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Holiday labor shortages
2009-Dec-14 08:01:33

After a crisis that sparked mass layoffs in China's export hubs, factories in manufacturing heartlands such as the Pearl River Delta are on the hunt for migrant workers again as orders revive for Christmas.

In recent visits to three Pearl River Delta towns, a fragmented, but consistent picture of labor shortages has emerged, with big job recruitment centers such as CHTONE in Changan experiencing a surge in activity.

"We're seeing more of that now," said Zhang Mingming, a young manager at the job center where a large red banner over the main entrance advertised 400 new jobs at an electronics factory.

Only a few months ago, such factories were laying off employees by the thousands, and a mass reverse migration was taking place as millions of out-of-work men and women streamed back to their villages in rural China to wait for the economy to pick up.

Now, with factories in China's Pearl River Delta ratcheting up production to meet Christmas orders for everything from Barbie dolls to Plasma TVs and designer jeans, workers are in high demand in a region that produces about one-third of China's total exports.

Yet many of the millions of migrant workers who returned home have stayed there, unwilling to make a hurried return to the fickle job market in China's "world factory," as the Pearl River Delta is known.

"For every 10 people we look for, we can only find two or three," said Huang Zhilian, a manager at Vmart Electronics, a company that exports calculators, watches and DVD players to emerging markets such as Romania and Pakistan.

Slumped behind a recruitment booth at a job center in Shenzhen's Longgang town, Huang said he'd only managed to hire six people in the past three days.

"We come here every day now. There's no choice," Huang said.

Jobs have become more plentiful and better paid in China's interior, thanks to the central government's 4 trillion yuan stimulus package. The package included major spending in underdeveloped parts of the country to help the country's job market become less dependent on export hubs.

It's not just the Pearl River Delta that is scrambling to find workers.

Shortages elsewhere

Other industrial belts are also facing labor shortages such as Zhejiang, in the eastern Yangtze River Delta, where State media report there is a shortage of 250,000 workers.

"We've had millions of pieces of reorders since October," said Bruce Rockowitz, president of export powerhouse Li & Fung that sources consumer goods extensively for the likes of Wal-Mart, the world's biggest retailer.

The demand for workers is putting upward pressure on wages, potentially eating into the already wafer-thin factory margins.

"Wages had come way down, and now they're starting to inch up again because a lot of the labor had migrated away," Rockowitz said.

While it remains to be seen whether China's migrant workers will stream back to the Delta, the recent labor strains underscore a growing need for the region to upgrade to reduce its reliance on low-end and labor-intensive industries.

While labor supply shortages aren't a new phenomenon, a demographic shift among China's 150 million migrant worker population suggests more are now content to stay home, rather than provide the muscle to power coastal export hubs.

"During the financial crisis many people returned home and once home, they don't want to come out again," said Lu Kewang, a young migrant worker from Guizhou province working at the Group Sense electronics factory in Dongguan's Changan town.

Wage inflation

While job centers are often teeming, workers are becoming choosier, preferring work at bigger factories and holding off for better pay, leading to creeping wage inflation in some parts.

Of the 20 million migrant workers out of work early this year, some 14 million or so across China had found work by June, the National Bureau of Statistics reported.

While the report didn't give a regional breakdown, it said 66.7 percent of migrant workers took jobs in eastern coastal areas, while 32.9 percent found work in central and western China, suggesting a significant number were now staying in the interior.

"Before, China was poor, so this region was very attractive," said Liu Hong, head of the Longguan job market in Shenzhen's Longgang district.

"Wages and benefits were many times higher than the inland. But because of China's economic development, the difference is getting less and less, so fewer people are coming out here," Liu said.

The improved situation on the ground accords with recent purchasing managers' index data suggesting that orders are on the rise.

But overall trade numbers remain weak, suggesting the increase isn't yet across the board, with Chinese exports in August falling a steep 23.4 percent year-on-year.

"The orders have become smaller, less frequent and with a shorter period of delivery. The orders are not continuous like before," said Hu Yifan, chief economist at Citic Securities.

"The recovery of exports will stabilize, but not be very strong going forward," Hu said.

China's export sector now makes up roughly a third of its GDP, and exports are vital in providing long-term employment for China's masses.

For minnows like the Yuang Kang toy factory in Dongguan, that makes stuffed dolls, including Santa Clauses and grinning snowmen, there's not much to cheer about this Christmas.

 

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