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Labor shortfall felt in coastal China as orders pile up
Updated: 2009-08-27 15:29

Although China's employment situation is still grave, a shortfall in labor resources has cropped up in some coastal regions as both domestic and world economy are making positive changes.

"Finding workers is my priority now as export orders have started to pick up since June," said Xiao Senlin, a senior manager of the Ha Yi Dai Toy Factory, which is based in the booming city of Dongguan in China's manufacturing base Guangdong province.

In Xiao's company, one third of the machines were laid off because of worker shortfall, despite increasing orders.

"I dare not answer phone calls because most of them are to press for earlier delivery," Xiao said. "I'm anxious but can do nothing about it without enough workers."

Xiao's company was not the only example of the impact of labor shortages. A lack of workers is spreading in export-oriented enterprises in two of the country's major manufacturing bases: the Pearl River Delta and Yangtze River Delta regions, as orders pile up.

Those suffering labor shortages are most small and medium-sized enterprises, which are China's major employers of migrant workers.

Wenzhou, a coastal city in eastern Zhejiang province, estimated a rural labor resource shortage of 150,000, most in some traditional labor-intensive sectors such as spectacles, garments, shoes and electronic goods manufacturing.

Like Xiao, Chen Aimin, a human resources department manager at Kuoshuai Garment Company in Wenzhou, was in a dilemma -- he was happy to see order increase but worried about a lack of workers.

"We did not expect that our orders for the second half this year would be 40 percent more than last year," Chen said. "As a result, we did not employ enough workers and now it becomes difficult to recruit new workers."

According to Wenzhou customs statistics, the city's garment exports rose 10 percent in July from a year earlier while shoe exports gained 2.7 percent year-on-year. However, compared with June, garment exports increased 12 percent last month and shoe exports surged 35 percent. The two sectors' exports accounted for 45 percent of the city's total export volume.

Although exports, a bedrock that fueled China's fast growth in the past few years, fell on a year-on-year basis last month, there were signs of improvement. July exports fell 23 percent from a year earlier, but increased 10.4 percent from June.

However, some analysts warned the current labor scarcity after the export order increase was mainly a result of seasonal factors instead of solid growth in external demand.

Most of the order increase was from daily necessities as foreign retailers started buying for the coming Christmas shopping season, said Zeng Shuiliang, an expert with the Yangtze Delta Region Institute of Tsinghua University.

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Meanwhile, many migrant workers have returned home to help the summer grain harvest, joining those who returned at the beginning of this year because of the grim employment situation, said Min Rui, deputy chief of the Wenzhou employment service bureau.

According to statistics from the Ministry of Human Resources and Social Security, of the 70 million homebound migrant workers, 18 million returned home jobless before the Spring Festival as the financial crisis forced closure of factories in the coastal regions.

China had 225 million farmer-turned workers at the end of last year and 140 million of them worked outside their hometown. They are the migrant workers.

Besides the 4-trillion-yuan ($585.7 billion) stimulus package to boost the economy, the government has taken measures to stabilize and increase employment, including expanding domestic consumption, reducing enterprises' tax burden, encouraging graduates and migrant workers to be self-employed and setting up vocational training.

China's economy grew only 7.1 percent in the first half of this year. This compared with double-digit annual growth during the 2003-07 period and also the first two quarters last year.

The government set an annual target of 8 percent for this year's economic growth, which was said to be essential for expanding employment.

"There are still a lot of unstable and uncertain factors ahead and the economic situation is still very grave, although both the world economy and the national economy are making positive changes," Premier Wen Jiabao said during an inspection tour in Zhejiang from August 22 to 24.

Besides the economic uncertainties that may hinder employment, some far-sighted experts are pointing to labor resource conflicts between the country's coastal region and the relatively under-developed western region.

In southwestern Chongqing, one of the country's major sources of migrant workers, going to the east coast to be a migrant worker is no longer an attractive option.

Compared with Chongqing, the earning in the coastal regions was not as attractive as it used to be, said Sun Huiju, manager of a local labor service export agency. Meanwhile, many of these home-returning migrant workers got re-employed locally and did not want to leave their hometown again, Sun said.

Labor resource conflict between the country's east and west would be natural in the long term as the western regions' economic development picked up and people's earnings increased, said Wang Ying, a workforce official in Chongqing.

The backflow of migrant workers to the western regions would help industrial structure adjustment, Wang said.

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