SHENZHEN, Nov 21 (Reuters) – Growing up in a Chinese village, Julian Xu saw his father only a few times a year when he returned for the holidays from his exhausting job at a textile mill in southern Guangdong province.
For his father’s generation, factory work was a lifeline from rural poverty. For Xu and millions of other young Chinese, the low pay, long hard hours and risk of injuries are no longer worth the sacrifice.
“After a while the job makes you numb,” says the 32-year-old, who left the production line a few years ago and now makes a living selling milk formula and delivering scooters for a supermarket in Shenzhen, China’s southern tech hub. . “I could not bear the repetition.”
The rejection of grinding factory work by Zhu and other Chinese in their 20s and 30s is fueling a labor shortage that frustrates manufacturers in China, which produces a third of goods consumed globally.
Factory bosses say they will produce more and faster, replacing their aging workforce with young blood. But offering the higher wages and better working conditions that younger Chinese want would risk eroding their competitive advantage.
And small manufacturers say big investments in automation technology are either unaffordable or unwise while rising inflation and borrowing costs are curbing demand in China’s key export markets.
A survey by CIIC Consulting showed that more than 80% of Chinese manufacturers faced a shortage of hundreds to thousands of workers this year, equivalent to 10% to 30% of their workforce. China’s Ministry of Education predicts a shortage of nearly 30 million manufacturing workers by 2025, larger than the population of Australia.
On paper, labor is not in short supply: around 18% of Chinese 16-24 year olds are unemployed. This year alone, a batch of 10.8 million graduates entered the job market, which, in addition to manufacturing, is very slow. China’s economy is facing its slowest growth in decades, due to COVID-19 restrictions, a slowdown in the property market and a regulatory crackdown on tech and other private industries.
Klaus Zenkel, chairman of the European Chamber of Commerce in South China, moved to the region nearly two decades ago, when university graduates were less than a tenth of this year’s number and the entire economy was about 15 times smaller 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.
Zenkel said China’s phenomenal 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 this work, climb ladders, operate machinery, handle tools, etc., but most of our installers are in their 50s and 60s,” he said. “Sooner or later we need to get more young people, but it’s very difficult. Applicants will quickly look away 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; invest more in automation; Or hop on the decoupling wave triggered by the intensifying rivalry between China and the West and move to cheaper pastures like Vietnam or India.
But all those choices are hard 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 fast gear or read data on screens.
Liu, who like other factory heads 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 given the cold shoulder.
“It’s like Charlie Chaplin,” Liu said, describing his workers’ demonstration, evoking a scene from the 1936 movie “Modern Times,” about the concerns of U.S. industrial workers during the Great Depression. The main character, the Little Tramp, played by Chaplin, fails to tighten a bolt on a 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% year-on-year, the International Federation of Robotics said.
But automation has its limitations.
Dotty, general manager of a stainless-steel treatment factory in the city of Foshan, has automated product packaging and work surface cleaning, but says a similar fix for other tasks would be too expensive. Yet young workers are critical to driving production.
“Our products are really heavy and we need people to transfer them from one processing process to another. It’s labor intensive in hot temperatures and we find it difficult to hire 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 colleagues are going to Vietnam and Thailand.
He’s “just thinking about how to survive at the moment,” he said, adding that he expected to lay off 15% of his 200 workers, though he still wanted little muscle on his assembly line.
The competitiveness of China’s export-oriented manufacturing sector has been built for decades on state-subsidized investment in production capacity and low labor costs.
Maintaining that status quo is now clashing with the aspirations of a better-educated Chinese generation for a more comfortable life than their parents’ sleep-work-sleep for tomorrow’s meal.
Rather than settling for jobs below their education level, a record 4.6 million Chinese applied for postgraduate studies this year. There are 6,000 applications for every civil service job, state media reported this month.
Many young Chinese are also increasingly adopting a minimalist lifestyle known as the “ling flat,” which does enough to defy China Inc’s rat race.
Economists say market forces could force both young Chinese and manufacturers to curb their aspirations.
“The unemployment situation for young people could get worse before it’s a mismatch,” said Zhiwu Chen, professor of finance at the University of Hong Kong.
By 2025, he said, “because demand will definitely decrease.”
‘You feel free’
Xu’s first job was to screw a fake diamond into a wristwatch. He then worked in another factory, molding tin boxes for mooncakes, a traditional Chinese bakery product.
His colleagues shared horror stories about workplace injuries involving sharp sheets of metal.
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 the hours he puts in. That’s nearly double what he earns at the factory, though some of the difference goes to housing, since many factories have their own dorms.
“It’s hard work. It’s dangerous on busy roads, in wind and rain, but for young people, it’s better than factories,” Xu said. “You feel free.”
Xiaojing, 27, now earns 5,000 to 6,000 yuan a month as a masseuse in an upscale area of Shenzhen after a three-year stint at a printer factory where she earned 4,000 yuan a month.
“All my friends my age left the factory,” she said, adding that it would be a tall order for her to return.
“If they paid 8,000 before overtime, sure.”
($1 = 7.0371 Chinese Yuan Renminbi)
Editing by Marius Zaharia and David Crawshaw
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