One of the defining myths of modern China - that it has a
bottomless well of unskilled, low-wage laborers - is coming apart at
the seams. And hardest hit are the southern coastal cities that
produce much of America's consumer bounty.
What began two years ago as a temporary blip in the steady supply
of migrants to China's export hub, where low wages and long hours
are the norm, has become a constant problem for factory bosses.
Some are responding with perks to attract job applicants as "Help
Wanted" ads go unanswered. Others are subcontracting work to inland
cities, chasing the young, single workers that once came knocking on
their factory gates but are now in shorter supply.
"There's a fixation that China has an abundant, unlimited supply
of labor ... so people initially said this was a temporary
phenomenon. But now [they] realize it's a general trend," says Hong
Liang, an economist at Goldman Sachs in Hong Kong, who studies
China's labor market. "In the central provinces, we're seeing more
manufacturers moving there to absorb the local labor."
Those workers that remain in coastal cities like Dongguan, whose
sprawl of tile-roof factories belch into a jaundiced sky, are
demanding higher wages - and getting their voices heard. Minimum
wages are on the rise, as authorities respond to the labor shortage,
setting a new floor for private employers. This pressure on factory
payrolls, coupled with rising cost of materials and energy, is
starting to bite. Retail buyers warn that textile factories in
Bangladesh and India are undercutting China and blame double-digit
wage hikes here for inflating costs.
None of this means that China's export engine is running out of
gas. Even as some factories struggle to stay competitive, other
industries are ramping up production. If anything, the economy could
be in danger of overheating at its current clip, which officials say
is more than 10 percent - a risk that prompted China's central bank
to raise interest rates last week for the first time in 18 months.
Why 1.7 million workers went home
But while China's labor shortage may not have dampened the
economy, it has factories here in the Pearl River Delta - its export
powerhouse - scrambling to adjust.
Around 1.7 million migrant workers in the region who took annual
leave in January during the Chinese New Year holiday didn't return
afterward, preferring to look for jobs closer to home or in other
coastal cities says Liu Kaiming, who runs a labor-rights group in
In an effort to retain workers at her small shoe factory, Maria
Ma raised salaries last year by 10 percent and added more vacation
time, but she still worries about losing out to rivals elsewhere in
China offering better wages.
She's not alone. A survey of members by the Asia Footwear
Association in Hong Kong found earlier this year that many Chinese
shoemakers were understaffed, some by as much as 60 percent. Newly
built plants in Dongguan are idle for lack of workers, says Percy
Lan, an entrepreneur who publishes a footwear industry magazine. …