The reality behind labor shortage

At times, employment becomes a hide-and-seek game for people, from policymakers and their economic advisers to jobseekers and parents planning their children's careers.

A healthy economic growth usually means a stable job market. Though China has emerged out of the shadow of the global economic downturn with a quarterly growth rate of 7 percent (in contrast to the still negative growth in some economies) no one can afford to be complacent.

Let's see if China has been successfully diversifying its business structure to be less and less dependent on overseas orders and still maintain a healthy economic growth rate.

On a macroeconomic level, we have done nothing, nothing that can be verified by figures. If that is the case, recent reports of "labor shortage" from some of the coastal provinces, home to most of China's export-oriented manufacturing units, appear misplaced.

One explanation for that could be purely political. Perhaps local officials want to send a feel-good message to Beijing before the celebration of the 60th anniversary of the founding of the People's Republic. But that seems unlikely because propaganda cannot bring any real benefit to the local economies.

A second explanation could be that jobseekers, most of them migrant workers from central and western provinces, have been slow to return to the coastal region after the factories laid many of them off at the end of last year when the global economic crisis prompted overseas companies to cut their orders massively.

Since orders from abroad are not yet as strong as before, and the prospects of a global recovery are still not clear, small-scale manufacturers can only afford to soft-pedal toward their expansion programs.

Many are looking for workers to help them extend their working hours in their existing assembly lines, which need little skill or experience. If the Chinese-language press is right, lack of confidence has made employers offer new recruits wages that are lower than usual.

Even the unskilled workers know as much as their potential employers that because uncer-tainty over recovery continues they can get temporary jobs without good pay or guarantee of long-term employment. That's why many have not even bothered about leaving homes to go job-hunting in coastal cities.

Rural people have their own access to social security, and social entrepreneurial projects such as funds and advisory groups help them grow cash crops. Plus, government procurement guarantees have drawn part of the labor force released from traditional farm operations.

There could be a third explanation, though. If a lot of coastal companies are undergoing the same experience, hiring high-skilled workers may really have become a problem.

In fact, throughout the past year, even during the most challenging time of the crisis, coastal manufacturers kept complaining about the dearth of skilled and experienced workers - not fresh college graduates but people adept at complicated and advanced floor operations - in making models, running computer-aided tools and policing various technical standards and so on.

The more the globe edges toward recovery, the more radically the country's manufacturing business will have to change. Competing on the basis of low prices will no longer be the rule of the game.

Manufacturers' nightmare will not be losing some low-paid workers and low-cost outsourcing orders, but the failure to produce a new generation of green products - those that are higher in energy efficiency and lower in carbon emission.

That makes a fact clear: employment is actually an educational issue. Losing some low-cost orders to countries where wage levels are lower than China's is no big deal for the coastal provinces. In contrast, losing highly skilled workers can spell doom for the local economies.

E-mail: younuo@chinadaily.com.cn

(China Daily 09/15/2009 page9)