At least nine Chinese provinces and cities will raise minimum wages from Thursday by as much as a third after Premier Wen Jiabao called for measures to head off growing worker unrest in the world’s third-largest economy.

Beijing is increasing the lowest monthly salary employers may pay in the Chinese capital to 960 yuan ($142) from 800 yuan, according to the city government’s website. Central China’s Henan, the nation’s most populous province with almost 100 million residents, is raising its minimum wage by 33 percent to 600 yuan, the local government said on its website.

Wen highlighted the government’s concerns that labor disputes over wages may spur social unrest when he called on companies last week to create “harmonious employment relations” by gradually raising incomes and ordered officials to handle “new issues” with skill. Strikes staged by workers demanding pay increases this year have halted production at Toyota Motor Corp. and Honda Motor Co. plants in the nation.

“This is a step in the right direction,” Stephen Roach, Morgan Stanley’s Asia chairman, said in Beijing. “China has a very low personal income share of GDP, and wages, surprisingly low wages, and limited employment growth are part of the problem.”

More than 20 provinces and municipalities plan to increase minimum wages this year, Yin Chengji, spokesman for the Ministry of Human Resources and Social Security, told a press conference in April. Shanghai, the country’s financial hub, ordered a rise of 17 percent to 1,120 yuan per month in April and Guangdong, China’s biggest export base, boosted five local minimum wages in the province by an average 21 percent, with the highest pay rising to 1,030 yuan.



Domestic consumption



In addition to preventing strikes, China also wants to raise the incomes of its 468 million industrial and services workers to boost domestic consumption and reduce the economy’s reliance on exports and investment for growth. China’s central bank said Wednesday economic restructuring needs to be accelerated, adding that the Chinese economy faces a “complicated situation.”

Raising minimum wages “is part of the rebalancing,” Morgan Stanley’s Roach said. China has no official data specifying the number of workers who are paid the minimum wage.

The government in 2009 suspended its requirement that the lowest salaries be increased at least once every two years to help companies weather the impact of the global financial crisis, which cut China’s economic growth rate to the slowest in almost a decade in the first quarter of 2009.



Economic recovery



A rebound in expansion and accelerating inflation prompted the government to order provinces and cities to raise payments for the lowest-paid workers, Yin told the April briefing.

Taipei-based Foxconn Technology Group, suffering a spate of suicides at its factory in Shenzhen, said last month it’ll double wages in the southern Chinese city to 2,000 yuan a month from October. Honda and Toyota both raised salaries to end the strikes at their plants in southern China.

Those pay increases and higher minimum wages may not be enough to prevent further strikes as rising living costs erode gains, said Liu Kaiming, Shenzhen-based director of the Institute of Contemporary Observation, a non-government organization that studies labor issues.

“The intentions are good but they won’t help to solve labor unrest,” Liu said in a telephone interview. “The percentage increases in pay appear high but wages are still low and with rising inflation and higher living costs, these increases won’t help workers much.”



Wage gap



Minimum wages in the more affluent eastern areas of the country are more than double those of poorer inland provinces, government data shows. In Henan, the lowest legal salary is 600 yuan a month compared with 1,100 yuan in Shenzhen, where Foxconn employs most of its 800,000 workers in China.

The wage gap is encouraging businesses to move production to central and western regions. Foxconn is planning to build a factory that will eventually employ 300,000 workers in Henan, according to a report on a local government website. Hewlett- Packard Co., Foxconn and Taiwan-based companies Quanta Computer Inc. and Inventec Co. will build the world’s largest laptop production center in western China’s Chongqing, the city’s Communist Party chief Bo Xilai said Wedensday. (Bloomberg)