By David Kirton
SHENZHEN (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 grueling job at a textile factory in the southern province of Guangdong.
For his father’s generation, factory work was a lifeline out of rural poverty. For Zhu and millions of other younger Chinese, low wages, long hours of drudgery and the risk of injury are no longer sacrifices worth making.
“After a while, that job makes you mind numbing,” said the 32-year-old, who left production lines a few years ago and now makes a living selling formula and making scooter deliveries for a supermarket in Shenzhen. the technological center of southern China. . “I couldn’t stand the repetition.”
The rejection of milling work in factories by Zhu and other Chinese in their 20s and 30s is contributing to a deepening labor shortage that frustrates manufacturers in China, which produces a third of the goods that are consumed worldwide.
Factory bosses say they would produce faster and faster, with younger blood replacing their aging workforce. But offering the higher wages and better working conditions that younger Chinese want would risk eroding their competitive advantage.
And smaller manufacturers say big investments in automation technology are unaffordable or unwise when rising inflation and borrowing costs are dampening demand in China’s main export markets.
More than 80% of Chinese manufacturers faced labor shortages ranging from hundreds to thousands of workers this year, equivalent to 10% to 30% of their workforce, a survey by CIIC Consulting showed. China’s Ministry of Education forecasts a shortage of nearly 30 million manufacturing workers by 2025, more than the population of Australia.
On paper, labor is not in short supply: about 18% of Chinese 16-24 year-olds are unemployed. This year alone, a cohort of 10.8 million graduates entered a job market that, aside from manufacturing, is very moderate. China’s economy, battered by COVID-19 restrictions, a housing market downturn and a crackdown on technology and other private industries, is facing its slowest growth in decades.
Klaus Zenkel, who chairs the European Chamber of Commerce in southern China, moved to the region about two decades ago, when university graduates were less than a tenth of this year’s numbers and the economy as a whole was a 15 times smaller in current US dollars. terms. He runs a factory in Shenzhen with about 50 workers that make magnetically shielded rooms used by hospitals for MRI exams and other procedures.
Zenkel said China’s breakneck economic growth in recent years had raised the aspirations of the younger generation, who now find their line of work less and less attractive.
“If you are young it is much easier to do this work, climbing stairs, working with machinery, handling tools, etc., but most of our installers are between 50 and 60 years old,” he said. “Sooner or later we need to get more young people, but it is very difficult. Applicants will take a quick look 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 address the labor market mismatch: sacrifice profit margins to raise wages; invest more in automation; Or ride the wave of decoupling unleashed by the growing rivalry between China and the West and move to cheaper pastures like Vietnam or India.
But all those options are difficult to implement.
Liu, who runs a factory 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 the faster equipment or read the data on the screens.
Liu, who like other factory bosses declined to give his full name so he could speak freely about China’s economic slowdown, said he tried to lure younger workers with 5% higher wages but was held back. the back.
“It’s like with Charlie Chaplin,” Liu said, describing the performance of his workers, alluding to a scene from the 1936 “Modern Times” movie about the anxieties of American industrial workers during the Great Depression. The main character, Little Tramp, played by Chaplin, can’t keep up with the tightening bolts on a conveyor belt.
Chinese lawmakers have emphasized automation and industrial upgrading as a solution for an aging workforce.
The country of 1.4 billion people, on the brink of a demographic recession, accounted for half of robot installations in 2021, up 44% from the previous year, the International Federation of Robotics said.
But automation has its limits.
Dotty, general manager of a stainless steel treatment factory in the city of Foshan, has automated the packaging of products and the cleaning of work surfaces, but says a similar solution for other functions would be too expensive. However, young workers are vital to keeping production moving.
“Our products are really heavy and we need people to transfer them from one processing process to the next. It is labor intensive in high temperatures and we have a hard time hiring for these procedures,” he said.
Brett, a manager at a factory that makes gaming controllers and keyboards in Dongguan, said orders have halved in recent months and many of his peers are moving to Vietnam and Thailand.
It is “just thinking about how to survive this moment,” he said, adding that he expected to lay off 15% of his 200 workers, even as he still wanted younger muscle on his assembly lines.
The competitiveness of China’s export-oriented manufacturing sector has been built for several decades on state-subsidized investment in production capacity and low labor costs.
Preserving that status quo now clashes with the aspirations of a generation of better-educated Chinese for a more comfortable life than the daily routine of sleep, work and sleep for tomorrow’s food that their parents endured.
Rather than settle for jobs below their educational level, a record 4.6 million Chinese applied for graduate studies this year. There are 6,000 applications for every civil service position, state media reported this month.
Many young Chinese are also increasingly adopting a minimal lifestyle known as “laying on the ground,” making just enough to get by and rejecting the China Inc. rat race.
Economists say market forces may force both Chinese youth and manufacturers to rein in their aspirations.
“The youth unemployment situation may have to get much worse before the mismatch can be corrected,” said Zhiwu Chen, a finance professor at the University of Hong Kong.
By 2025, he said, there may not be much of a shortfall of workers “as demand will surely decline.”
‘YOU FEEL FREE’
Zhu’s first job was threading fake diamonds onto wristwatches. After that, she worked in another factory, molding tin boxes for mooncakes, a traditional Chinese bakery item.
His colleagues shared gruesome stories of workplace injuries involving sharp sheet metal.
Realizing that he could avoid reliving his father’s life, he resigned.
Now that he does sales and delivery, he earns at least 10,000 yuan ($1,421.04) a month, depending on the number of hours he works. That’s almost double what you’d earn in a factory, though part of the difference is due to accommodation, as many factories have their own dormitories.
“It’s hard work. It’s dangerous on busy roads, windy and rainy, but for young people it’s much better than factories,” Zhu said. “You feel free.”
Xiaojing, 27, now earns between 5,000 and 6,000 yuan a month as a masseur in an exclusive area of Shenzhen after a three-year stint at a printer factory where he earned 4,000 yuan a month.
“All my friends who are my age have left the factory,” he said, adding that it would be a difficult task to get him back.
“If they paid 8,000 before overtime, sure.”
($1 = 7.0371 Chinese yuan renminbi)
(Editing by Marius Zaharia and David Crawshaw)