In 2009-2010, Akatiga and Inkrispena attempted to calculate the actual living expenses of working families in Indonesia to see the purchasing power of minimum wage. Based on the study, the minimum wage amount was not sufficient to meet the basic needs of the workers’ family. Because of their income were limited, the family had to lend money or consume less, or consume low quality goods.
In this article we will see the results of a survey conducted by Hong Kong based labor group, Worker Empowerment, on the minimum wage and living expenses of workers’ family in China. This article is an executive summary of the survey published in English (the full report of the survey is presented in Chinese only).
The survey shows us the similarity of the workers’ living condition in Indonesia and China: The minimum wages amount is not sufficient to meet the basic needs of the workers’ family. In such case, we could learn that workers everywhere, whether in Indonesia or China, tend to be low-paid and work only to survive day to day.
Worker Empowerment (WE) has long last concern on the minimum wage adjustment policy in China. WE have continued to conduct survey on wages and expenses of workers these years, which repeatedly show that the minimum wage policy is influential in adjusting workers’ basic wage, and is of vital importance to ensuring the grassroots workers’ livelihood.
In April 2017, we noticed that Guangdong province plans to freeze the minimum wage for three consecutive years. After a few months, a total of 22 districts announced an increase in the minimum wage in 2017. Today, the minimum wage in Shenzhen, Shanghai, Beijing, Tianjin and Zhejiang provinces has exceeded 2,000 yuan (Rp. 4,2 million), as leading in the whole country.
The minimum wage in Guangdong Province however, not only failed to adjust for three years, and the minimum wage in its highest level Guangzhou City is less than 2,000 yuan. WE are deeply concerned about the impact of Guangdong’s freezing minimum wage on workers’ livelihoods in the area. What is the actual living expense of Guangdong workers for these years? How do they deal with basic life necessities and other needs of life? How should the Guangdong provincial government amend the minimum wage to protect workers and their families?
From September to November 2017, we selected samples from four tier cities in Guangdong Province: Guangzhou in the first tier city ( whose current minimum wage is 1,895 yuan), Dongguan in the second tier city (whose current minimum wage is 1,510 yuan) , Huizhou in the third tier city (whose current the minimum wage is 1,350 yuan), and Heyuan City in the fourth tier city (whose current minimum wage is 1,210 yuan).
We conducted survey of questionnaire on workers’ monthly wages, overtime hours, personal living expenses, social security contributions and family financial burdens. A total of 78 valid questionnaires were gathered, including 16 female and 62 male workers. We also invited three different types of workers in Guangzhou and Dongguan to conduct a detailed monthly expenditure record in October 2017. In addition, from October to November 2017, we conducted market price survey in different shopping malls in Guangzhou and Dongguan respectively to know the price of daily necessities for workers. In the end, the results of the questionnaire are used to analyze and evaluate the different wage and actual life expenses of workers in different cities in Guangdong Province. The workers’ records of their monthly expenditure are mainly used to show how workers consumed in their actual needs. The market price statistics are used to estimate the worker’s consumption needs and real expenses.
After a series of survey on workers’ wages and expenses in four tier cities in Guangdong province, WE have the following important findings:
- In general, workers’ wage in this survey is clearly at a low level as compared with the overall social level.
If we only consider the basic wage, that is, without overtime and without additional subsidies, most workers will only earn a monthly wage less than 40% of the local average social wage. Only by including other details such as overtime and subsidies will workers’ wage rise to be 60% of the average social wage. From this survey, most workers could earn between 3,000 yuan (Rp 6,3 million) and 4,000 yuan (Rp 8,4 million) per month, yet their basic wage is quite low. More than 60% of workers earn a basic wage of less than 2,000 yuan (Rp. 4,2 million). The workers’ basic wage though met the local requirement, is not much higher than the minimum wage. WE surveyed into workers from various industries and sectors, yet such difference has little effect on workers’ basic wage. This shows that employers are still used to pay workers according to the minimum wage, hence the phenomenon that “minimum wage is almost workers’ highest basic wage” still prevails.
- Workers’ expenses are severely imbalanced: workers get used to low consumption and burden high cost for development.
We found that most workers’ daily life are quite economized on food clothing and personal expenses. They maintain a very limited cost on such life necessities. When we count workers’ life subsistence cost (eat, live, wear, daily grocery), workers average expenditure is 1,015 yuan (Rp 2,1 million) per month. When other costs are all included, the average monthly expenditure becomes as high as 3,073 yuan (Rp. 6,5 million).
Among their cost, food cost accounts for a large share of workers’ daily expenses. Then is their housing, which they used to choose cheap but bad-conditioned house for saving costs and sacrificing life standard. Workers seldom buy clothes regularly, they also strictly control their daily grocery and leisure or entertainment expenses. Many workers spend 0 yuan on transportation (except one return train ticket for hometown every year), so that they go by walk instead of by public traffic. Most workers in this survey also has no budget for skill training or continued education, nor do they have such opportunity.
On one hand, although workers’ wages exceeded the survival cost (including basic food, housing, clothing and grocery), they are accustomed to consuming at low level to meet such subsistence requirement. For food, house, clothing and such basic life necessities, workers are living in lower quality than standard. On the other hand, workers have invested more than double of their survival expenses in meeting their development needs, health care and family financial burden in particular. It can be argued that for those workers with low incomes, they are still sacrificing their personal life quality to meet their family development needs, hence trying hard to catch up with social development.
- There is clear regional difference in worker’s wage income, but there is not much difference in workers’ daily expenditure in different cities.
This survey shows that workers in higher tier city gain a relatively higher wage and better social security benefits, while workers in lowest tier cities receive the lowest average income and the worst social security benefits. However, workers’ expenses gap among four cities is quite little. Most workers save their food, clothing and living expenditures, to generously spend much money on their children and parents. Averagely speaking, workers in four cities support their families with above 1,000 yuan (Rp. 2,1 million) a month, some are even reaching 2,000 yuan (Rp. 4,2 million) per month, like workers from Huizhou city.
There are few workers living together with their families in urban cities, yet the cost of urban living is quite high. According to workers’ consumption records, workers who live with their families in the city spend at least 3,000 yuan (Rp. 6,3 million) a month, and most of their expenses are for the whole family.
The similar expenses among different cities also aggravates the burden on workers. For example, we see from the market price statistics that there is very little gap between Guangzhou and Dongguan on the necessary life expenditures. The investigation of workers’ daily necessities in four cities also displayed that the average expenditure on each item was mostly similar and within 100 yuan (Rp. 200.000) difference in the four cities. It can be argued that the market prices and living expenditures in different cities in Guangdong Province are slightly different, but the difference is not big at all.
- Social Security failed to ease the burden of workers, and there are gaps among workers on their savings.
Social security in the four cities are not fully covering all workers. Workers’ inadequate social security resulted that many expenses can only be borne by themselves. From the workers’ daily expenses, we can see that nowadays in China the social security model is still family shoulder the burden first but not the society. Chinese people usually bring up children for the purpose of being looked after in old age. And family is the place of self-help and retirement in the end. All labor force in the family would come out to make money and spend their income and savings for their family members like children and parents.
Workers’ saving amount is also influenced by their different ages and consumption habits. This survey shows a gap of age among workers in the four tier cities due to our selected sample. For example, the workers in Huizhou are generally older than 40 years old, while the workers in Heyuan are younger with an average age under 30 years old. Therefore, Huizhou workers displayed the highest cost on health care and highest financial support for family among four cities, and Huizhou workers also possess the highest proportion of savings. On the contrary, young workers in Heyuan are spending a highest entertainment expense among four cities, and their proportion of supporting families and savings is also the lowest in the four places. In all places, once workers encounter diseases or accidents, a sudden expenditure will be extremely heavy for workers, especially in condition that they have inadequate social security protection.
In view of this, we make the following suggestions on the adjustment of the minimum wage:
- We suggest the minimum wage should meet the living expenses of one’s family expenses.
We calculate the monthly needed minimum wage for workers, with example of a three-person family living in the industrial area of Guangdong Province. Our calculation is based on the market price, workers’ consumption habits and actual needs. Our suggestion is, a family of three in Guangzhou city should have a monthly income of at least 7,510 yuan (Rp. 15,8 million). In the case of 2 person at work, the minimum wage per person should reach 3,755 yuan (Rp. 8 million); a 3-person family living in Dongguan city should have a monthly income of 6,877 yuan (Rp. 14,5 million). In the case of two person at work, then each person’s minimum wage should reach 3,439 yuan (Rp. 7,2 million).
2. The minimum wage standard should reach the bottom line of 40% of average social wage.
At present, the actual minimum wage in Guangdong Province is far away from the actual needs of workers. It is losing the guiding significance to workers’ wage than that in the past. We argue that the minimum wage for Guangdong workers must be set back on track as soon as possible and the bottom line should be 40% of the average social wage. Guangdong government should recognize that lower-income workers shall share the fruits of economic development in recent years. Although there are regional differences, the 40% of average social wage should still be the lowest standard for workers’ minimum wage. This standard actually coincided with workers’ basic wage in four tier cities in our survey. Therefore, we propose that the minimum wage for four tier cities in Guangdong in 2018 should at least meet the following criteria: 2,970 yuan in Guangzhou city；1,922 yuan in Dongguan city; 2,159 yuan in Huizhou city; and 1,884 yuan in Heyuan city.
3. The minimum wage standard needs to be 60% of average social wage in order to meet workers’ development needs.
In addition, our findings also show that workers are spending more and more on their development needs. If 40% of the average social wage can not meet the real development needs of workers, we suggest that the minimum wage should eventually be in line with 60% of the average social wage, so as to make up for workers’ development expenditures in condition that social security protection is not fully covering workers.
infographic: Raisa Widiastari (Semar UI)
 The social wage in this case is distinguished from the ‘economic wage’ of wages received by the laborer in his employment relation with the employer. Unlike economic wages, social wages refer to social benefits and basic rights of citizens provided by the state, such as health, education and food services for workers and their families. Social wages are received by workers and their families from taxes allocated by the state to finance various forms of social protection as mentioned above.
 The phenomenon of ‘minimum wage is maximum wage’ also occurs in Indonesia. Employers in this case tend to pay the wage only according to the minimum wage, regardless of length of employment, labor skills or marital status (married / single).