Desperately Wanted: Factory Workers in Post-Holiday China

BEIJING (TheStreet) -- A festive holiday period in China is turning bleaker by the day for major electronics and appliance manufacturers facing a potentially serious labor shortage.

A trade group representing the country's home appliance makers sounded an alarm Wednesday following reports from several factory cities that migrant laborers were failing to return to work after their annual Spring Festival holidays.

Electronics companies such as Foxconn (FXCNY.PK:OTC), which makes Apple (AAPL) products and the Amazon (AMZN) Kindle, are finding it "difficult to attract workers" as the holiday period, which began January 30 winds down, said the report posted on the Web site of the China Household Electrical Appliances Association.

"According to a professional analysis, this year's labor shortage situation will be more serious than in previous years and will continue until April," the report said, without elaborating.

Most of the nation's estimated 260 million migrant workers travel to hometowns for one or two weeks during Spring Festival, which ends Friday. Afterward they return to factories, big-city restaurants and construction sites in areas far from home to work for the rest of the year.

But some migrants never go back to the jobs they held at live-in factory complexes run by labor-intensive manufacturers in Guangdong Province near Hong Kong or the Yangtze River Delta region around Shanghai. Often these no-shows find better wages closer to home, or for personal reasons drop out of the migrant workforce.

To keep migrants coming, local governments in several electronics manufacturing areas last year raised minimum wages. The Guangdong city of Guangzhou, for example, hiked its minimum monthly wage 19% to 1,550 yuan, or about US$260. The lowest legal wage in Zhejiang Province was pushed up 11% to 1,470 yuan per month.

Factories this month in the Guangdong city of Zhongshan have been offering salary-benefits packages worth up to 5,000 yuan per month, according to local media. Companies in nearby Shenzhen and Zhuhai have followed suit.

For some workers, though, these pay hikes may not be enough. According to a report released Monday by the Guangzhou Human Resources Market Service Center, employers in that city were expecting a combined shortfall of more than 123,000 migrant laborers after the Spring Festival. A Zhuhai job fair this week listed 3,000 factory openings but drew only 2,700 job-hunters, local media said.

Worker shortages have also been reported in cities in the eastern Yangtze region, such as Hangzhou and Wuhan.

Foxconn's manufacturing campus in Wuhan is struggling to fill about 5,000 job slots this week, according to that city's Changjiang Daily newspaper, while nearby the appliance maker Haier needs several hundred workers at a refrigerator plant.

In some cities, companies suffering staff shortages have tried to lure migrants away from other local employers by dispatching job recruiters to train stations. Recruiters swoop in after every train empties a load of migrants returning from their holidays.

A recent Huatai Securities report stated manufacturers in China were responding to labor shortages and rising wages by installing robots and automated production systems.

By Eric Johnson in Beijing

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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