China: Private SMEs Must Not Fix Employee Salaries Unilaterally

According to a guideline issued by All China Federation of Trade Unions on the collective consultation of salaries of industries, non-public companies must consult with industry trade unions or local trade unions representatives before fixing salary standards for their employees.

Based on the guideline, employee representatives attending the consultation shall be designated by the industry trade unions, in particular, the chief consulting representative shall be the trade unions chairman, while the enterprise representative organizations are reported to include the enterprise federation, the entrepreneurs association, as well as the association of industry and commerce and trade councils.

Zhang Mingqi, the vice chairman of ACFTU, said that the key of the collective consultation is the minimum salary standard, salary adjustment, labor quota, and salary payment methods, but currently it should focus on labor quotas, working hours, and payment standard.

Owners of some small and medium size enterprises are worried that the guideline may restrict the development of their development, particularly with over intervention from local trade unions.

At present, SMEs account for over 95% of the total number of Chinese enterprises and the majority of them are non-public, so it is believed that new guideline will have a great impact if it is enforced as a mandatory rule.

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