Archive for ‘Labour’

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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.

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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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09/05/2013

* China’s Vision for a ‘New’ Urbanization

WSJ: “China watchers are all abuzz about urbanization, which is supposed to be a focus of reform. But what does the term mean? After all, China has been urbanizing for 30 years, which has meant building roads, subways, ports — and relying more and more on infrastructure spending, which seems to have less and less payoff these days.

The National Development and Reform Commission, China’s state planning agency, is due to produce a report later this year laying out a path for a new kind of urbanization.

Li Tie, director general of the NDRC’s China Center for Urban Development, said the report involves a “new model of city development,” which would include three main parts:

First, there would be a focus on “low carbon” development — meaning trying to assure Chinese cities ease their horrendous pollution.

Second, would be reform of the household registration, or hukou, system. For smaller cities the system would be “totally liberalized,” Mr. Li said. He didn’t lay out his thoughts fully, but seemed to suggest that all residents would enjoy the same rights and benefits regardless of where they were born. For larger cities, migrants would get “resident cards” which assured them “improved treatment” and access to social services.

Third, China would look to increase “clustering” in big cities. Mr. Li didn’t explain what he meant by that, but in urban planning speak, clustering usually means trying to develop industries or specialties in a city or group of cities. That’s a way to build on the intellectual frisson of urban life, where new ideas can spawn new industries.

Those proposals address some of the most vexing problems with life in China’s cities: pollution, widening social inequality and lack of innovation. They also suggest that China’s leaders are committed to making urbanization into something more than another building spree. But changes would be costly and could require China’s central government to take a much more active role in overseeing—and paying for—urban growth than it has in the past. Whether China’s new leaders are ready to take such steps will become clear over the next year or two.”

via China’s Vision for a ‘New’ Urbanization – China Real Time Report – WSJ.

Posted in China alert, Economics, Migrant workers, Politics, urban development | 2 Comments »

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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.

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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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09/03/2013

* Where Have China’s Workers Gone?

Bloomberg: “Xi Jinping and Li Keqiang are taking over China’s leadership at a time when growth has slackened and labor issues have become more complex.

China's Disappearing Surplus Labor

Reports that businesses such as Foxconn Technology Group are raising wages and struggling to recruit workers in China have intensified debate over just how many surplus workers the country still has. Meanwhile, a boom in college-educated Chinese has raised concerns of an impending threat to U.S. competitiveness. These seemingly disparate concerns about China’s labor force are actually linked by common underlying factors, with critical implications for China’s ability to remain the growth engine of the world.

China’s large pool of surplus labor has fueled its rapid industrial growth. Now this “demographic dividend” may be almost exhausted, and its economy reaching a Lewis turning point: a shift named after the Nobel prize-winning Arthur Lewis, who was the first to describe how poor economies can develop by transferring surplus labor from agriculture to the more productive industrial sector until the point when surplus labor disappears, wages begin to rise and growth slows.

Citing periodic labor shortages and unskilled wages that have risen since 2003, prominent Chinese economists suggest that time has come. The International Monetary Fund disagrees and puts the turning point much later — between 2020 and 2025, based on a model analyzing labor productivity. A third view is that China’s surplus labor is still plentiful, given that about 40 percent of the labor force is still underutilized in the rural sector, mostly in agriculture, which accounts for only 10 percent of gross domestic product.

Mobility Restrictions

In China, many market imperfections impede the mobility and use of labor. Thus, actual availability may fall far short of what is potentially available. The hukou residency system that restricts migrant workers from accessing services where they are employed is the most glaring example of this kind of imperfection. Less obvious is the extent to which China’s rural- support policies, including subsidy programs, may be encouraging workers to stay in agriculture longer than they should.

Surplus workers may not be in agriculture as in the original Lewis model but in smaller towns, underemployed at depressed wages. The result is that China has the highest rural- urban income disparity in the world.

Why don’t these workers move to more productive jobs in more dynamic settings? In formal terms, it is because their “reservation wage” has increased — that is, the minimum wage they demand to move is much greater than their current wage, because for a generation that didn’t experience the hardships of the Mao Zedong era, the monetary and emotional costs of relocation have risen. Many workers won’t move to major cities that lack affordable housing. They may also have rights to land that can’t be sold for full market value — thus, staying in familiar surroundings is now a more attractive proposition.

If recent decades saw a huge migration that “brought workers to where the jobs are” along the coast, the future may mean the reverse, involving “bringing the jobs to where the workers are” with profound implications for China’s economic geography.

In lesser known provinces such as Henan, with a country- sized population of 100 million, large numbers of young workers seek factory positions but are unwilling to relocate to seemingly foreign places in coastal China. As China becomes more consumption-oriented with rising incomes and urbanization, the center of economic gravity will naturally move inland where two- thirds of the population resides.

College Graduates

Just as young workers are demanding more satisfying jobs, they also increasingly feel entitled to a college education. Government policy has expanded access to higher education. From 2000 to 2010, the percentage of college-age cohorts enrolled in universities more than tripled in China, a rate of increase far above that of India, Malaysia and Indonesia. China wants to produce 200 million college graduates by 2030; they will make up more than 20 percent of the projected labor force, more than double the current ratio. The push to expand higher education means the number of college-educated has leapfrogged — and excessively so — ahead of those holding only vocational or junior college degrees.

These college-educated workers are unwilling to settle for factory work and compete for office-based positions. College graduates are four times as likely to be unemployed as urban residents of the same age with only basic education, even as factories go begging for semi-skilled workers. Given the underdeveloped service sector and still-large roles of manufacturing and construction, China has created a serious mismatch between skills of the labor force and available jobs.

As the economy moves up the value chain, substituting more capital-intensive manufacturing for unskilled labor-intensive assembly, a shortage of semi-skilled workers is appearing. But the excessive growth of college graduates has outpaced the structural transition and prematurely shifted the labor supply from semi-skilled manufacturing workers to more knowledge- intensive service professionals. More emphasis on vocational training and industry-specific engineering skills will help China fill its immediate need for manufacturing workers.”

Yukon Huang and Clare Lynch are, respectively, a senior associate and a junior fellow at the Carnegie Endowment. The opinions expressed are their own.

via Where Have China’s Workers Gone? – Bloomberg.

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03/03/2013

* Migrant workers feel like outsiders in mainland cities, says survey

SCMP: “Despite spending years working in mainland cities, migrant workers still feel like outsiders and say their only sense of happiness comes from their families, a Renmin University survey has found.

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They also see themselves as the bottom of society and feel alienated because they have no influence on their lives or society in general, the survey found, with young migrant workers even gloomier about their prospects.

The findings underscore the challenge facing the new administration in realising premier-in-waiting Li Keqiang‘s high-profile commitment to people-oriented urbanisation.

The survey of 2,011 migrant workers, conducted in 20 major cities, found their sense of happiness came mainly from the satisfaction of their basic needs, such as income and education, how close they were to home and how often they could see their children.

Most said they felt that their social standing was very low and they were less happy than those who thought more highly of themselves. More than half of those with low opinions of themselves felt lonely, bored and incapable of having an impact on their lives or society.

The survey also found that migrant workers were not necessarily happier in more economically developed cities, with those in central and western regions where competition was less fierce generally more content.

Professor Hu Ping , from Renmin University’s psychology department, which conducted the survey, said the government should pay more attention to the well-being of migrant workers.

“Not just their basic living requirements and food but also their social needs such as being recognised, accepted and respected by society,” Hu said. “Their needs to participate in social life should also be met.”

Compared with a similar survey last year, migrant workers’ living standards had improved but their sense of happiness from social involvement and social standing had dipped.

Wang Junxiu , a researcher with the Chinese Academy of Social Science, said the survey showed that the sense of happiness of migrant workers was not entirely based on how much money they made but also how they felt about the future.

“The core of urbanisation is how to make these migrant workers urban residents and from the survey we see the migrant workers are not … wanting different levels of needs one by one,” Wang said. “Instead, they need to fulfil their needs at the same time and the government should do more to make them integrate into society.”

Hu said the government should be alert to the class awareness of migrant workers and work out strategies to effectively resolve conflicts among different social strata to avoid conflict.

Professor Ye Yumin , from Renmin University’s school of public administration and policy, said urbanisation should mean not only that people could move from place to place but also allow them to move up the social ladder. “Otherwise it is not successful,” she said.

Ye said it was the government’s job to create a fair channel for migrant workers to move up and the most effective way was through education.

via Migrant workers feel like outsiders in mainland cities, says survey | South China Morning Post.

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25/02/2013

As China matures and its labour policies and pay improves, it will become less competitive for low-cost production. The question is: can China move up the manufacturing value chain fast enough to avoid the predictable problems it will face?

See also:

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