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regular-article-logo Monday, 06 January 2025

China bumps up government wage to boost country's slow moving economy, surprise move

On a combined basis, the immediate payout would amount to a one-time shot to the economy of between about $12 billion and around $20 billion if all 48 million people counted as public-sector workers collected on the terms described to Reuters

Reuters Published 04.01.25, 10:52 AM
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Millions of government workers across China were given surprise wage increases this week, people affected by the move said, as Beijing looks to boost spending to support the slowing economy.

On a combined basis, the immediate payout would amount to a one-time shot to the economy of between about $12 billion and around $20 billion if all 48 million people counted as public-sector workers collected on the terms described to Reuters.

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The last time China publicly announced a nationwide increase in pay for civil servants was in 2015, when the government raised pay for local officials by more than 30 per cent as part of an effort to combat corruption and lift consumers’ spending power.

The State Council Information Office, which speaks for China’s government, did not immediately respond to a request for comment.

This time, monthly wages for government employees were increased by an average of about 500 yuan ($68.50), according to people contacted by Reuters or who had posted on social media. Some junior government workers reported monthly increases of near 300 yuan ($41).

In many cases, the salary increase for officials and public-sector workers was backdated to July and delivered in a single, bonus-like payment, people with knowledge of the matter said.

“Beijing’s strategy seems to be encouraging consumption by people who are more willing to spend,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.

“So far we’ve seen cash handouts to poor populations and the pay rise in the public sector. Low-income groups tend to spend a higher share of their income, while civil servants are presumably more likely to spend than private business employees due to their higher levels of social security benefits.”

The widespread pay increases, which affected teachers, police and civil servants working across China, were first reported by Bloomberg.

The move was not announced or detailed by Beijing. It was not immediately clear how the increase would be funded, what the total cost would be or the percentage increase in salaries.

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