Which way to success?

SHANGHAI: Strolling along Huaihai Road, passing chic shops and fancy restaurants, 24-year-old Xu Yuhui looks smart in his freshly pressed shirt and faded denim jeans. Although he can't afford most of the merchandise on display in the shops, he seems to be in good spirits.

"I am sure I can make it in Shanghai," Xu says. To this young migrant worker from neighboring Jiangxi Province, Shanghai is the promised land, thanks to its rapidly expanding service sector. In fact, Xu works as a waiter at one of those fancy restaurants on Huaihai Road.

Along with a group of young migrant workers from his native county, Xu was recruited about two years ago by a factory in Changning, an industrial district in Shanghai, with a daily wage of about 25 yuan ($3). It was hard work with long hours and dismal conditions.

When he heard that a restaurant near his factory was looking for people, he jumped at the chance. From there, he graduated from one restaurant to another before landing his current job which pays more than 1,000 yuan ($131) a month, plus free meals and lodging. He also gets one day off every week, which he never got from the factory. What's more, "I really like the work environment," Xu says.

As the momentum of Shanghai's service industry accelerates, an increasing number of migrant workers have been drawn from manufacturing industry to the service sector. The service sector's share of Shanghai's GDP, or gross domestic product, exceeded that of the manufacturing sector for the first time in 2006. Economists expect the gap to further widen in coming years as the consumer spending boom continues, fuelled by brisk economic growth and strengthening confidence in surging asset values represented by the stock market rally.

This trend, which is becoming increasingly entrenched not only in Shanghai but also in other major mainland cities, promises to have a profound effect on economic growth patterns as manifested in rising wages and improved living standards, especially for millions of migrant workers. This would, in turn, fuel consumer demand, which would create even more service sector jobs.

Xu is certainly not alone in turning his back on factory employment.

Helen Pan, a 20-year-old woman from a village in Jiangsu Province, agrees. Once she made up her mind to quit her job at the production line of a garment factory, she found employment as a hair washer in a newly opened salon near where she lived. Although she took a salary cut to switch, she has no regrets. "I am learning hard to be a hair dresser," she says.

Success seems to be within her grasp after she moved to an upmarket salon in a plush shopping mall. "Quite a few hair dressers here were at one time or another factory workers from out of town," she says. "They have made it in Shanghai, and it's my turn now."

The seemingly irrevocable changes on the labor front have not gone unnoticed by Shanghai's many retailers and service providers.

A hairdresser shop on Renmin Lu stays open till 1 am to cater for customers who drop in after finishing work at the restaurants and bars on nearby Huaihai Lu before going home to the sprawling tenement block behind. Xu and many of his friends are among the regular patrons of that hairdresser shop.

A clothing shop in Nanfang Shopping Mall on the outskirts of town is doing roaring business these days. "I believe many of my new customers are young migrant workers living in the vicinity because they speak with different accents," a sales girl at the shop says. "We have to revamp our merchandise stock to suit their tastes and pockets."

It may be too late for 40-year-old Ding Aiguo to start afresh in the service industry. But like many relatively older migrant workers in factories and construction sites, he has benefited from the exodus of younger workers to the service sector. Their employers have offered them higher pay to keep them. As a skilled worker at a construction company, Ding now earns an average 3,000 yuan ($394) a month.

But it's a 10-hour-a-day backbreaking job. Despite the high pay, "fewer and fewer young folks are willing to join the trade," Ding laments.

Shen Minggao, an economist at Citigroup, said a structural labor shortage could occur in very labor-intensive sectors such as the manufacturing industry, even though labor supply, at the moment, surpasses demand.

"The average wage in manufacturing has been lagging behind wages in the service sectors. This has made it difficult for some low-end manufacturers with thin profit margins to hire enough laborers," Shen said in a recent report.

Xiao Geng, a professor of economics at Brookings Institution of Tsinghua University, says it will become a trend that increasing migrant workers would be drawn to service industry as the expansion of this sector is outpacing the traditional manufacturing industry in Shanghai.

According to latest figures from Shanghai Municipal government, foreign investment in the city's service industry in 2006 increased 33.5 percent, accounting for 66.9 percent of the total contractual value, while the investment in manufacturing dropped 26.4 percent.

In the first six months of 2007, the turnover in service sector accounted for 51.4 percent of the city's GDP, outweighing for the first time the manufacturing sector.

"The fast increasing consumer market in China prompts the growing pace of service industry, " says Xiao Geng. "The further expansion of the consumer market boosted by the rapid economic growth will continue to attract more and more migrant workers to the service sector."

A recent survey conducted by Boston Consulting Group (BCG) showed that Chinese consumers are experiencing unprecedented wealth growth, three to five times faster than developed countries in the past 50 years.

Unlike their predecessors, more and more young migrant workers in Shanghai and other major cities have abandoned the idea of returning one day to their native counties and villages. Many have opted to stay in the cities where opportunities are plentiful for them and their families.

Zhang Hua, from Sichuan Province, is a 25-year-old waterman working for Coca-Cola. Every weekday, he carries bottled drinking water to numerous office and apartment buildings in Beijing. He says that every month he can earn about 840 ($110) to 1,000 yuan. "Plus the bonus for transporting additional bottles, sometimes, I can get 1,500 yuan ($197) a month," he says. "As a waterman," he continues, "the working hour is more flexible than in factories."

And what does he do in his spare time? "I want to learn a trade so I can find a better job and build a family in the big city," he says.

"Compared with the traditional construction and manufacturing industries, the service industry forces migrant workers to develop a rapport with different people, which helps them become part of the society," says Xiao Geng.

Xiao Zhixing, a professor of human resources and management at the China Europe International Business School, says more efforts should be made to quicken the reform of the household registration system, which will lend substantial support to migrant workers.

"The natural labor division between the urban and rural areas helps develop a sustainable economy," says Xiao Zhixing.

Economists and experts expect that the future bodes well for China's rural migrant labor, because balanced economic growth calls for the natural transference of labor throughout the country. "We are firmly set on achieving a more balanced growth and even distribution of wealth," says Xiao Zhixing.

Xu, the waiter in Shanghai, is attending cooking lessons with the hope of becoming a qualified chef. His ultimate dream is to open his own restaurant in Shanghai, preferably on Huaihai Road.

"Shanghai is a city giving us more opportunities to making money," he says. "I will not return to my hometown."

(China Daily 11/02/2007 page20)