However, the dynamics of the labor market started to change in 2007 after a shortage of factory workers began to loom over many provinces, especially those with large export-oriented enterprises. As a result, employers have voluntarily raised their salaries to attract more workers, making the average wage much higher than the legally required minimum.

At a job fair in Baoshan District, Shanghai, held last February, a local metallurgical equipment engineering company posted a recruitment advertisement seeking 15 welders and 10 turners. The positions offered a monthly salary of 3,500 yuan ($561) to 4,000 yuan ($641). Despite a promised year-on-year increase of more than 10 percent, the salary still failed to attract enough applicants.

Hu Shizhi, a business commentator on the website of Hong Kong-based Phoenix TV, wrote an article titled The Foolishness of the Minimum Wage on April 2. Hu argued that if the minimum wage is set below what the market has set itself, it is totally useless; if it is above the market level, it could lead to the redundancies and unemployment for lowest-paid workers, the group of people it was meant to protect. He went on to say that small businesses with meager profit margins wouldn't be able to afford the rises either.

However, in reality, minimum wage rises still lead to the improved economic well-being of middle- and low-income workers.

Xia Youguo, a veteran welder at a machinery-manufacturing company in Chongqing, earns between 3,000 and 3,500 yuan ($483 - $565) every month. The local minimum wage was bumped up by 200 yuan ($32) to become 1,250 yuan ($202) at the beginning of this year.

"Although most of my colleagues and I earn a salary higher than the minimum wage, every time the government increases the standard, my employer gives us a pay rise in order to retain skilled workers," Xia told Xinhua News Agency.

This is the same case for Liu Dong, a migrant worker from Henan Province, who works on a temp contract through an agency at an electronics factory in Shanghai.

Liu, who works eight hours a day for six days a week, earns a monthly salary of 2,800 yuan ($452) excluding overtime. The employer also provides him with meals and accommodation.

Striking a balance

Ye Weihong, an official with the Shanghai Municipal Bureau of Human Resources and Social Security, said that employees in labor-intensive services industries, such as retail, catering and property maintenance, benefit the most from minimum wage rises.

According to Ye, his bureau once worried about an adverse employment effect from minimum wage increases, however, this has not been witnessed. He said that for years, Shanghai's unemployment rate has stabilized at around 4.2 percent and a total of 600,000 new jobs have been created in Shanghai each year.

"This shows that our minimum wage adjustments are reasonable and don't exert any negative effect on employment," Ye said.

Nationwide, China created 3.44 million new jobs in cities in the first three months of this year, bringing the urban unemployment rate down to 4.08 percent from 4.1 percent at the end of 2013, according to the MHRSS.

However, complaints about financial burdens in relation to minimum wage rises are growing among business owners.

Jiang Yuanlin, manager of an electronic components factory in Shanghai, admitted to the leverage his workers now enjoy during salary negotiation after every minimum wage rise and complained about the extra costs imposed on the company.

"Besides shouldering the pay rises, the company also has to pay higher social security contributions for our workers. This has become an especially big burden for business owners when the economy slows down," Jiang said.

Su Qun runs a motorcycle parts factory in Chongqing. He said that although Chongqing's minimum wage increased by 200 yuan ($32) on January 1, 2014, the factory's compensation package per worker rose by 300 yuan ($48) to cover the consequent hikes in medical insurance premiums, social security insurance contributions and payments for workers on probation.

"Even though I am paying workers much higher than the required minimum wage, I still wish that the minimum wage would not be raised so frequently," Su said.

In response, Tang Jun, a senior research fellow with the Institute of Sociology under the Chinese Academy of Social Sciences, suggests that the government should give companies tax breaks as financial relief.

Liu Cheng, a professor at the School of Management, University of Science and Technology of China in Hefei, east China's Anhui Province, told China News Service that Chinese enterprises, even those in labor-intensive industries, should be able to afford the increased labor costs caused by the minimum wage rise. He said that employee payroll accounts for only 5 percent to 10 percent of the total operational costs of companies in China. "Even after a 20-percent pay rise, the percentiles would only rise to 6 percent to 12 percent, which are still much lower than the corporate human resources expenses in developed countries," he said.

Liu Cheng agrees with Tang in demanding tax breaks to companies, especially small and medium-sized ones.

"Moreover, the priority task for Chinese companies is not to reduce costs, but to improve their efficiency by adopting new technologies," Liu Cheng said.

Email us at: lili@bjreview.com