NYT: labor shortage in China?

["Daniel F. Vukovich" <dfvukov@ucsc.edu>]

Misleading title, and might be just another utopian market fantasy, but 
some interesting info in here...
And who said the labor theory of value is dead?

best, Dan

New York Times - April 3, 2005

Help Wanted: China Finds Itself With a Labor Shortage
By JIM YARDLEY and DAVID BARBOZA


INGXIANG, China - The pipeline that pours young, eager workers into
China's manufacturing juggernaut begins in the country's interior at
vocational schools like Hunan Top Software.

So it is here in Ningxiang, a 10-hour drive from the factories on the
southern coast, that clues can be found to a problem once thought
inconceivable: The world's most populous nation, which has powered
its stunning economic rise with a cheap and supposedly bottomless
pool of migrant labor, is experiencing shortages of about two million
workers in Guangdong and Fujian, the two provinces at the heart of
China's export-driven economy.

For Wu Dongshan, the job placement coordinator at Hunan Top, the most
obvious sign of change is that factory recruiters now come to him, a
reversal from three years ago, when he would make the long drive to
Guangdong with busloads of students desperate for work.

"We were begging the factories to hire our students," Mr. Wu said.
"We had too many students and not enough jobs."

No one thinks China is running out of workers. But young migrant
workers coveted by factories are gaining bargaining power and many
are choosing to leave the low pay and often miserable conditions in
Guangdong. In a nondemocratic China, it is the equivalent of "voting
with their feet."

March is one of the most important hiring months for China's
factories, yet some analysts believe that the current shortfalls are
the beginning of a long-term trend that is already bringing wage
pressures and could eventually erode China's position as the world's
dominant low-cost producer.

"It's not the end of the great China manufacturing story," said
Jonathan Anderson, the chief Asia-Pacific economist for UBS. "But
you're no longer going to be talking about China having labor so
radically cheap that it will capture all the investment flows. This
is an opening for Vietnam, it's an opening for India and Cambodia."

The shift, which experts say will happen gradually, began last year
and is a result of two decades of strict family planning, which has
made China one of the most rapidly aging countries in the world.

"The number of people in the labor force is going to be going down
for the next 15 years," said Dali Yang, a professor of political
science at the University of Chicago. "This is a shift in
demographics that is really good, not just for salaries but for work
conditions."

China remains a country where migrant workers are routinely
exploited. But after a decade of stagnant wages, these workers are
showing more willingness to demand their rights. Last year, factory
workers rioted and held strikes in Guangdong. Other workers just left.

They can do that because economic growth in other regions has created
increasing competition for workers. Many are leaving Guangdong for
the rival Yangtze River Delta region near Shanghai, where many
factories offer higher salaries. Others are starting to find work in
larger cities in interior provinces. Some are simply returning to the
farm.

"If we go to work in Guangdong, we work hard all year round but we
can't save much money," said Tang Xiaoliang, a migrant worker who
toiled in Guangdong factories but has returned to his village near
Hunan Top. "The pay is too low. Whoever pays higher, I will go there."

The choices made by workers like Mr. Tang can influence the world's
global trading network, because every decision about factory
building, jobs and wages in China can alter the price of a toy at
Toys R Us or socks at Wal-Mart.

Here in Ningxiang, a growing city in Hunan Province, workers began
migrating south to Guangdong and the surrounding Pearl River Delta
for jobs in the 1980's. At the Hunan Top Software vocational school,
a recruiter from one of Guangdong's biggest electronics plants
visited in December and signed 197 students up for jobs. But right
now, it is unclear how many will go.

For many of the teenage students, who start working as young as 16,
migrating to Guangdong often begins as a great adventure, a chance
for farmers' children to see the outside world. But students like
Ruan Xihua, 17, have not decided if they will take the promised job.
Ms. Ruan is a tiny, cheery young woman whose parents were among the
first generation of migrant workers to go to Guangdong in the 1980's.

"They told me it was pretty hard," she said. "They told me they
wanted me to study hard."

Ms. Ruan is also an only child who says she wants to find work closer
to home in case she needs to care for her parents.

"Most of these families have only one child because of family
planning," Mr. Wu said. "They don't want their child to be far away
from home."

That is one reason that Hunan's fast-growing provincial capital,
Changsha, is beginning to siphon some workers back from Guangdong. Zu
Xian, 22, quit a factory job in Guangdong because the high cost of
living prevented her from saving money. She now matches her old
factory wage by selling cosmetics at a new shopping mall in Changsha,
a job that allows her far more free time and far less stress.

"Many people come back," she said. "They had stayed for too long and
didn't have a better future. It's boring work. And there is not time
to study or improve yourself."

Changsha is far from the only urban center competing with Guangdong
for labor. Many workers are going to the booming Yangtze River Delta
region, a hotbed of entrepreneurship powered by thousands of textile,
electronics, software and automobile manufacturers.

Economists say the Yangtze Delta region, which encompasses coastal
Jiangsu and Zhejiang Provinces, as well as Shanghai, is already
beginning to rival Guangdong and the Pearl River Delta for
manufacturing supremacy in China. Factory life can be bleak in the
Yangtze Delta, but many manufacturers are raising pay and improving
conditions.

At Zhongce Rubber, one of China's largest tire makers with about
5,000 employees, the company has begun construction of a new factory
building. It will have free or subsidized food and housing for
workers. The company also has raised the average worker's salary to
$150 a month - above what most factories pay before overtime in
Guangdong.

"Our company is doing very well, so we have to pay better," said
Jiang Sheng Nian, a manager. "We feel that increasing salaries are
inevitable."

Guo Ren, a rosy-cheeked 21-year-old woman from rural Anhui Province
who now works at the tire company, first worked in an electronics
factory in the city of Dongguan, in Guangdong. She earned about $50 a
month, making chips that operate computer mouses, and lived in
cramped dorms with strict curfews because of rising crime rates.

"I left Dongguan because it wasn't very safe and the living standards
were not high," said Ms. Guo, who now earns close to $150 a month
doing odd jobs at Zhongce.

Despite its problems, Guangdong is still a manufacturing powerhouse.
In Guangdong and Fujian, the combined shortfall represents about 10
percent of the total migrant work force in those provinces.

Even so, the local authorities are taking action. Officials in
different Guangdong cities, as well as the adjacent special economic
zone of Shenzhen, are competing with one another to raise their local
minimum wage. In early March, Shenzhen announced that it would raise
its minimum to $83 a month from $74.

Factory operators, who have been experiencing worker shortages for
more than six months, are also worried. Some withheld wages from
migrant workers who went home for the Lunar New Year holiday in an
effort to ensure they returned by March. In early March at the Sanhe
Employment Center, a job fair in the manufacturing city of Baoan,
billboards were filled with leaflets advertising thousands of
openings at local factories.

"Some companies can't find workers for days," said Li Biyang, a
recruiter at the job fair, who said smaller factories faced the worst
problems. "Many small factories have bad management and bad working
conditions. They aren't attentive to workers."

But many of the larger factories are scarcely better. Sheng Kehua,
22, plans to quit her job at a sprawling electronics factory in Baoan
at the end of March. She works six days a week, 11 hours a day and
earns, with overtime, about $118 a month. She lives in company dorm
with 13 other workers.

"The boss always says we will try to work on that," Ms. Sheng said of
requests for improvements. "But every time, nothing happens."

Factories covet young, female workers like Ms. Sheng because they are
considered better at assembly line work and more docile than young
men. In the past, these workers were largely cut off from the outside
world, but now they use text messages or e-mail to check with friends
at other factories about wages and treatment.

"I checked the Internet and learned that the pay level in Shanghai is
better than here," Ms. Sheng said. Of the 30 workers who arrived with
her three years ago, only 7 or 8 remain at the factory.

Zhao Weinan, who heads an association of Taiwanese-owned
manufacturers in Dongguan, said factories once were very picky,
setting age limits for new hires and often prohibiting workers from
being married.

"In the old days, a company would just put a poster up, and you
needed security to stop people from pouring in," Mr. Zhao said. "Now,
you can post 100 notices and not find enough people."

He said Guangdong manufacturers operated on thin profit margins and
could not raise salaries too high. "If you raise salary, you raise
production costs," he said.

And if wages keep rising, he said, some companies could face a fate
familiar to many manufacturers in the United States - they would have
to move to a country with cheaper workers.

Jim Yardley reported from Ningxiang, Shenzhen and Guangdong for this
article, and David Barboza from the Yangtze Delta region and
Guangdong.

Copyright 2005 The New York Times


Daniel F. Vukovich
Visiting Humanities Scholar
Kresge College
University of California -- Santa Cruz
Santa Cruz, CA 95064