LA Times: People, people everywhere in China, and not enough to work

China Labour Bulletin is quoted in the following articles. Copyright remains with the original publisher.

How can China be facing a labor shortage? In the big manufacturing hubs, employers are scrambling.

By Barbara Demick and David Pierson

March 28, 2010

Reporting from Shanghai and Beijing

In the labor market's pecking order, Chen Xiulan is at the very bottom. She is female, middle-aged and from the countryside and stands barely 5 feet tall. (Height requirements are common with Chinese employers.)

Yet when the nearly 60-year-old grandmother from Sichuan province showed up in Shanghai last fall looking for work on the construction site of the sprawling World Expo, nobody laughed. Chen was handed a hard hat and a broom and put to work with the crew that sweeps up debris.

"If you're willing to work, you can get a job here even if you're old," said Chen, her dimpled face disappearing under the oversize hard hat at a Kentucky Fried Chicken construction site next to the U.S. pavilion. She said she earned the equivalent of $190 a month, 35% above the minimum wage in Shanghai.

It is a sign that even a country of 1.3 billion people might run out of workers.

Once thought to be an endless resource, the Chinese worker has suddenly become hard to find in some east coast cities, where factory bosses and real estate developers are scrambling for labor.

The shortage became glaringly apparent last month at the end of the Chinese New Year. Millions of workers headed to the countryside for the holidays, but they didn't return.

"We may be coming to a point where China is tapped out of cheap labor," said Patrick Chovanec, an associate professor at Tsinghua University's School of Economics and Management in Beijing.

Shanghai has a particular problem: It is in the throes of a $45-billion makeover and up against a May 1 deadline for the opening of the World Expo.

Clocks counting down the days to the fair are on display throughout Shanghai, underscoring the urgency. With heavy rains turning the fairgrounds next to the Huangpu River into a sea of mud, many of the showcase pavilions appear to be behind schedule.

Nearly 40,000 workers are involved in the construction phase, most of them migrants to Shanghai.

Zhu Yonglei, deputy director of the Shanghai Expo Coordination Bureau, said the local government had paid bonuses to construction workers who came back early from their 2 1/2 -week New Year's holiday or who skipped it entirely.

"As far as I know, this is not just a problem for Shanghai," Zhu said. "The entire coastal area of China is suffering from a lack of laborers."

The biggest complaints come from employers in the southern province of Guangdong, the manufacturing hub of China, where millions of workers were laid off in late 2008 because of a steep decline in exports caused by the global financial crisis. Now, employers are raising wages, storming job fairs and staking out train stations hoping to snare migrant workers.

The China Daily, the state-run English-language newspaper, said the city of Dongguan, where most of the world's toys are manufactured, was a million workers short of its usual population of 5 million migrants. State news media have reported that cities were offering better health benefits and housing subsidies to attract more.

To a large extent, China is a victim of its own success. Its gross domestic product grew by a surprising 8.7% in 2009, and exports rose 21% in January from a year earlier. In response to the global financial crisis, China launched a massive stimulus plan that put millions of people to work building roads, airports, rail projects and power plants, many of them deep in the country's interior.

Economists say migrants can now choose to stay closer to home by working in western provinces such as Sichuan, which has experienced tremendous growth in recent years.

Chinese Premier Wen Jiabao addressed the issue Feb. 27 during an online chat with the public, saying the labor shortage was a result of China's booming economy and "the growing awareness among the workers of their own rights and interests."

Labor rights advocates say the problem is that employers are not offering the wages, benefits or job security that would build workforce loyalty.

"The employers bleating and wailing about the fact that they can't hire workers are the same people who fired millions of them a year ago," said Geoffrey Crothall, author of a recent report titled "China's Labour Famine: Hype and Reality" for Hong Kong-based China Labour Bulletin.

Moreover, the jobs available are for unskilled or semi-skilled workers, not the growing army of unemployed college graduates.

A record 6.3 million graduates are expected to hit the job market this year, all products of a decade-long central government push to expand higher education. But newly minted diploma holders are three times more likely to be unemployed than the average urban resident.

Meanwhile, minimum wages -- which are set locally and vary by province and municipality -- began rising in February. Crothall said he expected them to grow 10% this year.

Economists theorize that China may be reaching what they call a "Lewisian turning point," named for the late Nobel Prize-winning economist Arthur Lewis, who observed that most developing countries eventually exhaust their labor pool from the countryside and must make the transition to a more developed economy.

China is also facing a demographic crisis. Because of the nation's one-child policy, the number of working-age adults is shrinking rapidly. By 2050, a third of China's population will be 60 or older, compared with 26% then in the United States.

At the Shanghai train station early this month, when migrant workers on holiday should have been returning from the countryside, it appeared that just as many were heading in the other direction.

"Why should I stay here when I can do the same work back home?" said Xin Peiyi, a 56-year-old construction worker waiting for a train to Hebei province after only 11 days in Shanghai. He said he was earning $300 a month in Shanghai working with a road crew, but he could make $15 a day at home and enjoy a more comfortable life.

"I can't stand all the rain here. It makes my back hurt," Xin said.

barbara.demick@latimes.com

david.pierson@latimes.com
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