A reversal of fortune in China’s labor market
Oct 02 2009
Yet finding those workers is another thing entirely. Many of the millions of people who lost their jobs and returned home have stayed there, unwilling to make a rash trip back to the fickle employment market in the ‘‘world factory,’’ as the delta is known.
Three recent visits to Pearl River Delta towns have shown a fragmented though consistent picture of labor shortages, with big job recruitment centers like Chtone in Changan having a surge in activity.
‘‘We’re seeing more of that now,’’ said Zhang Mingming, a young manager at the job center, where a large red banner over the main entrance advertised 400 new jobs at an electronics factory.
Only a few months ago, such factories were laying off employees by the thousands and a mass reverse migration was taking place as millions of out-ofwork people streamed back to their villages in rural China to wait for the economy to pick up.
Now, with factories in the Pearl River Delta ratcheting up production to meet Christmas orders for everything from Barbie dolls to plasma televisions, workers are in high demand in a region that produces about one third of China’s total exports.
‘‘For every 10 people we look for, we can only find two or three,’’ said Huang Zhilian, a manager at Vmart Electronics, a company that exports calculators, watches and DVD players to emerging markets like Romania and Pakistan.
Slumped behind a recruitment booth at a job center in Longgang, a district in Shenzhen, Mr. Huang said he had managed to hire only six people in the past three days.
‘‘We come here every day now,’’ Mr.
Huang said. ‘‘There’s no choice.’’ Jobs have become more plentiful and better paid in China’s interior, thanks to Beijing’s stimulus package of 4 trillion yuan, or $585 billion, which included major spending in underdeveloped parts of the country so the job market would depend less on export hubs.
China’s manufacturing sector continued to gather strength in September as an increase in new orders increased both output and jobs, the official purchasing managers’ index for China showed Thursday, rising to 54.3 from 54.0 in August.
It is not just the Pearl River Delta that is scrambling to find workers. Other industrial belts are also facing labor shortages, including Zhejiang, in the eastern Yangtze River Delta, where, state media say, there is a shortage of 250,000 workers.
‘‘We’ve had millions of pieces of reorders in the last two months,’’ said Bruce Rockowitz, president of Li & Fung, which manages supply chains for retailers like Wal-Mart. ‘‘Last two years, there was nothing.’’ The demand for workers is putting upward pressure on wages, potentially eating into the already wafer-thin factory margins.
‘‘Wages had come way down, and nowthey’re starting to inch up again because a lot of the labor had migrated away,’’ he added.
While it remains to be seen whether migrant workers will stream back to the Delta, the recent labor strains underscore a growing need for the region to upgrade to reduce its reliance on lowend labor-intensive industries.
And while labor supply shortages are not a new phenomenon, a demographic shift among China’s 150 million migrant workers suggests that more and more of them are content to stay home, rather than provide the muscle to power coastal export hubs.
‘‘During the financial crisis many people returned home, and once home, they don’t want to come out again,’’ said Lu Kewang, a young migrant worker from Guizhou Province working at the Group Sense electronics factory in Changan.
While job centers are often teeming, workers are becoming picky, preferring work at bigger factories and holding out for better pay, which has led to creeping wage inflation in some areas.
Of the 20 million migrant workers out of work early this year, about 14 million across China had found work by June, according to a report by the National Bureau of Statistics.
The report did not give a regional breakdown, but it said that 66.7 percent of migrant workers had taken jobs in eastern coastal areas, while 32.9 percent had found work in central and western China, suggesting that significant numbers were staying in the interior.
‘‘Before, China was poor, so this region was very attractive,’’ said Liu Hong, the head of the Longguan job market. ‘‘Wages and benefits were many times higher than the inland, but because of China’s economic development, the difference is getting less and less, so fewer people are coming out here.’’ Yifan Hu, the chief economist for Citic Securities, said, ‘‘The orders have become smaller, less frequent and with a shorter period of delivery. The orders are not continuous like before.’’ ‘‘The recovery of exports will stabilize but not be very strong going forward,’’ she added.
China’s export sector now makes up about a third of its gross domestic product, and exports are vital in providing long-term employment for China’s masses.
While the labor supply crunch has been a headache, some experts say it may have only a limited effect, with larger, better capitalized firms able to adapt and engage in stopgap outsourcing of production to smaller factories.
Craig Pepples, the chief operating officer of the trade intermediary Global Sources, said, ‘‘For capable suppliers, who are responsive to buyers and can adjust as requirements change — whether it’s payment terms or order quantity—things are looking very good indeed and can even improve year on year.’’ Meanwhile, many of the Delta’s small factories are still scrambling from one order to the next, while large companies seem to be gleaning most of the business and mopping up most surplus labor.
Forminnows like the Yuang Kang toy factory in Dongguan, which makes stuffed dolls including pudgy Santa Clauses and grinning snowmen, there is not much to cheer about this Christmas.
‘‘Things are just O.K.,’’ said Zhang Guopin, a sales manager for the firm.
‘‘We haven’t seen much improvement in our business.’’



















