Wednesday, March 31, 2010

Shenzhen employer blames government for labour shortage

ShenzhenShenzhen via Wikipedia
Remarkable comments by a Shenzhen employer in the Global Times on the current shortage of labor in the southern parts of China, the Pearl River delta. The interviewee, only identified as Zheng Qizhong of a not named telecommunication company in Shenzhen (but with his picture!), blames the Shenzhen government for the mismatch on the labor market:
Zheng: No. What has happened in Shenzhen highlights the problem of government mismanagement, a lack of policy commitment rather than the superficial labor supply.
Migrant workers choose not to stay in Shenzhen for several reasons. The central government is offering more preferential policies to the inland region, which is making the inland economy prosper faster than the past and its demands for labor more compelling.
Then there is the soaring cost of living in Shenzhen, compounded by the inefficiencies in the social welfare system. Migrant workers cannot resolve the problem of education, accommodation, and healthcare on their own. Therefore, they cannot build a life there, especially for those working in labor-intensive firms.
The labor crunch is also due to more incentives being offered by local governments. A Taiwanese friend of mine recently set up a factory in Wanzhou, Chongqing. The Wanzhou government offers a bunch of incentives to attract this kind of investment. The government paid for factory buildings and promised that the investors could acquire ownership of the physical investment after several years of sound management, as long as the companies pay a certain amount of taxes.
According to Zheng salaries went up in Shenzhen since 1995 as the region started to lose its comparative advantage. In his view, the local government has had time enough to deal with that situation. Shenzhen has a migrant population that outnumbers the number of Shenzhen citizens greatly, creating a rather unbalanced situation.
GT: Is it time for the whole of the coastal area to abandon labor-intensive industry?
Zheng: We can take the Japanese case as an example. Japan's labor-intensive industry was mostly developed in its urban areas at a early stage. As time went by they all moved to rural areas, small cities or abroad. But this process was never entirely managed by corporations. The Japanese government also played a certain role.
The Shenzhen government also should take some responsibility in helping with this transfer. We could keep our headquarters in Shenzhen, where the healthy commercial environment will continue to contribute to our business.
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