We’ve said it before, but there is more and more evidence: China’s coastal factories are running out of cheap workers. So many migrant workers have left Zhejiang province, for instance, that some companies are even recruiting new staff straight out of prison. According to state media, firms are offering to train inmates with less than two months left on their sentences if they sign contracts to join up on their release.
Labour shortages hit headlines last year but, anecdotally at least, the problem appears to have escalated. “Normally, worker shortages appear during the Spring Festival [usually early February] and last one month,” explains the Economic Observer, “but this year, they appeared four months before it.”
Some of the major manufacturing areas have responded by giving migrants more hukou benefits and increasing the minimum wage. Guangzhou recently set a national record by posting a Rmb1,300 ($200) minimum monthly salary. “One important reason [for the trend],” claims Xinhua, “is the serious recruitment difficulties in the Pearl River Delta.”
Still, Guangdong is now thought to be short of 2 million workers. To understand why, look at Fuyang in Anhui, a poor rural area that’s long relied on remittances sent home by migrants. Traditionally, over a quarter of its 9.5 million people have worked elsewhere. But now local industrial parks are holding job fairs and local cadres in Fuyang have been trying to convince potential workers to stay with offers of pensions, medical insurance and housing assistance.
lt’s thought that at least 21,000 migrant workers have been enticed to stay and work in the city rather than travel further afield to the likes of Guangdong.
“In recent years, Fuyang’s coal, chemicals, machinery, agricultural products, medicine and other industries have developed rapidly,” explains the 21CN Business Herald. “The industrial development has increased the demand for labour.”
The demand for workers has also forced wages to become more competitive. “Companies in the county are all lacking labour and provide monthly income of more than Rmb1,000 [$150],” says Gong Chunyan, Party secretary of a local county. Migrants will still earn more away from home (around Rmb1,700 according to a recent survey of workers under 30). But that may no longer be enough to compensate for the higher cost of living in the more developed coastal areas.
Staying closer to family is another major reason to look for work in your hometown, particularly as migrants have to pay extra to educate their children in cities that they move to in search of work. That means that they often leave their offspring with relatives: a recent survey by the All-China Women’s Federation found that migrant workers left behind at least 58 million rural children.
Staying at home – if the jobs are available – looks like a much better parental option. “They do not need to pay the so-called transfer and transient fees and are not subject to enrollment restrictions,” explains another Fuyang official.
The shift might be bad news for coastal manufacturers (various media reports now suggest that wages in Vietnam often undercut those in China’s leading manufacturing zones). But it’s a more promising sign for the country as a whole, especially for the policy planners who want to see economic development spread more evenly across the country, as well as GDP growth powered a little more by domestic consumption, and a less by investment and exports. Higher wages for workers like those in Fuyang should help…
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.