Demographics, generational changes, and policy successes have been key factors in changing worker mentality

In an insightful article in Caixin Online, the prominent economist Andy Xie recently wrote about one of the key factors that is contributing to the recent strikes and labour unrest: important demographic changes.

Xie bluntly notes that the Chinese economic miracle was underpinned by “compliant labour” that worked in massive, militaristic-like factories, that could maximize profits by exploiting economies of scale. Xie writes that he first saw the potential in Chinese factories in the 1990’s, compared to other developing countries, because Chinese workers had, “a cultural acceptance of "eating bitterness" in life; and familial obligations”.

Meanwhile, in the 1980’s and 1990’s, Taiwanese enterprises were setting up shop in China using a Japanese model of factory management. Xie notes that:

Labor management as a core competitive advantage in East Asia began in Japan. After the Meiji Reforms, Japan wanted to industrialize quickly but faced the challenge of turning agricultural labor into industrial labor. It looked to the military for a role model. The military faced a similar challenge: It had to turn farm boys into soldiers. The answer was maximum pressure and total regimentation. Factory uniforms, morning exercises, company loyalty indoctrination, etc., thus became unique characteristics of Japanese factories.

This model becomes less relevant as the transition from rural to urban labor force winds down and labor costs rise. Nowadays, Japanese factories have few workers and lots of robots on factory floors.

The Japanese military factory management system spread to other parts of East Asia, especially Taiwan. It was a Japanese colony for a half-century and receptive to Japanese management skills. When the yen's value rose in the 1970s, Taiwan got its first opportunity to take away Japanese market share by adopting the Japanese factory management system.

And when the Taiwanese took their businesses to the mainland, they found a place for applying their skill with 50 times as many people. Because they combine the Japanese system and knowledge of China's labor force, they are better than Japanese in managing factories in China.

The magnitude of scaling up by Taiwanese businesses is beyond what the Japanese could have imagined. Indeed, no other businesses have done what Taiwanese businessmen have with hundreds of thousands of workers in labor intensive operations.

Foxconn, more than any other factory, with 300,000 workers at one plant alone, best represents the excesses of this model.

But could this model be coming undone? If so, why?

First, there are important demographic changes at play. China’s “One Child Policy”, which went into effect in 1979, has dramatically reduced the number of young, migrant workers. Basically, the majority of people under 30 in China today are only children, whereas their peers who are just five to ten years older might have multiple siblings. Besides decreasing the overall population of workers in their late teens and early twenties (ie. the main age group that are employed in labour-intensive industries), it has also meant that parents with only one child could focus more attention on that one child. All educational expenses, hopes, dreams and aspirations were focused on one person. Xie notes that migrant workers in the 1990’s were often sacrificing themselves to send money home for their sibling’s education or to an ailing relative. This situation is much less prevalent today.

Second, the changes stemming from the “One Child Policy” have caused important social changes. As Xie says, “They are the first generation to grow up during prosperity, without worrying about food and shelter. Many were pampered by parents sensitive to the one-child policy. They are more like counterparts in other countries…”. On a person level, I can confirm some of these observations. I taught English at a university in Zhengzhou in 2001-2, and then in Beijing and Shanghai for five years after that. It was really striking to see the difference in the students who were born in the 1970’s compared to those born just a few years later. Broadly speaking, one group grew up with acute memories of poverty and with multiple siblings, while the latter group grew with more material comforts.

It’s hard to accurately convey how important and stark the generational differences are in China between the “post 80’s” generation (those born after 1980) and previous generations. In American terms, It could be roughly compared to the generation that grew up in the Great Depression and WWII (the so-called “Greatest Generation”) vs. the more decadent “Boomers”, or perhaps like blacks who grew up in the racist era of Jim Crow vs. those who grew up after Civil Rights. As in that latter American case, huge social problems continued to persist even after the passage of Civil Rights legislation, but the younger generation was much less willing to put up with injustice, and more assertive in defending their legal rights. Those analogies are necessarily inaccurate and incomplete. Still, writers like Yu Hua have pointed out that middle-aged Chinese people experienced a shift from medieval times to the modern era in just one lifetime, while young people grew up in conditions that wouldn’t be all too unfamiliar to most Westerners. While older and middle-aged Chinese might mentally compare current conditions to the hardships under Mao, young people might tend to compare their situation to the luxurious and appealing lifestyles they see portrayed in Chinese soap operas. In short, young people are less willing to put up with low pay and abusive management styles.

Rights awareness is also greater among younger people. According to a recent ILRF report that was based on a survey of the 367 interviews with workers in the Pearl and Yangtze River Delta’s, workers in different age brackets showed significant differences in how they obtained legal knowledge. The report found that overall 64 percent relied on traditional media sources, like television, and 46.6 percent received their legal information from the internet. Significantly, however, “…only 20 percent of the workers above the age of 30 used this resource (the internet), compared to 50.5 percent of those under 30…No workers with an education level below middle school reported using the internet to obtain information”. Older workers were also more likely to rely on friends and fellow workers for information.

Third, China’s widespread labour shortage, worker discontent, and successful strikes may be a side effect from successful governmental policies. The government in recent years has invested more in rural education, health, and has abolished the agricultural tax. Meanwhile, it has tried to go up the value chain in the goods it produces. All of this has given workers more employment choices and less pressure to “eat bitterness” (ie. work in sweatshops).

The influences of demographics, generational changes, and policy successes all underlie some of the most recent labour changes in China today. Hopefully the government will recognize the rapid pace of change and will respond positively.
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