You Nuo

Treat workers better to stay competitive

By You Nuo (China Daily)
Updated: 2010-03-03 11:25

The labor shortage in China's coastal areas should encourage the nation's first-generation industrial cities to treat workers more decently and offer them more benefits.

The inevitable change is bound to be raised at the annual session of the National People's Congress due to open in Beijing on Friday.

A similar decline in the arrival of migrant workers from interior rural areas was reported after the lunar new year in 2009. But that was during the world's worst financial crisis in 80 years, when there were fewer jobs.

This year is different. The economy is reportedly at the risk of running perhaps too fast. There is an unprecedented labor shortage in the Pearl River Delta, home of the densest cluster of manufacturing towns in China, where job vacancies are running high.

In Dongguan, a city that used to be famous for hosting some 5 million migrant workers, there is reportedly a shortage of some 1 million workers following the 2010 lunar new year.

Across the Pearl River Delta, observers say, the labor shortage in manufacturing could be well above 2 million.

There is no telling precisely how widespread the industrial staff shortage is. Recruitment agents in Guangdong and Hong Kong say they expect the crisis to last longer than the holiday season.

What is happening in this area may represent a trend soon to be identified in all the country's industrial cities along the coast.

It is part of a larger change that China must undergo as it shifts from a business model based primarily on cheap labor and low value-added manufacturing (much of it for overseas sales), to a new one based more on domestic consumption and diversified services.

The fact is that not only are consumers in developed countries saving more than they did before the global recession, but also young Chinese workers are no longer automatically attracted to manufacturing jobs.

In some factory towns in the Pearl River Delta, the manufacturing sector's average wage has reportedly risen to 1,700 yuan per month, or $250. That is a figure beyond most workers' dreams a decade or so ago. And that's without mentioning the lack of labor rights back then.

What the local press has yet to report is how much the workers would make by working for companies in their hometowns, or by running their own businesses. Does a worker find it worthwhile to leave his or her family in Sichuan province, for example, to work in the Pearl River Delta or in some nearby city?

More significantly, what is more important to a worker - working in the Pearl River Delta for higher wages, eventually returning home after 10 years, or working nearby for a lower income but having a greater chance of moving his or her entire family there in a couple of years? The latter would at least make their lives much easier.

So the real challenge for the Pearl River Delta cities is not just that they are faced by a lack of manufacturing workers for the time being, as in 2009, but how to become a better place for their workers to live in - at a time when they are faced with increasing competition from interior cities for labor and for skills.

If the coastal cities don't react to this crisis quickly, some of them may lose their commercial luster.

The author is business editor of China Daily