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31/05/2013

Urbanisation: Some are more equal than others

The Economist: “FOR many migrants who do not live in factory dormitories, life in the big city looks like the neighbourhood of Shangsha East Village: a maze of alleys framed by illegally constructed apartment buildings in the boomtown of Shenzhen, near Hong Kong. There are at least 200 buildings, many of them ten storeys tall (see picture). They are separated by only a metre or so, hence the name “handshake buildings”—residents of neighbouring blocks can reach out from their windows and high-five.

The buildings are China’s favelas: built illegally on collectively owned rural land. Rents are cheap. An eight-square-metre (86-square-foot) flat costs less than $100 a month. They symbolise both the success of the government’s urbanisation policy and also its chronic failures. China has managed a more orderly system of urbanisation than many developing nations. But it has done so on the cheap. Hundreds of millions of migrants flock to build China’s cities and manufacture the country’s exports. But the cities have done little to reward or welcome them, investing instead in public services and infrastructure for their native residents only. Rural migrants living in the handshake buildings are still second-class citizens, most of whom have no access to urban health care or to the city’s high schools. Their homes could be demolished at any time.

China’s new leaders now say this must change. But it is unclear whether they have the resolve to force through reforms, most of which are costly or opposed by powerful interests, or both. Li Keqiang, the new prime minister, is to host a national conference this year on urbanisation. The agenda may reveal how reformist he really is.

He will have no shortage of suggestions. An unusually public debate has unfolded in think-tanks, on microblogs and in state media about how China should improve the way it handles urbanisation. Some propose that migrants in cities should, as quickly as possible, be given the same rights to services as urban dwellers. Others insist that would-be migrants should first be given the right to sell their rural plot of land to give them a deposit for their new urban life. Still others say the government must allow more private and foreign competition in state-controlled sectors of the economy such as health care, which would expand urban services for all, including migrants. Most agree the central government must bear much more of the cost of public services and give more power to local governments to levy taxes.

Any combination of these options would be likely to raise the income of migrants, help them to integrate into city life and narrow the gap between the wealthy and the poor, which in China is among the widest in the world. Such reforms would also spur on a slowing economy by boosting domestic consumption.

Officials know, too, that the longer reforms are delayed the greater the chances of social unrest. “It is already a little too late,” Chen Xiwen, a senior rural policy official, said last year of providing urban services to migrants. “If we don’t deal with it now, the conflict will grow so great that we won’t be able to proceed.”

Yet Mr Li, the prime minister, would do well to dampen expectations. The problems of migrants and of income inequality are deeply entrenched in two pillars of discriminatory social policy that have stood since the 1950s and must be dealt with before real change can come: the household registration system, or hukou, and the collective ownership of rural land.”

via Urbanisation: Some are more equal than others | The Economist.

See also: https://chindia-alert.org/2013/05/14/right-thing-to-do-comes-with-a-price-tag/

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Posted in China alert, Construction, Economics, Household registration, Human rights, Inequalities, Labour unrest, Low income, Migrant workers, temporary workers | 2 Comments »

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19/05/2013

* Factory women: Girl power

The Economist: “SITTING around a restaurant table, six workers discuss the progress of their labour action. Five of them are women, as are most of their several hundred colleagues who have been occupying the toy factory since mid-April. They have been sleeping on floors, braving rats and mosquitoes, to stop the owner shutting down the factory without giving them fair compensation. Those at the table are all migrants from the countryside. A couple are tearful. All are angry and determined not to give way.

In Guangdong province, where nearly 30% of China’s exports are made, women usually far outnumber men on labour-intensive production lines such as those at the toy factory in the city of Shenzhen, next to Hong Kong. Rural women are hired for their supposed docility, nimble fingers and attention to mind-numbing detail.

 

But in recent years Guangdong’s workforce has changed. The supply of cheap unskilled labour, once seemingly limitless, has started to dry up. Factory bosses are now all but begging their female workers to remain. At the same time the women who have migrated to the factory towns have become better-educated and more aware of their rights. In labour-intensive factories, stereotypes of female passivity are beginning to break down.

Over the past three decades the migration of tens of millions of women from the countryside to factories in Guangdong and other coastal provinces has helped to transform the worldview of an especially downtrodden sector of Chinese society (the suicide rate among rural women is far higher than for rural men). Conditions in the factories have often been harsh—poor safety, illegally long working hours, cramped accommodation, few breaks and little leave—but for many it has also been liberating and empowering, both personally and financially. Leslie Chang, an American journalist, spent three years reporting on women workers in Dongguan, a city near Shenzhen. In her 2008 book “Factory Girls” Ms Chang wrote that, compared with men, the women she encountered were “more motivated to improve themselves and more likely to value migration for its life-changing possibilities.”

They are still not as well-educated as men (about a year less in school on average, with most having only primary- or junior secondary-school education). But the gap has been narrowing.

Crucially, China’s changing demography has been shifting in their favour. Labour shortages that began to hit low-skilled manufacturing in the second half of the past decade have driven up wages and forced factories to improve working conditions. Once all but unthinkable (for both sexes), strikes have become increasingly common. Anecdotally at least, women appear as likely to take part as men.

Strikes in 2010 affecting factories in Guangdong owned by Honda, a Japanese car firm, helped to galvanise labour activism. One of them occurred in the city of Zhongshan, where the workers were mostly female. The unrest there resulted in pay concessions and set a precedent for collective bargaining led by representatives chosen by the workers themselves, rather than government-controlled trade unions. At the Shenzhen toy factory, the workers have chosen five representatives to negotiate with management. Three of them are women. A male worker says the women are more aware of their rights.

China Labour Bulletin, a Hong Kong-based NGO, reported on March 19th that about a fifth of strikes in Guangdong since the beginning of the year had been in factories and other workplaces with largely female staff. It said that women were also “some of the most active workers posting information online about strikes and protests, and in seeking out legal assistance for problems at work.” The protesting toy-workers offer evidence of this. They have posted photographs on microblogs of protesting female workers clad in red jackets opposite lines of police. One of their slogans reads: “Bad boss—give us back our youth”.”

via Factory women: Girl power | The Economist.

Posted in China alert, Economics, employment, labour shortage, Migrant workers | Leave a Comment »

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15/05/2013

* Premier promises administrative streamlining to create jobs

Li Keqiang 李克强

Li Keqiang 李克强 (Photo credit: Wikipedia)

Xinhua: “Chinese Premier Li Keqiang has called for reducing administrative barriers for launching businesses to create more job opportunities.

On a nationwide tele-conference held on Monday about the functional transformation of the institutions under the State Council, or the cabinet, Li said China faces a tough employment situation due to the tempered economic growth in the past few months this year.

The country will expect a record 6.99 million college graduates this year, Li said, adding that it is an important task to help them get employed.

Efforts should be made to vigorously develop medium-sized, small and micro businesses by canceling unnecessary administrative approvals, as state-owned enterprises and institutions have limited capacity in providing employment opportunities.

Li said that the government should also make efforts to lower the threshold for people to seek employment or start businesses.”

via Premier promises administrative streamlining to create jobs – Xinhua | English.news.cn.

See also: https://chindia-alert.org/2013/05/15/job-prospects-grim-for-chinas-7m-fresh-grads/

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15/05/2013

* Job prospects grim for China’s 7m fresh grads

ANN: “When James Zhao, 23, read news reports last Friday claiming Renren, the “Facebook of China“, could be laying off three-quarters of the staff at its 3G technology department, his heart sank.

China Job

Having been unsuccessful in his job applications to several multinational tech firms, including mobile giant Motorola, he was hoping to have better luck with local companies like Renren.

“If even the local firms are cutting staff, then the hiring sentiment is getting from bad to worse,” Zhao told The Straits Times. He will graduate next month with a master’s degree in software engineering from a university in Beijing.

One key reason for his employment woes is the record bumper crop of 6.99 million fresh graduates – 190,000 more than last year – who will enter the job market this year.

A sluggish economic recovery also dampens hiring prospects, with some state media calling 2013 “the worst employment year” for white-collar workers.

In the first three months of this year, when the economy grew a slower-than-expected 7.7 per cent, demand for workers fell by 3 per cent, or 163,000 people, in China’s 84 major cities from a year ago.

The hardest hit were the prosperous eastern provinces, according to data from the China Labour Resources Market Research Centre. This region, which houses many of China’s key export and manufacturing hubs, saw a 7.2 per cent drop in labour demand.

In Guangdong province, the hiring rate for fresh graduates at its major universities is currently 52.4 per cent, about 7 percentage points lower than last year.

The job trend this year “may even be worse” than in 2008 during the global financial crisis, the Information News reported yesterday, citing a spokesman for the provincial education bureau’s employment guidance centre.

Industrial output data for April, released yesterday, showed weaker-than-expected growth of 9.3 per cent. This prompted analysts like Renmin University labour expert Liu Yuanchun to warn that “if the economy continues to slow, the impact on employment in certain sectors will be more obvious”, with even mass layoffs.

Earlier this year, MNCs had already made headlines with a round of dismissals in China. In March, some 50 employees at HSBC’s life insurance unit staged a protest outside its offices after 22 workers and 138 agents were axed. Motorola’s Mobility Unit in China is currently undertaking the first of three rounds of job cuts that would shrink its workforce by 800 in total.

Some larger local firms reportedly received local government support to keep their staff numbers stable. This is in line with the Chinese government’s pledge last week to keep this year’s jobless rate at 4.6 per cent or less. It will create nine million urban jobs, the same number as last year, when the jobless rate was 4.1 per cent.

But there are signs that some local players are starting to buckle under pressure.

Loss-making Chery Automobile is said to be planning 9,000 job cuts, China Business News reported yesterday, citing unnamed company insiders. The company bled 191 million yuan (US$30.79 million) in losses in the first quarter.

Even here in Beijing, where white-collar jobs are traditionally more plentiful, Zhang Mi, 25, has yet to land an offer as a teacher or a trainer despite submitting 60 job applications to schools and private firms since last October.

The social studies master’s degree holder has had only four interviews and her parents are “worried sick”.

“There are simply too many graduates this year. I will have to lower my expectations,” said Zhang, who is seeking a 5,000 yuan starting salary.

via Job prospects grim for China’s 7m fresh grads – ANN.

Posted in China alert, Economics, employment | 3 Comments »

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14/05/2013

* Right thing to do comes with a price tag

Now we know why the Chinese government has been hesitant about correcting the rights of its vast migrant worker population. If the public expenditure required to turn a rural migrant worker into an urban citizen is estimated to be around 80,000 yuan ($12,664) in China, then the total for the estimated 230m migrant workers to be fully urbanised will cost some 3 trillion US dollars. A cost even China will find too large to handle in one go.

The Times: “100,000 … yuan is the estimated cost of turning a rural resident into a fully registered urbanite and providing them with all the healthcare, education and social security rights denied to China’s vast migrant worker population when they move to the cities.

Workers weld a standing on the roof of a building at the Guanyinqiao Pedestrian Street in Chongqing Municipality, China

Dangerously belated reform of China’s household registration — hukou — system may or may not be unveiled by Beijing this year. Clearly there is the political will, but officials mutter that the reform package is snagged on the details.

If that £10,600 estimate proves even close to reality (it’s a government estimate, so don’t expect too much from it) and if the reforms were tested initially on a limited basis to affect only 10 per cent of China’s overall migrant worker population, that would still cost about two trillion yuan (£211 billion). If the Government shouldered only a third of that (splitting the financial burden three ways with companies and employees), China would be paying more on this first blush of hukou reform than it is spending on its entire military budget.

But, according to the CLSA economist Andy Rothman, it would be money well spent. Grant migrant workers an urban household registration and all sorts of good things would happen. They would become consumers, they would become a more highly skilled and better-educated slab of workforce. They would be a less consistent source of social unrest.

For Beijing, it is painfully clear that foot-dragging on hukou reform is really not an option any more. If the Government flinches at the cost, the very considerable social implications or the politics of reform, China’s great urbanisation story could lurch from nice to nasty in short order. Miss the chance to reform and, at best, the whole programme of switching China’s growth model towards consumption stalls because tens of millions of migrant workers are forced to remain precautionary savers. They would remain unwilling to think of more than a small percentage of their income as disposable because, without an urban hukou, they are condemned to live without the protection of a welfare system.

At worst, the migrants create a permanent underclass in each of the 150 Chinese cities with populations of more one million. As the administration in Beijing knows well, this is not an underclass that could be relied on to behave itself: without reform, it will only grow angrier.

The problem, as usual, is one of scale. China’s 234 million migrant workers are unambiguously the backbone of the economy. Somebody has had to constitute an unlimited supply of labour and be prepared to work at a subsistence wage for the Chinese “miracle” to work at all. The migrants are those people. Migrant workers keep China’s factories humming, they cook, they clean, they funnel money from the cities to the countryside and, most symbolically, they built the place as 90 per cent of the construction industry workforce.

And the problem is that they all have mobile phones and internet access. Much though China would like to test out a bit of hukou reform on a smallish initial batch of 20 million people (equivalent to the population of Romania), as soon as that process began the other 210 million migrant workers (equivalent to the population of Indonesia) would start asking why some were receiving the blessing of urban residency and not others.

It’s an all-or-nothing game, unfortunately for Beijing, and that calculation of 100,000 yuan per person suddenly implies a £1 trillion burden for the State.”

via China in numbers: right thing to do comes with a price tag | The Times.

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03/05/2013

* China Factories Try Karaoke, Speed Dating to Keep Workers

WSJ: Third in a Series: China’s Changing Work Force

“After years of offering production bonuses and other financial incentives to boost employee loyalty, TAL Group this year tried an unconventional tactic at its factory here in southeastern China: holding a “Sewing Olympics.”

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The manufacturer for such companies as Burberry Group BRBY.LN +1.21% PLC and Brooks Brothers Group Inc. had workers race to cut, stitch and fold raw fabric into high-end dress shirts. The 10 winners received small cash prizes and had their life-size images hung at an outdoor location where thousands of workers pass on the way to meals.

Cheng Pei Quan is a winner of the ‘Sewing Olympics’ at a factory. Manufacturers are looking beyond bonuses to retain workers and boost production in China.

First in the Series: China Manufacturers Survive by Moving to Asian Neighbors

Second in the Series: A Billion Strong but Short on Workers

“Chinese people put quite a lot of value on ‘face,’ ” says 23 year-old winner Cheng Pei Quan, who earned the nickname “The King of Collars” because he can sew 95 collars an hour, a third more than average. “This competition gives me a sense of pride that other benefits such as rising wages cannot give me.”

After boosting pay to compete with other manufacturers, factory owners are finding money alone no longer is enough to attract and retain a generation of workers that demand a greater work-life balance than their parents did.

Companies are holding “American Idol”-esque singing contests, sponsoring dating events, constructing libraries and karaoke rooms on campus, and organizing small dinners between managers and top workers.

Businesses also are sending postcards to workers who visit their families during the Lunar New Year—when manufacturers can lose 20% or more of their staff—urging the employees to return to work.

The measures are a response to an unprecedented shortage in China’s workforce. Demand for workers exceeded supply by a record in the first quarter. China’s working-age population, defined as people from ages 15 to 59, fell last year for the first time in decades, a result of the national one-child policy that was implemented in 1980.

While the number of migrant workers in China rose 3.9% last year, manufacturers face stiff competition from construction, mining and other industries for staff. The average monthly wage for such workers has increased 74% in the past four years, to $395 in the first quarter.

For factory owners, the ability to recruit workers is a matter of survival. If plants can’t find or replace staff quickly enough, they won’t be able to fill customer orders on time. Those that can’t will be forced to turn elsewhere in Asia to manufacture goods—or go out of business.

via China Factories Try Karaoke, Speed Dating to Keep Workers – WSJ.com.

Posted in Affluence, China alert, Economics, employment, Labour, labour reform, labour shortage, Low income, Manufacturing, Migrant workers, wage rises | Leave a Comment »

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01/05/2013

* China Manufacturers Survive by Moving to Asian Neighbors

WSJ: First in a Series: China’s Changing Work Force

“In a corner of a sprawling factory in this coastal southern city, sewing machines that stitched blouses and shirts for Lever Style Inc.’s clients now gather dust. As the din on the factory floor has dropped, so, too, has the payroll. Over the past two years, Lever Style’s employee count in China has declined by one-third to 5,000 workers.

The company in April began moving apparel production for Japanese retail chain Uniqlo to Vietnam, where wages can be half those in China. Lever Style also is testing a shift to India for U.S. department-store chain Nordstrom Inc. JWN -0.34% and moving production for other customers.

It’s a matter of survival. After a decade of nearly 20% annual wage increases in China, Lever Style says it can no longer make money here.

image

A board shows workers’ statuses at each production line at Lever Style’s factory in Shenzhen, China.

“Operating in Southern China is a break-even proposition at best,” says Stanley Szeto, a former investment banker who took over the family business from his father in 2000.

Companies from leather-goods chain Coach Inc. COH -0.53% to clogs maker Crocs Inc. CROX -0.94% also are shifting some manufacturing to other countries as the onetime factory to the world becomes less competitive because of sharply rising wages and a persistent labor shortage. The moves allow the companies to keep consumer prices in check, although competition for labor in places such as Vietnam and Cambodia is pushing up wages in those countries as well.

At Crocs, 65% of its colorful shoes are expected to be made in China this year through third-party manufacturers, down from 80% last year. Coach will reduce its overall production in China to about 50% by 2015 from more than 80% in 2011 so the handbag maker isn’t too reliant on one country, a spokeswoman says.

Some migration of apparel manufacturing from China is expected, and even encouraged by the government, as the country’s economy matures. As other Asian nations become efficient at mass manufacturing, China must embrace research and high-technology production to transform its economy as South Korea and Japan once did. But healthy economic growth requires that China expand its service sector and create higher-skilled manufacturing jobs at a rapid clip to compensate.

“If costs continue to rise, but China is unable to become more innovative or develop home-grown technologies, then the jobs that move offshore won’t be replaced by anything,” says Andrew Polk, a Beijing-based economist for the Conference Board, a research group for big American and European companies.

China continues to be the developing world’s largest recipient of foreign direct investment, attracting $112 billion last year. But that was down 3.7% from a year earlier. And exports still are rising in the double-digit percentages. Growth is slowing.”

via China Manufacturers Survive by Moving to Asian Neighbors – WSJ.com.

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01/05/2013

* China Grapples With Labor Shortage as Workers Shun Factories

The government’s plan to shift the economy from manufacturing and export to services and internal consumption may be a step in the right direction to re-balance the economy – see https://chindia-alert.org/2013/04/19/chinas-growth-the-making-of-an-economic-superpower-dr-linda-yueh/.  But only if the move doesn’t “hollow out” manufacturing and export as a result. Otherwise, China will be treading a path Western nations have trod and are still treading to one of slow growth and increasing debt.

WSJ:

Second in a Series: China’s Changing Work Force

“For 15 years, Cui Haifeng worked in China’s manufacturing industry, stitching together leather to make soccer balls before working her way up to warehouse manager at a wood-flooring factory.

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A young woman stands in the street as a hostess and advertisement for a hotpot restaurant in the shopping district Dongman in Shenzhen.

Last month the coal miner’s daughter traded a past of factory uniforms for a blouse and skirt, training as a customer-service representative for a life insurer in Guangzhou, southern China’s largest city.

The insurance industry “provides a more promising future and flexible working hours,” says Ms. Cui, 34 years old, who grew up in central China’s poor Henan province. “I want to earn more money to give my two kids a better and stable living environment.”

Her experience mirrors a transition sweeping China. This year, service-related positions—such as those in retail, travel and leisure—for the first time will account for more of the country’s gross domestic product than industrial-sector jobs, J.P. Morgan Chase JPM -1.90% predicts. Government figures show that the service sector created 37 million new jobs in the past five years, compared with 29 million in the industrial sector, which includes manufacturing, construction and mining.

Growing competition between the service and industrial sector for migrant workers like Ms. Cui is contributing to China’s tightest labor market in years, putting upward pressure on wages that already are rising in the double digits annually. That is leading apparel manufacturers to shift some production out of China, although concerns about worker safety in countries such as Bangladesh are forcing factory owners to consider the risks of doing so.

Demand for urban workers in China exceeded supply by a record amount in the first quarter, according to the government. Meanwhile, the average monthly income for migrant workers rose 12.1% from a year earlier.

“There is no let up in the labor shortage,” says Kelvin Lau, a senior economist Standard Chartered Bank. Manufacturers “are realizing that this is not a cyclical thing. It’s not about riding out a storm.”

In southern China’s industry-heavy Pearl River Delta region, nearly 90% of factory owners surveyed by Standard Chartered say the labor shortage will remain the same or get more severe this year.

Stronger growth for service-sector jobs signals that the government’s long-promised transition from an industrial economy focused on exports to one led by domestic demand is under way. Creating jobs in hair salons and insurance companies, instead of in steel mills and soccer-ball factories, helps fuel growth in the world’s second-largest economy.”

via China Grapples With Labor Shortage as Workers Shun Factories – WSJ.com.

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14/04/2013

The real cause and impact of China’s labour shortage

So far this labour shortage has not had a significant impact on the economy. But if ignored, it will.

Posted in China alert, Economics, Go West, higher education, Household registration, labour shortage, Low income, Migrant workers, wage rises | 1 Comment »

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25/03/2013

* Wages Rising in Chinese Factories? Only For Some

Working in these Times: “If we are to take recent news reports at face value, the collective conscience of the worlds consumers can be eased, because conditions at Chinese factories are improving.

Last year, The New York Times told us that these workers are “cheap no more,” and just this February, the Heritage Foundation, touting the virtues of global free trade, claimed that Chinese factory wages have risen 20 percent per year since 2005. Foxconn, Apples major supplier and the manufacturer of approximately 40 percent of the worlds consumer electronics, says it will hold free union elections every five years.

But Pollyannas should take pause: The average migrant workers $320 monthly salary in 2011 was actually 43 percent less than the $560 national average, according to government statistics. And though its true that Foxconn will permit the election of union leaders, we have yet to see how much Chinas so-called democratic unions can empower the workers they purport to represent.

Skepticism and caveats aside, the reality is that the lot of formal production workers in China is indeed advancing, however slowly and painfully. But that is true only for formal workers. What many consumers and observers fail to note are the perilous conditions of Chinas temporary production workers and the increased tendency among Chinese factories to use such workers to manufacture the brand-name products that fill your home.

Factories supplying Apple and Samsung, for example, make heavy use of temp workers. According to official statistics, temp workers make up 20 percent of Chinas urban workforce of 300 million, though the proportion in individual factories often tops 50 percent. As China turns into a land of short-term workers, there are grave implications for labor, companies, and Chinese society.”

via Wages Rising in Chinese Factories? Only For Some – Working In These Times.

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