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    China Business
     Mar 3, 2010
Home is best for China's migrant workers
By Olivia Chung

HONG KONG - Chinese factories ranging from electronics giant Foxconn to diminutive outfits employing a handful of people are struggling to find workers to help fill surging export orders. Migrant workers who returned home for the recent spring festival are deciding to stay there, where they are finding opportunities that appeal more than going back to long hours and often hard conditions in the Pearl River Delta.

The week-long annual festival sees millions of migrant workers in the Pearl River Delta region, the driver behind the country's now decades-long economic boom, return to distant provinces to celebrate with their extended families. Just a year ago, they were being urged to stay there as factories cut work forces during the economic slowdown, making thousands redundant. Now the


migrants are staying at home of their own accord.

Taiwan-based Foxconn, which supplies products for computer and electronics companies such as United States-based Apple from a plant in China's Guangdong province, faces a shortage of 50,000 workers at its Shenzhen factory, with many vacancies due to workers not returning from their holiday. Wu Guizhou, in charge of recruitment, said the company needed to hire at least 25,000 more workers, mainly ordinary workers, after recruiting about 25,000 since the beginning of this year. The company now offers employees 200 yuan (US$30) for every person they introduce to the factory.

As the world emerges from recession, demand for Chinese-made goods is soaring. Export orders grew more than 21% in January compared with a year earlier, adding to 17% growth in December, when a pick-up led by sectors such as mechanical and electrical products and textiles ended 13 months of declines.

Yu Xiaoping, boss of a mold-making factory in Dongguan, in Guangdong province, told Asia Times Online that orders started to grow as early as last April after they had collapsed by 50% in late 2008. New, rather than repeat, business accounted for about 40% of total recent orders.

"During the bad time, we cut half of our staff, to about 25 people. But the situation started to recover in the second quarter of 2009," she said. "Our offer of a benefits package for an ordinary worker has been raised to 1,500 yuan a month plus food and accommodation, but such an offer has failed to attract enough staff."

Yu's offer of a monthly salary for a skilled worker reaches 3,000 yuan, much higher than the minimum salary of workers in Dongguan of 1,000 yuan. "We badly need about 15 workers, one-third of our total workforce," said Yu, adding that production capacity for the coming months had to be at full speed to meet order deadlines.

Adding to their problems, factories also have to cope with smaller orders and shorter delivery times.

"The orders we now receive are mostly short-term, which are ignored by big mold-making firms. Clients also require delivery in a couple of weeks, less than half the delivery requirement before the global financial crisis," Yu said.

The shortage of workers is affecting plants in cities such as Shenzhen, next to Hong Kong, Guangzhou, capital of Guangdong, and Wenzhou, a private-sector powerhouse further north in Zhejiang province, known for manufacturing shoes and leather goods.

In Dongguan, some 150,000 extra workers are needed, said Huang Huiping at the Dongguan Labor and Social Security Bureau. "It is because many factories have opened more production lines following increased overseas orders," the official said.

There are about 150,000 vacancies in Guangzhou alone, compared with almost none last year during the depth of the global economic crisis, according to a survey by the Guangzhou Human Resource Market Service Center. About 270 companies, each employing more than 200 migrant workers, were interviewed for the survey.

In Wenzhou, the labor shortage may reach 800,000 to one million, said Zhou Dewen, vice president of the China Association of Small and Medium Enterprises.

Cai Huanxing, at the Shenzhen Municipal Labor and Social Security Bureau, said the city was short of 900,000 workers. It was 819,000 workers short in the last quarter when demand for labor reached 1.94 million, according to bureau statistics.

At the "Spring Breeze Action" job fair in the Luohu district of Shenzhen, the first government-organized job fair in the Year of Tiger, employers are offering pay increases of more than 10% for rural migrant workers. Cai said pay for ordinary workers had been raised to about 1,700 yuan per month this year from about 1,500 yuan last year. Electronics, mold-making and clothes factories were particularly hard hit by the shortage, followed by service industries, Cai said.

About 105 employers attended the job fair, offering about 11,000 vacancies, more than two-and-a-half times the number at last year's event and 1.42 times as many as in 2008, according to the bureau. Only about 1,000 workers attended the fair looking for jobs.

Han Jun, director of the Research Department of Rural Economy with the State Council's Development Research Center, a top think-tank, said the major manufacturing centers in coastal China were no longer as attractive to migrant workers as previously.

"When many migrant workers were forced to return to their homes in central and western regions after losing their jobs amid the global financial crisis in September 2008, they became aware of the opportunities in their home towns as there has been much infrastructure work there as a result of the [4 trillion yuan] stimulus package launched by the Chinese government."

Han also blamed the shortage of workers in the coastal areas of China on poor working and living conditions, the common practice of delaying earnings, and inflation. "Due to the rising cost of living in the delta, migrant workers find it difficult to earn enough for their families, so an increasing number are willing to stay at home if they find opportunities there," he said.

In Sichuan province in the heart of the country and a big exporter of migrant workers, the average salary has climbed to around 1,000 yuan per month.

China had 229.8 million migrant workers last year. About 94 million worked in south, north and east China, down by about 9% from 2008, while 21.77 million worked in central China, up by 33.2%, and 29.43 million worked in west China, up by 35.8%.

Labor shortages and rising wages in the big coastal manufacturing hubs give only half the news, said Pauline Loong, senior vice president in charge of China policy and risk research at CIMB-GK Securities (HK). "The real story is about the supply and demand distortions from massive layoffs at the height of the financial meltdown and the skewed demand now for short-term staff as employers worry that orders could dry up again," she said in a research note published on Monday.

Bankers that CIMB-GK Securities (HK) estimate that one in six Hong Kong-owned factories in Guangdong province collapsed during the worst of the crisis. The closures put 1.6 million migrants out of work, forcing them to return to their villages.

Loong said the higher wages on offer reflected the premium paid for short-term workers. "Given export market uncertainties, employing short-term workers is more cost-effective than longer-term hires, even with the temp premium," she said.

More money must also be offered to lure migrants who now have a choice of working closer to home as more jobs are being created under the government's rural stimulus programs, Loong said.

She believed that if export demand continued to recover, employer confidence would rebound. "Shortages would ease as they would be prepared to offer migrants long-term contracts and a more competitive salary," she said.

Olivia Chung is a senior Asia Times Online reporter.

(Copyright 2010 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

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