In the first three quarters of this year, the country's economic growth was below 10 percent, the first time in five years. At a press conference at the sidelines of the seventh Asia-Europe Meeting (ASEM) on Oct 25, Premier Wen Jiabao confirmed such a shift in the country's economic policy and said his government had put maintaining a steady economic growth on top of its agenda.

A pause on the implementation of the minimum wage system is expected to help teetering domestic enterprises reduce production costs and thus help them weather the emerging economic slump. It is obvious that any measures to add to the burdens on their shoulders would be adverse to the economy and aggravate the already volatile domestic employment situation.

The decision not to raise the minimum wage standard is also aimed at avoiding the otherwise large-scale staff-cutting plan that some struggling enterprises might take. The country's effort to sustain economic growth is not merely for pursuing a rise in the gross domestic product (GDP). Its essence is to keep a steady employment rate, further expand domestic demands and create more jobs.

One of the important measures to realize such goals is to try to prevent the collapse of some struggling small and medium-sized enterprises (SMEs) and ensure the newly established enterprises outnumber the ones going bankrupt. It is known that in China, SMEs have long served as one of the main channels for people's employment. A brake on the advancement of the minimum wage program is particularly favorable for their survival and development.

Earlier this year, the labor and social security department in Guangdong province said it would continue to raise the province's minimum wage standard in the following three years. In April, the local authorities did raise the standard for provincial enterprise workers by an average 12.9 percent, with the minimum monthly wage in Guangzhou becoming 860 yuan ($126) from the previous 780 yuan. At the same time, the government also said it would raise the standard once a year from the previous frequency of once every two years.

This should not be encouraged as a large number of domestic SMEs are struggling against the ongoing economic crisis.

The author is a researcher with the National Development and Reform Commission

(China Daily November 25, 2008)