Mainland's labor shortage worries HK entrepreneurs
Updated: 2014-03-13 08:26
By Eddy Li(HK Edition)
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It has become a "tradition" that after the Lunar New Year holiday, recruiting workers seems to be much more difficult than during normal times in labor-intensive industries in Guangdong. Since Lunar New Year, many Hong Kong entrepreneurs, who have investments in Guangdong, have expressed concern about the severe labor shortage in their factories - the recruiting situation is harder than ever. According to mainland media reports, although this problem is conspicuous in most provinces - even inland Hubei province is facing a shortage of 600,000 workers, Guangdong is in desperate need of workers with its labor shortage exceeding 1 million.
I think this year's shortage is due to several reasons.
The first is the success of policies to support agriculture and help farmers. In recent years, the central government has implemented policies beneficial to farming, including easing agricultural and livestock taxes; a subsidy scheme for agriculture; and subsidies for rural residents to purchase home appliances and motor vehicles, etc. These policies have substantially improved people's quality of life in rural areas. Therefore, it is not very surprising for workers who return to their hometowns for Spring Festival from relatively prosperous districts to find their homelands are no longer mired in poverty. Therefore, many choose to stay home, rather than leave their families.
The second is that economic development in central and western China has reduced the outflow of local workers. In the initial stage of reform, lots of Hong Kong business people chose the Pearl River Delta area for investment or to set up factories. This provided abundant job opportunities and also coincided with a desire for work by rural workers, who had experienced hardship in their hometowns and so they came south to make a living. This situation, however, has totally changed - as stated in the 2010 Government Work Report delivered by then premier Wen Jiabao, "The central and western regions and northeast China accelerated opening up and development, welcomed industries relocated from other parts of the country, and continuously strengthened their foundation for development". The development of central and western regions has narrowed the wage gap between them and the coastal regions. This has resulted in difficulties in recruitment in Guangdong and coastal areas.
The third reason is changes in the mainland's population structure. According to the National Bureau of Statistics, after decades of population and family planning policies, and with a growing aging population, the labor force (aged between 16 and 59) last year was about 900 million. It has decreased by 1.2 percent (2.44 million) from a year before. This decline will continue, and the labor shortage will extend to every industry.
At the moment, there is another troubling problem - a high labor mobility ratio, which further intensifies the difficulty of recruitment. Some of my friends with companies on the mainland told me the mobility ratio is as high as 70 percent. This is forcing companies to constantly try to hire people to make up for the labor shortage.
Some ascribe this to the attitudes of the second generation of rural workers. These young workers are not burdened by poverty; some are even financially supported by their families. They often come to cities for experience rather than for work. The second generation is distinguished from their predecessors by several traits: They have less of a sense of belonging to a company; they are less hard-working; and changing jobs is common for them.
There is no easy way to resolve this recruiting difficulty - other than to cultivate a good corporate culture. At the same time, some companies are embracing automation - so their dependence on labor is actually being reduced.
The author is vice-president of the Chinese Manufacturers' Association of Hong Kong.
(HK Edition 03/13/2014 page1)