Is Cheap Labour Drying Up?

Long the life-blood of China’s economy, it seems cheap labour is becoming increasingly hard to come by. Following an article written earlier last month by Duncan Innes-Ker of the Economist Intelligence Unit, Hong Kong-based Phoenix News has reported on the China Entrepreneurial survey results, which showed that for the first time in the past ten years migrant wages have been raising faster than wages for urban workers. As a result, while industries struggle to make the leap from low-cost mass production to high-end manufacturing, migrants are finding themselves increasingly in a position to “assert their influence over the marketplace”. In Zhejiang the manager of a fast food chain restaurant is worried. Recently, the company has been searching for employees in Guizhou to no success. Even including food and accommodation as well as a 1000RMB one-off payment on top of wages hasn’t enticed people. However the key issue is that in rural areas one basically cannot find young people. “The company’s profits are increasingly slim, the next step for us is to change our direction to offer a high-end dining service and give up on fast food,” stated Jian Bin, the company manager. In reality all of China’s labour intensive industries are facing similar challenges. According to the China Entrepreneurial Survey results just published for August, increases in labour expenses have already become the main difficulty facing private industries, especially in the development of small to medium industries: regarding “currently the major difficulty facing the development of your industry”, the most frequently chosen response was “increases in labour costs”, which at 73%, eleven percentage points higher than last year, made it the number one choice of the 16 possible responses. The State Council Development Research Centre Human Resources Research and Training Centre deputy director Li Lan points out that this makes ...
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