BEIJING (Reuters) – Millions of government workers across China got a surprise pay rise this week, people affected by the move said, as Beijing looks to boost spending to support a slowing economy.
Combined, the immediate payment would be a one-time boost to the economy of between $12 billion and $20 billion if all 48 million people are counted as public sector workers, according to the criteria reported to Reuters.
The last time China publicly announced a nationwide pay raise for civil servants was in 2015, when the government raised pay for local officials by more than 30% as part of efforts to fight corruption and boost consumer spending power.
The State Council Information Office, which speaks for the Chinese government, did not immediately respond to a request for comment.
Meanwhile, the monthly salary of civil servants was raised by an average of 500 yuan ($68.50), according to people contacted by Reuters or who posted on social media. Some junior civil servants reported monthly raises of around 300 yuan ($41).
In most cases, salary increases for officials and public sector workers were pushed back to July and distributed in one payment, such as a bonus, people with knowledge of the matter said.
“Beijing's plan seems to encourage consumption by people who are willing to spend,” said Xu Tianchen, an economist at the Economist Intelligence Unit.
“So far we have seen the handing over of money to the poor and the increase in wages in the public sector. The lower income groups tend to spend a higher share of their income, while public sector workers are expected to spend more than private sector workers due to their higher levels of social security.
The widespread pay hike, which has affected teachers, police and civil servants across China, was first reported by Bloomberg.
The move was not announced or explained by Beijing. It was not immediately clear how the increase would be funded or what the total cost would be.
China's leaders agreed last month to run a budget deficit as high as 4% of gross domestic product (GDP) this year, Reuters reported.
That will support efforts to reach a target for economic growth of around 5% by 2025 despite the drag of a protracted property crisis, falling prices and the prospect of rising prices for US exports.
Civil servants have started posting to the media about salary increases on either side of the New Year's Day holiday.
“It's good for everyone if we can get out of deflation,” one person posted on Weibo (NASDAQ: ) from Jiangsu.
Others were critical. “How do you stimulate consumption by targeting a small group of civil servants?” a Hubei-based Weibo user said.
A record 3.4 million Chinese took civil service exams last year, drawn by job security at a time when the private sector is under pressure.
The number of civil service applications has tripled since 2014 even as some local governments struggle to pay salaries, cut compensation and in some cases cut jobs.
A group of Beijing city workers were told on Thursday that they would receive at least 500 yuan a month without further details, one of the workers, who asked not to be identified, told Reuters.
The good news prompted the group to go out to a restaurant to celebrate, the person told Reuters. “This should help increase usage,” he said.