Thursday, August 21, 2008

Labor shortages in China...

Decades from now, the Olympics will be seen as the apex in this cycle of China's development.

TOKYO (Nikkei)--Dark clouds are gathering quickly over China's economy, with concern growing over a notable drop in the number of workers migrating from rural areas to take factory jobs in cities.
The labor shortages are emerging at a time when the export-led growth model that has propelled China's rapid-fire expansion is grinding to a halt. And China has not made sufficient progress in replacing its export-driven economy with a new one that draws on domestic demand. There is a danger that Chinese society could be destabilized if the current period of high economic growth ends.
The city of Shenzhen in Guangdong Province, a special economic zone bordering Hong Kong, raised the minimum wage by 17.6% to 1,000 yuan a month in July, a margin more than double the increase in consumer prices
Home to clusters of companies assembling electronic goods and a wide range of other products, Guangdong serves as China's foremost export base, accounting for some 30% of the country's total export value. Until a few years back, factories in the province had hummed with activity, being able to tap a labor pool of rural migrant workers paid around 500 yuan a month.
Now, employers in Shenzhen and elsewhere in Guangdong are finding that capable workers are hard to come by unless they are paid double to triple the minimum wage. There have been reports of an increasing number of factories in the province closing down after being hit by stagnant exports. But the labor shortage is here to stay because "the total number of migrant workers is stuck at the same level," according to Ryo Ikebe, deputy director-general of the Japan External Trade Organization's Guangzhou office.
Wages are also rising in inland regions, although pay levels there continue to be lower than in coastal areas. Wuhan, the capital of Hubei Province, hiked the minimum wage 20% to 700 yuan, effective in August.

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