Economy

Labor shortage sparks calls for growth reform

By Hu Yuanyuan (China Daily)
Updated: 2011-03-02 15:21

Job recruiters wait for potential employees at the Datang job market in Zhuji, East China’s Zhejiang province, on Feb 19. [Photo / China Daily]

Enterprises are pressed to hasten upgrading

BEIJING -Zhang Xiang, a young man from Ezhou, Hubei province, never expected to stay in the provincial capital, Wuhan. He had planned to go to Guangzhou to work in a factory.

He changed his mind a few days ago when he went to Wuchang Railway Station. There he found a number of enterprises had set up recruiting booths, in the hope of luring workers who planned to head south for work to stay.

Labor shortages in China are back in the headlines. But this year, the story has a new twist: Companies in central and western China have also entered the labor-grabbing fray.

Rising labor costs, together with labor shortages, are pressing enterprises to hasten industry upgrading to improve efficiency. And as workers' salaries increase, they are more willing to spend, helping make economic growth more consumption-driven.

According to Nomura Securities, local and multinational companies that once operated only in the coastal regions are moving or expanding inland in ever-growing numbers, attracted by lower costs and improving infrastructure, thus offering new job opportunities.

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Increased labor demand in the inland region has narrowed the wage gap with the coastal areas.

A National Bureau of Statistics survey shows the average monthly wage in the east was 1,422 yuan ($215) in 2009. Wages were only 44 yuan less in the western regions and 72 yuan less in Central China. But the higher cost of living makes working in the eastern regions less attractive.

"I suddenly noticed that the salary Foxconn offers now is not so different from what the factory in Guangzhou did. Why should I bother to leave my home province and struggle for a train ticket each year?" Zhang said.

To fuel business expansion in China's inland cities, Foxconn, the world's largest maker of electronic components by volume, opened a green channel in each job fair where interviews, recruitment and transportation to the workplace could all be arranged on the spot. The company has built plants in inland Chinese cities of Wuhan, Chengdu, Zhengzhou, Jincheng and Taiyuan, creating thousands of jobs in the process.

"Though we've increased our salaries by nearly 20 percent this year, we still face a big labor shortage," a human resources manager said, adding that the company plans to hire 30,000 workers in Wuhan this year.