Image Credits - The Economic Times
According to sources familiar with the matter, China has introduced a nationwide salary increase for civil servants, marking the first significant pay hike in years. Effective retroactively from July, the move aims to bolster domestic consumption amid slowing economic growth and persistent deflation.
The basic salaries of many government employees have increased by at least 500 yuan (S$93) per month, translating to a roughly 5% raise for some workers. This adjustment comes nearly a decade after the last confirmed public pay hike in 2015 when 40 million staff received an average increase of 300 yuan.
Social media discussions suggest similar adjustments may have occurred in 2018 and 2021, though these were never publicly acknowledged. The Communist Party of China has not officially announced the latest wage increases, leaving questions about the programme’s scale and funding unanswered.
The timing of the pay raise coincides with President Xi Jinping’s renewed emphasis on boosting domestic consumption as a cornerstone of the country’s economic policy for 2025. While efforts so far have centred on rate cuts and housing-sector support, the wage hikes deliver a direct financial boost to millions of government workers ahead of the New Year and Spring Festival holidays.
However, critics warn of potential backlash from private-sector workers grappling with stagnant or declining wages. The lack of direct consumer cash handouts also raises questions about the broader effectiveness of this strategy in addressing China’s longest deflationary streak since 1999.
Neither the State Council Information Office nor the Ministry of Human Resources and Social Security has responded to requests for comment on the wage increases. As the economic challenges persist, the government’s approach to balancing public and private-sector concerns remains a key focus for analysts.