China faces public sector wage crisis

Qatar Tribune

5 days ago

Agencies
Beijing
In late June, widespread reports emerged across China showing that public employees—civil servants, teachers, healthcare workers, and state-owned enterprise workers—are not being paid on time.
On Douyin, the Chinese version of TikTok, a growing number of users are posting about wage delays across cities, from Shenyang to Wuhan to Nanjing. A Shenyang blogger went viral when he put out a list of public departments in Yuhong Distric which have not paid salaries to its workers for the last six months.
'Even public kindergartens have stopped paying staff,' the post said. Other netizens followed, listing wage arrears in their own regions. Such posts are close to the hearts of frustrated people which proves beyond doubt that China's public sector is in shambles.
For decades, public-sector jobs in China were called 'iron rice bowl' positions—guaranteed income, benefits, and stability. That myth is now shattering. Social media has become the only venue where these grievances can surface, as state-run media maintain total silence. In a viral post Shenyang worker wrote that his wife is about to give birth but he cannot afford the hospital bill.
A retired official says in a post that he spent his youth serving the government. Now he is really scared of his future. Civil servants—once among the most secure—and even retirees are being dragged into the economic chaos. The roots of this crisis are systemic. For years, China's local governments relied heavily on land sales to generate revenue. After the collapse of real estate market, money has gone.
Meanwhile, debt has ballooned to unprecedented levels. Many local governments operate through Local Government Financing Vehicles (LGFVs)—opaque entities that borrow heavily and are now estimated to hold $7 to $11 trillion in off-balance-sheet debt. As those loans come due, cash-strapped municipalities are prioritizing bond payments over paying public workers.
Even wealthier provinces like Guangdong and Zhejiang are slashing bonuses, delaying wages, and cutting back on basic services. In poorer inland areas, the damage is worse. Teachers in Shandong reportedly haven't been paid for over six months. A nurse in Sichuan complained that monthly pay had dropped to barely $180 and that bonuses had not been issued in months. In some cities, pension payments have also been delayed. Workers who once formed the backbone of China's social and bureaucratic machinery are being pushed to the margins. The human cost is staggering. Families are skipping meals. Workers are borrowing money just to survive. Some have taken to the streets, silently protesting outside local government buildings or publishing video testimonials online. Expressway and construction workers staged demonstrations in Hebei and Guangxi. Public servants are now marching alongside the migrant laborers they used to manage. The grievances are no longer limited to factory floors—they're now coming from teachers, nurses, and police.
Predictably, the government response has been to suppress rather than solve. Protesters have been labeled 'malicious' or 'disturbing public order.' Online posts are scrubbed, hashtags deleted, and videos removed. Courts are rushing to mediate disputes over wage arrears, but enforcement is weak. In some places, local governments are selling state assets or dipping into temple donations to fund salaries—a clear sign of financial desperation. None of these measures fix the underlying problem: a broken fiscal system built on borrowed time and borrowed money. The central government has tried to step in. In late 2024, Beijing announced a massive $1.4 trillion bond-swap program aimed at easing local debt pressure. It followed that with a central pay raise for government workers—about 500 yuan per month—but even that has failed to reach many of those still awaiting back pay. The so-called raises often appear as backdated bonuses and are meaningless for employees who haven't been paid in months.
What this crisis exposes is not merely a temporary fiscal squeeze—it's a breakdown in China's governance model. The country's growth for the past 20 years has been driven by debt-fueled infrastructure and real estate development. Local officials borrowed heavily, counting on continuous growth and land sales. Now, with growth slowing and land values plummeting, the model has imploded. The costs are falling on the very people who served and upheld the state. The betrayal runs deep. Public sector employees are forced to believe that there is stability in the country; They accepted modest wages in exchange for security and predictability. Now they are being sacrificed to maintain the illusion of control. Loyalty is no longer rewarded, and the regime's priorities are clear: protect debt repayments, suppress dissent, and save face.
This is a moral failure as much as a financial one. China's leaders refuse to confront the truth. Instead of auditing and restructuring debt transparently, they hide liabilities in LGFVs. Instead of committing to pay wages first, they service loans and suppress voices. People are suffering but there is no accountability. The crisis is spreading and will worsen. Unless China undergoes sweeping fiscal reform—starting with full disclosure of local government debts, restrictions on off-book borrowing, and a restructuring of its entire public finance system—the decay will accelerate. Wage delays are only the first visible symptom of a broader collapse.
Ultimately, this is not just about unpaid salaries—it's about a failing contract between the Chinese state and its people. The promise of the 'iron rice bowl' has been broken. A regime that can't even pay its own workers is one whose authority is hollow. Behind the sanitized headlines and deleted posts, the truth is plain: China's foundation is cracking, and the consequences will reverberate far beyond its borders.