Shenzhen employers will have to pay at least 810 yuan (US$101) per month to workers inside the special economic zone (SEZ) and 700 yuan per month to those outside the SEZ starting July 1, the municipal government announced yesterday.

The new minimum wages represent a 17.4 percent rise from the current minimum wage of 690 yuan inside the SEZ and a 20.7 percent rise from the current minimum wage of 580 yuan in the area outside the SEZ.

Although the pay increases are the highest in the city's history, the labor shortage will not be greatly relieved, said Zhang Guojiu, an official with the municipal labor bureau.

"The labor shortage is becoming increasingly severe every year. It is caused by many reasons. We cannot count on one pay rise to solve the problem of labor shortage," Zhang said.

The 810-yuan minimum wage is expected to be the second highest on the Chinese mainland, after Shanghai. The minimum wage outside the SEZ, meanwhile, will be the same as that in other Pearl River Delta cities including Dongguan, Huizhou, Zhuhai, Zhongshan and Foshan, according to the bureau.

Asked if the pay rise will drive labor-intensive companies out of Shenzhen, Wu Liyong, an official with the municipal labor bureau, said most Shenzhen companies could afford the new salaries.

"We are adapting to the market through the pay rise, rather than interfering with the market. In fact, many companies have raised their monthly salaries to more than 800 yuan, and some are even paying as much as 1,200 yuan a month to a worker," Wu said.

Still, the pay rise caters more to the employers than to the workers.

While most employees demanded a minimum monthly wage of 850 yuan inside the SEZ and 750 yuan outside the SEZ in earlier surveys by the labor bureau, employers generally requested minimum monthly wages of no more than 800 yuan and 700 yuan.

Shenzhen entrepreneurs earn more money than those in most other Chinese cities. In 2003, 51.32 percent of the city's GDP went to companies, a higher proportion than in Beijing, Shanghai, and Guangzhou. Only 33.62 percent went to employees, a lower proportion than in these cities, according to official statistics.

Despite a GDP growth of 15 percent and a double-digit rise in minimum wages last year, the average salary in Shenzhen rose only 1.7 percent in 2005, statistics show.

Editor: Yan