and lift the spending power of millions as the country seeks to increase consumption.

The basic salaries of some civil servants would be almost tripled, according to the document distributed to China’s cabinet and dated Jan 12. It said the increases would be effective from Oct 1, 2014. The change is part of a broad effort by Beijing to reform the compensation levels of government workers to improve efficiency, reduce graft and hold officials more accountable for their own performance.

Executives at some Chinese state-owned companies, notorious for their inefficiency, suffered pay cuts this month. “The pay hike indicates Beijing’s goal of improving the quality of life for the average Chinese,” Nomura economists said in a note. They said it was the first wage rise in eight years for central government workers.

Hu Xiaoyi, vice minister at the Ministry of Human Resources and Social Security, told reporters yesterday that the cabinet has agreed to “adjust” the basic wages of civil servants. The ministry, which produced the document, declined comment today. As part of the revision, subsidies and performance bonuses for government workers would be frozen, the document said.

Even after the pay increase, the salaries of Chinese state workers remain low. The monthly salary of ordinary government workers is as low as 510 yuan (RM296), while the standard monthly salary of China’s most senior leaders, including President Xi Jinping, starts from 5,250 yuan, the document showed.

Critics say poor civil service pay is one of the main causes of corruption, driving workers to look for supplementary sources of income. Some of the increase will immediately be taken back: last week, all civil servants were told they had to pay 8% of their monthly wage into a state pension fund. Previously government workers did not have to make monthly contributions to the fund, but that was changed as the state came under pressure to pay for the growing number of retired people.

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