Years ago, Allen Wong, the founder and chairman of Hong Kong's leading electronics company, VTech Holdings, told a reporter that there could never be a labor shortage at the company's VTech City site in Dongguan in Guangdong province, downriver from Guangzhou and maybe 90 minutes by road from Hong Kong.
The reason? There would always be a steady stream of people coming from Sichuan province looking for work in his factories, allowing the company to be confident of perpetually low labor costs.
This rule of an endless supply of migrant workers has long been taken as a given by manufacturers in China's coastal provinces. But, like the maxim that said capitalists and communists can never mix, that assumption can now be tossed out the window. State media have added migrant labor to the list of China's shortages, along with power and various commodities.
Since Golden Week in May, that seven-day hiatus when everyone lays down hammer and sickle to journey to homes far away, newspapers have been reporting on shortages slowing industrial schedules in different parts of the country, but especially in Zhejiang province on the edge of Shanghai, Fujian province, Taiwan's industrial base across the strait, and in Allen Wong's home base, Guangdong's Pearl River delta.
Reports speak of shortages of both skilled and general laborers, and suggest that at least for now, there are not enough people to keep pace with China's raging economy.
Unbelievable as its sounds for a country with unemployment running into the tens of millions, companies have been forced to begin casting their recruiting nets wider. In Shenzhen, firms are even taking calls from seniors in Hong Kong. "I told him I was in my sixties," said one resident who answered an ad from a company looking for an office manager. "And he said he still wanted to meet me." Interview done and passed, she told China Economic Review she was offered the job, which paid half again what she was getting as a night cleaner at Hong Kong International Airport.
The shortfall has brought all the usual pressures. Some companies have started to respond by improving work conditions and raising pay. According to state media, hard-pressed provinces are short by a total of two million workers. Although migrants are, by definition, hard to count, officials in Zhejiang estimate the available pool is down by as much as 20% this year compared to last. The Hong Kong Federation of Industries – member companies own most of Guangdong's electronics and toy factories – reckons the Pearl River delta is short 300, 000 workers.
What explains this odd turn of events? One reason given is that central government policies aimed at spreading China's coastal wealth into the interior are starting to work. With rice and other grains commanding higher prices, life in towns and villages in landlocked provinces has improved and opened up more options for migrants who can now look at opportunities beyond the coastal regions.
And while living situations slowly improve in more westerly provinces, they may have stalled or deteriorated for many on the coast where inflation, which threatens to average 5% this year, is eating away at already meager wages.
There is also the scum factor: migrant workers have become more wary of employers who skip out on unpaid wages or leave them to sweat it out in near intolerable conditions. In de-socializing China, there is little protection against being victimized by unscrupulous employers except for the social security net of friends and family at home.
Tier 2 industrial cities are feeling the pressure to reduce the gap with the Yangtze River delta that swallows up much of Zhejiang and all of Shanghai. Wages there outpace the national average by 8.5%. And now, judging by current labor shortages, China's top scale looks like it will have to be adjusted up. Cautioned a top Canon executive in Beijing recently, "China's low costs aren't going to continue forever."