China’s Migrant Workers Stay Home: The trend continues

China’s migrant workforce, the backbone of coastal manufacturing industry, is following through on its determination to stay home.

Following the Global Financial Crisis, there was a brief drop in export orders, which resulted in many migrant workers being laid-off, but this situation reversed by late 2009. However, though there was again a need for workers, their pay declined, often by around one third. As a result, many migrants decided they could no longer afford to live and work in the city, and a dire labour shortage, particularly of semi-skilled labour, became apparent. It was in the context of this disjuncture of labour demand and low wages that major incidents occurred at Honda and Foxconn plants.

And the trend is continuing. According to China Daily, former migrant workers are being actively courted through job fairs in their home provinces. Typically, migration ran from the poorer interior to the developing coast. Now, businesses situated on the coast are increasingly worried about labour shortages. According to one factory manager, “More than 10 percent of workers have not returned after the Spring Festival each year since 2009. We’ve asked employees this year about their willingness to stay or not and 15 percent of them said they would not come back.”

Migrant workers have been unequal partners in China’s development, abused in every concievable way by the companies they worked for, from short pay to crippling exposure to toxic substances, and, as non-urban residents, they have been unable to use the services available to everyone else in the cities, from education to healthcare. Now, they are increasingly demanding change. The number of labour protests has grown geometrically each year since the mid-2000s.

A shortage of migrant workers drew notice even before the Global Financial Crisis, leading the central government to put pressure on employers to raise wages and to begin actually paying them as announced, far from a foregone conclusion in many enterprises. Labour increasingly has the market advantage as structural labour shortages set in. As more enterprises relocate inland, more workers choose to accept lower-paying jobs nearer home rather than moving to coastal areas. Simultaneously, Chinese officials such as then-human resources and social security minister Yin Weimin are acknowledging the twin issues of higher wage and benefit expectations and an ageing population.

Taken together, these changes add up to a new shift in worker mentality, which demands of foreign capital a modest but more proportionate share of the benefits of their labour, and more importantly, a future. While this trend may cause some capital to turn to cheaper labour elsewhere, it may also be a sign that the race to the bottom is not so inexorable as some have assumed. Finally of course, migrants endured great hardship in hopes of building a better life for themselves and their families. They have learned that this will not happen working in coastal industries. Whether they stay home in hopes that their voices will be more easily heard or simply out of resignation, the point is that the incentive to move has disappeared.

Crisis, Planned Transition or Both?

Of course, none of this is terribly surprising or unlooked-for. Believe it or not, the Party foresaw this trend several years before it kicked off. Their prepared answer was twofold. First, when the country reached a certain level of wealth, it would be time to transition to domestic markets. Reliance on exports alone was never viewed as a sustainable strategy in a country with growing standards, and cost, of living. Business is already being lost to cheaper labour in Southeast Asia, and so there is ultimately no choice but to develop a domestic market.

Second, the problem is viewed as an opportunity to address regional inequality, a persistent problem in China’s development. The very fact that their native regions are trying to get migrants to stay home indicates that they may finally have the resources to make use of that labour. The Party may well hope that this augurs the beginning of a long-awaited rebalancing of regional economies, a partial solution to a persistant headache for the ruling elite.

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2 thoughts on “China’s Migrant Workers Stay Home: The trend continues

  1. […] Chinese labour becomes more expensive and a disaffected migrant workforce increasingly stays home, an increasing share of China’s export manufacturing business is drawn to cheaper venues in […]

  2. […] Chinese labour becomes more expensive and a disaffected migrant workforce increasingly stays home, an increasing share of China’s export manufacturing business is drawn to cheaper venues in […]

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