Mon, May 19, 2008 - Page 12 News List

FEATURE: New worker power may mean an end to the era of cheap Chinese products


Migrant workers, for years the backbone of China's export miracle, are discovering their economic muscle, threatening an end to the flood of cheap goods heading west, the author of a new book said.

The seemingly endless supply of cheap labor that has flooded into Guangdong and other southern provinces is evaporating, pushing up wages and the price of cheap televisions, toys and clothes, Alexandra Harney says.

Her book The China Price: The True Cost of Chinese Competitive Advantage examines the lives of individual workers behind the country’s manufacturing miracle.

“Ten to 15 years ago workers lined up outside the gates — they would be lucky to have a job at your factory,” said Harney, who spent two years interviewing workers, factory bosses and foreign investors in the region.

“Now a lot of factories I know are having to pay bonuses to workers to convince their family members to come and work there. They send them to the countryside and ask them to bring people back,” she said.

China’s booming export sector has been one of the undoubted success stories since the country began to open up its economy 30 years ago.

Foreign firms have employed local factories or set up their own operations to make goods ranging from cutlery to underwear, computer chips to furniture.

The success was based on the minimal cost of labor, kept low by a stream of work-hungry bodies from across China desperate to escape crippling rural poverty.

It led to perhaps the biggest migration in human history, with around 200 million workers churning out products for export across the world, a sprawling group that Harney was attracted to write about as they were “really powerful, but nameless.”

And their power is increasing as labor has begun to dry up since 2004, mainly as a result of China’s one-child policy, which has left a dearth of teenagers seeking employment.

Inevitably the reduction has led to higher wages — Harney says in some cases up to 20 percent annual pay rises — and combined with the higher cost of raw materials, has created a crisis for manufacturers.

“It is clear that the forces that have been at work on Chinese factories in the past few years — rising costs, rising wages, more aware workers — are now coming to a head as they are combined with an appreciating renminbi,” she said.

“That has created a perfect storm for manufacturing,” she said.

Although the former Financial Times journalist believes there is some exaggeration of the problems by factory bosses — recent stories of 15,000 factories having to shut down are aimed at watering down a costly new labor law, she said — Harney has little doubt that the balance of power is shifting toward workers.

“If you are entering a factory now after several years of worker shortages, you are likely to find it has better conditions than it previously did,” she said.

“A manager five years ago thought workers were a dime a dozen. And now he has a greater consciousness, he needs to think more about worker retention, motivating his workforce.”

Although Harney said there has been an increase in workers’ appreciation of their legal rights, the awareness has yet to manifest itself in any form of noticeable movement to rival China’s official trade union.

But the shortage has given some migrants incredible opportunities, as demand for workers in all industries is so high.

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