When Premier Wen Jiabao repeatedly mentioned raising income levels and improving social welfare during his annual government work report on Monday, some people were happy, others not.

Wen is sending a message to all Chinese companies that they should raise their employees' salaries and pay more for their medical treatment and housing on an annual basis.

However, at a time when global demand has slackened and the Chinese economy is slowing down, this is likely to have a harsh impact on small and medium-sized private enterprises, which make a major contribution to the Chinese economy, as it will mean increasing labor costs and business operation pressures.