Guangdong / Shanghai Export Areas Face Worker Shortages, Higher Wages

By: EW News Desk Team   Date: 21 January 2011

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EW News Desk Team

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EconomyWatch, News Desk Team

 

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21 January 2011

Two of China’s main export manufacturing areas are suffering from an acute shortage of migrant workers,

giving laborers more leverage over wages and curtailing the expansion plans of some companies.

The shortfall is especially severe in the service and manufacturing industries.

The regions most affected, both of them coastal, are

  • the Pearl River Delta, in the southern province of Guangdong, and
  • the Yangtze River Delta, near Shanghai. 

The Pearl River Delta could be short by as many as 900,000 workers, citing a survey last year by the human resources department of Guangdong.

Experts said that a combination of rising living costs along the coast and low wages had led to

an increasing number of workers deciding to stay in the interior of China, where living costs are much lower.

Some companies have moved factories inland, to provinces where many workers have traditionally come from.

Transportation costs for goods being shipped out of China are higher in those regions,

but lower labor costs appear to help offset that in some cases.

Early in 2010, a series of work stoppages at factories thrust the issue of wages for migrant workers into the national spotlight.

Workers taking part in the protests demanded more pay and better work conditions,

and in some cases wanted a legitimate union to represent their interests,

rather than relying on the government-run union, which often supports management.

The continuing labor shortage and wage pressure could eventually raise the costs of Chinese-made exports,

which have been a main driver of China’s impressive economic growth.

China can point to the labor shortage in the export hubs as one reason to resist US pressure to let the renminbi’s value rise,

since companies are already grappling with the possibility that higher wages could make their goods less competitive.

A significant currency appreciation could help cause a wave of business failures and bankruptcies, Chinese officials say.

There has also been an explosion in the number of labor disputes going to arbitration or the courts.

Awareness of rights among workers has grown after the passage of recent labor laws.

Workers laid off during a wave of factory shutdowns that took place when the global financial crisis first hit China have been demanding the compensation due to them.

In 2009, there were 318,600 labor cases brought to court, according to an official news report in September of 2010.

The labor shortage in the booming Pearl River Delta is coming during the busiest time of the year for factories there.

Some factories have had to turn down orders because of a lack of trained labor, according to reports in the government-run China Daily .

The fast-approaching Lunar New Year of the Rabbit could worsen the situation.

Every year millions of migrant workers make their way back to their hometowns for the holiday,

and every year some do not return to their jobs, according to this article in the New York Times.

In the current climate, more than usual might not return, putting more wage pressure on the coastal factories.


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