Sunday, February 28, 2010

Not Enough Workers

You'd think that with all the people in China, there'd an endless supply of labor. There's not.

From The New York Times:

GUANGZHOU, China — Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage.

As American workers struggle with near double-digit unemployment, unskilled factory workers here in China’s industrial heartland are being offered signing bonuses.

Factory wages have risen as much as 20 percent in recent months.

Telemarketers are turning away potential customers because recruiters have fully booked them to cold-call people and offer them jobs.

Some manufacturers, already weeks behind schedule because they can’t find enough workers, are closing down production lines and considering raising prices. Such increases would most likely drive up the prices American consumers pay for all sorts of Chinese-made goods.

Rising wages could also lead to greater inflation in China. In the past, inflation has sown social unrest.

The immediate cause of the shortage is that millions of migrant workers who traveled home for the long lunar New Year earlier this month are not returning to the coast. Thanks to a half-trillion-dollar government stimulus program, jobs are being created in the interior.

But many economists say the recent global downturn also obscured a longer-term trend: China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh laborers for its factories.

Read On
It's astounding that there are labor shortage this year whereas last year after the Chinese New Year there were as many as twenty million migrants without work. China's economy is incredibly nimble and fluid.

China's response to the economic crisis has, if nothing else, kept its wheels spinning. Their response is probably creating housing bubbles, over-developing commercial real-estate, and causing a number of other unforeseen issues, but they're at least doing something. I hate to go all Thomas Friedman and espouse the virtues of one-party rule, but China is not experiencing the gridlock that the polarized US is. And during these turbulent economic times, that is worth a lot.

The work shortages highlighted in the article above relate back to the post I made a few days ago. China's economy is no longer so coastal-focused. The opportunities for migrants used to be largely centered in cities like Shenzhen, Guangzhou, Shanghai, and other boom towns along the coast. More and more though, there are increasing opportunities on the interior of the country.

With low-level employees having more power and money, this article states that inflation and higher prices of goods are possible. Whatever the macro-economic hiccups could be, I see migrants having more choice and opportunity in their work as a good thing. The migrants of China perform back-breaking, monotonous labor far, far away from their home towns for very little money. I'm all for them having the chance to make a little more money, have, possibly, better working conditions, and live better lives.


Anonymous said...

I tend to think China is getting a labor force that is no longer willing to work for such low wages and under such terrible conditions. There are millions of unemployed skilled workers in China, but I don't see them rushing to those jobs.

At some point, in the near future I predict, the masses are going to say "Ok, we bought in, 'to get rich is glorious', 'let a few get rich first' so more can get rich later. Well, its later!".

Mark said...

I hear what you're saying, Hopfrog. I just think that, for the most part, even the low-paying (what we would deem) terribly-intensive labor jobs are a great opportunity for the people taking them.

Making $120 a month at a factory or making $120 a YEAR farming is not even close. Now, it's not that bad for all farmers, but I've heard of such numbers in the deep countryside of Shaanxi Province.

Relatively, industrialization is a
good opportunity for China's poor. It's hard for me to wrap my mind around.

Anonymous said...

ugh, I had no idea factory work paid that much more than farming! $120 a year.

Now my stomach is really gonna churn when I see those guys from Beijing betting 200,000 per hand and toting their long pinky nails. Sickening.

Mark said...

I'm not going to say all farmers are that poor (I honestly am not sure what the "average" earnings are), but, yeah, many are.

A friend of mine started the first soup kitchen in China. He's a great guy from England who still lives in Xi'an. He would often go into deep, remote parts of Shaanxi Province with clothes and help for people in need.

He told me about one family (of either four or six, I can't remember) that lived on six hundred yuan a year. That's about $90. For a family.

I'm plowing through Peter Hessler's Oracle Bones right now. Hessler was just talking about Shenzhen and the chain fence that was put up around the city. The fence was a physical boundary, but also a symbolic one.

It split the new wealth of China from all of the migrants and outsiders who wouldn't and couldn't participate.

The rural/urban split in China is unreal. Absolutely insane. I find it to be one of the most fascinating aspects of the always-changing and dynamic country.

Ramesh said...

Great post and discussion Mark and Hopfrog. Living in Guangzhou, I am surprised by this news. Maybe its the general lethargy of workers returning back after the spring festival holidays, but we can't see or sense a labour shortage in this part of China.

The views on rural/urban divide is thought provoking. Yes there are huge gaps in China, but the pace at which they are narrowing is breathtaking. I come from a country where there is an even worse divide and from where we sit, we would be delighted to achieve what China has done !

Hessler's books are simply wonderful. I read River Town after a recommendation in one of your earlier posts and then loved it so much that I picked up Oracle Bones immediately after. He truly is a super writer.

Anonymous said...

Peter Hessler has a new book out. I think the title is Driving Across China.I've read Oracle Boines and I want to go visit The Shanghai Museum. I have River Town and after I finish reading 5,000 Years of Chinese Characters, I will start that next. I also live in Xi'an. Mark, your posts, insights and articles are fantastic. Thanks, David

Anonymous said...

The Hessler book is Country Driving, David.

If it weren't for the big numbers that China is putting up I think there would also be a big focus on what is going on in India Ramesh. I think one of the greatest things about Slumdog becoming such a big hit and Oscar winner was that it helped shed light on this gap you are talking about Ramesh. The sad thing to me is that the 'haves' hated this aspect of Indian society being so honestly put out in the open. Its like so many countries, many of the 'haves' would rather just hide turn a blind eye and preserve their own status then help their society as a whole improve.

I think China and India could learn a lot from each other, if they only tried o.O

Mark said...

@Ramsesh - It's interesting hearing your perspective on China's income gap. Being an American, China's disparity is unbelievable. (And yes, I know that America's income inequality is rather large relative to the rest of the world.)

But your perspective, being Indian, is a fresh one for me. You're right, China's gap is narrowing. To me, it seems very slow. But to you, it's moving very quickly.

More perspective always helps to better understand a situation. Especially one as complex and contradictory as contemporary China.

@David - I appreciate the nice words on my blog. Please chime in whenever you want to.

I can't wait to read Country Driving. When I saw it was coming out, I had to get Oracle Bones because I've been putting it off. Am so glad I finally got it. The next few weeks are going to be Peter Hessler-dominated.

@Hopfrog - I know what you're saying about India. I like that China is all over our news and America people's minds because the country is so near and dear to me. But I often wonder why we hear so little about India.

India's economy is booming and its population is massive (will overtake China's before too long).

My general (probably uninformed) take is that India's government is not as "together" as China's and that the country is having a harder time building up its infrastructure and tackling problems as effectively as China's is. And because of that, it is lagging a little bit behind China.

Ramesh, please correct me if I'm off base on that.

India's a country that I look forward to learning more and more about. Ramesh has done an awesome job filling me in on some basics both in the comments of this blog and on his own blog. I'd love to visit the country one day.

Matt said...

I think they should be given better wgaes and have better conditions. Its an of set of globalization. Sooner or later wages and conditions will improve, however, that could ultimatly result in the labour spreading back to the west as a result.