SHENZHEN, Nov 21 (Reuters) – Julian Zhu, who grew up in a Chinese village, only saw his father a few times a year when he returned on vacation from his exhausting job at a textile mill in southern Guangdong province.
For his father’s generation, factory work was a lifeline to rural poverty. For Zhu and millions of other young Chinese, the low pay, long hours and risk of injury are no longer worth the sacrifice.
“After a while that job numbs your mind,” said the 32-year-old, who quit the production line a few years ago and now makes a living selling milk and delivering scooters to a supermarket in China’s southern tech hub Shenzhen. . “I can’t bear the repetition.”
After Zhu and other Chinese rejected grinding factory jobs in the 20s and 30s, labor shortages have been escalating, frustrating manufacturers in China, which produces a third of the goods consumed worldwide.
Factory owners say they will produce more and faster, with young blood replacing their aging workforce. But providing the higher wages and better working conditions that young Chinese want risks undermining their competitive advantage.
And small manufacturers say they are unwise to buy or invest heavily in automation technology at a time when rising inflation and borrowing costs in China’s key export market are dampening demand.
More than 80% of Chinese manufacturers face labor shortages of hundreds to thousands of workers this year, equivalent to 10% to 30% of their workforce, according to a survey by CIIC Consulting. China’s Ministry of Education predicts that by 2025 there will be a shortage of around 30 million workers in a manufacturing industry larger than the population of Australia.
On paper, there is no labor shortage: about 18% of Chinese aged 16-24 are unemployed. This year alone, a group of 10.8 million graduates entered the job market, which, apart from production, is very low. China’s economy, struggling with the slowest growth in decades, is facing the slowest growth in decades due to COVID-19 restrictions, a slump in property markets and a regulatory crackdown on tech and other private industries.
Klaus Genkel, president of the European Chamber of Commerce in South China, moved to the region nearly two decades ago, when university graduates were less than one-tenth of this year’s and the overall economy was 15 times lower in current US dollars. Conditions. He runs a factory in Shenzhen with about 50 workers that makes magnetically shielded rooms used by hospitals for MRI screening and other procedures.
Jenkel said China’s explosive economic growth in recent years has raised the aspirations of younger generations, who now see their line of work as increasingly unattractive.
“If you’re young it’s much easier to do the job, climb ladders, operate some machinery, handle tools, etc., but most of our installers are in their 50s to 60s,” he said. “Sooner or later we need to bring in more young people, but it’s very difficult. Applicants will look quickly and say ‘no thanks, that’s not for me’.”
The National Development and Reform Commission, China’s Macroeconomic Management Agency, and the Ministries of Education and Human Resources did not respond to requests for comment.
Manufacturers say they have three main options to deal with labor-market mismatches: sacrifice profit margins to raise wages; more investment in automation; Or hop on the double wave triggered by the bitter rivalry between China and the West and move to cheaper pastures like Vietnam or India.
But implementing all those options is difficult.
Liu, who runs factories in the electric battery supply chain, has invested in more advanced production equipment with better digital measurements. He said his older workers struggle to keep up with fast gear, or to read data on a screen.
Liu, who like other factory chiefs declined to give his full name so he could speak openly about China’s economic slowdown, said he tried to lure younger workers with a 5% higher wage but was given the cold shoulder.
“It’s like with Charlie Chaplin,” Liu said, describing his workers’ performance, alluding to a scene from the 1936 movie “Modern Times,” about the concerns of American industrial workers during the Great Depression. The main character, the Little Tramp, played by Chaplin, fails to tighten the bolts on the conveyor belt.
Chinese policymakers have emphasized automation and industrial upgrading as solutions to an aging workforce.
The country of 1.4 billion people, on the brink of a demographic recession, will account for half of robot installations in 2021, up 44 percent year-on-year, according to the International Federation of Robotics.
But automation has its limits.
Dotty, general manager of a stainless steel treatment factory in Foshan City, has automated product packaging and work surface cleaning, but says that similar fixings for other operations are too expensive. Yet young workers are vital to sustaining production.
“Our products are really heavy and we need people to transfer them from one processing process to another. It is labor intensive in hot temperatures and we have difficulty working for these processes,” she said.
Brett, manager of a factory that makes video game controllers and keyboards in Dongguan, said orders have halved in recent months and many of his friends are moving to Vietnam and Thailand.
He is “just wondering how to survive at the moment,” he said, adding that although he expected to lay off 15% of his 200 workers, he still wanted young muscle on his assembly lines.
The competitiveness of China’s export-oriented manufacturing sector has been built over decades on state-sponsored investment in production capacity and low labor costs.
Preservation of that status quo is now clashing with the aspirations of a generation of well-educated Chinese for a more comfortable life than the sleep-work-sleep daily grind their parents endured.
Instead of settling for jobs below their educational level, a record 4.6 million Chinese applied for postgraduate studies this year. There are 6,000 applications for each civil service job, state media reported this month.
Many young Chinese are also living minimalist lifestyles known as “false flats,” doing just enough to get by and defy China Inc.’s rat race.
Economists say market forces could force young Chinese and manufacturers to curb their aspirations.
“The unemployment situation for young people could be worse,” said Zhiwu Chen, a professor of finance at the University of Hong Kong.
By 2025, he said, the labor shortage may not be as great “because demand will definitely decrease.”
‘You feel free’
Zhu’s first job was to put fake diamonds into wristwatches. He then worked in another factory, molding tin boxes for mooncakes, a traditional Chinese bakery product.
His colleagues shared horror stories of workplace injuries involving sharp metal sheets.
Realizing that he could avoid living his father’s life, he left.
Now selling and delivering, he earns at least 10,000 yuan ($1,421.04) a month, depending on how many hours he puts in. That’s almost double what he would earn in a factory, although some go to different housing, like most factories. Has its own hostel.
“It’s hard work. It’s dangerous on busy roads, in the wind and rain, but for young people it’s much better than factories,” Zhu said. “You feel free.”
Xiaojing, 27, now earns 5,000 to 6,000 yuan a month after working for three years at a printer factory in an upscale area of Shenzhen.
“All my friends my age left the factory,” she said, adding that it would be a tall order to bring her back.
“If they pay 8,000 before overtime, sure.”
($1 = 7.0371 Chinese Yuan Renminbi)
Edited by Marius Zaharia and David Crawshaw
Our Standards: Thomson Reuters Trust Principles.