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Sunday, 14 March 2010
Better-paid workers key to mainland’s progress
There are few constants in business, but the law of supply and demand is one of them. With business picking up and labour short, migrant workers in Guangdong province are increasingly choosy about what jobs they take - and not surprisingly so.
There are few constants in business, but the law of supply and demand is one of them. With business picking up and labour short, migrant workers in Guangdong province are increasingly choosy about what jobs they take - and not surprisingly so. Nobody wants to work in sweatshops for long hours for minimal pay. Factory owners are faced with a number of choices: Move operations to where labour is cheaper, pay higher wages, improve working conditions and accept lower margins, or manufacture higher-priced, better goods with a better-paid, skilled workforce. With domestic consumption so essential to the mainland’s development, the latter two options seem to be the best.
Many of the province’s factory owners are locked in a model of production that is under threat from progress. It is the same one that served Hong Kong well when it was an industrial centre in the 1960s, but does not apply when education levels improve and financial and livelihood expectations rise. While many parts of China remain underdeveloped, economic and social circumstances in high-growth areas have evolved to the point that not all workers are willing to work for meagre salaries. Factories have to be flexible with working hours, improve conditions and provide recreational facilities.
The circumstances are vexing for owners. There is a marked shortfall in the number of workers despite high unemployment and underemployment. The government’s economic stimulus package included incentives for rural areas, prompting people who would have moved to cities in search of work to stay on the land. Buyers in the west apply crippling pressure to keep prices down. Meeting workers’ demands cuts into profits.
A natural choice for owners has been to move operations to poorer provinces and other countries where labour is cheaper. This is good for the firm’s viability and profits and provides opportunities for people who would be otherwise unemployed, and could well spur development further inland. But that does not help the coastal regions, and cannot be a strategy that can be employed for the long run. For the sake of the country, economy and citizens, China needs a workforce that is increasingly skilled and better paid - workers that are in a better position to afford to buy the products they make.
There has been an increase in wages at some factories in Guangdong, but it is unclear how lasting the trend is. Import and export figures are substantially up on this time last year, though, and orders are flooding in. Workforce shortfalls do not necessarily mean higher minimum wages. More cash is being handed out for longer shifts and people who would previously not have been considered for jobs, such as the elderly, are being taken on. Job fairs held recently in Shenzhen give an indication of what workers want. One for factories drew scant attention, while another for white collar jobs was packed. A more sophisticated population has meant a supply crunch in low- and unskilled labour. The trend is spreading across the nation as a result of urbanisation, improved living standards, affluence and the better-educated children of migrant workers wanting a better lot than that of their parents.
Factory workers have more negotiating power, at least for now. Higher wages and better conditions benefit workers - and also the country. Greater spending power in more hands will spur the domestic economy and make the nation less dependent on exports. Factory owners obviously are not so enthusiastic about the changes. Nonetheless, without greater consumer demand, the domestic economy cannot grow, and that hurts everyone in the long run.
1 comment:
Better-paid workers key to mainland’s progress
12 March 2010
There are few constants in business, but the law of supply and demand is one of them. With business picking up and labour short, migrant workers in Guangdong province are increasingly choosy about what jobs they take - and not surprisingly so. Nobody wants to work in sweatshops for long hours for minimal pay. Factory owners are faced with a number of choices: Move operations to where labour is cheaper, pay higher wages, improve working conditions and accept lower margins, or manufacture higher-priced, better goods with a better-paid, skilled workforce. With domestic consumption so essential to the mainland’s development, the latter two options seem to be the best.
Many of the province’s factory owners are locked in a model of production that is under threat from progress. It is the same one that served Hong Kong well when it was an industrial centre in the 1960s, but does not apply when education levels improve and financial and livelihood expectations rise. While many parts of China remain underdeveloped, economic and social circumstances in high-growth areas have evolved to the point that not all workers are willing to work for meagre salaries. Factories have to be flexible with working hours, improve conditions and provide recreational facilities.
The circumstances are vexing for owners. There is a marked shortfall in the number of workers despite high unemployment and underemployment. The government’s economic stimulus package included incentives for rural areas, prompting people who would have moved to cities in search of work to stay on the land. Buyers in the west apply crippling pressure to keep prices down. Meeting workers’ demands cuts into profits.
A natural choice for owners has been to move operations to poorer provinces and other countries where labour is cheaper. This is good for the firm’s viability and profits and provides opportunities for people who would be otherwise unemployed, and could well spur development further inland. But that does not help the coastal regions, and cannot be a strategy that can be employed for the long run. For the sake of the country, economy and citizens, China needs a workforce that is increasingly skilled and better paid - workers that are in a better position to afford to buy the products they make.
There has been an increase in wages at some factories in Guangdong, but it is unclear how lasting the trend is. Import and export figures are substantially up on this time last year, though, and orders are flooding in. Workforce shortfalls do not necessarily mean higher minimum wages. More cash is being handed out for longer shifts and people who would previously not have been considered for jobs, such as the elderly, are being taken on. Job fairs held recently in Shenzhen give an indication of what workers want. One for factories drew scant attention, while another for white collar jobs was packed. A more sophisticated population has meant a supply crunch in low- and unskilled labour. The trend is spreading across the nation as a result of urbanisation, improved living standards, affluence and the better-educated children of migrant workers wanting a better lot than that of their parents.
Factory workers have more negotiating power, at least for now. Higher wages and better conditions benefit workers - and also the country. Greater spending power in more hands will spur the domestic economy and make the nation less dependent on exports. Factory owners obviously are not so enthusiastic about the changes. Nonetheless, without greater consumer demand, the domestic economy cannot grow, and that hurts everyone in the long run.
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