“Made in China,” meet Labor Crunch

[Omaha Steve]

http://www.chinastakes.com/story.aspx?id=211

February 18,2008

by CSC staff


The monster “Made in China” is discovering that the seemingly endless upside to the modern market place it's been riding has at least one corresponding downside. The Pearl River and Yangtze River Deltas, centers of China’s immense manufacturing machine, are confronting increasing labor pressures. Scads of enterprises in these areas are facing reduced numbers of workers and are in the meantime having to raise wages and increase welfare benefits to attract more and more skilled workers.

Matters have been made even worse at the start of this year by disastrous winter weather that centered itself on the Chinese New Year, a time when much of China is traditionally on the road to faraway homes. Blizzards and ice paralyzed the transportation system in southern and central China, stranding many thousands of would-be travelers. The government of Guangdong Province persuaded 3.2 million workers to stay in Guangdong during the holidays and a total of over 13 million workers spent new year’s holidays there. But millions more who made it out may not be returning to the Pearl River Delta until March or April. The delayed return of the migrant workers will inevitably affect the output of the area’s manufacturing in the spring.

In some areas this is not such a problem. Influenced by a global economic slowdown, RMB appreciation, rising raw material prices and adjustments in foreign trade policy, the export environment for companies in south China is not the boom times it has been. The labor demand in Hong Kong, Taiwan and Macao invested private enterprises is down. During the forth quarter of last year, labor demand dropped by 199,600 persons in total, including a decrease of 34.93%, i.e. 173,200 persons, working in foreign invested companies.

With others it is. In the textile and shoemaking industries, formerly big earners in Guangdong Province, the labor situation is at its most serious. An average wage of only 960 yuan is no longer as attractive as it was and higher wages are precluded because of low margins. According to the Asia Footwear Association (AFA), last year thousands of factories in the Delta went bankrupt or got out, and of the survivors about 25% have moved to Southeast Asia, about 50% have transferred to hinterland provinces and some 25% of them are still waiting and watching.

New Labor Contract Law better protects laborers and helps to attract migrants with a desire for work. Enterprises under the new law, however, are more cautious in hiring workers and are requiring higher skills or training. A Guangzhou HR service center survey found that the demand for non-educated workers slumped by 12 percentage points to only 17%, while 12% of the posts require college certificate or above.


FULL story at link.

[Captain Hilts]

1. I wish some of them said "Made in Mexico" or "Made in USA" instead. nt