China's "labour famine:" Hype and reality

If you ask a factory worker or a waitress in Dongguan if they have had a pay raise recently, they will either stare at you blankly or just burst out laughing.

For all the hype in the Chinese and international media about  30 percent wage inflation and a "famine" (民工荒) of more than one million labourers in the Pearl River Delta, the reality for migrant workers remains the same; low pay, long hours and no job security.

Job seekers scan the recruitment ads outside Shenzhen's Luohu Talent Market

The evidence is in the job advertisements posted outside factories, shops and inside the delta's numerous recruitment centers, known colloquially as "talent markets" (人才市场). The major electronics manufacturers in Dongguan, for example, are still only offering a basic salary of little more than the local minimum wage, currently set 770 yuan a month. And the only way for factory workers to earn a decent wage is to do vast amounts of overtime. China's Labour Law limits overtime to 36 hours a month but many employees will exceed that. Working eleven hours a day, six days a week is not uncommon in Dongguan.

And the situation for some workers in neighbouring Huizhou is even worse. On 24 February, a group of 300 women workers at a components factory in Boluo county went on strike to demand higher wages. The workers complained that, even after excessive overtime, they earned less than 1,000 yuan a month; moreover they had never received a bonus or any kind of subsidy from their employer, the Lifeng Switch Factory. One employee, Ms Peng, a migrant worker from Hunan, who had been working at the factory for five years, said her basic wage was still just 550 yuan a month, or 120 yuan less than the 670 yuan minimum wage in the city.

Many employers in the Pearl River Delta are now offering incentives to attract new employees. Some companies will pay signing-on bonuses or bonuses to workers who recruit new employees or to those who work an entire month without taking a single day off. If you put all this together with overtime, factory workers can earn up to twice their basic wage or sometimes even more. However, these incentives are all based on increased productivity and are usually balanced with fines and demerits for absenteeism and breaches of company rules.

Despite the shortage of workers, many employers are still limiting their intake to strong and healthy workers under the age of 30. Employers in Dongguan have for a long time refused to hire anyone over 35 because they believe they will not be able to cope with the long arduous hours expected of employees. Some companies, such as Foxconn, go even further and demand in their ads that production line employees have "regular features, no scars or noticeable birthmarks, no communicable diseases and no criminal record."

And despite these restrictions, companies are still hiring. On Monday March 1, the first day after the traditional Lunar New Year two week holiday, some 200 young men and women marched en masse through the gates of a labour recruitment company in central Dongguan to be allocated jobs in the nearby Nokia factory. The recruitment company had the previous week hired about 400 new workers.

A labour shortage but no famine

That is not to say there isn't a labour shortage in Dongguan. Walk down the street and you will see deserted building sites, empty commercial and residential developments, and recruitment ads posted everywhere. Some smaller companies, and those in the outlying townships, are now loosening their employment criteria in response to the shortage. In Shipai township, which, locals say, lost about half its workforce during the economic crisis, factories are recruiting workers up to the age of 55 and offering wages comparable with the major employers downtown or even higher in some cases.

The retail and restaurant sectors are particularly short staffed after the exodus of migrant workers last year. On one street in Shipai, for example, there were half a dozen hair salons, all with mass recruitment ads for stylists and assistants offering monthly salaries of around 3,000 yuan. However, most of these salons were empty because the factory girls who make up the bulk of their customers have not returned either.

The reason they have not yet returned is simple. The new generation of migrant workers, those born in the 1980s and 1990s, have far more options than their parents - the original generation of rural migrant workers who fuelled China's extraordinary economic growth over the last two decades. While their parents moved from the countryside to the city out of economic necessity, those born the 1990s, in particular, have always enjoyed a higher standard of living, are better educated, and better understand the reality of life in the big city. Many were born in or grew up in the city, and consider themselves to be more urban than rural. As 19 year-old migrant worker Chen Changzheng told a reporter the Dongguan Times: "Exactly what part of me do you think looks like a peasant?"

The younger generation of workers are both more aware of their rights and more self-confident and assertive. They will not accept indefinitely the appalling working conditions their parents put up with. Many will only work for a few months before moving on to another factory or a new town. They are highly mobile and think nothing of jumping on a train or bus to cross the country if the mood takes them.

More choices for younger migrant workers

And it is this increased mobility that has put the Pearl River Delta at a disadvantage. The delta is no longer the only show in town for factory workers, there are jobs everywhere from Chongqing to Jiangsu and increasingly closer to home for rural families. The wages may not be as high as in the delta but the lower cost of living and proximity to their friends and family make staying closer to home an increasingly attractive option.

Younger workers can also afford not work if they choose to. Very often their parents have made enough money to live on and don't need their children to support them. However, very few young workers are living off their parents. They money they do earn, they spend on themselves and their friends. As one teenager said, "I don't need to support my family but neither do I want to be a burden."

For many young people, a move to the big city is only worthwhile if they can find a decent job with prospects that pays a lot more than working on the production line. In Shenzhen this week the talent markets recruiting factory workers had little more than a trickle of job-seekers, while a specialist recruitment fair for the automotive industry was absolutely flooded. One car company recruiter explained that the automotive industry has traditionally been seen as a sector where you can earn a lot of money and then eventually go into business for yourself. Young men and women with high school or technical college diplomas were queuing up for jobs in sales, marketing, repairs and distribution that paid between 2,000 yuan and 3,000 yuan a month. Whereas university graduates with five years work experience could easily find a job in Shenzhen that paid around 5,000 yuan.

Shenzhen has tried very hard over the last five years to position itself as a high-end job market, pushing out low-cost factories and attracting hi-tech and professional workers. And in a bid to further boost its pre-eminent position in the labour market, the city government announced on 2 March that it would raise the city's minimum wage, currently 1,000 yuan a month, by "at least" ten percent this year, and that Shenzhen's minimum wage would definitely be higher than anywhere else in China, particularly the Yangtze River Delta and other Pearl River Delta towns.

There has been speculation in the domestic media that Dongguan will have to raise its minimum wage as well, perhaps to 900 yuan or even 1,000 yuan if it is to attract enough workers. However, the city may have to do more than simply raise the minimum wage. At some point it too will have to move away from low-cost manufacturing and adapt to the changing needs of the labour market by providing the skilled and more professional jobs the younger generation of workers are seeking. If it fails to do so, the abandoned factories, deserted warehouses and empty shops that already litter the municipality will become more and more commonplace, and the city that was once the bustling manufacturing heartland of China could become just another run-down factory district.
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