China's nearly 50 million government workers are believed to have received a surprise New Year's gift this week – a healthy pay rise.
This move comes at the right time The yuan is depreciating against other international currenciesappears to be part of Beijing's plan to increase spending to support consumption to boost the country's sluggish economy.
Taken together, if all 48 million people are counted as public sector workers receiving the terms described by Reuters, the immediate payments would amount to a one-time boost to the economy of about $12 billion to about $20 billion. expenditure.
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The last time China publicly announced a nationwide increase in civil servant wages was in 2015, when the government raised the salaries of local officials by more than 30% to combat corruption and increase consumers' spending power.
The State Council Information Office, which speaks on behalf of the Chinese government, did not immediately respond to a request for comment.
This time, government employees' monthly salaries increased by about 500 yuan ($68.50) on average, according to people contacted by Reuters or who posted on social media. Some entry-level government workers reported monthly salary increases of nearly 300 yuan ($41).
In many cases, the raises for officials and public sector workers were retroactive to July and were paid out as one-time payments similar to bonuses, people familiar with the matter said.
“Beijing's strategy seems to be to encourage consumption by those who are more willing to spend money,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
“So far we have seen cash handouts to the poor and public sector pay rises. Lower-income groups tend to spend a higher proportion of their income, and civil servants are likely to pay more than private sector employees due to higher levels of Social Security benefits. Spending is possible.
10% salary increase for teachers and civil servants
Widespread pay increases affect teachers, police officers and civil servants across China.
Beijing did not announce or detail the move. It's unclear how the raises will be funded, what the total cost will be, or what percentage the salary increases will be.
A teacher and a civil servant in southern China both said they had received a salary increase of about 10%. Another person familiar with the matter said the size of the salary increase will also depend on the economic and fiscal situation of provincial governments.
Chinese leaders agreed last month Maintain a higher budget deficit of 4% of gross domestic product This year (GDP), Reuters reported two weeks ago.
This will support efforts to achieve the economic growth target of around 5% by 2025, despite being weighed down by a protracted housing crisis, falling prices and the prospect of rising tariffs on U.S. exports.
Government workers began posting on social media about pay increases around the New Year's Day holiday.
“If we can get out of deflation, it will be a good thing for everyone,” a person from Jiangsu posted on Weibo.
Others were critical. “Why target a small group of civil servants to stimulate consumption?” said a Hubei Weibo user.
Last year, a record 3.4 million young Chinese took the civil service exams, lured by job guarantees at a time when the private sector was under pressure.
The number of civil service applications has tripled since 2014, even as some local governments struggle to pay wages, cut salaries and, in some cases, cut jobs.
A group of Beijing workers were told on Thursday they would receive a monthly pay increase of at least 500 yuan, a Beijing worker told Reuters on condition of anonymity, without providing further details.
The good news prompted the team to celebrate at a restaurant, the person said. “This should help stimulate consumption,” she said.
- Reuters Additional editing by Jim Pollard
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