Cheap labor has limits in manufacturing industry

Updated: 2010-06-02 11:55
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BEIJING: Global manufacturers struggling with life-or-death pressures to control costs are finding that the legions of low-wage Chinese workers they rely on have limits.

Analysts at the All-China Federation of Labor in Beijing said recent labor disputes indicated that it was vital to increase wages and adopt better working conditions for laborers.

Since May 1, the minimum wage in Guangzhou had increased by 20 percent and from July 1, the minimum wage in Shenzhen would be increased by 10 percent.

Luo Mingzhong, a professor at the South China Agricultural University in Guangzhou, said that in the Pearl River Delta, most laborers in the manufacturing industry worked at least 10 hours a day and had to work overtime to earn a monthly salary of 1,800 yuan ($263.63).

"Low wages are a significant factor in Pearl River Delta factories which have a headache finding and keeping workers," said Luo.

According to the Guangzhou Daily, from 1993 to 2007, the proportion of Chinese people's wages in the country's gross domestic product had decreased from 49.49 percent to 39.74 percent, which means laborers' incomes haven't risen with the economy during the past two decades.

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"Wages have been rising in recent years, but compared with soaring prices they remain very low," said Luo.

"Migrant workers who were born in the 1980s and 1990s are totally different from older generations in their attitude toward life. The goal of former generations was merely to support their families, while the younger generation focuses on individual prospects. If manufacturers continue to squeeze labor benefits, young workers will no longer be willing to accept it," said Luo.

The paper said the processing trade accounted for 50 percent of the country's total trade volume. But, in the global production chain, the revenue rate generated from the processing trade was as low as 5 percent.

Luo said the era of cheap labor in manufacturers in China had come to an end and the manufacturing industry should shift from relying on low labor cost to relying on research, development and self-branding.