In Markets

China: Worker shift reshapes export sector

The landscape of China’s manufacturing sector is rapidly evolving as suppliers adapt to the changing nature of the job market.

A steady and seemingly irreversible transition is taking place in China’s manufacturing labour market – one that may have wide-ranging consequences for suppliers and buyers alike.

Workers are heading back home.

An estimated 30 to 40 percent fewer employees returned to their jobs in the south-east following the 2009 Chinese New Year holiday. A large portion of them found new work in their hometowns – a situation that is strengthening.

As a result of the government’s multibillion-dollar stimulus package, public works projects have generated a significant number of jobs in the countryside. An estimated 20 million farmers-turned-migrant workers who were laid off at the height of the global financial downturn have since found improved economic conditions at home. Some have found jobs, while others have been able to start small businesses.

The trend is exacerbating a labour shortage that has intensified in recent months as the country’s exports have started to pick up. While overseas shipments remain down year-on-year in most sectors, the rate of decline has decelerated.

Rather than lose orders, some understaffed factories have extended lead times by a few days to more than a month. Others are offering improved salaries and benefits to attract workers, resulting in increases in export prices of as much as five percent. Even with such changes in effect, many plants remain short of hands.

Desperate companies are sending recruitment agents to staffing centres in the interior, hiring anybody from 18 to 50 years old. But few are signing up. Manufacturers that need hundreds of new workers are lucky to get more than a few dozen after weeks of trying.

According to the Shenzhen Labor Bureau, Guangdong province, one of the country’s top export centres, had 120,000 job vacancies in August 2009, a sixfold increase in just four months. Zhejiang province lacked a whopping 250,000 workers, with Wenzhou posting more than 26,000 openings – up 11 percent from the previous month. In Chengdu, Sichuan province, many businesses claim to be lacking by 20 to 50 percent.

Those who do leave their hometowns and villages have been spurning the south-east in favour of relatively new opportunities for the agriculture, construction and service industries in the northern and western areas. These include the provinces of Heilongjiang, Jilin, Liaoning, Hebei and Shanxi, and the autonomous regions of Xinjiang and Inner Mongolia.

Manufacturing continues to lure its share of migrant workers, however, provided such jobs are closer to home. In fact, newly established and expanding factories in the inland provinces seem to have less recruitment problems than those in the coastal hubs.

This means China’s industrial production will no longer be concentrated in the traditional bases of the south-eastern provinces.

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