In Dongguan, a major manufacturing city in Guangdong Province, it is getting harder to recruit workers in recent years. And this year, the challenge is even greater, according to a factory manager responsible for recruiting.
In order to deal with labor shortage, some of the factories cooperate with technical schools. The student workers have become one of the major labor sources for the factories. They engage in the same work as the regular workers, but they are ineligible for overtime pay and don't receive social insurance.
The demand for workers in Dongguan and the factories inability to find workers has led to the growth in the last two years of recruitment agencies that are usually known as labor companies. The labor companies get more than a hundred yuan for each recruited worker; however, nowadays, it's rare to recruit more than a hundred workers in a month.
Most migrant workers are now unwilling to work in Dongguan due to soaring inflation and stagnant wages wages that are lower than that of the Yangtze River Delta region, according to a man surnamed Zhang, who works for a labor company.
Zhang said that when he was in Dongguan in 2006, there were a lot of workers waiting in line outside of each factory applying for jobs. Now there are no lines, and in Zhang's view lower pay is the primary cause for Dongguan's labor shortage.
Chen, who was working for a large Japanese electronics company, said the salaries she and fellow workers got was paltry. And in recent years, the company contracted with schools from different regions bringing in students. "Even the temporary student workers can get higher pay than us", Chen said.
Chen may have gotten that impression, but actually student workers are known to receive worse treatment than the average worker.
Wang Li, 16, is a student worker from Anxiang, Hunan Province. Together with more than 200 other students, she came to Dongguan under a work-study program and has worked for a company for four months. She didn't even know when she started working how much she'd be paid, but it didn't really matter because none of it would go in her pocket. Students' salaries, around 1,500 yuan (US$228) a month, go directly to their schools.
The labor costs are lower for student workers and factories aren't required to buy social insurance for the "temporary" student workers. Also, companies don't need to pay overtime wages for student workers.
This situation is not an isolated to Dongguan. Many companies are hiring student workers especially larger ones, as they are more competitive in contracting with the schools and the student workers make up a greater proportion of their workers.
The demand for labor affects many parts of the country. According to Zhou Dewen, president of Wenzhou SME (small-medium enterprises) Development Association, Wenzhou City in Zhejiang Province will need 350,000 workers this year and Zhejiang Province will need about 700,000 workers.
In Zhou's opinion, with the continuous development of Wenzhou enterprises, together with Hubei, Chongqing, Sichuan and other central and western regions' competing for workers, the labor shortage in eastern region will be intensified in the coming years, especially for coastal areas.
To tackle with labor shortage, companies have exhausted every means to keep workers. The general practice has been salary increases and this has marked a transition in the Chinese economy.
"China's economic development has entered a turning point. The era of cheap labor is coming to an end." Zhou said.
Nearly 70 percent of companies are compelled to increase salary, yet profits aren't growing at the same rate, so Zhou believes increased pay will worsen the situation. Zhou says in order to maintain the vitality and development momentum, companies should focus on technical, management and marketing innovation that could in turn improve both the product quality and labor productivity.
Accelerating industrial upgrades and restructuring the industry are the fundamental ways to solve labor shortage. However, for most companies, the transition is by no means easy.
"Over the years, Wenzhou has been exploring the road for industrial upgrading and restructuring; however, no remarkable achievement was made," Zhou said.
According to him, most of the small and medium-sized enterprises in Wenzhou are struggling to survive. They lack sufficient resources needed for industrial upgrading. He estimated that for a long time in the future, traditional industries in Wenzhou won't finish their transformation, and that the government should guide SMEs to develop scientifically.
According to Zhou, local governments should encourage companies to unite and form industrial unions and guide the leading companies to integrate with smaller ones. In this way, the industry will be improved and the product process will be more streamlined, and thus labor will be saved and the companies will be more competitive.
(This article was first published in National Business Daily and translated by Li Huiru)
By Li Chaowen and Zhang Juanjuan
