Issued by Division of Planning and Wages,
Shanghai Municipal Labour & Social Security Bureau, April 4, 2006

To all the Municipal Committees, Offices and Bureaus, the Holding (Group) Corporations, the Group Corporations, the District/County Labour & Social Security Bureaus, the concerned State Enterprises:

In light of Shanghai’s economic growth, consumer price index, employment and labor cost in 2006 and the worker’s wage level in 2005, the suggestions on the Guidelines for the Enterprises’ Wage Increasing Rate in Shanghai Municipality in 2006 are as followings:

Ⅰ. The Guideline for the average increasing rate of the enterprises’ wage in Shanghai Municipality is 9%. The enterprises with sound business operations and enhancing economic performance may determine their worker’s wage increasing rate referring to the Guideline for the Average Wage Increasing Rate.

Ⅱ. The Guideline for the minimum increasing rate of the enterprises’ wage in Shanghai Municipality is 3%. The enterprises whose worker’s annual wage have reached a relatively high level in the previous year and those whose tax and net profit per capita this year run parallel to that of the previous year may determine their worker’s wage increasing rate referring to the Guideline for the Minimum Wage Increasing Rate.

The enterprises that have negative growth in economic performance or suffer from deficit in the current year may make zero increase in wages, while the wages paid shall be no less than the minimum wage standard in the Municipality.

The Labour and Social Security Administrations at all levels, the Holding (group) Corporations and the Group Corporations shall strengthen the guidance on the wage increasing rate of the enterprises within their jurisdictions. Referring to the Guidelines for wage increase and labor cost in the respective industries, the enterprises shall rationally make wage adjustment arrangement in 2006 in light of its actual situations, and meanwhile rationally determine the wage standard of the personnel engaged in business operations and management, specialized technology, manufacturing and service, etc referring to the wage standard guidance in the labor market. Both the enterprises and the workers shall actively define the wage distribution system, form of distribution and wage increasing rate thereof through collective bargaining.