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Pay hikes, industry upgrade to solve labor shortage

By Wang Ke: 0 Comments Print E-mail China.org.cn, March 10, 2010

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As workers in the U.S. face double-digit unemployment, in southern China, the Pearl River Delta, one of the world's largest manufacturing bases, is struggling to cope with a labor shortage.

"Firms need to upgrade their industries, and the government should help with policies to attract migrant workers back," said Jeffrey Lam Kin-fung, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

CPPCC member Jeffrey Lam Kin-fung is also a member of the Hong Kong Legislative Council and managing director of Forward Winsome Industries. [Wang Ke/China.org.cn]

The labor shortage may mean only a temporary drop in revenue for industry and the government, but solving it is crucial for sustainable development, rebuilding China's exports industry, and addressing social issues such as unemployment, said Lam.

After the Spring Festival in February, many factories in coastal cities found it difficult to recruit workers. The situation was in sharp contrast to the end of 2008, when large numbers of migrant workers returned to their home towns as factories lost export orders amid the financial crisis.

China Daily reported Zhang Yousheng of Gaowei Electrics Group as saying that Zhongshan City, a center of home appliance manufacturing in the Pearl River Delta, was facing a shortfall of 130,000 workers.

A January survey by the Guangzhou-based Southern Metropolis Daily found that more than 20 percent of migrant workers would not return to Dongguan after the Spring Festival, citing low pay as the main reason.

Li Jing from the Chinese Academy of Social Sciences says the shortage of workers in the Delta is due to low pay.

A proposal from Jeffrey Lam Kin-fung recommends industrial restructuring as a solution to southern China's labor shortage. [Wang Ke/China.org.cn]

"Companies in the central and western regions are offering the same salaries as the Delta," Li told China Radio International on February 22.

"Migrant workers can find work in central and western regions, thanks to the government's 4-trillion-yuan(US$590 billion) stimulus plan to boost infrastructure construction. The large scale construction of roads, airports and railways has absorbed a large number of workers," Li said.

Lam told China.org.cn that some manufacturers, already weeks behind schedule because they can't find enough workers, are planning to shut down production lines and are considering raising prices.

The New York Times reported on Feb, 26 that factory wages in the Pearl River Delta had risen by as much as 20 percent in recent months.

"The new generation of migrant workers are better educated and have much higher expectations, ranging from working conditions to salary and insurance packages," Lam wrote in a proposal to the government. "In addition to increasing wages, the government should provide training and welfare for the workers, especially migrant workers."

Another reason for the labor shortage is an unbalanced industrial structure, Lam said. Coastal industry has boomed over the past 10 years. International brands invested in China to reduce manufacturing costs and to gain a presence in the Asian market.

But labor-intensive industry provides low-paying, physically demanding jobs in unhealthy working environments. The basic welfare of workers is often ignored and employees' legal rights are trampled on.

"The government should guide companies to upgrade, improve their product mix and increase added value," Lam told China.org.cn. "Enterprises need to switch from labor-intensive to technology-intensive development."