A wage-increase requirement (賃上げ要件) is a condition a subsidy places on payroll growth. Whether a missed target leads to repayment, and how much, depends on the program, application round and the target the business committed to. An ordinary failure to meet a target is distinct from a false or fraudulent application.
This article uses Round 8 of the SME Labor-Saving Investment Subsidy, General Type (中小企業省力化投資補助事業・一般型), with its August 2026 guidelines. Other programs and earlier awards require their own applicable rules. Sources were checked and the article corrected on September 14, 2026. The Chinese original was published on September 8; this English version was prepared on September 14.
Separate basic conditions, special measures and scoring bonuses
Wage commitments can appear as basic eligibility conditions, special measures increasing a subsidy cap or rate, or application scoring criteria. Find the relevant section before deciding whether a commitment is optional and how it will be measured.
Round 8 distinguishes the following wage conditions:
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| Item | Basic requirements | Special measure for a higher subsidy cap |
|---|---|---|
| Payroll per employee | Annual compound growth of at least 3.5%, meeting the business's stated target | Annual compound growth of at least 6.0%, meeting the stated target |
| Workplace minimum wage | At least ¥30 above the applicable prefectural minimum | At least ¥50 above the applicable prefectural minimum |
| Measurement | Payroll at the end of the plan; minimum wage checked during each year | Apply the respective special-measure rules |
A separate minimum-wage measure that increases the subsidy rate exempts eligible applicants from the basic workplace minimum-wage requirement. It must not be confused with the enhanced-cap measure above. Productivity and other eligibility conditions also apply. Round 8 guidelines, section 1-5, PDF pages 9–11
Annual growth is different from total growth
The baseline is the financial year containing completion of the subsidized project. The three-to-five-year plan starts in the following financial year. The wage indicator uses the defined payroll and employee scope, not an informal average of employees' take-home pay. Guideline definitions, pages 6–7
Illustration only, not a customer case or an approval forecast: if qualifying annual payroll per employee starts at ¥4 million and the stated target is 3.5% annual growth over three years, the final-year benchmark is approximately ¥4.4349 million: ¥4 million × 1.035³. Reaching ¥4.14 million after three years is only 3.5% total growth.
Check three things before calculating:
- Employees included: the rules use employees paid for all months of the relevant financial year. Employees joining or leaving partway through a year without a full year's pay are excluded for that year. Do not permanently exclude new hires or select an arbitrary fixed group.
- Payroll included: qualifying salaries, bonuses and taxable allowances count; welfare costs, statutory employer welfare costs and retirement payments do not. Employer social insurance contributions may matter to cash planning without counting toward the wage indicator.
- The actual commitment: retain payroll ledgers, employee calculations and the stated target. If the business chose a target higher than the minimum, assess progress against that target.
See the employee and payroll definitions on page 10.
Repayment is assessed separately for each condition
Section 1-6 of the Round 8 guidelines distinguishes:
- Missed per-employee payroll target: repayment according to the achievement ratio; zero or negative annual growth has a full-repayment provision.
- Missed basic workplace minimum wage: the annual end-of-March check uses a repayment amount based on the subsidy divided by the number of plan years.
- Missed enhanced-cap conditions: the subsidy above the ordinary cap is subject to repayment. If basic conditions are also missed, their repayment provisions also apply.
The guidelines contain exemptions, including defined rehabilitation businesses and specified conditions concerning added value, operating losses or events beyond the business's responsibility, such as natural disasters. Business difficulty alone does not automatically qualify. Basic-condition exemptions should not simply be assumed to cover repayment under the enhanced-cap measure. Confirm the applicable clause with the program office using actual records. Guidelines, page 12
The earlier article's blanket claims about blacklisting, automatic reporting to banks and uniform fines for ordinary wage-target failures have been removed. False or fraudulent applications have separate cancellation and repayment provisions. Guidelines, pages 2–3
Five things to prepare before committing
- Applicable version: the official program name, round, category or special measure, and a saved copy of the guidelines.
- Wage baseline: financial year, qualifying employees, payroll ledgers, bonuses, allowances and workplace minimum wage.
- Annual budget: calculate the wage indicator separately from additional cash spending, including employer contributions and a weaker-sales scenario.
- Responsibilities: assign payroll changes, employee communication and reporting. Round 8 requires disclosure of the target to all employees or their representative and officers by the grant application stage.
- Potential shortfalls: review the relevant repayment rules, retain evidence and contact the program office when a target appears at risk.
These are preparation suggestions, not an alternative official eligibility score. Ticking several boxes does not establish eligibility.
Common questions
Can I choose a 1% target to reduce risk?
A business cannot lower the program's minimum requirement. Round 8 General Type requires a per-employee payroll target of at least 3.5% annual growth. Other programs have their own rules.
Can hiring or dismissals be used to adjust the average?
Calculate honestly using the prescribed employee and payroll definitions. Round 8 excludes projects that mainly manipulate productivity or similar indicators through dismissals to meet conditions. Guidelines, page 13
Does selection for funding end the wage obligations?
No. Selection, the grant decision, project implementation and subsequent reports are different stages. Keep the original commitment and applicable rules, and continue managing payroll and reporting after equipment installation.
Related programs and consultation
For equipment plans, read our Labor-Saving Investment Subsidy overview. For software and digital operations, compare the Digitalization and AI Adoption Subsidy, using that program's own conditions. For an initial consultation, provide the program, round, employee count and a summary of your payroll plan. Individual employees' detailed salary records are not needed in the first message.
Latest official versions: General Type document downloads.
Correction record — September 14, 2026: corrected terminology and program names; added Round 8 sources; separated basic and special conditions, annual and cumulative growth, and ordinary shortfalls from fraudulent applications. Unsupported claims about uniform penalties and credit consequences were removed.