Pressure to Ease Labor Shortage Spurs Pay Hike

Pressure to Ease Labor Shortage Spurs Pay Hike

To entice and retain workers, Guangdong is studying how much to raise minimum wage levels in the province. Makers, hard-pressed to keep costs low, prefer to improve living conditions instead.

The upcoming Chinese New Year holiday calls to mind problems associated with the annual event-long lines at the bus and train stations, stranded passengers, and factories wondering whether their workers would come back.

Manufacturers in Guangdong, in particular, are worried. The province has become one of the most expensive places in China for a migrant worker to live in. Although its minimum wage is the third-highest in the country, many workers have deemed it better to find jobs in the Yangtze River Delta region. The cost of living in Zhejiang province, for instance, is slightly lower than in Guangdong. Plus, the basic pay is higher.

Since wages are not as competitive, Guangdong’s suppliers are concerned this year’s holiday will result in another severe labor shortage. This is especially troubling because many factories in the province are still trying to fill positions that have remained vacant since the 2010 Chinese New Year festival. Moreover, a large number of companies have reported workers resigning to go back to their home provinces as early as December.

Because of this, some of the bigger manufacturers are 500 to 600 hands short. Such businesses now have to assign office employees to the production lines at least once a week to help finish all orders before the holiday starts.

Guangdong mulls minimum wage hike

To ease the pressure from the anticipated labor shortage after the Chinese New Year holiday, Guangdong is now considering raising the minimum wages this year. How high the current levels will be lifted, however, depends on what the circumstances will be after the festival.

Among the factors to be considered are the labor shortage situation, the minimum wage levels at other provinces and how much local companies can afford to dole out monthly.

But while increasing the basic pay could retain some migrant workers, doing so is not likely to stem the movement away from the Pearl and Yangtze River Delta regions and to the inland provinces.

Last year, 30 provinces and municipalities raised minimum wage levels, many by more than 20 percent. After the adjustments, Shanghai still offers the highest basic pay at 1,120 yuan per month, followed by Zhejiang at 1,100. Guangdong is third with a 1,030 yuan monthly minimum salary.

This came as the National Bureau of Statistics showed the eastern provinces had 8.9 percent fewer migrant workers in 2009, at about 90 million. In contrast, the western provinces saw a 35.8 percent increase in the number of migrant workers in the area, exceeding 29 million.