China Short of People?

By LAN FANG

Believe it or not, in recent years the armada of factories on China’s coast have to grapple with an undersupply of laborers for an extended period following the annual Spring Festival. “In a sense, the shortage of migrant workers is a wake up call to upgrade and transform our industries,” remarked an official in the Employment Promotion Department, Ministry of Human Resources and Social Security (MHRSS).

In Zhengzhou, Henan, recently: an ocean of want ads reminds this migrant worker how badly he is needed.                                                                                                                      China Foto Press

"Garden Variety" Workers Scarce

Just after the 2010 Spring Festival, the labor market in Yiwu, Zhejiang Province, was jammed with thousands of employers holding up handwritten want ads. Since the end of summer in 2009, when orders for exports exploded, the same scene can be found in many Chinese cities, especially in the coastal Yangtze River and Pearl River Deltas, the most industrialized pockets in China.

In late February 2010, the MHRSS conducted an extensive social study on migrant workers in 2009 and a needs assessment for factories in 2010. The conclusion is that the labor shortage is – so far – confined to parts of China, but may spread more widely across the region in the coming years.

The economic recovery is bringing about a rapid growth in new orders, and exporters, many of whom are located in the coastal areas, need more hands to meet the demand. The MHRSS survey shows that in 2010 every company plans to employ 143 new workers on average, an increase of five percent over the corresponding period in 2008; but 70 percent of companies expect or have already experienced difficulty recruiting workers.

Ordinary workers, those not necessarily skilled in particular fields, are in the most demand, contrary to the assumption that these will be in ready supply. The reality is a surprise divergence from the popular view that it is technical workers that are badly needed.

Describing the widening gap, Zhang Chewei warns this is a faint but unmistakable signal that structural and seasonal deficits in the labor force are gradually growing into overall shortages. The vice-director of the Institute of Population and Labor Economics, Chinese Academy of Social Sciences (CASS) also predicts that such a labor shortage will become a common phenomenon in China’s labor market.

“The labor pool cannot meet expanding demand from the market indefinitely,” said Wang Meiyan, a scholar with the same institute. “If it’s not an overall shortage, it’s at least a limited surplus.”

Options at Hand Inland

What may have touched off the situation is a series of preferential measures for the agricultural sector that began to be felt in 2004. In the following two to three years Chinese economy experienced high-speed growth, leading to demands that further taxed the labor pool.

The strain on the labor supply was eased in the latter part of 2008, when at least 12 million jobs were shed due to the global financial crisis. However it was proved to be episodic. According to the National Bureau of Statistics (NBS), by the end of the third quarter of 2009, more than 150 million farmers were back at work in the cities, 11 million more than at the end of 2008.

But not all are flocking back to where they were. The River Deltas used to be the magnet force for China’s migrant workers – now they are less attractive.

NBS monitoring data show that among those planning to set off to work in the cities in 2010, 29 percent eyed the less developed central and western provinces, an increase of seven percent. Of all the migrant workers back to their hometowns for the Chinese New Year, eight percent indicated no desire to leave home anymore.

Li Tie is the director of Small Town Research Center, National Development and Reform Commission. He believes the inland regions, with improving local economies and an influx of industries relocating from the coast, now offer more job opportunities; many migrant workers are lured back from the coastal areas as a result.

Under the RMB four trillion stimulus plan, a large sum of money was earmarked for infrastructure construction in the central and western provinces; enhanced employment followed like flowers from showers. Meanwhile, to cope with the early 2009 crisis-induced unemployment, these provinces have introduced a series of policies to encourage laid-off workers to establish their own businesses in their hometowns.

Show Me the Money

Need any more reasons why coastal cities are not the first choice for migrant workers any longer? Another disenchantment is the low wages.

Looking farther a field for workers who would be satisfied with the remuneration, 19 companies based in Taicang, Jiangsu, went to Pingliang in the western province of Gansu in September 2009. The search for hired hands was nearly fruitless. For about 1,000 positions they attracted only 100 applicants. Finally no more than 20 workers made their way east. Yan Feng, an official in charge of human resources in Taicang, said the city organized this headhunting excursion on the assumption that the wage level would appeal to farmers in less developed places in the west like Pingliang. But the deal was not so sweet once other factors are taken into consideration. Though jobs in Pingliang are paid less, the local cost of living is lower too. What’s more, by working in nearby towns farmers can happily stay close to their families. “Taicang is less attractive in this sense,” concluded Yan.

RMB 1,000 used to be big money for rural inhabitants, but now the increase in farming incomes and job opportunities have taken the shine off.

Ai Zhenjun, a farmer in Hebi in the central province of Henan, led a dozen fellow villagers to work in the downtown near his village. Originally he planned to go to Beijing, but changed his mind on hearing an experienced construction worker there earns only RMB 120 a day. In the local city, the boss gives him RMB 100 or more and three meals a day. “I don’t have to abandon my land and family,” he said, “This way I have no worries.”

On the coast, the wages have gone up but are still comprised of the minimum hourly wage and overtime. The income growth is tied to longer hours, which is apparently unappealing to potential workers.

What Can't Be Bought

Increasing the wage standard doesn’t solve all the problems either. Twenty-year-old Zhou Zhengfu is paid RMB 2,700 a month in a large processing factory in Nanjing, a sum he could hardly make in his hometown Leshan, Sichuan Province. But he isn’t excited about the current job, and is ready for a new one anytime.

“I work 15 to 16 hours a day, sometimes till one o’clock in the morning. I go directly to my bed when I am back from work, wake up the next morning and do it all over again,” he smiles bitterly. “I feel like part of an assembly line. What does it matter that I earn more money?”

Yan Feng, the Taicang official, knew a young woman freshly arrived from a rural area. She worked in a shoe factory for two months and saved 2000 yuan, and then quit to do a little traveling. When the money runs out, she will come back and find a job. It’s easy. “The older farmers would not see the value in this idea,” sighed Yan. The first generation of migrant workers are still thinking of saving money for retirement or better living conditions whereas the second generation apparently have broader ambitions.

Young people born in the 1980s constitute the better part of this workforce. Statistics show that 61 percent of migrant workers were born in this decade or later. Different from their diligent and patient fathers, the new generation is aware of their value to industry, apprised of their rights as workers, and eager to realize their own agenda. Money alone won’t retain them.

The Way Out Is Urbanization

Some experts think that shortages are here to stay and that the unlimited low-end labor supply China was used to won’t be seen again soon. Growth that depends on cheap labor cannot be sustained. According to Zhang Libin, director of the Employment and Labor Market Department of the Institute of Labor Science, the labor shortfall has its roots in the slow industrial upgrading that lags behind improvement in labor pool skills. This will drive the upgrading of China’s manufacturing sector, and eventually the whole industries. When the industries refine their operations they will need fewer but better-skilled workers.

The upgrading of both industry and workers will promote sustainable development and the refinement of industrialization in China. However, there are still many obstacles on the path. The most serious complications are posed by urbanization; it too trails far behind the industrialization process.

Cai Fang, another CASS scholar, pointed out the effects of the household registration system. It technically keeps migrants from remaining in urban areas and means the source of demand (cities and coastal areas) and the source of supply (usually the countryside of central and western areas) are separated. Under this system, changes in demand are not reflected in a timely manner on the supply side, resulting in sharp fluctuations in specific areas of the labor market.

The first generation of farmer workers who flooded into cities in the 1980s and 1990s still have strong roots in the countryside. The second generation, most of whom grew up in cities, retain vague memories of, and little connection to, the rural experience. They don’t know how to farm, nor are they attracted to this traditional way of life.

The logistics of household registration and immaturity of social security systems are themselves obstacles to easing of the stresses,” concludes Wang Meiyan. If only restrictions related to migrant workers were relaxed – giving them equal access to social security and public welfare in cities – their numbers would swell the urban labor pool.

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LAN FANG is a journalist for New Century magazine.