For some time now, manufacturers in coastal regions have complained that workers are hard to get. So hard, in fact, that one Dongguan employer told CHINA ECONOMIC REVIEW that he gives a RMB500 (US$73) bonus to any employee who brings a new worker to the shop floor.
This doesn’t mean that China is running out labor – merely that factories are being forced to deal with a more competitive labor market.
Paul Cavey, China economist at Macquarie, agrees that the piles of job ads and decent rural wage growth suggest that fewer people are coming to the coast in search of factory work. But China is not at crisis point. "Rather than high supply swamping weak demand, it seems more likely that the labor market is somewhere near equilibrium," Cavey said.
T.J. Bond, China economist at Merrill Lynch, believes the situation reflects the wider economic shift seen this year. "Jobs lost in the export sector are being offset by jobs created in the construction sector and by stimulus projects," he said. And since the exporters have started recruiting again, they have found themselves with fewer people at their disposal.
Merrill Lynch estimates that China’s manufacturing and service sectors will create 12.5 million jobs in 2009 – down from the 18 million per year between 2004 and 2008, but still above the 10-12 million level needed to keep urban unemployment from rising. The crux is that workers, with various options open to them, will want to earn more than the minimum wage for manning a production line miles from home.
The trend was there before the slowdown and, now prospects have brightened, it has returned.
"Inevitably, the sharp economic slowdown at the end of last year had a tangible impact on wage and employment trends in China," said Cavey. "But the labor market corrected, rather than cracked."