Chinese labour turns a deaf ear to the return-to-work siren, putting mainland manufacturing under pressure.
China expects exports to grow by eight percent this year, but the Ministry of Industry and Information Technology warned on its website that there may be problems getting exports back to pre-crisis levels “in the short term”.
Those problems, MIIT minister Li Yizhong told Xinhua, extend to growing trade protectionism and Chinese manufacturers relying too much on overseas markets.
This is a curiously conflicting statement. It appears the minister wants exports to recover to the levels before the crisis, yet still chides manufacturers for relying too much on overseas markets.
That China needs to change its economic model is without doubt, but it won’t happen overnight or even in 10 years. There is a rapidly emerging middle class that will devour more and more domestic production, but China is still the factory of the world and will be for a long time.
However, to operate factories in the mainland requires labour. A lot of it. And that’s where some deeper problems are emerging that could keep the brakes on exports this year.
Factory owners in the Pearl River Delta – the address of the Factory of the World – have complained they are short about two million workers.
The week-long Lunar New Year holiday is over and factories are getting back to work. Orders are coming in and the migrant labour is trickling back.
And that’s the problem. If that trickle doesn’t turn into a pour, the factories will be in trouble. It is not unusual to find a factory with 80,000 workers. There is little automation because it is cheaper to use humans. Let’s face it; any factory that can afford to pay wages to 80,000 workers is paying far too little.
Encouraging the workers to return to the factories is proving more and more difficult. Especially considering that worker benefits took a hit during the trade slowdown last year. Factories changed working hours and conditions, many froze wages and cut benefits, cancelled overtime or even slashed social security payments. One survey found 40 percent of enterprises were not paying workers during rest or vacation days.
Then there are the occupational safety issues faced by many workers, their options simple: Live with it or quit.
Beijing had a go at upgrading the labour legislation in early 2008, pushing ahead despite a cacophony of complaints from factory owners protesting that paying better wages and benefits would undermine their competitiveness.
But that was all suspended in the financial crisis.
So with poor working conditions and wages, and living in cramped conditions far from home, no wonder many of China’s migrant workers are choosing not to migrate.
There are other factors keeping them put. The stimulus measures back in their home provinces have enabled huge numbers of migrant workers to find jobs closer to home on big infrastructure projects.
Also, these workers have gradually become better educated and do not need jobs painting Barbie dolls.
Beijing has for a long time been trying to get low-value goods manufacturers to move the hell west and away from the more affluent coastal areas. It wants to raise the quality and value of goods manufactured in the Pearl River Delta, which will have the effect of lifting the entire region.
So there are indeed many problems standing between China and eight percent export growth in 2010, most of them in the labour relations arena.
With that in mind, perhaps it is the Ministry of Labour that should be issuing statements on export recovery, and not the Information and IT fellows. Because how the Labour Minister handles the steadily growing discontent among its labour force will determine whether that eight percent growth is realistic or merely a product of the usual statistical thumbsuckery.