China grants surprise pay hikes to millions of government employees
- Josephine Tan
- Topics: China, Compensation and Benefits, Home Page - News, News
Millions of government employees across China have received unexpected pay increases, signalling Beijing’s efforts to stimulate consumption and support the country’s slowing economy. The move, reportedly impacting teachers, police officers, and civil servants nationwide, represents a one-time injection of between US$12 billion and US$20 billion into the economy, reported Reuters.
The salary increases, averaging 500 yuan (US$68.50) per month, were implemented retroactively to July and issued as a lump-sum payment in many cases. Some junior government employees reported monthly increases as low as 300 yuan (US$41). This marks the first nationwide wage adjustment since 2015 when pay for local officials was raised by over 30% to combat corruption and encourage spending.
Unlike previous adjustments, the current pay hike was neither formally announced nor detailed by Beijing, leaving questions about its funding, total cost, and percentage increases. A civil servant and a teacher in southern China indicated their salaries rose by approximately 10%, though the increase varied based on the fiscal conditions of provincial governments.
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Economists suggested the move is part of a broader strategy to encourage spending among groups with higher social security benefits and greater propensity to consume. “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. He noted that previous measures, including cash handouts to low-income populations, also align with this objective.
China’s civil service has become increasingly appealing to jobseekers, offering stability in a challenging private sector environment. A record 3.4 million individuals took the civil service exam in 2024, triple the number in 2014. This surge in demand persists despite reports of wage delays, reduced compensation, and job cuts in some regions.
