Labor shortages are materializing across China as young people turn their backs on factory jobs and more migrant workers stay home., offering a possible preview of the bigger challenges that lie ahead as the workforce ages and contracts.
With the increase in global demand for Chinese products this year, factory owners say they are struggling to fill vacancies for the production of everything, from bags to cosmetics.
Some migrant workers are concerned about contracting Covid-19 in cities or factories, despite the low number of cases in China. Other young people are turning to service industry jobs that pay more or are less demanding.
Trends Echo Similar Disparities in the U.S. Labor Market, where some employers have a hard time hiring enough workers, even though millions of people who lost their jobs during the pandemic are still out of work.
But China's troubles also reflect longer-term demographic shifts that are legacies of the country's one-child policy., which lasted for decades and was formally abandoned in the 2016.
These trends pose a serious threat to China's long-term potential growth rate.. They will also make it harder for China to continue supplying the world with cheap manufactured goods., what could contribute to global inflationary pressures.
“China long ago exhausted its demographic dividend”, dijo Shuang Ding, economist at Standard Chartered Bank, in Hong Kong.
Yan Zhiqiao, who runs a cosmetics factory in the southern city of Guangzhou with about 50 workers, has not been able to increase production this year despite increased demand, primarily because the factory has had difficulty recruiting and retaining staff, in particular individuals under the age of 40 years.
Your factory offers a payment equivalent to about 3.90 dollars an hour, which is above the market salary, plus free meals and lodging. But it has attracted few young candidates.
He noted that the factory cannot afford to raise wages due to higher raw material prices this year.. The other option would be to increase prices for foreign buyers., if they accept them.
“Unlike our generation, young people's attitudes towards work have changed. They can turn to their parents and don't have much pressure to make ends meet”, indicated Yan, from 41 years. “Many did not come to the factory to work, but to look for boyfriends or girlfriends”.
China's manufacturing labor shortage occurs when it grapples with the opposite problem in another part of its economy: too many workers for white collar jobs. More of 9 million students, a record, they are graduating from university this year, exacerbating the structural disparity in China's labor market, economists stand out.
The dwindling number of manufacturing workers has forced many factories to pay bonuses or raise wages, eroding profit margins that were already under pressure from rising commodity prices and shipments.
Foxconn Technology Group, formally known as Hon Hai Precision Industry Co. and one of the main suppliers of Apple Inc., last month raised bonuses for newly hired employees at a facility in Zhengzhou to 9 thousand yuan, the equivalent of a thousand 388 Dollars, or more, if they work during 90 consecutive days, according to announcements posted by a Foxconn business unit on WeChat. Foxconn did not respond to requests for comment..
With the Delta variant sweeping other Asian countries, some Chinese factories have seen an increase in orders as buyers redirect business from elsewhere, indicated David Li, secretary general of the Asian Footwear Association, en Dongguan. That has made some companies even more desperate to hire workers by raising wages., said.
“Many factory owners are now in a quandary. They do not know if they will be able to make a profit if they accept new orders”, he pointed. “His main headache is the struggle to find workers”.
Last week, the Chinese Prime Minister, Li Keqiang, said the country will continue to face a “relatively large operating pressure” for him 2025 and pledged to dedicate more support to labor-intensive industries, including additional vocational training.
China's working-age population, defined as people between 15 Y 59 years, fell to 894 million last year, or the 63% of the total population. That was less than 939 million in the 2010, or the 70% of the total population at that time, according to the data of the country's census that is carried out once every decade.
China's workforce is anticipated to decline by about 35 million over the next five years, according to official estimates.
President Xi Jinping's campaign in recent years to revive the country's rural areas by concentrating more investment in the interior provinces may have added to the challenges for factories., economists say, by creating new opportunities for migrant workers from China, allowing many, who used to travel long distances in search of work in large cities, earn a living closer to home.
At 2020, the number of rural Chinese people classified as migrant workers declined for the first time in a decade, in more than 5 million to 285.6 millions, Data from China's National Bureau of Statistics reveal, by staying more workers in their places of origin or looking for jobs nearby. Many did so out of fear of Covid-19 in the largest cities and have not yet returned to them.
At 2020, more than half of China's migrant workers had at least 41 years. The percentage of migrant workers under the age of 30 years decreased steadily as 23% in the 2020 compared to the 46% in the 2008, reported Wind.
With more young people considering factory work as routine and boring, the service industry became the most popular source of employment for migrant workers in the 2018, outperforming manufacturing and construction, revealed an annual survey of migrant workers conducted by the statistics bureau of China.
“Young people are no longer willing to accept any kind of hard work. They have much higher expectations of what a job can bring and can afford to wait longer”, Ding mentioned, economista del Standard Chartered Bank.
Fountain: The Wall Street Journal