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WorkersOn Labour Shortages in ChinaOne of the key components of China’s twenty five years of economic growth has been a huge supply of peasant labour moving to off-farm work. A sizeable minority of these migrants find work in coastal special economic zones (SEZs) specifically set up to promote exports. Labour relations in the zones are distinguished by the vigilant enforcement of State restrictions on trade union organising along with an “absence of rigour and failure of implementation” regarding laws and regulations designed, on paper at least, to restrict the rate of exploitation.[1] In the peak season, the factories lines run seven days a week twenty four hours a day and a combination of rural poverty and shortage of arable land ensures the continuous supply of workers that places a downward pressure on real wages. Or they did. Until recently, using the words “labour shortage” when writing about China’s ‘economic miracle’ just didn’t fit. However, despite 800 million farmers, the government’s adoption of fast–track urbanisation, a measured relaxation on rules restricting access to SEZs, the East and South coasts’ ‘streets paved with gold’ reputation among farmers in the poor hinterlands, and despite at least 15 million people looking for work in the cities [2], a “migrant worker famine” (mingong huang) has been widely reported. Articles began to appear in the Mainland media after the Spring Festival in February 2004 when the annual return to work failed to meet demand in some areas. One plastics factory boss told this writer that she had tried to ban her employees bringing newspapers back to the dormitories in case they read and discussed the stories of labour shortages together. Most of the media reports blame the bosses for keeping wages too low and she didn’t want her employees “to start pressuring us for higher wages”. A government report released at the end of December 2004 pointed out that real wages in the Pearl River Delta (PRD) had risen just 68 yuan in 12 years. So what’s going on? Given China’s integration in, and impact on, the global economy the shortages raise important questions for the international trade union community – especially for those unions who are well-established in sectors where employers have set up shop in China. With this in mind, we will attempt to provide a summary of the situation by looking at the following questions: • How widespread is the shortage? As we go to press, the 2005 Spring Festival Holiday has just ended and already there are reports of the shortages continuing. Local media in the city of Shenzhen, perhaps China’s best known export boomtown, are reporting that only 60 per cent of the employees who left for the spring break have returned to work – though the figure rises to 87 per cent for Guangzhou city, 80 miles to the north.[3] If these initial reports are a harbinger of continued shortages, the government’s policy on relying on foreign investment as a driver for economic growth will come in for some rigorous questioning, not least from the TNCs themselves. From flood to famine? – A look at the figures It is generally assumed that most internal migrants in China end up working in the southern and east coast cities that have attracted so much attention over the last 16 years. While the flagship cities of Guangzhou, Shanghai, the capital Beijing, and the manufacturing zones that surround them are magnets for the 210 million people who have moved to the towns looking for work since 1988, most migrants travel no further than the next province. As far as we can ascertain – for there is a lack of composite national figures – the labour shortage to date has been most evident in the aforementioned coastal areas. However, there is also evidence of shortages in less well-known manufacturing areas. Press reports, research institutions and notices from government agencies demonstrate that shortages have also occurred inland. Guangdong province: Guangdong has more migrants than any other province and is home to the PRD which extends from Guangzhou city to Shenzhen. Bordering Hong Kong, the PRD has become known as the “workshop of the world”. According to the Institute of Contemporary Observation in Shenzhen (ICO), there were over 30 million migrant workers in the Guangdong province in 2004 and a shortage of up to two million workers in the PRD alone. Fujian Province: Researchers from various industries conducted a survey in the Fujian city of Pujian and found most enterprises operating at 80-85% capacity. The reason for the shortfall was blamed chiefly on a lack of workers to operate newly-installed production lines. For most of 2004, the ceramics industry was operating at just 50% of capacity. [4] Chongqing Municipality: The largest urban centre in China located in the more remote south-west. A survey of 500 enterprises in the textile town of Huilongba revealed a shortage of 5,000 workers. As a result, three textile factories had closed and five more were operating well-below capacity. [5] Hunan Province: Middle-class folks in the capital city of Changsha are finding it difficult to find domestic workers. Since March 2003, the number of women coming into the city and specifically looking for work as maids has dropped by 70 per cent. Like domestic work anywhere, maid-work in China is one of the most vulnerable jobs on the market and maids are not protected by the national Labour Law. A shortage in this sector possibly indicates that potential maids are finding it easier to get jobs in manufacturing and the service industries due to a general labour shortage.[6] On their own, these snapshot statistics do not prove a national cross-sector labour shortage, but they do suggest a significant shift in the labour-capital equation that is potentially to the advantage of workers. It has been suggested by some economists that Chinese factories simply won’t be able to meet the expected surge in orders due to the end of the Multifibre Arrangement and removal of production quotas in the textile sector. Mr Tang from the labour services office of the Chongqing Labour Bureau told the government-run China Agriculture Information Network that: “The whole country’s textile industry is short of workers. Beginning last year, the coastal areas’ textile and clothing factories were running well under capacity and these are large factories that recruit huge numbers of workers. At the [labour services] office we get calls everyday from out-of-province enterprises in urgent need of workers. In August this year (2004) we got a call from Quanzhou in Fujian province asking us to send 10,000 migrant workers. [With more and more workers leaving for other provinces] we simply don’t have the numbers to meet demand here in Huilongba.” [7] Reasons for the shortage: some informed guesses It would be foolish to argue that there was any one specific reason for the shortages. High labour turnover rates and the demand for experienced and/or skilled workers suggests that the labour market is increasingly fluid and the employers’ habit of laying off workers in the slack season does not make it any more stable. The rise in the price of rice, along with the new leadership’s promise to reduce tax burdens on farmers whose incomes, according to official figures, rose at an unprecedented eight per cent in 2004, are possible reasons for persuading some farmers to stay at home. [8] A choice made easier given the considerable risks involved in taking the migrant work route. Juliana So of the Guangdong-based China Labour Support Network argues that the two-decade old one-child policy is also beginning to have an impact on the supply of young workers. She points out that the baby boom of the pre-reform era resulted in a large number of young people being available for factory work throughout the nineties. Deng Xiaoping’s one-child policy – two in the countryside if a couple’s firstborn is female or handicapped – is now beginning not to bear fruit so to speak. While these demographic changes are still in their infancy, the one-child policy has had a dramatic impact on China’s fertility rates which dropped below replacement levels by the early nineties. The mid-term effect will be more dramatic and “assuming relatively stable economic growth, demographic trends predict that the supply of entry-level, low-skilled industrial workers will now start to shrink”.[9] Rules governing China’s system of residential registration, known as hukou, have been relaxed and the notorious Custody and Repatriation Law that allowed police to detain and forcibly return anyone who was away from their place of birth without the relevant papers required has been repealed. However residential classification according to where one was born remains very much in place. The hukou system does not prevent freedom of movement but it does restrict where one can permanently settle. There is a minimum qualification of seven years continual residency to qualify for a change in hukou status – except in new towns that have sprung up as a result of the planned urbanisation programme in mid and west China – and even then one has to provide evidence of considerable funds, either by buying a property or setting up a business. In Shenzhen it is almost impossible. Over the past 25 years over 30 million migrant workers have worked or are working in the city. As of May 2004, only one migrant had obtained the right to permanent residence. But aside from the hukou system being discriminatory, it is also part of the social architecture that is contributing to the current labour shortage. [10] China’s continued economic growth and move up the export valued-added ladder is increasingly requiring experienced and skilled workers; but labour conditions, insecurity of temporary status and discriminatory residential rules result in workers frequently moving jobs in search of better pay. The ICO in Shenzhen has dubbed this a “huge waste of human resources and a default cause of labour market instability in PRD.” [11] However, while other manufacturing centres such as the Yangzi River Delta (YRD), which stretches inland from Shanghai, offer higher wages and a generally more regulated working environment, the National Bureau of Statistics reported serious shortages there as well.
In fact the often appalling labour conditions that many migrants work are an important to understanding the nature of the shortage. Migrants face an institutionalised exclusion from welfare and access to urban resources that most workers with a city hukou won the right to back in the early fifties. For example, migrant workers are not entitled to minimum livelihood relief which, in theory at least, forms a safety net for low-income families in the cities. They also find themselves without a democratic trade union and stuck in a balance of class forces that weakens the working class as a whole. So it maybe that some migrants are simply voting with their feet; if there is work elsewhere, or the family farm is bringing in more cash this year, why take the risk if the only work you can get is in a sweatshop? “The rise in the price of rice has encouraged some of the workers to go back home and work the fields. They are mainly the older ones who are not willing to take all the abuse from management”. [12] This opinion was echoed by workers this writer spoke to in Shekou just north of Hong Kong. But the numbers returning to the fields are very small and cannot account for such a large labour shortage. Interviews with workers at the Humen labour market in the southern province of Guangdong demonstrate that some migrants feel they can refuse the worst jobs: “I was getting only 410 yuan. In Hunan we can make at least 300 to 400 so many people are not willing to come back after the Lunar New Year. Or if we do, we want to find a good factory.” [13] A bottleneck or ‘systemic’ flaw? Figures vary considerably on urban unemployment in China and there is much regional variation. Feng Jianhua, a research fellow at the State Development and Reform Commission estimates that the national rate is seven percent.[14] The privatisation or closure of thousands of state-owned enterprises since the pivotal 15th Party Conference in 1997 led to over 25 million SOE workers losing their jobs. Many remain unemployed and the phasing out of temporary re-training centres that SOEs were obliged to provide for three years following lay-offs means that the numbers of formally registered urban unemployed is likely to rise in 2005. The situation appears even more complicated when we look at the decline in the numbers employed in China’s manufacturing sector over recent years. Behind the headlines of dramatic export growth and so-called ‘job theft’ from developed countries lies a loss of over 25 million manufacturing jobs between 1995 and 2002. According to the Asian Development Bank, the sector accounted for almost 110 million jobs and 16% of employment share in 1995. By 2002, this had fallen to just over 83 million or 11.3 per cent of employment share. [15] So how can there be a labour shortage or how can we even talk of one with so many unemployed workers? Just as famine can raise its murderous head at the same time as food mountains pile up, so too can labour “famines” occur in times of high unemployment. The situation of a nation state is of course particular to itself, but a generalised answer lies in a distorted and uneven pattern of development that can produce chronic overproduction, high unemployment and labour shortages at the same time. Rather than a planned increase in output based on actual needs and equal access to resources, the market reforms have been conducted on the premise that the bosses must first accumulate considerable wealth before the rest of society can enjoy the benefits of their labour. International capital has flowed into China and brought jobs with it – some of them good ones. But it has always gone to “whoever can do things best, or cheapest” and this has not been in the overall interests of Chinese workers and farmers.[16] Combined with a raft of policies concomitant with globalisation such as rapid urbanisation, a heavy dependence on foreign direct investment to fuel economic growth, flexible working, a pro-employer labour market and labour relations environment, as well as the nurturing of an inappropriate intimacy between capital and government agencies, the reforms have facilitated a development hierarchy that puts the East coast before the interior, urban development before rural investment, and the interests of the elites and middle classes before those of the working class and farmers. In this light, labour shortages can hardly be labelled as ‘systemic’. They are a reflection of weaknesses and contradictions in the economic model itself. The questions we need to consider are can Chinese workers make use of it and can trade unions outside China support them if they do? Labour shortages and labour rights “We want our wages. We are not going to work any more. We are going home. We want our wages and then we are going home” In parts of the YRD skilled workers have been leading the way in calling for better conditions and wages for almost two years. The slogans above where whispered by a group of up to 100 workers who had gathered outside government offices in a manufacturing zone during a well-directed attempt to alarm officials into disciplining employers while keeping demonstrations quiet, orderly and non-violent in order to reduce the risks of repression. According to one report: “Skilled workers are much sought after in the busy season and the companies raise wages in order to try and attract them. Such workers, such as cross-stitchers often shift jobs and this causes a lot of problems between the companies. The skilled workers themselves also use the situation to their own advantage by demanding higher wages, often for all the workers in a factory. If the bosses refuse, it is these workers who will call and lead a strike. In cases such as wage arrears, it is also the skilled workers who generally lead the other workers in demonstrations to the government offices with complaints against the factory managers. They also make sure the demonstrations are peaceful. One tactic is to collectively and repeatedly whisper demands that are sure to attract the official’s attention.” [17] This is the hardly the ‘race to the bottom’ that Chinese workers often stand accused of leading. The threat of a group of up to 100 workers simply leaving in the middle of a busy season after a six-day strike is the stuff of nightmare to local government officials that have carefully created an investor-friendly environment. The events described above took place in the YRD but the PRD has also seen a significant increase in militancy. The picket line featured on IHLO’s website homepage is just one of many collective large-scale disputes and strikes that have swept South China during the last eight months. Both employers and workers agree that one of the reasons for workers’ increased confidence to act collectively in pursuit of their legal rights is the shortage of labour in some areas and sectors. Mid-term demographic changes will continue to help and it may also be that “as the number of 15-year olds steadily declines over the next 15 years or so, this will translate into more bargaining power for those entering into the labour force in the future”. [18] Lack of freedom of association, State repression and the raw power of the employer should not lull us into believing that the labour market will witness the emergence of genuine bargaining any time soon, but the Chinese working class has a history of operating in a difficult environment and the demographic trends described in this article will blunt at least one of the employers’ weapons. Opportunities for Solidarity The labour shortages are just one factor that has increased workers’ confidence by a couple of notches. Increased awareness of rights, a growing number of sympathetic and courageous journalists prepared to report abuses, and development of China’s legal system – albeit still very slow and far from ideal – have also contributed. As has the continued emergence of labour NGOs, labour service centres and labour lawyers.[19] But the overall environment remains scarred by the lack of freedom of association and a pro-employer labour market. International pressure from the ICFTU, GUFs and national union centres played a major part in the recent release of workers charged and imprisoned after a strike turned violent at the Stella Factory in Shenzhen. As already noted, the strike did not take place in isolation and was part of a more general rise in militancy among migrant workers in the PRD. Indeed the original sentences, handed down on the flimsiest of evidence, were interpreted by many migrant workers inside China and unionists abroad as a warning to others not to resort to collective action, a tactic known in Chinese as ‘killing the chickens to frighten the monkeys.’ It didn’t work. Pressure for the release of imprisoned workers is important. Equally important is pressure on the Chinese government to draft legislation protecting the right to strike. It is generally agreed among most trade unionists that settlements reached with employers that spring from collective workforce pressure are far more effective than codes of conduct and corporate-led efforts by companies to appear socially responsible. In fact the latter can sometimes provide an investor-friendly pressure release valve that can derail more effective action organised by the workers themselves. The increase in strike activity needs to be closely monitored by trade unionists. This will provide a valuable resource for solidarity and lobbying work. It will also serve as an accurate barometer to measure the state of the Chinese labour movement itself and help to target TNCs operating in areas where labour shortages have led to an increase in militancy and tipped the scales a little way back in labour’s direction. ------------ 1. See Pringle and Frost “The absence of rigour and failure
of implementation” in the International Journal of Occupational
Environmental Health Volume 9 Number 4 October/December 2003.
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