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Will Labor Shortage Be an Imminent Issue in China ? --- A survey on current labor employment in six provinces

Dec 25,2012

By Li Zhineng & Wang Jicheng, DRC Task Force on Labor Shortage in Enterprises in Spring 2012, Enterprise Research Institute of DRC

Over a period of time after the Spring Festival (China's Lunar New Year which falls on January 23, 2012), many mass media reported the "labor shortage" issue in some localities and enterprises, which drew extensive attention of governmental departments concerned. "Labor shortage" indicates the overall and aggravated lack of workers for enterprises within a period of time. We have made a survey in line with our researches on labor employment in Guangdong, Zhejiang, Henan, Anhui, Sichuan and Shaanxi Provinces to find out if there is or will really be a "labor shortage" issue in China and in the near future during the 12th Five-Year Plan period. We have come to the following conclusions through relevant analyses.

I. Labor Employment Remains Stable, Reasonable and Relaxed with a High Rate of Return to Jobs, Which Is Quite Opposite to the Reported "Labor Shortage"

Zhejiang Province is still facing a recruitment plight in 2012, yet the tense labor employment has been alleviated as compared to the previous year, and the labor-starved industries and types of work tally basically with the province's industrial structure. Meanwhile, a high rate of return to jobs has been witnessed among workers after the Spring Festival due to the improvement of working conditions. For example, the survey of 4,000 small and medium-sized enterprises in Yiwu city suggests that in recent years an average of 65% of veteran workers have returned to factories in Yiwu and the number of new workers introduced by veteran workers on labor market made up another 25%, leaving a relatively reasonable 10% of labor shortage.

The return to homeland has remained stable among migrant workers of Guangdong enterprises on the whole. Before the Spring Festival, 9.81 million migrant workers in Guangdong went back to their hometowns. By February 13, 8.42 million migrant workers had returned to Guangdong, being 85.8% of the home-returnees before the Spring Festival, and the time of return to Guangdong was postponed for 1-2 days as compared to last year. In mid-February, the rate of return to jobs approached 90%. After the Spring Festival, the recruitment is aimed at staff supplement, with the recruitment demand and peak labor shortfall remaining basically the same as last year.

Since October 2011, employing workers cautiously and reasonably has become the choice among most labor-starved enterprises. In January 2012, the monitoring data on labor employment by enterprises of Henan Province demonstrate that the labor shortage rate was 18%, down consecutively in the fourth month. Sample surveys among some enterprises of 8 provincially administered municipalities reveal that the rate of workers' return to jobs exceeded 70%, up 18 percentage points over the previous year.

The recruitment boom did not happen again on the human resources market in Anhui Province. Job seekers have become more reasonable and the "recruitment plight" has been evidently alleviated. The relevant survey made in January this year by Anhui Human Resources and Social Security Department among 10,654 enterprises in 30 state- and province-level economic and technological development areas shows that the labor shortage rate was 5.4% and the staff turnover rate was 0.6% across the economic development areas in the entire province. Anhui's key enterprises of electrical home appliances and fast moving consumer goods saw their rates of worker's return to jobs after the Spring Festival all exceeding 90% and "enormous staff inflows and outflows" after the Spring Festival in previous years no longer took place.

II. Labor Employment Has Decreased on the Whole in Such Provinces as Zhejiang, Guangdong and Anhui as a Result of Economic Growth Slowing Down and Export Declining

The fact that the global financial crisis is still far from coming to an end makes the resurgence of the world economic growth quite painstaking. Trade protectionism has intensified and the international market demand has decreased. Meanwhile, the internal resources, environmental constraints and structural readjustment facing China's economic development have all made the downturn of China's GDP average annual growth rate inevitable during the 12th Five-Year Plan period and are producing a challenge to the overall capacity of the Chinese economy to increase job opportunities.

Take Zhejiang as an example. The decrease of export demand and the export instability this year are becoming clear. Short-term, small and urgent orders are in large number, while long-term orders are in small number. According to surveys by Zhejiang Spring Festival Transport Office, from January 26 to February 12, 2012, the number of passenger arrivals in Zhejiang amounted to 5.5624 million, down 9.7% as compared to the same period of last year. The transport peak volume came on February 6 during the Spring Festival, three days late over last year. During the Lantern Festival this year (February 6), the province's statistical and survey department reported that the maximum load and the highest power consumption reached 30.46 million kilowatts and 593 million kilowatt-hours respectively, down 2.59 million kilowatts and 56 million kilowatt-hours respectively over last year, suggesting that the utilization and resumption of capacity of this year is lower than that of the previous year.

The total number of migrant workers in Guangdong has decreased. In recent two years, the number of newly incoming migrant workers has accounted for only 5% or so of all migrant workers in the province, being lower than the level of 10% recorded in previous years.

Anhui's special labor employment investigation demonstrates that 3,966 enterprises in the province are short of 50 laborers or more and they intend to recruit 245,000 people, signifying a reduction of 13,000 people by 5.1%. Labor demand on the human resources market is decreasing as well from a year earlier and the principal cause is that the pressure of economic downturn is estimated to intensify and the labor cost to increase.

III. Transfer of Labor Force from Central and Western Provinces Will Not Change, Transfer within Provinces Is Growing Fast, the Number of Workers Returning Hometowns for Business Startup and Backflow of Skilled Workers Have Increased, yet Only Some Newly-increased Workers Can Be Locally Provided with Jobs

At present, the number of surplus rural labor reserves in Shaanxi Province has come to 7.65 million, with 6.5 million or so being transferred. Of those transfers, about 3.3 million cross-province ones have been stabilized for a period of five years. The number of laborers of Shaanxi will be increased by 700,000 every year during the 12th Five-Year Plan period, while the province can only provide 350,000 jobs, thus leaving the balance of jobs to be obtained from other provinces. The rapid economic development in Yan'an, Yulin, Tongchuan and Hanzhong had brought along the growth of transfers within the province from 2.2 million in 2007 to 3.27 million in 2011. Benefiting from demonstration counties for migrant workers' business startups in their hometowns, entrepreneurship training and such policies as government supply of small loans guarantees, the number of migrant workers returning home for business startups has evidently increased. By 2011, 224,000 farmers had gone back to Shaanxi to start businesses and set up 98,000 enterprises, providing jobs to 595,000 farmers.

Before Spring Festival, 7.5158 million workers returned to their hometowns in Anhui and 7.3342 million went out for work after the festival, of whom 5.3856 million left the province for jobs, with 1.9486 million shifting within the province.

The number of rural laborers in Sichuan leaving hometowns for jobs has always been growing since 2001 and the number increased to 23 million in 2011, of whom 10.92 million were for shifts within the province, up by 778,000, while 12.05 million left the province for jobs, down 214,000. It is predicted that by 2015 the number of leaving rural laborers across the province will reach 23.5 million. Due to the implementation of such new development plans as "New Areas of Sichuan", the key projects in Chengdu in 2012 would need 350,000 workers or so.

Henan Province is still in the period of demographic dividend. Of the 23 million workers going outwards, 12 million left the province for jobs. In 2012, 2 million people in cities and towns of the province need jobs and there are also 8 million surplus rural laborers who need to be transferred for jobs.

These figures illustrate that, on one hand, the situation of China faced with a pressure of its aggregate employment volume continually intensifying has become more severe and complicated during the 12th Five-Year Plan period and, on the other, the labor force transfer and rivalry among the eastern, central and western regions has been evidently exaggerated. The eastern region absorbs workers across the board with services to city clusters, while central and western regions take in workers selectively with the new round of industrialization in big cities. Central and western regions are unable to catch up with the city clusters in eastern coastal region within a short period of time in terms of relatively perfect infrastructure facilities, complete industrial chains, better living and working environments and the ability to address the financial crisis. Although the growing number of new projects with rapidly-generated new capacities in central and western regions has increased the aggregate labor demand, yet when taking over shifted industries and enterprises from the eastern region, some provinces and municipalities in central and western regions already feel it difficult to recruit and retain workers. The central and western regions still have to face the plights experienced by present enterprises and are unable at all to absorb the working population squeezed out from the eastern region in addressing the financial crisis and export downturn.

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