Right after the Chinese New Year, labor shortage becomes the hot topic in the Pearl River region. The local news paper(Chinese) shows an official number from the Guangdong Labor and Social Security Department that some 900,000 employees are in short supply. However, the actual gap is said to reach 2 million employees in the whole province of Guangdong.
Even though labor shortage is not a new issue, yet it turned to be more influential this year and is conveying a strong message. Change is taking place.
First of all, a good number of the existing labor force is moving to Yangtze River region, which is Shanghai, Zhejiang and Jiangsu province. Factories in Jiangsu and Zhejiang provinces are offering more competitive package to the workers in the recent years, which is a compelling force behind this change.
In addition, job opportunities are mounting in the central and western regions, including infrastructure construction boosted by the national stimulus plan. Also, the rural areas are enjoying favorable policy on farming. As a result, would-be migrant workers now choose to stay in their hometown or move to other rural regions. Given the similar income, one might also sense greater CPI (Consumption Price Index) pressure when working in Guangdong province, thus the relocation away from the urban centers.
Another important factor lies in the change of age structure amongst the work force, as more and more employees born after 1990 join the labor force. This group of people prefers to have more fun and to explore more than those born one or two decades ago. They seem to care less about a stable job or secure income. They would rather move on to another job opportunity when the general working conditions do not satisfy them.
Nationwide increases in the minimum wage will add to further pressure to the issue of labor shortages. Facing the labor shortage, the Shenzhen government is to increase the local minimum wage by 10% (Chinese) so as to attract more migrant workers. However, Shenzhen is not the early bird. In January, Jiangsu(Chinese) province took the initiative to increase its local minimum wages by more than 12% for the year of 2010. Following Jiangsu, both Shanghai and Zhejiang also announce to raise the local minimum wage, effective from April 1st 2010.
Minimum wage increases will bring immediate challenge for factories in terms of the labor cost. Despite this, the factories would still have to “grab” more employees to meet the production needs. And if some newly-recruited employees are not skillful enough, more resources would be needed for the on-job training. The Guangdong production factories are facing labor force competition with other regions of China.
The year of tiger seems to set off on the wrong foot for the manufacturing sector.
