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The Ministry of Labor and Social Security is working on a draft regulation to encourage employers to implement salary rises, a move that is being seen as a way to lessen the effects of rising inflation.

The regulation is designed to help develop a mechanism to facilitate a healthy and rational increase of employees' salaries, an official said.

The draft will be submitted to the State Council for review soon but the source did not release specific details.

Qiu Xiaoping, a senior official with the ministry, said the consumer price index shall be taken into account when salary levels are set.

"The government can not force companies to increase salaries. We hope to find a decision-making system that involves all parties in this issue through the regulation," he was quoted by Beijing-based financial weekly China Times.

About 12 provinces in China have announced their own rules on the salary issue and labor departments in 27 provinces began to ask employers to deposit a certain amount of security to ensure they do not delay payment.

These efforts have effectively reduced the number of cases in which salaries have been paid in arrears, the ministry said.

But many employers have not increased salaries for years and employees, especially blue-collars, still earn less than they should, Qiu said.

China, whose economy is driven by low-cost labor, has made efforts to protect the rights of employees. A new labor contract law took effect on January 1, imposing tighter controls over employers' rights to hire and fire staff.