The Impact of Recent Labor Shortages in China

Mentor: Professor Yongsheng Wang
Students: McKenzie Graf, Alexander Smith, Savannah Sprowls, Aaron Szafran

Project Abstract

In order to study the impact of recent labor shortages in China on the country, its employers and laborers, our group travelled to Qingdao, Shanghai, Wuhan and Shenzhen, China. We visited company offices to interview officers and managers and gain there perspective on the impact of labor shortages; workers and students (future workers) to obtain their views on the implications of changing labor patterns; and labor law attorneys for information on changing labor regulations. Each student researcher is exploring a different topic related to labor in China and preparing a final paper on his/her discoveries.

McKenzie Graf

My research focuses upon the changes being made by factories in China in order to successfully compete for employees in an increasingly tight labor market. I discovered that younger Chinese, even those with limited skills, have increasingly high expectations as they seek better jobs with increased pay and benefits than their parents did. Although managers are reluctant to talk about possible salary increases being given to workers, they noted that they are increasing the non-wage incentives given to workers who accept employment with them. These include the upgrading of the dormitories in which workers are housed and the free meals provided to workers, and also include the creation of libraries and outdoor recreational centers, improving workers’ access to televisions, and encouraging the forming of clubs and social groups for workers. Health care is being improved. In one case, workers’ birthdays are being noted and they are being given special treatment – a birthday cake and gifts are given them on this day. Where necessary, transportation is also being improved between company dorms and the factories.

Alexander Smith

My research centers upon the impact of the 2008 Chinese stimulus package on China. Although on first glance, the massive infusion of monies to develop rural infrastructure, upgrade transportation networks, build affordable housing, and stimulate the westward expansion of industry in China seems a smart thing to do, most Chinese we interviewed felt that it is still difficult to determine what will be the lasting effects of this huge fiscal stimulus. Some feel that China is increasingly on its way to becoming a demand-driven economy, and that the stimulus will help encourage this development. Others feel that it is imperative for China to become more integrated and that the stimulus can help integrate the western and central areas of China to the more economically and industrialized east coast, thereby creating a unified economy.

Savannah Sprowls

My research on the changing labor force in China reveals several things. First, a significant segment of young Chinese are not only more and better educated and legally conscious, but also more willing to risk unemployment to seek to find better work in the workplace. Second, the demand for unskilled laborers in the Chinese labor market outweighs the supply in several key regions, but skilled workers – those highly educated – still often face hurdles in finding adequate employment opportunities. Third, although migration patterns are changing, this is not at a rate that threatens a decline in coastal development. However, the much higher cost of living on the east coast of China place industry in this region at a disadvantage. Fourth, the projected shift in China from an industrial-based export economy located on the east coast to one based in the center and in western China will have major implications for China’s economy, as will the drift towards a service-oriented and demand-driven economy.

Aaron Szafran

There are several strands of research that I am exploring and will continue to explore as I complete my research on the pattern of labor migration and causes for changing labor patterns in China occasioned by labor shortages. First, I discovered that a lot of migrant workers are now seeking service based jobs, rather than low-wage industrial jobs, along the east coast of China. Second, it is clear that the working conditions in many Chinese industrial plants do not fit the stereotypes of squalidness often portrayed in the West. Third, a thorough examination of the impact of the “one-child policy” and the hukou system on China’s labor shortage seems appropriate. Finally, it is becoming apparent that increasingly companies are moving inland as they search for cheaper labor, land, and economic incentives.