The Ministry of Human Resources and Social Security yesterday issued a circular freezing minimum wages at their current levels.
The circular also said that areas whose medical and industrial injury funds were in surplus could implement a one-off reduction in employer contributions to the funds.
The move was seen as an attempt to reduce the pressure on companies hit by the deepening economic crisis.
The announcement came as a surprise, since as recently as October 27 a Ministry spokesman had emphasized the government's intention to continue adjusting minimum wages in line with inflation.
"The economic situation meant the Ministry had no choice," said Su Hainan, president of Compensation Committee of the China Association for Labor Studies.
Su said the economic downturn would force many companies to cut wages to survive the winter. If the government did not take steps to lessen the burden on companies many would be forced to lay off staff or may even face bankruptcy.
Some commentators claim the Ministry circular contradicts minimum wage regulations, but Su Hainan said the regulations specify that minimum wages need only be adjusted every two years.
"The suspension will not make a significant difference to most workers," he added.
(China.org.cn by Wu Huanshu, November 18, 2008)