Wages creep up in Guangdong as industries wean jobs from manufacturing
The Chronic shortage of cheap labor available in Guangdong for manufacturing is set to become worse with the tertiary sector beggining to take off. After almost 30 years of breackneck growth, Guangdong is now the recihest province in the mainland with a bigger economy than Hong Kong's. As Guangdong becomes wealthier, living costs are soaring and employers have to offer higher pay for workers. Until two years ago, $112 a month was sufficient for a migrant worker; now even at $150, factories cannot find enough hands. The area is also witnessing a startling change in people's attitudes. Even jobs such as taxi driving, waiting in restaurants, and working as domestic maids-once considered menialp-are more attractive than factory work for many. The labor shortage sweeping the Pearl River Delta will require profound restrcuturing of attitudes and even of the economy.
Now that Guangdong is enjoying a better economy and people are demanding for a better pay, what do you think it should be done by these manufacturing companies in order to not have a labor shortage and still be cost-efficient companies?
source: International Technology Network. Zvolume II, Issue 2. 2006
posted by hammer06 @ 5:48 PM
5 comments
5 Comments:
I am sure that just like companies in America that are forced to offer more benefits and higher wages, these companies will move their operations to areas with cheaper labor. I am sure these companies wouldn't have to move too far in order to find an area in China with a cheaper labor force. While this solution doesn't bode well for the factory workers in Guangdong, it is the one that seems to be the most cost effective for the companies.
In a country of more than 1 billion people, there is no shortage of workers. While these workers are in the right to demand better wages, they may be digging their own graves.
I wonder what the profit margin is. It sounds like the factories are getting greedy in a competitive market. If taxi jobs and cleaning jobs are more attractive then the factory jobs, the factories should boost their incentives to work. Besides, I would think the laborers in richer areas are more likely to be educated than cheaper labor from poorer areas. Is it really cost effective to shutdown the factory, move it, and retrain poorly educated people? And if the factories pull out what happens to Guangdong. Are the factories making Guangdong wealthy?
Maybe it wouldn't even require shutting the factory down. Instead, desperate workers would flock to Guangdong looking for whatever work they could find.
If the labor will not be supplied by people in Guangdong then it could be supplied by other areas. The question is if the opportunity cost of paying workers higher wages higher than the cost of moving the operations elsewhere.
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