Surprise Wage Increases for Chinese Government Workers

BEIJING (Reuters) – Millions of government workers across China received unexpected wage increases this week as Beijing aims to boost spending in a slowing economy.

The immediate payout could total between $12 billion and $20 billion if all 48 million public-sector workers benefit from the increases. This marks the first nationwide pay raise for civil servants since 2015, when salaries were raised by over 30% to combat corruption and enhance consumer spending power.

The State Council Information Office did not immediately comment on the situation.

Monthly wages were reportedly raised by an average of about 500 yuan ($68.50), with some junior workers seeing increases around 300 yuan ($41). In many instances, these raises were retroactively dated to July and issued in a one-time payment.

According to Xu Tianchen, senior economist at the Economist Intelligence Unit, this strategy aims to encourage spending among those more likely to utilize the funds.

So far, measures have included cash handouts to low-income populations and the public sector pay rise. Civil servants tend to spend more of their income due to better social security benefits compared to private-sector employees.

Bloomberg first reported widespread pay increases affecting teachers, police, and civil servants nationally. No official announcement detailed the funding source, total cost, or salary percentage increase.

Reports suggest teachers and civil servants received around a 10% increase. The amount varied based on provincial fiscal situations.

In a recent agreement, Chinese leaders decided to run a higher budget deficit this year, equivalent to 4% of GDP, to help achieve a 5% growth target for 2025 amid challenges like the property crisis and potential export tariffs from the U.S.

Workers began discussing the pay rises on social media around New Year’s. While some expressed optimism about breaking out of deflation, others criticized the selective nature of the stimulus.

A record 3.4 million young Chinese took the civil service exam last year, motivated by job security amid private sector struggles. Civil servant applicants have tripled since 2014, despite some localities facing wage payment challenges.

In Beijing, city workers received notices of at least 500 yuan in monthly salary increases. One worker shared their excitement about the news, saying it should help stimulate consumption.